ICRA Nepal provides rating of A4 to short term loans of Platinum Marketing; Clientele includes cement industries, brick industries, steel industries, tea estates and various other traders and suppliers

Tue, Mar 3, 2020 11:14 AM on Credit Rating, Latest,
ICRA Nepal...

ICRA Nepal has assigned a short-term rating of [ICRANP] A4 (pronounced ICRA NP A four) to the existing short-term loans of NPR 565 million of Platinum Marketing (Platinum).

Credit strengths

  • Sectoral growth remains supported by the growth prospects of construction sector industries
  • Prior experience and commitment of the promoter remains a comfort in driving the business ahead
  • Moderate track record and wide-area sales coverage resulted in a diversified and established clientele

Credit challenges

  • High dependence on borrowed funds increased financial burden, affecting its profitability and coverage indicators
  • Low regulatory entry barriers can pose entry of large-scale players affecting the current players’ share
  • Pricing and forex risk
  • Stretched liquidity amid increased working capital cycle
  • High sales concentration and unsecured debtors

About the firm  

Incorporated on October 18, 2011, Platinum Marketing (Platinum) is involved in trading of construction materials like coal, gypsum, cement, bitumen, MS plate/wire and others. The primary traded stock is coal, comprising around 88% of its overall revenue for FY2019. The clientele includes cement industries, brick industries, steel industries, tea estates and various other traders and suppliers. The firm has been solely promoted by Mr. Rajnish Karnani with a paid-up capital of NPR 5 million and a registered capital of NPR 50 million (net worth of ~NPR 67 million as of mid-October 2019). The firm carries its trading activities through its head office situated at Dhaijan of Jhapa District, Province-1, Nepal and three other branches at Birgunj (Parsa district, Province 2), Bhairahawa (Rupandehi district, Province-5) and Udaypur (Udaypur district, Province-1).

Key Financial Indicators

Amount in NPR million

 

Audited

 

Provisional

FY2016

FY2017

FY2018

FY2019

Q1FY2020

Operating Income

794

848

1,367

1,358

288* 

OPBDIT/OI (%)

2%

3%

4%

6%

5%

PAT/OI (%)

1%

1%

1%

1%

1%

Gearing (times)

4.15

4.44

6.25

7.33

6.63

OPBDITA/Interest (times)

1.99

1.71

1.88

1.44

1.21

DSCR (times)

1.57

1.38

1.66

1.35

1.31

NWC/OI (%)

18%

23%

24%

37%

44%

Total Outside Liabilities/TNW (times)

9.93

10.63

12.11

12.74

10.98

Total Debt/OPBDITA (times)

7.03

5.82

5.57

5.69

28.41

*An increase in sales by ~62% vis-à-vis corresponding quarter sales last year

Instrument details 

Instrument 

Limit (NPR Million) 

Ratings 

Short term loans; non-fund based

425

 

Letter of Credit-Sight/Usance

400

[ICRANP] A4

Bank Guarantee

25

[ICRANP] A4

Short term loans; fund based

140

 

Trust Receipt Loan (within LC Limit)

(320)

[ICRANP] A4

FCY Import Loan (within LC Limit)

(320)

[ICRANP] A4

Demand Loan (within LC Limit)

(320)

[ICRANP] A4

Overdraft 

70

[ICRANP] A4

Short term loan

70

[ICRANP] A4

Grand total

565

 

Source: www.icranepal.com

Read the full report here.