Garment Gear’s Bank Facilities Rated ‘CARE-NP BB-’ and ‘CARE-NP A4’ by CARE Ratings

CARE Ratings Nepal Limited has assigned a ‘CARE-NP BB-’ rating to the long-term bank facilities of Rs 800 million and a ‘CARE-NP A4’ rating to the short-term facilities of Rs 500 million for Garment Gear Private Limited (GGPL). The company is developing an export-oriented garment manufacturing plant in the Special Economic Zone (SEZ) of Rohini Rural Municipality, Rupandehi district, Lumbini Province.

Medium to long-term instruments rated ‘CARE-NP BB’ are considered to have a moderate risk of default regarding timely servicing of financial obligations in Nepal, the rating agency mentions on its website. 

Similarly, short-term instruments rated ‘CARE-NP  A4’ are considered to have minimal degree of safety regarding timely payment of financial obligations, in Nepal. Such instruments carry very high credit risk and are susceptible to default.

GGPL’s board comprises six directors and is chaired by Min Bahadur Gurung, chairman and managing director of the Bhat-Bhateni Supermarket chain, Nepal’s leading retail network. The foundation stone for the plant was laid about eight months ago.

Among the directors is Umesh Shrestha, a veteran education-sector entrepreneur who chairs LA Group, one of Nepal’s largest school networks, and also leads Agrivastu Cold Storage Private Limited.

The project’s estimated cost is Rs 804 million, proposed to be financed in a 75:25 debt-to-equity ratio. As of January 28, 2026, Rs 150 million, or 74 percent of the equity, has already been infused. CARE Ratings noted, “Financial closure of the debt component of the funding mix has been achieved, and overall financial progress of ~34 percent had been reached by January 2026.”

However, the agency flagged potential project implementation risks, including timely completion within the projected cost and stabilization of operations post-launch. Profitability may also be affected by fluctuations in raw material prices—particularly imports from China—and by foreign exchange volatility. “The pricing of imported fabrics from China is in Chinese yuan. The company has no hedging measures, such as forward contracts or options, to mitigate exchange rate risks,” the statement said.

Incorporated on February 5, 2025, GGPL plans to produce around 5.76 million units annually, covering a range of woven and knit garments, including denim bottoms, leggings, jeggings, treggings, pants, shirts, and knitwear. While a portion of the production will be exported to high-potential international markets such as the United States, Canada, Europe, and India, some products will be supplied domestically, particularly through Bhat-Bhateni Superstores.

Being located in an SEZ, Garment Gear is eligible for significant tax and customs incentives under the Special Economic Zone Act, 2076 BS, including:

* 100% corporate income tax exemption for the first five years of operations, followed by 50% exemption for the next five years.

* Full exemption on customs duties for imported machinery and raw materials.

*VAT and excise duty exemptions on imported inputs and products intended for export.

According to the Trade and Export Promotion Centre, Nepal exported ready-made garments worth Rs 8.75 billion in the last fiscal year. In the first six months of the current fiscal year, exports stood at Rs 4.59 billion, a 2.07% decline compared to Rs 4.69 billion during the same period last year.

Industry analysts note that the SEZ-based project is expected to boost Nepal’s garment exports, create jobs, and strengthen the domestic manufacturing ecosystem.