Surya Nepal to obtain short term banking facilities worth Rs.5.75 Arba; Care ratings assigns top ratings

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP A1+’ to the short term bank facilities worth NPR 5750 Million of Surya Nepal Private Limited (SNPL).

The rating assigned to the bank facilities of Surya Nepal Private Limited (SNPL) derives strength from its strong brand equity, leadership position in market with a strong portfolio of offerings mainly in its cigarette business and experienced management in the related field. The rating factors in strong financial profile characterized by growth in the revenue, high profitability, minimal debt and strong liquidity backed by large liquid investments. The rating also derives comfort from the availability of significant business and management expertise to SNPL from its strong holding Company- ITC Limited (ITC) across all businesses.

These strengths are partially offset by exposure of the cigarette business, which is the main profit earning business segment of SNPL to high taxation regime and stringent regulatory framework in Nepal on cigarettes making the business susceptible to regulatory changes. Ability to actualize full revenue potential of Cigarettes in midst of high taxation regime, difficult regulatory framework and the impact of future capital expenditure plans on the capital structure of the company remain the key rating sensitivities.

SNPL started operations in 1986. ITC Limited, India holds 59% shares in SNPL and is its holding company. Further, 39% shares are held by a group of Nepali individual and institutional shareholders and remaining 2% shares is held by British American Tobacco (Investments) Limited, UK. SNPL is the largest private sector manufacturing enterprise in Nepal and is currently engaged in the business of Cigarettes, Safety Matches, Agarbatti, Confectionery and Readymade Garments in Nepal.

Source: Care Ratings Nepal