INNEGROUP LIMITED

Executive Summary

INNEGROUP LIMITED has moved from a negative to a slightly positive net asset position, reflecting some financial recovery. However, the company continues to face liquidity challenges due to a significant working capital shortfall. Credit extension is feasible but should be conditional on tight monitoring of liquidity and operational cash flows to mitigate short-term risk.

INNEGROUP LIMITED - Analysis Report

Company Number: 13786581

Analysis Date: 2025-07-20 16:48 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   INNEGROUP LIMITED demonstrates some improvement in net asset position from a negative £11,464 in 2022 to a positive £1,959 in 2023, indicating a turnaround. However, the company has significant net current liabilities (£41,504 in 2023) reflecting a working capital deficit and potential liquidity constraints. The company operates in the licensed and unlicensed restaurant sector, which is sensitive to economic cycles and competitive pressures. Given the tight liquidity, credit should be extended cautiously with conditions such as short-term limits, monitoring of receivables and payables, and possibly personal guarantees from the principal shareholder, Mr. Dammar Bahadur Karki, who holds significant control.

2. Financial Strength:

• Fixed assets total £43,463, primarily tangible assets and goodwill, showing capital investment but also amortisation and depreciation reducing asset values.
• Shareholders’ funds have turned positive but remain minimal (£1,959), signaling a fragile equity base.
• The company’s balance sheet shows a net current liability position of £41,504, driven by creditors of £62,838 against current assets of £21,334. This reflects a reliance on creditor financing or possibly delayed payments.
• There is no indication of long-term debt, which limits financial leverage but also indicates limited external financing.
• The company has reduced its liabilities from prior year (£82,483 in 2022), showing some improvement in managing obligations.

3. Cash Flow Assessment:

• Cash at bank increased to £8,084 in 2023 from £5,224 in 2022, a positive sign for liquidity management.
• Current assets include stock of £6,750 and debtors of £6,500, which require effective management to convert into cash.
• Negative net current assets suggest potential liquidity risk; the company may struggle to meet short-term obligations without additional cash inflows or refinancing.
• Absence of detailed cash flow statements limits full assessment, but working capital deficiency highlights the need for close cash flow monitoring.

4. Monitoring Points:

• Watch working capital trends closely to ensure the company can meet short-term liabilities without resorting to emergency financing or supplier delays.
• Monitor debtor collections and stock turnover to improve cash conversion cycles.
• Track profitability and cash generation in future periods to confirm the positive net asset turnaround is sustainable.
• Scrutinize any changes in creditor balances and tax liabilities, as these are significant components of current liabilities.
• Review director and shareholder conduct, although no adverse records are present, given the principal’s significant control.