ICRA Nepal assigns LA+ rating to long term funds of Hongshi Shivam Cement; Company joint venture of Hongkong Red Lion Cement No. 3 and Shivam Holdings

Tue, Feb 18, 2020 12:43 PM on Credit Rating, Latest, Stock Market,
ICRA Nepal...

ICRA Nepal has assigned the long-term rating of [ICRANP] LA+ (pronounced ICRA NP L A plus) to Hongshi Shivam Cement Private Limited (Hongshi). 

Credit strengths

  • Strong operational profile as largest cement unit in Nepal
  • Sizeable revenue base in first year of full operations with incremental sales outlook
  • Low gearing and healthy profitability leading to strong debt coverage indicators
  • Strong promoter profile and experienced directors/management
  • Entire credit limit and tenure covered by bank guarantee from two Chinese banks
  • Secured debtor mechanism; zero working capital borrows provide high financial flexibility

Credit challenges

  • High working capital intensity
  • High selling expenses in initial years to establish brand image
  • Limited track record of operations and intense competition in the industry
  • Vulnerability to cyclicality and seasonal demand
  • Risk of regulatory changes

About the company   

Incorporated in September 2015, Hongshi Shivam Cement Private Limited (Hongshi) is involved in producing and selling clinker and cement. The capacity of the company stands at 6,061 TPD for clinker and 6,970 TPD for grinding. The shareholding of the Hongshi is with two companies, namely Hongkong Red Lion Cement No. 3 Ltd. (70% stake) and Shivam Holdings Pvt. Ltd (30%). Its factory is located at Beni Manipur VDC of the Nawalparasi district. The company currently manufactures ordinary Portland cement (OPC) and Portland pozzolana cement (PPC) under the brand, Hongshi.

 Key financial indicators  


FY2019 (Provisional)

Operating income-OI (NPR million)





FY2019 (Provisional)

Total debt/Tangible net-worth-TNW (times)


Total outside liabilities/ TNW (times)


Total debt/OPBDITA (times) 


Interest coverage (times) 


Net-working capital/OI (%)


Source: Company data

Source: https://www.icranepal.com/

Read the full report here.