Short term loans of East Link Motors rated A4+ by ICRA Nepal; Company regional dealer of Toyota passenger vehicles for Bagmati zone, Nepal

Tue, Feb 18, 2020 12:35 PM on Credit Rating, Latest,
Short term...

ICRA Nepal has assigned a short-term rating of [ICRANP] A4+ (pronounced ICRA NP A four-plus) to the short-term loans (including non-fund-based limits) of East Link Motors Private Limited (EMPL). 

Credit strengths

  • Long track record of operations and experienced promoters
  • Steady sales growth in the last three fiscals
  • Established position of Toyota-brand vehicles

Credit challenges

  • Modest financial profile with leveraged capital structure
  • Increased taxes, revised financing norms and high borrowing rates could impact PV segment growth
  • Intense competition and high dependence on a few models
  • Working capital intensive operations

About the company   

Established in 2007, East Link Motors Private Limited is the regional dealer of Toyota passenger vehicles for Bagmati zone, Nepal under a dealership agreement with United Traders Syndicate Private Limited, the distributor of Toyota vehicles in Nepal. EMPL’s registered office is in Lainchaur, Kathmandu and currently operates two self-owned showrooms, one in Lainchaur, Kathmandu and the other in Kupondole, Lalitpur. The company is owned by Mr. Narayan Prasad Poudel, Mr. Rajendra Bikram Poudel and Dr. Dhananjay Regmi, each holding one-third of shares. Dr. Regmi is the Managing Director of the company.

Financial indicators 

 

FY2016 (Audited)

FY2017 (Audited)

FY2018 (Audited)

FY2019 (Audited)

H1 FY2020

(Provisional)

Operating income (OI; NPR million)

1,417

1,600

1,737

1,910

738

OPBDITA/OI (%)  

1.87%

2.63%

3.10%

3.31%

4.30%

Total debt/Tangible net worth (TNW; times) 

2.59

5.33

7.72

3.91

5.63

Total outside liabilities/TNW (times)

16.13

12.47

26.56

24.25

14.94

Total debt/OPBDITA (times) 

3.39

4.39

5.19

2.39

4.86

Interest coverage (times) 

5.01

2.97

2.24

2.04

3.70

DSCR (times)

4.20

2.78

2.06

1.84

3.15

Net working capital/OI (%)

6%

10%

17%

8%

21%

 Source: Company data

 Instrument details  

Instrument

Limits (NPR million)

Ratings

Fund-based facilities; Short-term loans

 

 

Demand loan

150

[ICRANP] A4+ 

Demand loan

100

[ICRANP] A4+ 

Demand loan (within LC)

(84)

[ICRANP] A4+ 

Overdraft

5

[ICRANP] A4+ 

Total Fund-based-Short term (A)

255

 

 

 

 

Non-fund-based facilities; Short-term

 

 

Letter of credit

120

[ICRANP] A4+ 

Letter of credit

500

[ICRANP] A4+ 

Total Non-fund-based-Short term (B)

620

 

 

 

 

Grand total (A+B)

875

 

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

Read the full report here.