Vijayshri Steel’s long term and short term loans rated BB and A4 by CARE Ratings Nepal; Company's TMT bar manufacturing plant in Kapilvastu district of Nepal

CARE Ratings Nepal Limited (CRNL) has reaffirmed rating of ‘CARE-NP BB’ assigned to the long-term bank facilities and ‘CARE-NP A4’ assigned to the short-term bank facilities of Vijayshri Steel Private Limited (VSPL). 

Key Rating Weaknesses

• Subdued operational and financial performance of the company during the first year of operation in FY19 with net loss
• Leveraged capital structure and weak debt service coverage indicators
• Working capital intensive nature of operations
• Raw material price volatility risk and foreign exchange fluctuation risk
• Presence in highly fragmented and competitive nature of steel industry
• Exposure to volatile interest rates

Key Rating Strengths

• Established business group and experienced promoter in cement manufacturing and trading business
• Demand of steels products in the country
• Locational advantage

About the Company

VSPL is a private limited company, incorporated on February 23, 2017, to set up a TMT bar manufacturing plant in Kapilvastu district of Nepal. The company is promoted by businessmen engaged in manufacturing and trading business. The company manufactures TMT bars by importing raw materials from India and selling them into Nepal’s market with production capacity of 700 MT of TMT bars per day. The project has been in operation from November 25, 2018.

Brief financials of VSPL for FY19 is given below:

(Rs. Million)

 Details of the Facilities rated

 Source: https://careratingsnepal.com/

Read the full report here.