ICRA Nepal has assigned LBB and A4+ rating to longterm and short term loans of Palpa Cements respectively

Mon, Apr 29, 2019 1:19 PM on Corporate, Credit Rating, Latest,
ICRA Nepal...

ICRA Nepal has assigned a long-term rating of [ICRANP] LBB (pronounced ICRA NP L double B) to the long-term loans of Palpa Cements Industries Private Limited (PCIPL). ICRA Nepal has also assigned a short-term rating of [ICRANP] A4+ (pronounced ICRA NP A four plus) to PCIPL’s short-term loans (including non-fund based limits).

Credit strengths

  1. Reduction in execution risks, given the advanced stage of project
  2. Low project costs with low funding risks
  3. Experienced promoters; operational synergies could arise from being part of RMC Group                            

Credit challenges

  1. Debt coverage indicators likely to remain stretched over the near term
  2. Intense competition
  3. Raw material price volatility risks
  4. Inherent cyclicality of the industry with high working capital intensity

About the company   

Incorporated in 2009, Palpa Cements Industries Private Limited (PCIPL) has an under-construction cement manufacturing plant, which is expected to commence commercial operations shortly. The plant is in Sunuwal VDC, Nawalparasi district, while the mines are located ~30 km from the factory in Rahawas VDC, Palpa District. The plant has a manufacturing capacity of 1,800 TPD clinkers and 2,200 TPD cement, based on the vertical rolling mill (VRM) technology. The company plans to mainly produce ordinary Portland cement (OPC) and Portland slag cement (PSC). PCIPL belongs to the RMC Group, which is a renowned business house in Nepal with extensive experience primarily in the manufacturing sector. The company’s registered office is in Central Business Park, Thapathali, Kathmandu, Nepal.