ICRA Nepal assigns A3+ to short term loans of MAW Earth Movers; Find the details

Thu, Feb 13, 2020 11:27 AM on Credit Rating, Latest,
ICRA Nepal...

ICRA Nepal has assigned a short-term rating of [ICRANP] A3+ (pronounced ICRA NP A three plus) to the short-term loans (including non-fund based limits) of MAW Earth Movers Private Limited (MEPL). 

Credit strengths

  • Fair track record of operations and strong market presence
  • Improving sales mix
  • Comfortable financial profile
  • Financial flexibility as part of M.A.W. Group

 Credit challenges

  • Cyclicality in demand led to huge decline in equipment sales in FY2019
  • Intense competition and high dependence on a few models
  • High working capital intensity
  • Tighter bank financing could impact cash flow streams

About the company   

Incorporated in 2008, MAW Earth Movers Private Limited (MEPL) is the sole authorised dealer for the JCB brand construction equipment in Nepal. The company is promoted by M.A.W. Enterprises with 65% stake and Mr. Vishnu Kumar Agarwal (Chairman for the Group as well as the company) with a 35% stake. The company is a part of the M.A.W. Group which has an extensive experience in the automobile sector (>50 years) including dealerships of two-wheelers, commercial vehicles, construction equipment, private cars. The Group also has stake in other diverse spheres such as hire purchase financing. MEPL has presence across the country through a network of 12 branches and 16 authorised retail outlets (AROs).  

Key financial indicators 

 

FY2016   (Audited)

FY2017   (Audited)

FY2018   (Audited)  

FY2019

(Provisional)

Operating income (OI; NPR million)

4,423

8,206

10,565

7,316

OPBDITA/OI (%)  

7.1%

7.0%

7.8%

9.0%

Total debt/Tangible net worth (TNW; times) 

             3.50 

             3.31 

         3.70 

               1.16 

Total outside liabilities/TNW (times)

             4.97 

             4.08 

         4.76 

               2.15 

Total debt/OPBDITA (times) 

             2.85 

             3.22 

         3.55 

               1.55 

Interest coverage (times) 

             6.57 

             4.77 

         3.52 

               3.06 

DSCR (times)

             4.94 

             3.60 

         2.83 

               2.53 

Net working capital/OI (%)

25%

27%

32%

24%

Source: Company data

 Instrument details 

Instrument  

Limit (Amount in NPR Million)  

Rating Action  

Non-fund based facilities; Short term

 

 

Letter of credit - LC 

2,250

[ICRANP] A3+

LC (within funded limits)

(430)

[ICRANP] A3+

Bank guarantee – BG

50

[ICRANP] A3+

BG (within funded/non-funded limits)

(70)

[ICRANP] A3+

Total non-fund based (A)

            2,300

 

Fund-based facilities; Short term

 

 

Overdraft

70

[ICRANP] A3+

Import loans/ Trust receipt (TR) loans

1,130

[ICRANP] A3+

Import loans/ TR loans (within funded/non-funded limits)

(1,850)

[ICRANP] A3+

Instrument  

Limit (Amount in NPR Million)  

Rating Action  

Short-term loans

500

[ICRANP] A3+

Short-term loans (within funded/non-funded limits)

(1,230)

[ICRANP] A3+

Total fund-based (B)

            1,700

 

 

             

 

 Grand total (A+B)

            4,000

 

 Source: ICRA Ratings Nepal (https://www.icranepal.com/)