ICRA Nepal assigns LBB- to long-term loans of Bishal Cement Industries; Rating of A4 assigned to short term loans
Mon, Sep 23, 2019 10:17 AM on Credit Rating, Latest,
ICRA Nepal has assigned the long-term rating of [ICRANP] LBB- (pronounced ICRA NP L double B minus) to the long-term loans of Bishal Cement Industries Private Limited (BCIPL or the company). ICRA Nepal has also assigned the short-term rating of [ICRANP] A4 (pronounced ICRA NP A four) to the short-term loans of BCIPL.
Credit strengths
Healthy sales growth till FY2018; recent capacity enhancement expected to aid future sales growth
Improved operational profitability in recent periods
Good demand outlook for cement in the country
Credit challenges
Stretched working capital cycle leading to weak liquidity
Limited track record with fluctuating indicators; coverage indicators generally remain low
Intense competition leading to lower realisation
High dependence on top dealers
Vulnerability to cyclicality and seasonal demand
Risk of regulatory changes
About the company
Incorporated in December 2009, Bishal Cement Industries Private Limited (BCIPL) produces and sells cement, and has a grinding capacity of 800 TPD. The company’s shares are held by six individuals from diverse backgrounds and one trading company. BCIPL produces OPC under one brand and PPC under three brands. Its factory is in Mianihiya-4, Rupandehi.
Key financial indicators
|
|
FY2016 (Audited) |
FY2017 (Audited) |
FY2018 (Audited) |
FY2019 (Provisional) |
|---|---|---|---|---|
|
Operating income (OI; gross revenue in NPR million) |
315 |
755 |
971 |
1,032 |
|
OPBDITA/OI (%) |
13.5% |
4.6% |
8.2% |
11.5% |
|
Total debt/Tangible net worth (TNW; times)* |
3.8 |
4.3 |
3.9 |
2.0 |
|
Total outside liabilities/TNW (times) |
4.1 |
5.1 |
5.5 |
2.4 |
|
Total debt/OPBDITA (times) |
9.1 |
11.9 |
6.4 |
5.0 |
|
Interest coverage (times) |
1.2 |
0.8 |
1.7 |
1.8 |
|
DSCR (times) |
0.6 |
1.1 |
0.9 |
1.1 |
|
Net working capital/OI (%) |
69% |
34% |
23% |
47% |
Source: Company data
* TNW excludes revaluation reserves created by revaluing the land in FY2019.
Instrument details
|
Instrument |
Limit (Amount in NPR Million) |
Ratings |
|---|---|---|
|
Fund-based facilities; short term (A) |
|
|
|
Overdraft |
230.00 |
[ICRANP] A4 |
|
Demand Loan |
210.00 |
[ICRANP] A4 |
|
Total (A) |
440.00 |
|
|
|
|
|
|
Fund-based Long-term Loans (B) |
159.88 |
[ICRANP] LBB- |
|
|
|
|
|
Grand total (A+B) |
599.88 |
|
Source: ICRA Nepal
