CARE Ratings Nepal assigns BB+ and A4+ to long term and short term loans of Jagdamba Enterprises; M.S. Black & Galvanized pipe manufacturing plant set up in Jeetpur, Parsa district

CARE Ratings Nepal Limited (CRNL) has assigned rating of „CARE-NP BB+‟ to the long term bank facilities and CARE-NP A4+ to the short term bank facilities of Jagdamba Enterprises Private Limited (JEPL). 

Key Rating Weaknesses

• Highly leveraged capital structure and weak debt service coverage indicators in FY18 which further deteriorated in FY19
• Raw material price volatility risk and foreign exchange fluctuation risk
• Working Capital Intensive Nature of Operations
• Exposure to volatile interest rates
• Presence in highly fragmented and competitive nature of steel industry

Key Rating Strengths

• Established and long track record of operations with experienced management team in the related field
• Strong operational and financial performance characterized by healthy growth in sales, profitability, PAT and internal accruals in FY18 however subdued performance in FY19
• Established brand with country wide market presence and large scale of operation
• Diverse product range catering to wide spectrum of industries and established marketing setup
• Demand of steels products in the country
• Locational advantage and scope to increase export

About the Company

Jagdamba Enterprises Private Limited (JEPL) is a private limited company which was incorporated on March 29, 2001 for setting up M.S. Black & Galvanized pipe manufacturing plant in Jeetpur, Parsa district of Nepal. The company is operating from more than 15 years, manufacturing wide range of steel products with total installed plant capacity of 300,360 Metric Tons Per Annum (MTPA) in FY19 and is the leading player in the industry. JEPL had six tube mills with total tube manufacturing capacity of 118,800 MTPA and the seventh tube with capacity of 57,600 MTPA commenced operations in the beginning of FY20.

Brief Financial Performance during the last 3 years is as follows:

(Rs. In Million)

*Audited

 Details of the Facilities rated

 Source: https://careratingsnepal.com/

Read the full report here.