CARE Ratings designates Rating of CARE-NP BB + and CARE-NP A4+  respectively to long term and short term bank facilities of Kankai International Builders

CARE Ratings Nepal Limited (CRNL) has assigned Rating of ‘CARE-NP BB + (Double B plus)’ to the long term bank facilities and ‘CARE-NP A4+ (A Four Plus)’ to the short term bank facilities of Kankai International Builders Private Limited (KIBPL).

The ratings assigned to the bank facilities of KIBPL are constrained by tender based nature of business and high competition, working capital intensive operations and planned debt funded capex leading to deterioration in the debt coverage indicators in the medium term.

The rating, however, derives strength from experienced promoters & management, established track record in executing diverse projects, increasing scale of operations and profits on consolidated basis; however, decline over the period as per FY18 (Prov, Standalone refers to the year ended mid-July 2018), moderate order book position with medium term revenue visibility and, ownership of sizeable equipment fleet and built-in escalation clause in majority of the contracts.

Ability of the company to successfully execute projects in time and recover contract proceeds and ability of the company to manage the growth and maintain profitability margins without deterioration in its financial risk profile will be the key rating sensitivities.