Kathmandu. Nimbus Group, a business establishment, is preparing to issue an IPO of another company as part of its strategy to raise public investment only in companies with weak financial conditions.
KB Agro and Research Company Limited (KB Agro), a 43% stake in Nimbus Group, is all set to issue an initial public offering (IPO). The company, which barely made an operating profit in the first year of operation, is very weak in terms of both financial and business competitiveness.
Since the IPO is mandatory for the purpose of the issue, KB Agro has given an issue rating. Although the issue rating has been issued, the Securities Board of Nepal (SEBON) has not made public any information about the application for the IPO issuance.
This is the financial position of KB Agro: {{TAG_OPEN_span_30 TAG_CLOSE_span_30}}
ICRA Nepal has assigned “ICRA NPB Issuer Rating” to KB Agro based on its financial soundness rating. This valuation, which is made available to the issuer, indicates the high risk situation in relation to the issuer’s ability to meet its financial obligations within a predetermined timeframe.
According to ICRA Nepal, KB Agro’s operating profit is only 1 percent. It is clear that the company is in net loss by deducting the expenses of depreciation, interest, tax and other expenses. In addition, it has a high net current capital to operating income ratio.
The company has utilized 109 percent of the limit approved by the bank to meet the operating capital requirement. The company, which sells processed chicken meat, accounts for 49 per cent of its business on 10 vendors.
ICRA Nepal said in a statement, “As it is still in the initial phase of operation (starting from January 2081), the company is yet to stabilize its performance. Operating profit is only 1 percent. This profit rate indicates the general level of operation so far. This has led to weak financial burden indicators (FY 2081). In 2018, the debt service ratio was 0.2 times and the total loan and depreciation, interest, operating profit before tax was 97.7 times. So far, it has met its capital needs through regular self-investment.
According to ICRA Nepal, the liquidity availability of Rs 8.5 crore in its balance sheet till the end of the last fiscal year has provided some relief. In the future, the ability to generate adequate turnover and operating profitability, as well as improvement in debt repayment capabilities from internal cash flows, will be key valuation sensitivities, ICRA Nepal said in a statement.
KB Agro has been operating a processing plant in Dhading with a capacity to process 32,000 birds on a daily basis. The blast freezing capacity of the industry is 24 metric tons and freezing capacity is 500 metric tons. In blast freezing technology, the refrigerated product is cooled through a continuous flow of cold air.
Loss Company under Nimbus Group:
Not only KB Agro, Nepal Warehousing Company Limited, which owns a significant amount of Nimbus Group, is also continuously incurring losses. Last fiscal year 2081. According to the unaudited financial statement of Rs 82, the company has a net loss of Rs 5,58,78,000. The company had raised Rs 13.75 crore from the general public through the initial public offering.
As part of the work being done by Nepal Ware Housing, the KL Dugar Group with the grant support of UK Aid (UK Aid Agency) had targeted the farmers of Banke and Bardiya in Nepalgunj. But in Nepal’s unorganized agricultural market, this concept was not adopted by both farmers and agricultural markets, and was eventually forced to shut down.
Nimbus Group had announced in 2014 that it would establish 200 agriculture centers across the country within two years. In the initial phase, the group had established a network of small agricultural implements and seeds shops in Kalimati, Birgunj, Bharatpur, among other places. The first shop in Kalimati is still in existence. The center now sells goods through local veterinary stores.
Profitable Companies:
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Nimbus Holding Pvt. Ltd. i.e. Probiotech, Nimbus Nepal, Nimbus International, Nepal Gas among other companies operating under the Nimbus Group have not yet shown interest in issuing IPOs to the general public.
According to New Business Age, in 2021, Nimbus Holdings had an annual turnover of Rs 13 billion, making a profit of Rs 1 billion.
Under this group, there are industries and commercial companies related to animal feed, fish feed, medicines required for livestock, vaccines, pesticides, seeds, PVC sacks, edible oil, food import, processing and distribution.
