CARE Ratings Nepal Limited (CRNL) has revised the rating to ‘CARE-NP BB-’ for the long-term bank facilities and reaffirmed ‘CARE-NP A4’ assigned to the short-term bank facilities of Balaji Cement Industries Private Limited (BCPL).
The revision in ratings assigned to the bank facilities of Balaji Cement Industries Private Limited (BCPL) takes into account negative implications of COVID-19 on the business of the company, subdued operational and financial performance of the company in FY19 (audited, refers to 12 months period ended mid-July 2019) with only one month of operation and weak financial performance during H1FY20 (unaudited, refers to 6 months period ended mid-January 2020) and expected losses for FY20.
Key Rating Weakness
- Impact of COVID-19 on the business of the company
- Subdued operational and financial performance of the company in FY19 with only one month of operation and weak financial performance during H1FY20
- Leveraged capital structure and weak debt service coverage indicators
- Working capital intensive nature of operations
- Lack of backward integration and Raw material price volatility risk
- Exposure to volatile interest rates
- Presence in highly fragmented and competitive nature of cement industry
Key Rating Strengths
- Experienced promoters in the manufacturing industries
- Demand of cement products in the country
- Product diversification and own brand
- Locational advantage of the plant site
About the Company
BCPL is a private limited company, established in May 2016, promoted by the individuals involved in cement industry and other manufacturing industries, for setting up clinker grinding plant at Kapilvastu District of Nepal. The promoters of the company have set up a clinker grinding unit to with cement manufacturing capacity of 1400 metric tons per day which came into operation from June 15, 2019. BCPL is engaged in manufacturing of Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC) and Ordinary Portland Cement (OPC) under various brands.
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