Kathmandu. Jagdamba Spinning Mills, a yarn industry being operated by Sorab Group, is going to issue initial public offering (IPO).
The company has conducted a financial soundness assessment from Infomerics Nepal, which is considered mandatory for the IPO issuance. The company has been given a ‘Triple B Minus Rating’ by Infomerics Nepal.
The company has not disclosed the shares and amount of the proposed IPO.
According to Infomerics, a company rated “triple B minus” is considered to have a moderate level of assurance in terms of meeting its financial obligations. Such stock issuing companies carry a moderate level of debt risk.
In addition, Infomerics Nepal has been rated “Triple B” for long-term bank facility. The company has availed a long-term loan facility of Rs 1.37 billion. It has been upgraded to ‘A3 Plus’ for short-term loan of Rs 2.34 billion.
According to Infomerics Nepal, the rating has been strengthened due to the positive impact on profit along with improvement in export trade in the last fiscal year. The company, which exports 95 percent of its production to India and third countries, depends on imported raw materials. The Indian market accounts for 95 per cent of the total exports.
Therefore, it will be affected by fluctuations in the demand for yarn and supply of raw materials in the foreign market. Raw material expenses accounted for more than 80 per cent of the company’s total operating income in the last three financial years ending the previous fiscal year. As a result, its profitability has become highly sensitive to fluctuations in the cost of raw materials.
The government has been providing incentives ranging from 4 to 8 percent of the export value.
In the previous fiscal year 2080, the market demand increased. In the last fiscal year, the business income increased by 3 percent compared to 81 percent. The profit before interest, tax, depreciation and loan repayment increased to 15.19 percent. Such profit was 12.21 percent in the previous year. Profit after tax has also increased from 5.39 percent to 9.20 percent.
According to Infomerics Nepal, the company has distributed 15 percent dividend to its shareholders in the last fiscal year.
The company had signed a memorandum of understanding (MoU) with NIBL Equity Capital last fiscal year to add capital to the company.
Established in September 2005, Jagdamba Spinning Mills Limited later converted into a Public Limited Company in July 2021. The company’s manufacturing unit is located at Kamariya-3, Rupandehi. With a total annual production capacity of 17,885 MT, the industry focuses on the production of polyester spun yarn and polyester viscose yarn.
According to Infomerics, the major shareholders of the company are Durga Prasad Neupane (30%), Bishnu Prasad Neupane (21%) and Vaibhav Neupane (16%).
