ICRA Nepal assigns LBBB+ and A2 rating to long term and short term loans of Sarbottam Cement
Sun, Dec 15, 2019 4:11 PM on Credit Rating, Latest,
ICRA Nepal has assigned the long-term rating of [ICRANP] LBBB+ (pronounced ICRA NP L triple B plus) and the short-term rating of [ICRANP] A2 (pronounced ICRA NP A two) to Sarbottam Cement Private Limited (Sarbottam).
Credit strengths
- Strong operational profile
- Diverse sales channel and good demand leading to high capacity utilisation and healthy sales growth
- Healthy profitability indicators
- Experienced promoters/management; operational synergies from being part of the Saurabh Group
Credit challenges
- High working capital intensity
- Decreased sales realisation and increased debts leading to moderation in coverage ratios
- Intense competition in industry
- Vulnerability to cyclicality and seasonal demand
- Risk of regulatory changes
About the company
Incorporated in October 2010, Sarbottam Cement Private Limited (Sarbottam) is involved in the production and selling of clinker and cement. Initially established as a plant with a clinkerisation capacity of 1,190 TPD, the capacity currently stands at 2,990 TPD for clinker and 1,200 TPD for grinding. The shareholding of the company is held by seven individuals, of which four promoters belong to the Saurabh Group (62% stake), a prominent business house of Nepal. Its factory is located at Ramnagar VDC-05, Nawalparasi district. The company currently manufactures OPC and PPC under the brand Sarbottam.
Key financial indicators
|
|
FY2016 (Audited) |
FY2017 (Audited) |
FY2018 (Audited) |
FY2019 (Provisional) |
|---|---|---|---|---|
|
Operating income-OI (NPR million) |
3,048 |
4,813 |
6,268 |
7,049 |
|
OPBDITA/OI (%) |
28% |
38% |
32% |
29% |
|
Total debt/Tangible net-worth-TNW (times) |
2.33 |
1.68 |
1.51 |
1.65 |
|
Total outside liabilities/ TNW (times) |
2.61 |
2.05 |
1.77 |
1.99 |
|
Total debt/OPBDITA (times) |
4.60 |
2.23 |
2.56 |
3.01 |
|
Interest coverage (times) |
3.42 |
5.94 |
5.21 |
4.49 |
|
DSCR (times) |
0.84 |
1.94 |
1.88 |
1.76 |
|
Net-working capital/OI (%) |
22% |
44% |
58% |
49% |
Source: Company data
Instrument Details
|
Instrument |
Limit (Amount in NPR Million) |
Ratings |
|---|---|---|
|
Fund-based, long-term Loans (A) |
3,742.74 |
[ICRANP] LBBB+ |
|
|
|
|
|
Fund-based, short-term Loans |
|
|
|
Existing working capital loan limits |
2,260.00 |
[ICRANP] A2 |
|
Proposed working capital limits |
1,200.00 |
[ICRANP] A2 |
|
Bridge gap loans (to be converted to term loans) |
297.60 |
[ICRANP] A2 |
|
Total fund-based, short term loans (B) |
3,757.60 |
|
|
|
|
|
|
Non-fund-based facilities, Short-term |
|
|
|
Letter of credit |
900.00 |
[ICRANP] A2 |
|
Bank guarantee |
100.00 |
[ICRANP] A2 |
|
Total non-fund based (C) |
1,000.00 |
|
|
|
|
|
|
Grand total (A+B+C) |
8,500.34 |
|
Source: ICRA Nepal Rating
