CARE Ratings Nepal Limited (CRNL) has reaffirmed rating of ‘CARE-NP BB’ assigned to the long-term bank facilities and ‘CARE-NP A4’ assigned to the short-term bank facilities of A.S.T. Private Limited (AST).
The ratings assigned to the bank facilities of AST are constrained by impact of COVID-19 on the business of the company, working capital intensive nature of its operations leading to high utilization of working capital limits, exposure to volatile interest rates, price volatility risk on traded commodities and exposure to foreign exchange fluctuation risk. The ratings also factor in fragmented industry with competition from both national and international players. The ratings, however, derive strength from moderate track record and experienced promoters in the related field, improvement in profitability of the company despite decline in revenue during FY19(audited, refers to 12 months period ended mid-July 2019), moderate debt service coverage indicators and diversified distribution network with locational advantage. Ability to profitably scale up the operations of the company, effective management of working capital with improvement in solvency position are the key rating sensitivities.
Key Rating Weakness
- Impact of COVID-19 on the business of the company
- Working capital intensive nature of operations
- Exposure to volatile interest rates
- Price volatility risk on traded commodities and foreign exchange fluctuation risk
- Fragmented industry with competition from both domestic and international players
Key Rating Strength
- Moderate track record and experienced promoters in the related field
- Improvement in profitability of the company despite decline in revenue during FY19
- Moderate debt service coverage indicators
- Diversified distribution network with locational advantage
About the Company
A.S.T. Private Limited (AST) was registered as a private limited company on December 23, 2011, which was earlier registered as a proprietorship firm and operated since November 30, 2005 in the name of Allied Shruti Traders. The company is promoted by individual businessmen of Nepal with registered office situated in Birgunj, Parsa. AST is involved in import and trading of chemicals and industrial raw materials from various countries for end-user industries such as bakery & confectionary, snacks & noodles, juices & beverages, dairy, paints & textiles etc.
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