ICRA Nepal has assigned along-term rating of [ICRANP] LB (pronounced ICRA NP LB) to the long-term loans of Arihant Polypacks Limited (APL). ICRA Nepal has also assigned a short-term rating of [ICRANP] A4 (pronounced ICRA NP A four) to APL’s funded and non-funded short-term loans.
The ratings of APL remain constrained by its weak financial profile characterised by lower profitability, high gearing, stretched coverage indicators and tight liquidity position. Gearing is high due to higher utilisation of long-term loans for expansion of capacity and addition of new product lines while the net worth growth is low amid lower net profitability. Lower net profitability is the result of higher financial burden on account of gearing. These factors coupled with high working capital intensity of the business, primarily driven by high debtor and inventory levels have resulted in stretched liquidity position.This has led to a sustained need for external financing through promoter loan and occasional over utilization of its drawing power along with mismatch in short term loans resulting in current ratio of lower than 1x.Moreover,the company’s operations and profitability are also susceptible to raw material pricing along with the associated forex fluctuation risks. Similarly, the company’s revenue growth and profitability are exposed to external factors such as low entry barriers and changes in government regulations including taxes and import regulations.
- Experienced promoters and management team
- Diversified customer and supplier base
- Diversified Product Lines:
- High financial leverage, lower net profitability and weak coverage metrices
- Stretched liquidity position
- Exposure to raw material price fluctuation risk and forex fluctuation risk
- Highly competitive intensity limits pricing flexibility
About the company
Incorporated on February 18, 2008, Arihant Polypacks Limited (APL) is a manufacturing unit that manufactures polypropylene (PP) and high-density polyethylene (HDPE) woven fabrics (with or without lamination), non-woven fabrics(with or without lamination),woven sacks, non-woven shopping bags.leno fabrics and tarpaulins primarily for industrial packaging. The tarpaulins are being manufactured under the brand name of “Blue Horse”,” Hulas” and “Relaxo”. The approved installed capacities are 6,000MT for PP/HDPE Woven Fabric (with and without lamination), 200MT for PP/HDPE Woven Bag (with and without lamination), 900 MT for PP Non-Woven Fabric and 600MT for PP Non-Woven Bag. The company has been established by a group of 11 individual shareholders people from diverse businesses.The factory is situated at Biratnagar of Morang District, Province 1, Nepal.
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