ICRA Nepal assigns LBBB- and A3 rating to long term and short term loans of MAW Investment; Investment part of the MAW group

Mon, Sep 23, 2019 10:26 AM on Credit Rating, Latest,
ICRA Nepal...

ICRA Nepal has assigned the rating of [ICRANP] LBBB- (pronounced ICRA NP L triple B minus) to the long-term loans of M.A.W. Investment Private Limited (MIPL). ICRA Nepal has also assigned a rating of [ICRANP] A3 (pronounced ICRA NP A three) to the short-term loans of MIPL.

Credit strengths

Part of the M.A.W. Group enables funding access

Adequate underwriting controls reflecting in healthy asset quality

Granular portfolio at low LTV

Credit challenges

Reduced spreads likely to put pressure on profitability

High dependence on CE segment

Moderate capitalisation

Limited track record of operations and modest scalability

Evolving liquidity and risk management practices amid low regulatory oversight

About the company  

Established in 2011, M.A.W. Investment Private Limited (MIPL) is a hire purchase financing institution, which operates in line with broad guidelines of NRB. Its registered office is in Biratnagar, Morang, with its main branch in Tripureshwor, Kathmandu. MIPL also has regional staff who cater to the financing needs of vehicles sold by more than 40 dealers of its Group companies across the country. The company is a part of the M.A.W. Group, which started its operations in 1965 as an automobile workshop. The Group units currently deal with various brands of CEs, CVs, PVs and 2Ws, among others. MIPL is engaged in financing the vehicles sold by its sister concerns with increasing focus along CE segment financing. As on mid-July 2019, the company’s shares were held by M.A.W. Enterprises Pvt. Ltd. (40%), M.A.W. Earthmovers Pvt. Ltd.  (30%) and Mr. Vishnu Kumar Agarwal (30%). Mr. Agarwal is the chairman of the company.

Key financial indicators 

 

FY 2016 (Audited)

FY 2017 (Audited)

FY 2018 (Audited)

FY 2019 (Provisional)

Total income (NPR million)

27

75

212

375

Net profit (NPR million)

10

25

54

77

Net worth (NPR million)

108

171

225

278

Total managed portfolio (NPR million)

216

743

1,736

2,399

Total managed assets (NPR million)

225

771

1,770

2,449

Return on average managed assets

5.29%

5.02%

4.26%

3.67%

Gross NPA

0.00%

0.00%

0.00%

0.17%

Net NPA

0.00%

0.00%

0.00%

0.01%

Net NPA/Net worth

0.00%

0.00%

0.02%

0.08%

Managed gearing (times)

0.67

2.76

6.03

7.21

Source: Company data

Instrument Details 

Instrument

Limit (in NPR million)

Rating Action

Existing fund-based facilities

 

 

Long term (Revolving term loan)

2,040

[ICRANP] LBBB-; Assigned

Short term (Overdraft)

60

[ICRANP] A3; Assigned

Total existing fund based (A)

2,100

 

 

 

 

Proposed fund-based limits

 

 

Long term (Revolving term loan)

170

[ICRANP] LBBB-; Assigned

Short term (Overdraft)

10

[ICRANP] A3; Assigned

Total proposed fund based (B)

180

 

Grand total (A + B)

2,280

 

 

 Source: ICRA Nepal