Rating of B+ and A4 assigned to long and short term loans of Orchid Holdings by CARE Rating Nepal; Company constructed a 4-star hotel in Kathmandu named "Hotel Crowne Imperial"

Thu, Feb 27, 2020 12:31 PM on Credit Rating, Latest,
Rating of...

CARE Ratings Nepal Limited (CRNL) has assigned rating of „CARE-NP B+‟ to the long term bank facilities and CARE-NP A4 to the short term bank facilities of Orchid Holdings Private Limited (OHPL). 

Key Rating Weaknesses

  • Project stabilization risk and long gestation period associated with hotel industry
  • Time overrun of the hotel followed by project cost overrun
  • Financial risk profile marked by negative PAT and weak debt coverage indicators for the initial year of operations
  • Exposure to volatile interest rates
  • Susceptibility to cyclicality, intense competition and geographic concentration risk in the hospitality sector

Key Rating Strengths

  • Experienced board and management team
  • Strategic locational advantage of the hotel
  • Fully operational hotel project
  • Government initiative and support for tourism
  • Increasing trend of tourists in Nepal

About the Company

Orchid Holdings Private Limited was incorporated on November 13, 2007. The company has constructed a 4-star hotel in Kathmandu with a total of 131 room keys operating under the commercial name of Hotel Crowne Imperial. The commercial operation date of the hotel was August 01, 2019. The company is being promoted by 16 equity shareholders including one institutional promoter who has infused total paid-up equity of Rs. 344 Mn as on July 16, 2019.

Details of the Facilities rated

Nature of the Facility

Type of the Facility

Amount (Rs. In Million)

Rating

Long Term Bank Facilities 

Term Loan

946.96

CARE-NP B+

Short Term Bank Facilities 

Overdraft Loan

45.00

CARE-NP A4

Total

 

991.96

 

 Source: https://careratingsnepal.com/

Read the full report here.