ICRA Nepal assigns LBB- and A4 to long tern and short term funds of Bhagwati Laminates Private Limited
Mon, Jan 27, 2020 4:30 PM on Credit Rating, Latest, Stock Market,
ICRA Nepal has assigned a long-term rating of [ICRANP] LBB- (pronounced as ICRA NP L double B minus) to the long-term loans of NPR 430 million and a short-term rating of [ICRANP] A4 (pronounced ICRA NP A four) to the short-term loans of NPR 300 million of Bhagwati Laminates Private Limited (BLPL).
Credit strengths
- Prior experiences and commitment of promoters, management team drive business
- Growth outlook of furniture business, construction sector and increasing urbanisation key to sectoral growth of the industry
- Healthy operating margin; however, numbers yet to stabilise amid low track record
Credit challenges
- High gearing with accumulated loss and weak coverage indicators
- Stretched liquidity amid higher working capital cycle and growth phase
- Counterparty credit risk
- Intense competition amid low entry barriers and substitute products
- Environment and forex risks
About the company
Incorporated on November 27, 2016, Bhagwati Laminates Private Limited (BLPL) is a plywood manufacturing unit that produces various products such as plywood, plyboard, plyboard doors and veneer. The company has obtained a certificate from the Industry Ministry to manufacture plywood for an installed capacity of 3.42 million square meters and laminates for the capacity of 1.2 million pieces. Of the two licensed units (plywood and laminates), as of now, the company is operating the plywood unit and is planning to operate the laminate section in the near future. It has been in commercial operation since February 2019 and is selling the products under the brand name NEPLY. The company has been established by a Group of seven individuals with a paid-up capital of NPR 200 million. As at mid-November 2019, the company had a net worth of ~NPR 127 million with an accumulated loss of NPR 73 million. The factory plant is situated at Mechinagar Municipality of Jhapa District, Province-1, Nepal.
Key Financial Indicators
|
Amount in NPR million |
Provisional |
|
|---|---|---|
|
5MFY2019 |
4MFY2020 |
|
|
Operating Income |
142 |
156 |
|
OPBDIT/OI (%) |
12% |
19% |
|
PAT/OI (%) |
-45% |
-6% |
|
Gearing (times) |
4.86 |
5.26 |
|
OPBDITA/Interest (times) |
0.48 |
1.40 |
|
DSCR (times) |
0.49 |
0.69 |
|
NWC/OI (%) |
62% |
48% |
|
Total Outside Liabilities/TNW (times) |
5.62 |
5.67 |
|
Total Debt/OPBDITA (times) |
37.82 |
21.99 |
Instrument details
|
Instrument |
Limit (NPR in Million) |
Ratings |
|---|---|---|
|
Existing Loan Limits |
|
|
|
Long term loans, fund based (A) |
430 |
|
|
Fixed Term Loan |
430 |
[ICRANP] LBB- |
|
Short term loans, fund based (B) |
200 |
|
|
Overdraft |
200 |
[ICRANP] A4 |
|
Trust Receipt Loan (within LC) |
(80) |
[ICRANP] A4 |
|
Demand Loan (within Trust Receipt Loan) |
(80) |
[ICRANP] A4 |
|
Bridge Gap Loan (within TL) |
(15) |
[ICRANP] A4 |
|
Short term loans, non-fund based (C) |
100 |
|
|
Letter of Credit II-Sight/Usance |
100 |
[ICRANP] A4 |
|
Letter of Credit I-Sight/Usance (within TL) |
(50) |
[ICRANP] A4 |
|
Bank Guarantee (within LC-II) |
(0.3) |
[ICRANP] A4 |
|
Grand total (A+B+C) |
730 |
|
Source: icranepal.com
