Rating of LBB and A4 assigned to long term and short term funds of Goyal Ispat; Major promoters include Rajesh Hardware and Siddhartha Hardware

ICRA Nepal has assigned a long-term rating of [ICRANP] LBB (pronounced ICRA NP LBB) to the NPR 900-million long-term bank loan limits of Goyal Ispat Private Limited (GIPL). ICRA Nepal has also assigned a short-term rating of [ICRANP] A4 (pronounced ICRA NP A four) to the proposed short-term bank loan limits of NPR 2,600 million (interchangeable between fund-based and non-fund based facilities).   

 Credit strengths

• Strong promoter group and established track record in the trading of construction materials
• Focus on infrastructure development supporting steel demand in Nepal; domestic players benefit from high import barriers

Credit challenges

• Project execution risk
• Fragmented and competitive nature of the industry
• High gearing could stretch debt coverage indicators
• Regulatory risk
• Limited product diversification
• Inherent cyclicality of the industry

About the company

Established in 2018 and promoted by the Rajesh Hardware Group, Goyal Ispat Private Limited (GIPL) is a closely-held company. GIPL’s Group entities – Rajesh Hardware and Siddhartha Hardware – hold 70% and 15% stakes in the company while the balance 15% is held by Mrs. Suman Agarwal. Mr. Sushil Agarwal is the Chairman and Managing Director of the company.

GIPL is setting up a factory for manufacturing black pipes and steel sections with an installed capacity of ~72K metric tonnes each. The production facility will use imported HR/CR sheets and steel billets to produce the finished goods. GIPL’s production facility, which is in the Ramgram Municipality of Nawalparasi, is in the final stage of commissioning and is expected to commence operations from mid-January 2020. A major portion of GIPL’s produce is expected to be sold through the trading arms of the Group viz. Rajesh Hardware and Siddhartha Hardware, which are also the flagship entities of the Group.  

 Instrument details 

 Source: https://www.icranepal.com/

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