Approx Rs 12 arba loan ratings of Chandragiri Hills, Hulas Steels Industries and Hulas Auto Craft Private Limited on the Watch with Negative Implications by ICRA Nepal

Fri, Jul 10, 2020 2:26 PM on Credit Rating, Latest,

Chandragiri Hills Limited

ICRA Nepal has assigned an issuer rating of [ICRANP-IR] BB@(pronounced ICRA NP issuer rating double B) to Chandragiri Hills Limited (CHL). ICRA Nepal has also assigned a long-term rating of [ICRANP] LBB@(pronounced ICRA NP L double B) to the long-term loans and a short-term rating of [ICRANP] A4+@(pronounced ICRA NP A four plus) to the short-term loans of CHL. The ratings assigned are on Watch with Negative Implications.

Credit strengths

  • Financially  resourceful  promoters
  • Unique tourist attraction contributing to good revenue base over a short period of time
  • Tourism sector remains a priority for the Government

Credit challenges

  • Covid-19 pandemic would have significant impact on the hospitality sector
  • Weak financial profile with high leverage and sub-par coverage ratios
  • Limited  track  record  of  operations for  cable  car;  project  stabilisation  risk  high  for  the  resort
  • Fragmented  hotel  industry  and  increasing  competition

About the company

Established in 2009, Chandragiri Hills Limited (CHL) is the operator of the integrated tourist complex located in Chandragiri Hills, Thankot, Kathmandu. The project includes a cable car service to the peak of the hill with religious importance, amusement parks and restaurants therein. The company also operates a 100-room boutique resort, and several other visitor activities at the property. The cable car project started operations on August 8, 2016.The soft launch of the resort was made in July 2019, while the formal launch is yet to be made. CHL was initially registered as Kathmandu Fun Park Private Limited and was converted into a public limited company on July 16, 2014. Its name was changed to the current oneon May 16, 2016. The company is promoted by 15 individuals with Mr. Hem Raj Dhakal and Mr. Chandra Prasad Dhakal as the largest shareholders with 21.8% ownership each. Mr. Chandra Prasad Dhakal is currently the Chairman of the company.The company proposes to issue an IPO shortly (~NPR 184 million), which would dilute its promoter holding to 88%.

For detailed rating, click here

 

Hulas Steels Industries Limited

ICRA Nepal has assigned a long-term rating of [ICRANP] LBBB- (pronounced ICRA NP L triple B minus) to the fund-based long-term  limits  of NPR 240.8  million  of  Hulas  Steels  Industries  Limited  (Hulas).  ICRA  Nepal  has  also  assigned a short-term  rating  of [ICRANP]  A3 (pronounced  ICRA  NP  A three)  to  the short-term fund-based  limits  of  NPR  5,702.5  million (including embedded non-fund based limit of NPR 3,069.2 million) and short-term non-fund based limits of NPR 1,825.8 million.These ratings are kept on watch with negative implications amid the Covid-19 pandemic’s impact and its likely implications on Hulas’liquidity position and debt coverage indicators.

Credit strengths

  • Established track record, strong brand, and tested distribution network
  • Relatively healthy operating profit margin in consolidated and duty-protected sheets segment
  • Healthy capitalisation and low gearing levels

Credit Challenges

  • Near-term growth and margins to be challenged by Covid-induced externalities
  • High working capital intensity resulting in stretched liquidity 
  • Regulatory risk
  • Inherent cyclicality of the industry
  • Pricing and exchange volatility risk 

About the company

Hulas Steel Industries Limited was established in 1981 as a private limited company and converted into a public limited company  in  2006.At  present, Charnley  Development  Company Limited holds  50.0%  stake in  Hulas  while  the  balance stake is held by the Golchha family viz. Mrs. Jayshree Golchha (~24.5%), Hulas Metal Craft (~7.7%), and Mr. Dinesh Kumar Golchha (~3.9%) among others. Hulas is a secondary steel producer, which manufactures steel sheets (galvanised and colour coated)and pipes among other products. It mainly imports hot rolled (HR) steel sheets as raw material input, from primary steel manufacturers in India. Hulas also imports zinc used for galvanisation and occasionally the cold-rolled (CR) sheets. The company has in-house cold-rolling mills to convert the HR sheets into CR sheets which largely meets its requirement for sheet products. It mainly caters to the domestic market.

Hulas currently has an annual installed capacity of ~399,100 metric tonnes, including ~20,000 metric tonnes per annum capacity for pipes (black and galvanised), ~329,400 MT of sheets (plain and corrugated/GPI/GCI) and balance 49,700 MT comprising other ancillary products such as aluminium structures, welded structures, pipe fittings, etc. Pipes and sheets jointly account for ~88% of the installed capacity and ~93% of FY2019 sales for Hulas. Moreover, the Galvalume project, for  sheets  production  with a capacity of 330 metric  tonnes per  day  is  in  the  final  stage  of  commissioning  with  the commercial production planned for the beginning of FY2021.

For detailed rating, click here

 

Hulas  Auto Craft Private Limited

ICRANepal  has  assigned  a long-term  rating  of [ICRANP]  LBBB-@ (pronounced ICRA  NP L triple B minus)  to the  long-term loans  of  Hulas  Auto  Craft  Private  Limited  (HAC).  ICRA  Nepal  has  also  assigned  a  short-term  rating  of  [ICRANP]  A3@ (pronounced ICRA NP A three) to the short-term  loans (including non-fund-based limits)  of HAC.  These ratings  remain on watch  with  negative  implications.

Credit strengths

  • Part of the Golchha  Organization  with experienced promoters
  • Leading  market position  of  Bajaj  brand  vehicles  in  Nepalese  2W market
  • Strong operational  profile

Credit challenges

  • Externalities  brought in by Covid-19  could  affect  key  operating parameters
  • Limited  track  record  and  high  dependence  on  short-term  borrowings
  • Financial  profile to witness pressure
  • Exposed  to regulatory  risks
  • High  dependence on variants  from a single  model
  • Tight  liquidity  and  high  borrowing  rates could  deter final  customers and  hence  impact  revenue growth

About the company   

Established  in 2013, Hulas Auto Craft Private Limited (HAC) is the authorised assembling  unit of Bajaj  brand two-wheelers and  three-wheelers.  The  assembled  vehicles  are  solely  sold  to  its  sister  concern,  Hansraj  Hulaschand  and  Company  Private  Limited  (HHC),  the authorised distributor  of  those  products in Nepal. HAC’s registered office is in Ganabahal, Kathmandu, with its assembly  unit  in  Ramgram,  Nawalparasi.  The  company  is  a  part  of  the  Golchha  Group,which  has operations  across various  manufacturing  and  trading  sectors in Nepal.  As  of now,  the company’s shares are held by Mr. Shekhar Golchha (80%)and Mr.  Akash Golchha (20%).  Mr. Shekhar Golchha  is the sole director of the company.

For detailed rating, click here

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