ICRA Nepal assigned A4+ ratings to Rs 414.1 crore loan of HIM Electronics

Fri, Jul 10, 2020 2:15 PM on Credit Rating, Latest,

ICRA  Nepal  has  assigned  the  short-term  rating  of  [ICRANP]  A4+(pronounced  ICRA  NP  A  four plus)  to HIM  Electronics Private Limited (HIM).

The assigned rating factors in HIM’s established track record and its experienced promoters and management team.The rating also takes comfort from HIM’s strong market positioning as one of the two authorised importers and distributors of Samsung  brand  of  handheld  devices  and  home  appliances. Strong brand recall of Samsung, HIM’s strong and well diversified distribution network and traction in the local market, augurs well for the future growth of the company. In addition  to  Samsung,  the  company  also  has  its own homegrown  brand  of  consumer  electronics  and  electricals  (viz. Himstar) that offers segment and revenue diversification to the company. The company has reported healthy growth in revenue  in  the  last  three  to  four  years  (notwithstanding a marginal  decline in  growth in  FY2019  and  expected deterioration over the near term amid the Covid-19 pandemic), on a steady operating profit margin, which is a positive for its future profitability.

Credit strengths

  • Established track record and experienced promoters,management team
  • Established supply chain, almost exclusive import and distribution rights and strong brand recall of Samsung
  • Good revenue growth with diversified customer base and steady retention of profits

Credit challenges

  • Absence of long-term agreement with Samsung Electronics
  • High working capital intensity increasing the need for external financing
  • High gearing resulting in modest coverage indicators,despite improving operating profit
  • Fragmented market and high competition

About the company 

HIM  Electronics  Private  Limited  (HIM),  established  in  1988,  is  one  of  the  leading  importers  and  traders of  consumer electronics  and  home  appliances  in  Nepal.  HIM  is one  of  the  two  authorised  importers and  distributors of  Samsung mobiles,hand-held devices as well as Samsung home appliances and consumer electronics. Secondary product portfolio of Him comprises electricals and small appliances from brands such as Bajaj, Indoasian and Osram and Timex watches. HIM  also  has  an  assembling  unit  that produces the Himstar  brand  of  consumer  electronics,  home  appliances  and alternative energy equipment such as solar panel and inverters.

HIM  is  a  unit  under the Golchha  Organisation,  a  family-owned  business  conglomerate  with  investment  spanning manufacturing  and  trading  sectors. The  major  shareholder  of  the  company  is  Mr.  Shekhar  Golchha  with  ~67% shareholding and the remaining stake is held equally by eight members of the Golchha family.

HIM’s distribution and after sales service network comprises four warehouses,  over  9000  big  and  small  dealers,  13 company-owned retail outlets and over 40 exclusive service centres spread across the country

For detailed rating, click here