Balaji Cement Industries Rs 3 billion long and short term loans ratings revised by Care Ratings Nepal

Tue, Jun 23, 2020 4:13 PM on Credit Rating, Latest,
Balaji Cem...

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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