CARE Nepal assigns BBB and A3+ to long term and short term bank facilities of United Distributors Nepal

Fri, Jun 14, 2019 11:47 AM on Corporate, Latest,

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BBB’ to the long term bank facilities and ‘CARE-NP A3+’ to the short term bank facilities of United Distributors (Nepal) Private Limited (UDN). 

Key Rating Strengths

  1. Established and long track record of operations along with strong Promoters and experienced management team
  2. Increasing scale of operations
  3. Liquidity profile supported by liquid investments in listed shares
  4. Diversified distribution network and established brands

Key Rating Weaknesses

  1. Volatile profitability over the past 3 years due to trading nature of business
  2. Working capital intensive nature of operations
  3. Leveraged capital structure with moderate debt coverage indicators
  4. Exposure to volatile interest rates
  5. Foreign exchange fluctuation risk
  6. Fragmented industry with competition from both domestic and international players

About the Company

United Distributors (Nepal) Private Limited (UDN) was registered as a private limited company as on

April 2003. Registered office of the company is at Kathmandu-22, Khichapokhari. UDN is involved in import/ trading of FMCGs. Currently UDN is involved in supplying more than 1350 varieties of products manufactured by around 17 FMCG companies around the globe under more than 80 brands. For most of the products, the company is sole distributor in Nepal although the agreements have non-exclusivity clause. 

Details of the Facilities rated

Nature of the Facility

Type of the Facility

Amount (Rs. Million)

Rating

Long Term Bank Facilities 

Term Loan

423.90

CARE-NP BBB

Short Term Bank Facilities

Working Capital Loans

6,510.00

CARE-NP A3+

Short Term Bank Facilities (Proposed)

Working Capital Loan

156.10

CARE-NP A3+

Short Term Bank Facilities

Letter   of         Credit/ Bank

Guarantee #

910.00

CARE-NP A3+

Total

 

8,000.00

 

# Out of total fund based working capital limits of Rs. 6,510 Mn, Rs. 3,450 Mn will be used as non-fund facilities (letter of credit/ bank guarantee) interchangeably.