Existing facilities of Simrik Air Private Limited graded by ICRA Nepal; includes proposed facilities worth USD 5.36 Million

Fri, Apr 10, 2020 2:43 PM on Credit Rating, External Media, Latest,

ICRA Nepal has placed the ratings assigned to the bank loan limits of Simrik Air Private Limited (SAPL or the company) on watch with negative implications. These ratings include the rating of [ICRANP] LBB-@ assigned to the company’s long-term loans and the rating of [ICRANP] A4@ assigned to the company’s short-term loans (including non-fund based limits). The graded facilities are worth NPR 586.90 Million and USD 6.33 Million.

The ratings for SAPL have been placed on watch with negative implications, given the expected impact of Covid-19 on the Nepalese tourism sector and consequently the rotor-wing aviation sector. The initially assigned ratings drew comfort from the Government initiatives in celebrating 2020 as a Visit Nepal Year which has been cancelled recently, amid the global coronavirus outbreak. The outbreak resulted in a marginal decline in tourist arrivals in January-February 2020, with a sharp decline expected in the months to follow. The period of March-May is considered the second peak season for tourism-related activities in Nepal, given the conducive environment. Hence, the high seasonality in revenues for entities like SAPL is likely to accentuate the level of impact.

Additionally, a decline in the arrival of foreign tourists would result in lower USD earnings, which offer better margins to the players. For rotor-wing sector players like SAPL, revenues are highly seasonal and dependence on USD earnings is very high. The company also carries a sizeable USD loan and operational cost obligations and hence this would add up to forex risks as well.

In operation since 2001, Simrik Air Private Limited (SAPL) is a leading helicopter operator company in Nepal which has been extending services along chartered flights, rescue operations; sling operation services, adventure/religious tours, among others. SAPL currently extends its services through four Airbus helicopters and one Bell helicopter. The company is mainly promoted by Capt. Rameshwor Thapa who is also the Chairman of the company. With presence of many experienced pilots in its crew, SAPL has established itself as one of the leading service providers in the sector.

Source: ICRA Ratings Nepal