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T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, December 28, 2015, Vol. 18, No. 254
Headlines
A U S T R A L I A
ATLAS IRON: Moody's Cuts Senior Secured Term Loan Rating to Ca
EMECO HOLDINGS: Moody's Affirms Caa1 CFR; Outlook Negative
GBL MINING: First Creditors' Meeting Set For Jan. 5
MSC CONTRACTING: First Creditors' Meeting Set For Jan. 4
STANLEY INTERNATIONAL: First Creditors' Meeting Set For Jan. 7
STRAIGHT UP: First Creditors' Meeting Set For Jan. 7
C H I N A
CITIC RESOURCES: Moody's Changes Outlook to Neg.; Affirms Ba3 CFR
SKYSTAR BIO-PHARMACEUTICAL: Nasdaq Delists Shares
WUHAN IRON: SOEs Look to Slash Thousands of Jobs
I N D I A
AISHWARYA IMPEX: Ind-Ra Assigns 'IND B+' LT Issuer Rating
ALLWELD ENGINEERS: Ind-Ra Assigns IND B+ Long-Term Issuer Rating
ALMADINA STEEL: ICRA Suspends B+/A4 Rating on INR5.35cr Loan
ANDHRA SINTER: ICRA Assigns B+ Rating to INR0.90cr Loan
ANUPAM SYNTHETICS: ICRA Assigns 'B+' Rating to INR5.91cr Loan
AVALON AGRO: ICRA Suspends B+ Rating on INR11.50cr Loan
BLA PROJECTS: Ind-Ra Assigns of 'IND B+'Long-Term Issuer Rating
BRAKEWEL AUTOMOTIVE: Ind-Ra Assigns 'IND BB' LT Issuer Rating
CRACKERS INDIA: ICRA Reaffirms C+ Rating on INR4.0cr Cash Loan
DEIFY INFRASTRUCTURES: ICRA Cuts Rating on INR300cr Loan to B/A4
DIWANKA ENERGY: CRISIL Reaffirms 'B' Rating on INR70MM Cash Loan
GHSPL JEYPORE: CRISIL Assigns B+ Rating to INR76.1MM LT Loan
GLOBCON INDUSTRIES: ICRA Assigns B+ Rating to INR6.70cr Term Loan
HUNSUR PLYWOOD: ICRA Reaffirms B+ Rating on INR5.25cr Cash Loan
INDOMET STEEL: ICRA Suspends B+/A4 Rating on INR6.65cr Loan
ISHWARCHARAN BUILDERS: CRISIL Reaffirms B- Rating on INR160M Loan
JASCH PLASTICS: Ind-Ra Assigns 'IND B+'Long-Term Issuer Rating
JAYALAXMI ENTERPRISES: ICRA Ups Rating on INR1.25cr LT Loan to B+
KAJARIA IRON: CRISIL Assigns 'B' Rating to INR20MM Cash Loan
KHURANA EXPORTS: CRISIL Assigns 'B+' Rating to INR70MM LT Loan
KIMPLAS PIPING: ICRA Upgrades Rating on INR17cr Cash Loan to BB
M. M. AUTOMOBILES: CRISIL Cuts Rating on INR35MM Cash Loan to D
MAHAVEER INFRAENG'G: CRISIL Reaffirms B Rating on INR100MM Loan
MARIANELLA PROPERTIES: ICRA Assigns 'B' Rating to INR15cr Loan
MINI DIAMONDS: CRISIL Assigns B+ Rating to INR20MM Cash Loan
NAV BHARAT: ICRA Reaffirms 'B' Rating on INR6cr LT Loan
NAVEEN POULTRY: CRISIL Cuts Rating on INR40MM LT Loan to 'D'
PARAMOUNT BLANKETS: CRISIL Reaffirms 'C' Rating on INR97.5MM Loan
RACHITECH ENGINEERING: CRISIL Cuts Rating on INR55MM Loan to B+
RAM SARUP: CRISIL Reaffirms 'B' Rating on INR17.5MM Cash Loan
S.R. COLLECTION: CRISIL Assigns 'B' Rating to INR75MM Term Loan
SHANKAR RICE: ICRA Reaffirms 'B' Rating on INR34cr Loan
SRI RAM: ICRA Lowers Rating on INR9.0cr Fund Based Loan to D
SUBRAMANIAM BOTTLES: CRISIL Assigns B+ Rating to INR200MM Loan
SUMMA REAL: ICRA Reaffirms B+ Rating on INR15cr Term Loan
SUPER JEWELLERS: CRISIL Assigns B+ Rating to INR100MM Cash Loan
SYNERGY GREEN: CRISIL Reaffirms 'D' Rating on INR356.7MM Loan
TULSI CONSTRUCTIONS: ICRA Assigns B+ Rating to INR7.90cr Loan
VICEROY EXPORTS: CRISIL Reaffirms B+ Rating on INR100MM Loan
VIJ AGRO: CRISIL Upgrades Rating on INR600MM Cash Loan to B+
VNR HOMES: CRISIL Cuts Rating on INR80MM LT Loan to B-
* INDIA: Introduces Bill for Bankruptcy Law in Parliament
J A P A N
TOSHIBA CORPORATION: Moody's Lowers Rating on Sr. Bonds to Ba2
TOSHIBA CORP: S&P Lowers CCR to 'BB+' & Puts on CreditWatch Neg.
N E W Z E A L A N D
HAMMERHEADS RESTAURANT: Sale of Assets Falls Short
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A U S T R A L I A
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ATLAS IRON: Moody's Cuts Senior Secured Term Loan Rating to Ca
--------------------------------------------------------------
Moody's Investors Service downgraded the rating on the $US267
million senior secured term loan B due December 2017 to Ca from
Caa3. At the same time, Moody's has also downgraded Atlas Iron
Limited's corporate family rating to Ca from Caa3. The outlook for
all ratings is negative.
RATINGS RATIONALE
The rating action follows Atlas' announcement on 23 December 2015
that it has signed a debt restructuring support agreement with 75%
of its term loan B (TLB) lenders and an amendment to its existing
syndicated facility agreement.
Under the agreement, Atlas will make a pay down of the TLB loan of
USD10 million and issue shares and options in exchange for TLB
lenders to retire USD132 million (AUD183 million) of debt. On
implementation, Atlas will have reduced its term loan debt from
USD267 million to USD135 million and TLB lenders will subsequently
hold 70% of the company's shares and options. The maturity of the
TLB will also be extended from December 2017 to April 2021.
"If successful, the transaction will constitute a distressed debt
exchange, which is a default event under Moody's definition. The
downgrade of the secured term loan to Ca considers this default
and our assessment of the high economic loss when compared to the
original payment promise for the Notes," says Matthew Moore, Vice
President -- Senior Credit Officer / Corporate Finance. "Moreover,
the downgrade of Atlas' corporate family rating to Ca from Caa3
reflects our concern that the company will continue to face
financial stress after the transaction closes as proposed," adds
Moore.
Moody's recognizes that the completion of the exchange offer will
substantially reduce Atlas' debt levels and interest costs.
However, given the significant drop in iron ore prices and Moody's
revised expectations for prices in 2016 and 2017, the rating
agency expects that prices will be below Atlas' breakeven levels
in the near term, barring further material cost reduction and/or
depreciation of the Australian dollar relative to the U.S. dollar.
Atlas' guidance for FY16 full cash costs is AUD55-AUD59 million.
However, at current iron ore prices of around USD40 per tonne and
the prevailing AUD/USD exchange rate in the low AUD0.70 range,
Moody's estimates that the company is operating near breakeven at
the low end of its cost guidance -- and is substantially cash
negative at the higher end. Assuming around 14-15 million tonnes
produced, this could lead to around AUD70-80 million in negative
cash flow over the next 12 months, relative to the company's
expected cash balance of AUD85-95 million at 31 December 2015
(before the USD10 million in term loan repayment as part of the
proposed debt restructure).
The negative rating outlook factors in uncertainty over whether
the exchange offer and consent solicitation will be successfully
completed; the fact that that, following the transaction, the
company's liquidity position is expected to remain significantly
stressed; and the consideration that its operating model has been
severely weakened. Accordingly, Moody's considers that the risk of
default remains high.
Atlas Iron Limited (Atlas), headquartered in Perth, Australia, is
an iron ore producer and developer focused on the North Pilbara
region of Western Australia. Atlas exports iron ore from its
current operations comprising three producing mines.
EMECO HOLDINGS: Moody's Affirms Caa1 CFR; Outlook Negative
----------------------------------------------------------
Moody's Investors Service has affirmed Emeco Holdings Limited's
Corporate Family Rating (CFR) at Caa1. At the same time,
Moody'saffirmed Emeco Pty Ltd's senior secured notes rating at
Caa1. The outlook on all ratings is negative.
RATINGS RATIONALE
"The Caa1 rating and negative outlook reflect Emeco's weak credit
metrics and high leverage, as well as our expectation that
significant weakness in mining and oil and gas sectors will
continue to pressure earnings as its customers focus on cost
cutting and capital expenditure deferral", says Matthew Moore, a
Moody's Vice President and Senior Credit Officer, adding "While
the debt reduction from the bond repurchase will help to improve
credit metrics, Moody's expects leverage to remain at high levels
for the rating", adds Moore.
"Prices of coal, copper and oil, which are key products for
Emeco's customers, are trading at very weak levels due to poor
fundamentals, and we do not expect any material shift over the
next 18-24 months", says Moore, adding "We expect mining companies
to continue to exert pressure on mining services providers as they
look to further reduce costs in the weak pricing environment".
Emeco has experienced some improvement in results in the September
2015 quarter with utilization levels increasing to around 75% from
around 59% in September 2014. This led to an improvement in
EBITDA margins in the quarter to around 24% relative to 9% in the
previous corresponding period. However, the outlook remains
negative reflecting the likelihood that the challenges facing
Emeco's customers and the heightened competitive environment for
mining service providers could further pressure earnings over the
next 12-to-18 months.
The Caa1 rating takes into account the company's post-repurchase
capital structure and reflects the benefits from the notes
repurchase in terms of debt and interest cost reductions.
However, Moody's views the discounted bond repurchase as a
distressed exchange, which is a default under Moody's definitions.
On Dec. 15, 2015, Emeco repurchased USD52.3 million of its USD335
million senior secured notes outstanding, which mature in March
2019. This transaction was funded by the partial closure of cross
currency interest rate swaps which released around USD34.2 million
of value held in the mark to market position of these facilities.
Moody's views note repurchases as distressed exchanges when
creditors incur material losses relative to the original promise
to pay and they could have the effect of allowing issuers to avoid
default. Moody's views this repurchase as a distressed exchange
given the materiality of the discount relative to par (greater
than 40% based on recent trading) for creditors and our view that
the company's capital structure is unsustainable in the current
environment.
Default avoidance is not clear given the long runway to the March
2019 maturity and Emeco's still adequate liquidity. However, in
Moody's view, Emeco's capital structure may not be sustainable
over the medium term given its high leverage, over 10x debt-to-
EBITDA at 30 June 2015 (over 8-9x pro-forma for the repurchase),
and the likely earnings pressure from the weak outlook for the
sectors the company services.
While Emeco has not stated any intention for additional buybacks,
any incremental discounted note repurchases would likely be
treated as a distressed exchange when viewed in combination with
the current proposed transaction.
The ratings could face further negative pressure if the
challenging market conditions deteriorate beyond our current
expectations, further hindering Emeco's revenue and earning
generating ability, and leading to Debt/EBITDA ratio exceeding 15x
on a consistent basis. At the same time, the rating could also be
downgraded if the company's liquidity buffer diminishes at a pace
that is not consistent with our expectations.
The outlook could revert to stable if Emeco secures new contracts
and increases revenue and earnings, such that gross adjusted debt-
to-EBITDA remains comfortably below 6.5x on a consistent basis.
The principal methodology used in these ratings was Equipment and
Transportation Rental Industry published in December 2014.
Emeco Holdings Limited (Emeco), established in 1972 and based in
Perth Australia, is a mining equipment rental company.
GBL MINING: First Creditors' Meeting Set For Jan. 5
---------------------------------------------------
David Ross and Richard Albarran of Hall Chadwick were appointed as
administrators of GBL Mining Solutions Pty Ltd, trading as Aspired
Living, on Dec. 23, 2015.
A first meeting of the creditors of the Company will be held at
Hall Chadwick, Level 10, 575 Bourke Street, in Melbourne, on
Jan. 5, 2016, at 10:30 a.m.
MSC CONTRACTING: First Creditors' Meeting Set For Jan. 4
--------------------------------------------------------
Paul Burness and Matthew Jess of Worrells Solvency & Forensic
Accountants were appointed as administrators of MSC Contracting
Pty Ltd on Dec. 22, 2015.
A first meeting of the creditors of the Company will be held at
Novotel Perth Langley, 221 Adelaide Terrace, in Perth, on Jan. 4,
2016, at 11:00 a.m.
STANLEY INTERNATIONAL: First Creditors' Meeting Set For Jan. 7
--------------------------------------------------------------
David McEvoy and Robert Ditrich of PPB Advisory were appointed as
administrators of Stanley International Pty Ltd on Dec. 23, 2015.
A first meeting of the creditors of the Company will be held at
PPB Advisory, Level 21, 181 William Street, in Melbourne, on
Jan. 7, 2016, at 2:00 p.m.
STRAIGHT UP: First Creditors' Meeting Set For Jan. 7
----------------------------------------------------
Stephen Dixon and Laurence Fitzgerald of Grant Thornton
Australiawere appointed as administrators of Straight Up
Scaffolding (Aust) Pty Ltd on Dec. 23, 2015.
A first meeting of the creditors of the Company will be held at
Grant Thornton Australia Limited, The Rialto, Level 30, 525
Collins Street, in Melbourne, Victoria, on Jan. 7, 2016, at
11:00 a.m.
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C H I N A
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CITIC RESOURCES: Moody's Changes Outlook to Neg.; Affirms Ba3 CFR
-----------------------------------------------------------------
Moody's Investors Service has changed to negative from stable the
outlook for CITIC Resources Holdings Limited's Ba3 corporate
family rating.
At the same time, Moody's has affirmed the Ba3 corporate family
rating.
RATINGS RATIONALE
"The change in the rating outlook to negative reflects the
weakening performance of the company's exploration & production
(E&P) businesses and its deteriorating credit metrics in view of
the persistency of the low oil price environment," says Joe
Morrison, a Moody's Vice President and Senior Credit Officer, and
also the International Lead Analyst for CITIC Resources.
Moody's has concerns that CITIC Resources' credit metrics will
likely deteriorate further in 2016.
Accordingly, adjusted debt/EBITDA will increase to a high level of
around 20x and adjusted EBITDA/interest will fall to 1.0x from 15x
and 1.5x in 2015 on the expectation of continued low oil prices
and the absence of any recovery in its commodity export business
in the next 12-18 months.
Such a high level of debt leverage will pressure its ratings.
"We also expect CITIC Resources will continue to be supported by
its parent, CITIC Group Corporation (A3 stable)," says Pingping
Xing, a Moody's Assistant Vice President and Local Market Analyst.
CITIC Resources' Ba3 corporate family rating combines the
company's standalone credit strength and a three-notch uplift,
reflecting our assessment that it is likely to receive strong
support from its ultimate parent, in times of financial
difficulty.
The three-notch uplift considers the company's importance as CITIC
Group's overseas platform for resources development and the high
reputational risk for the group should CITIC Resources default on
its debt.
Therefore, Moody's believes that the company is capable of
refinancing its short-term debt due to its association with CITIC
Group. For example, the company was able to secure a syndicated
term loan of $490 million in 1H2015.
CITIC Resources' standalone credit strength reflects: (1) the
small scale of its E&P operations; (2) the cyclical nature of its
coal and metal businesses; (3) its acquisitive appetite; and (4)
the uncertainties surrounding the successful ramp-up of production
at the Hainan-Yuedong project.
CITIC Resources' diversified business portfolio partially
mitigates the volatility in its earnings, while its association
with CITIC Group helps it maintain good access to bank funding.
Upward ratings pressure is limited, given the negative ratings
outlook.
Nevertheless, the rating outlook could return to stable if CITIC
Group provides strong support to improve both the company's
financial profile -- through enhanced funding arrangements -- and
business profile.
On the other hand, the rating could be downgraded if: (1) CITIC
Resources embarks on a larger-than-expected debt-funded
acquisition, or if such an acquisition entails a high level of
implementation risk; (2) it suffers losses in its commodity import
and export businesses; (3) it breaches the financial covenants on
its syndicated loans, such that its liquidity position is further
weakened; or (4) its financial profile remains weak, as evidenced
by high debt leverage, with adjusted debt/EBITDA exceeding 10x and
adjusted EBITDA/interest falling below 1.0x for a prolonged
period.
Any weakening in the relationship with CITIC Group -- thereby
lowering the support level -- will be negative for the rating.
A downgrade of CITIC Group's rating would lead Moody's to revisit
its assumptions of support and hence the uplift in CITIC
Resources' ratings.
The principal methodology used in this rating was Global
Independent Exploration and Production Industry published in
December 2011.
CITIC Resources Holdings Limited is an energy and natural
resources investment holding company, with interests in aluminum
smelting, coal, import and the export of commodities, manganese,
bauxite mining and alumina refining operations, as well as the
exploration, development and production of oil. The company
serves as the principal natural resources and energy arm of its
parent, CITIC Group.
SKYSTAR BIO-PHARMACEUTICAL: Nasdaq Delists Shares
-------------------------------------------------
Skystar Bio-Pharmaceutical Company, a China-based manufacturer
anddistributor of veterinary medicine, vaccines, micro-organisms
andfeed additives, on Dec. 18 disclosed that on December 17,
2015,Skystar Bio-Pharmaceutical Company received notification from
TheNasdaq Stock Market informing the Company that a Nasdaq
hearingpanel had decided to delist the Company's shares from
Nasdaq andthat the Company's shares would be suspended from
trading on Nasdaqat the open of business on December 21, 2015.
The Company previously disclosed a notification from Nasdaq
informing the Company that it was subject to delisting because it
failed to comply with Nasdaq's filing requirements set forth in
Listing Rule 5250(c)(1), because it failed to file its Form 10-K
for the fiscal year ended December 31, 2014, and Forms 10-Q for
theperiods ended March 31, and June 30, 2015. The failure to file
theQuarterly Report constitutes an additional basis for
delisting.The Company also previously disclosed that Nasdaq had
notified theCompany of two additional, and separate, bases for
delisting underListing Rule 5250(b)(1) (failure to disclose
material non-publicinformation) and Listing Rule 5101 (public
interest concerns).
The Company will continue to work towards completing its filing
requirements for the respective periods and other reports with
theSecurities and Exchange Commission pursuant to the Exchange Act
of1934, as amended, and other federal securities laws.
The Company expects to commence trading on the over-the-counter
market on December 21, 2015.
About Skystar Bio-Pharmaceutical Company
Skystar -- http://www.skystarbio-pharmaceutical.com-- is a
China-based developer, manufacturer and distributor of veterinary
healthcare and medical care products. Skystar has four product
lines: veterinary medicines, probiotics, vaccines and feed
additives formulated and packaged in house across several modern
manufacturing and distributions facilities. Skystar's
distributionnetwork includes almost 3,000 distribution agents of
which 360 arefranchised stores with exclusivity agreements
covering 29 provincesthroughout China.
WUHAN IRON: SOEs Look to Slash Thousands of Jobs
------------------------------------------------
The Financial Times reports that shades of the 1990s are haunting
China's rust-belt cities as strapped state-owned employers look at
cutting jobs, with beleaguered Wuhan Iron & Steel Group the latest
company said to be laying off thousands of workers.
The FT says the dismantling of market pricing reforms and the
"iron rice bowl" system of life-long jobs in the 1990s eliminated
thousands of state-owned small or medium-sized enterprises, which
specialised in everything from industrial boilers to wedding
photographs. SOEs now account for about a third of China's
productive capacity and an even smaller portion of urban
employment, even though in some smaller cities they still
dominate.
Since then, years of precipitous growth and cheap state-backed
credit has left many sectors of the Chinese economy bloated on
debt and unprepared for a downturn. Heavy industry has been
particularly hard hit by the sharp drop in prices for coal,
energy, iron ore and steel, the FT notes.
According to the report, the biggest SOEs typically employed
hundreds of thousands of workers until a debt crisis and economic
slowdown in the late 1990s forced millions of workers into early
retirement on meagre pensions. Twenty years later, many remain the
largest employers and taxpayers in their cities, still employing
tens or even hundreds of thousands despite mounting debt burdens
and collapsing prices for the metals or coal they produce.
The FT relates that Chinese media earlier this month said Wuhan
Iron & Steel Group, one of China's largest mills, would lay off up
to 11,000 workers, although the producer has denied the plans. The
reports follow an announcement in October of 100,000 lay-offs at
Longmay, a struggling state-owned coal miner near the Siberian
border, the report says.
While small SOEs have mostly vanished, the biggest have bulked up
on state-backed loans as Beijing tried to create national
champions to compete with multinationals. The CYN4 trillion
stimulus unleashed in the wake of the global financial crisis
resulted in "blind investment" by the SOEs, according to Hu
Xingdou, a professor at the Beijing Institute of Technology.
"The problem is what they call the 'pillar' functions," the report
quotes Hu as saying. "They are concentrated in core areas like
banking, steel or energy so their influence on the national
economy is still great."
The FT says Beijing has orchestrated a number of mergers of big,
centrally owned state groups but local governments are reluctant
to take the next step of slashing employment rolls or shutting
down excess capacity that could trigger debt defaults.
According to the FT, the talk of downsizing at Wuhan Steel comes
after a decade in which it consolidated smaller mills in central
China, built a state-of-the art new mill in southern China and
fought off attempts by state-owned Baosteel Group in Shanghai to
dominate its market. But now steel prices have dropped and China's
anti-corruption campaign has claimed Deng Qilin, the irascible
former chairman who in happier times enjoyed chain-smoking his way
through long interviews with journalists, the FT says.
The FT states that reports of lay-offs at Wuhan Steel recall steps
perfected in the 1990s such as forcing the "early retirement" of
older or female workers, or spinning off non-core businesses to
local governments, in an effort to soften the social impact.
Sporadic protests have hit some depressed cities but the country
has so far avoided the mass demonstrations that roiled the
industrial north-east two decades ago.
Security forces are cracking down on labour rights groups that
might help disgruntled workers organize, adds the FT.
Wuhan Iron and Steel Company Limited is principally engaged in the
manufacture and distribution of iron and steel products. The
Company provides silicon products, hot-rolled products, cold-
rolled products, plate products, profile products and wire rod
products, among others. It distributes its products primarily in
domestic markets.
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I N D I A
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AISHWARYA IMPEX: Ind-Ra Assigns 'IND B+' LT Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Aishwarya Impex
(Aishwarya) a Long-Term Issuer Rating of 'IND B+'. The Outlook is
Stable. The agency has also assigned Aishwarya's INR95.0m fund-
based working capital limit 'IND B+/Stable/'IND A4' ratings.
KEY RATING DRIVERS
The ratings reflect the company's weak credit metrics on account
of weak EBITDA margins and high working capital requirements
leading to a tight liquidity position, both inherent to the
trading nature of business. FY15 financials indicate net leverage
(Ind-Ra adjusted net debt/operating EBITDAR) of 13.0x, EBITDA
interest cover of 2.4x and EBITDA margins of 2.4%. The company's
peak use of the working capital facilities was around 100% during
the seven months ended November 2015.
The ratings also factor in Aishwarya's partnership structure and
the susceptibility of prawns to disease outbreaks. With the shift
of business from letting out cold storage to trading of prawns in
4QFY15, revenue growth is likely to continue in FY16.
The ratings are supported by the around two decades of experience
of the company's founders in the business and its strong
relationships with its customers and suppliers.
RATING SENSITIVITIES
Positive: Substantial revenue growth leading to a sustained
improvement in the overall credit metrics will be positive for the
ratings.
Negative: A decline in the revenue or a rise in margin pressures
leading to sustained deterioration in the credit metrics will be
negative for the ratings.
Aishwarya was established in 2011; initially, it was into
providing cold storage facilities. It has ventured into prawns
trading from January 2015. Unaudited 1HFY16 financials indicate a
turnover of INR525.6m, EBITDA of INR13.8m and EBITDA interest
cover of 2.2x.
ALLWELD ENGINEERS: Ind-Ra Assigns IND B+ Long-Term Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Allweld Engineers
Private Limited (AEPL) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable.
KEY RATING DRIVERS
The ratings reflect AEPL's small scale of operations and moderate
credit metrics. In FY15, revenue was INR40.91m, EBITDA margin was
20.78%, interest coverage was 2.02x and net financial leverage was
2.50x.
Moreover, the net cash cycle was long at 364 days due to a long
inventory holding period of 310 days on the back of a long
gestation period in the production process. However, AEPL's
liquidity position is comfortable as indicated by its average
maximum fund-based limit utilisation of around 56% in the 10
months ended October 2015.
The ratings are supported by AEPL's operating track record of over
two decades in the field of mechanical industry.
RATING SENSITIVITIES
Positive: A sustained improvement in the scale of operations and
profitability with an improvement in the credit metrics will be
positive for the ratings.
Negative: A negative rating action could result from a decline in
the profitability resulting in deteriorated credit metrics.
Incorporated in 1993, AEPL is Bangalore-based entity engaged in
the design, manufacture and supply of hydraulic cylinders and
engineering assemblies.
AEPL's ratings:
-- Long-Term Issuer Rating: assigned 'IND B+'; Outlook Stable
-- INR45m fund-based limits: assigned Long-term 'IND B+';
Outlook Stable
-- INR10m non-fund-based limits: assigned Short-term 'IND A4'
ALMADINA STEEL: ICRA Suspends B+/A4 Rating on INR5.35cr Loan
------------------------------------------------------------
ICRA has suspended the [ICRA]B+/A4 ratings assigned to the INR5.35
crore bank facilities of Almadina Steel. The suspension follows
ICRAs inability to carry out a rating surveillance in the absence
of the requisite information from the company.
According to its suspension policy; ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
Incorporated in April 2012, Almadina Steel (AS) is engaged in the
business of manufacturing mild steel ingots. The entity is
promoted by Mr. Samir Saiyad and Mr. Sohil Saiyad and started
commercial operations in February 2014. Its manufacturing facility
is located in Babra, Gujarat with an installed capacity of 14,400
MTPA of MS Ingots. The partners have long standing experience in
the manufacturing of MS ingots through their stake in another
company, Dilaver Steel Private Limited.
ANDHRA SINTER: ICRA Assigns B+ Rating to INR0.90cr Loan
-------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B+ to INR0.90 crore
term loan limits of Andhra Sinter Limited. ICRA has also assigned
ratings of [ICRA]B+/[ICRA]A4 for INR19.10 crore of unallocated
limits of ASL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based Limits-
CC 0.90 [ICRA]B+ Assigned
Unallocated Limits 19.10 [ICRA]B+/A4 Assigned
The assigned ratings are constrained by low scale of operations
with volatile revenues in the past 5 years; and high planned capex
of INR22.57 crore to be funded by INR10.00 crore term loans (with
financial closure still pending), INR5.00 crore of equity and
residual from unsecured loans from promoters. The rating is also
constrained by the high execution risk of an order book of
INR45.78 crore as on 31 August, 2015 and high working capital
utilisation of the limits owing to high inventory holdings. The
ratings, however, favourably factors in long standing experience
of company in supplying clutch components for battle tanks to
Ministry of Defence (Government of India); and high entry barrier
in the segment with ASL being only one of the two suppliers for
the supply of critical clutch components for T-72 and T-90 battle
tanks resulting in healthy profit margins during FY2014-15.
Going forward, the ability of the company to execute timely the
outstanding orders with timely completion of capex without cost or
time overruns, timely achieving of financial closure for
additional loans along with maintaining the profit margins will
remain key rating sensitivities from credit perspective.
Andhra Sinter Limited was incorporated in the year 1985 and is
currently engaged in production of technological products on
powder metallurgy catering to automotive, defence, refrigeration
and general engineering industries. The company is one of the two
suppliers for batch clutch plates and mine sweeping plough to be
used in battle tanks (T72 and T90) for Ministry of Defence.
Recent Results
As per audited financials, the company reported profit after tax
of INR0.55 crore on operating income of INR3.62 crore during
FY2014-15 as compared to net loss of INR0.76 crore on operating
income of INR0.49 crore for FY2013-14.
ANUPAM SYNTHETICS: ICRA Assigns 'B+' Rating to INR5.91cr Loan
-------------------------------------------------------------
ICRA has assigned its long-term rating of [ICRA]B+ to the INR6.80
crore, fund based bank facilities of Anupam Synthetics Private
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund-
based bank
facilities 5.91 [ICRA]B+; Assigned
Long Term
Unallocated 0.89 [ICRA]B+; Assigned
ICRA's ratings are constrained on account of Anupam Synthetics
Private Limited's (ASPL) modest scale of operations, the highly
competitive and fragmented nature of the industry, and the low
value additive nature of operations with major sales achieved
through trading activities. Further, the rating is also
constrained on account of its modest financial profile on account
of its high debt requirement to fund its working capital which
coupled with modest net worth and profitability margins result in
high gearing and modest debt coverage indicators.
The ratings, however favorably factors in the extensive experience
of its promoters in the textile business and operational synergies
with its other group entities.
The company's ability to improve its profitability and scale while
effectively managing its working capital cycle shall be the key
rating sensitivities.
Incorporated in 1985, ASPL operates in three different lines of
business: supplying cotton and polyester fabrics for suiting and
shirting to garment exporters, selling fabric for furniture
products/ work station fabrics to IT companies and garment
manufacturing on job work basis. ASPL is promoted by Mr. Gulshan
Kumar Luthra along with his sons, Mr. Kshitij Luthra and Mr. Shrey
Luthra. Mr Gulshan Luthra has been in the textiles business for
the last 30 years. Further, the Luthra family is also in the
dyeing and processing business through group company Rajendra
Engineering Udyog Private Limited (rated at [ICRA]B+).
Recent Results
ASPL reported a net profit of INR0.38 crore on an operating income
of INR33.98 crore in FY15 as against a net profit of INR0.32 crore
on an operating income of INR32.74 crore in the previous year.
AVALON AGRO: ICRA Suspends B+ Rating on INR11.50cr Loan
-------------------------------------------------------
ICRA has suspended the [ICRA]B+ rating assigned to the INR11.50
crore limits of Avalon Agro Products Private Limited. The
suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
Avalon Agro Products Pvt. Ltd. was incorporated on February 2,
2012 as a private limited company promoted by GuarCo LLC, Mr.
Vinay Deshmane and others. The company is setting up a green field
project in Dahej SEZ, Gujarat and proposes to engage in
manufacturing of guar gum powder from guar bean splits. The
company has forward integrated operations with AV Gums LLC, Texas
for marketing of guar gum powder manufactured by the company in
overseas markets. The plant would have an installed capacity of
manufacturing 6000 MTPA of guar gum powder with commercial
operations commencing in April 2014.
BLA PROJECTS: Ind-Ra Assigns of 'IND B+' Long-Term Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned BLA Projects Pvt.
Ltd. (BLAPL) a Long-Term Issuer Rating of 'IND B+'. The Outlook is
Stable.
KEY RATING DRIVERS
The ratings reflect BLAPPL's weak liquidity position as reflected
in its maximum average working capital utilisation of 100.47% for
the 12 months ended November 2015. The ratings also factor the
company's moderate credit profile as reflected by its gross
interest coverage of 2x and net financial leverage of 2.4x in
FY15.
The ratings are supported by the company's close to two decades of
experience in the extraction of coal.
RATING SENSITIVITIES
Positive: A substantial improvement in the liquidity profile along
with maintenance of its credit profile would lead to a positive
rating action.
Negative: Further deterioration in the liquidity may lead to a
negative rating action.
Kolkata-based BLAPL (formerly Bonwari Lal Agarwal Pvt Ltd) was
reconstituted as a private limited company in 1998. The company is
engaged in the extraction of coal and removal of overburden for
subsidiaries of Coal India Ltd. BPPL also undertakes the
construction and maintenance of road projects.
BPPL is promoted by Banowari Lal Agarwal, Liladhar Agarwal, Ajay
Agarwal and Sarita Devi Agarwal.
BPPL's ratings:
-- Long-Term Issuer Rating: assigned 'IND B+'/Stable
-- INR226m fund-based working capital limit: assigned 'IND
B+'/Stable
-- INR890m non-fund-based working capital limits: assigned 'IND
A4'
BRAKEWEL AUTOMOTIVE: Ind-Ra Assigns 'IND BB' LT Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Brakewel
Automotive Components (India) Private Limited a Long-Term Issuer
Rating of 'IND BB'. The Outlook is Stable.
KEY RATING DRIVERS
The ratings reflect BACIPL's small scale of operations with
revenue of INR279.32m in FY15. The ratings are also constrained by
the company's susceptibility to intense competition in the auto
spare parts manufacturing industry.
The ratings are, however, supported by BACIPL's moderate credit
metrics with net financial leverage (total Ind-Ra adjusted net
debt/operating EBITDA) of 3.04x and gross interest coverage
(operating EBITDA/gross interest expense) of 3.06x and moderate
margins of 4.24% in FY15.
The ratings also factor in BACIPL's comfortable liquidity as
evident from its around 60% average utilisation of the working
capital limits during the 12 months ended November 2015.
The ratings are further supported by the over three decades of
experience of BACIPL's promoters in the auto parts manufacturing
industry.
RATING SENSITIVITIES
Positive: Substantial growth in the top line along with a further
improvement in the profitability leading to a sustained
improvement in the credit metrics will lead to a positive rating
action.
Negative: A decline in operating profitability leading to
deterioration in the credit metrics will be negative for the
ratings.
BACIPL started auto spare parts manufacturing in 1983 at its plant
in Noida. In 2011, another manufacturing plant was set up in
Greater Noida. The company sells 50%-55% of its products to
Original Equipment manufacturers, 5% to domestic market and
exports 40%-45% to Dubai, Malaysia, Thailand and Philippines.
BACIPL procures raw materials from domestic suppliers and imports
from China and Saudi Arabia.
BACIPL's ratings:
-- Long-Term Issuer Rating: assigned 'IND BB'; Outlook Stable
-- INR5.00m term loan: assigned 'IND BB'/Stable
-- INR55.00m fund-based working capital limit: assigned 'IND
BB'/Stable/'IND A4+'
-- INR7.50m non-fund-based working capital limits: assigned
'IND A4+'
CRACKERS INDIA: ICRA Reaffirms C+ Rating on INR4.0cr Cash Loan
--------------------------------------------------------------
ICRA has reaffirmed the [ICRA]C+ rating to INR4.00 crore cash
credit facility and INR3.0 crore working capital term loan of
Crackers India (Alloys) Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 4.00 [ICRA]C+ reaffirmed
Working Capital
Term Loan 3.00 [ICRA]C+ reaffirmed
The reaffirmation of rating takes into consideration weak
financial profile of the company as reflected by cash losses
suffered during the last three financial years, depressed debt
coverage indicators, very high working capital intensity of
operations leading to stretched liquidity position for CIAL and
high utilisation of the bank facilities limiting the company's
financial flexibility. ICRA also notes CIAL's small scale of
operations with limited value addition at the existing stand-alone
sponge iron manufacturing unit and the inherent cyclicality in the
iron and steel business; which is currently passing through a weak
phase. The rating has also factored in the fact that CIAL has
significant investment in a subsidiary company and loans extended
to a group company which accounted for around 32% of the tangible
net worth as on 31st March, 2015, and are not value accretive at
present. The rating, however, derives comfort from significant
growth witnessed in operating income during FY15 owing to improved
capacity utilisation, CIAL's moderate capital structure
notwithstanding the deterioration during the last three financial
years and demonstrated ability of the promoters to support the
company through regular equity infusion and extension of interest
free unsecured loans which primarily supports the debt-servicing
requirement of the company. The rating also factors in the low
utilisation level of operations at present.
CIAL was incorporated in 2002 by the Sahoo family based at
Bhubaneswar, Odisha. The company currently has facilities for
manufacturing of sponge iron (60,000 tonnes per annum across two
kilns) and fly ash bricks. CIAL also operates a stone crushing
unit. CIAL's manufacturing facilities are based at Keonjhar,
Odisha. Sponge iron sales contributed around 99% to the topline
during FY15, and with negligible contribution from the fly ash
bricks and the stone crushing unit.
Recent Results
CIAL reported a loss of INR1.75 crore during FY15 on an OI of
INR32.16 crore as against a loss of INR6.12 crore on an OI of
INR10.00 crore during FY14.
DEIFY INFRASTRUCTURES: ICRA Cuts Rating on INR300cr Loan to B/A4
----------------------------------------------------------------
ICRA has downgraded the long-term rating from [ICRA]BB+ to [ICRA]B
and the short-term rating from [ICRA]A4+ to [ICRA]A4 outstanding
on the INR300.00 crore (reduced from INR325.00 crore) fund
based/non-fund based bank facilities of Deify Infrastructures
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Fund Based
Limits 300.00 [ICRA]B/[ICRA]A4 Downgraded
The revision in ratings factor in the deterioration of the
financial profile of the company with 19% de-growth in operating
income along with a sharp decline in operating profit margins from
8.58% in FY14 to 2.57% in FY15. The ratings also takes into
account the weakening of the debt coverage indicators owing to
high working capital requirements of the company due to advance
payments to be made to its suppliers. ICRA notes the high
dependence of DIL on its Group company, JNIL, for securing orders.
DIL's entire order-book consists of projects being executed for
JNIL, coupled with deterioration of the financial performance of
JNIL, resulting in delay in meeting in repayment obligations to
lenders, this scenario poses as high client concentration risk for
DIL. The ratings further remain constrained by the company's
limited revenue visibility, going forward, owing to its inability
to secure new orders from either the Neco Group or from outside
clients.
The ratings also factor in the company's significant exposure to
the cyclicality inherent in the steel industry. ICRA notes the
current precarious position of the domestic steel industry due to
dumping by China, as well as the contraction in domestic demand.
The ratings also consider DIL's exposure to residual project
execution risks, especially considering that it entirely sub-
contracts physical construction while restricting its own scope to
design/engineering and supervision.
The ratings, however, favourably consider the longstanding
experience and demonstrated track record of the promoters in
executing Engineering, Procurement and Construction (EPC) projects
in the power, and iron and steel sectors. Moreover, DIL's
technical (design / engineering) team has been culled from JNIL,
with significant experience in the sector.
As DIL is exposed to client concentration risks, with its total
revenue being contributed by single client, JNIL, its revenues
remain sensitive to the impact of deterioration in JNIL's
financial position. The company's ability to secure new orders and
maintain its working capital cycle, therefore, remain critical.
Deify Infrastructures Limited (DIL) is part of the Nagpur-based,
Neco Group. The promoters of the company have more than four
decades of experience in the steel and casting business. In July
1991, Neco Investments Private Limited was incorporated as an
investment entity within the Group. Subsequently, in July 2009 the
name of the company was changed to Deify Infrastructure Private
Limited (DIPL), in line with the change in business activities:
DIPL was incorporated to function as the EPC arm of the Group.
DIPL was converted to a public limited company in June 2010. The
entity is a 100% promoter Group-owned company; and all
shareholders comprise operating/investment companies ultimately
owned by the promoters.
DIWANKA ENERGY: CRISIL Reaffirms 'B' Rating on INR70MM Cash Loan
----------------------------------------------------------------
CRISIL's ratings on the bank facilities of Diwanka Energy Private
Limited (DEPL) continue to reflect DEPL's below-average financial
risk profile, marked by a small net worth and a high total outside
liabilities to tangible net worth (TOLTNW) ratio, and the
susceptibility of its operating performance to intense competition
in the steel trading industry and cyclicality in demand from end-
user industries. These rating weaknesses are partially offset by
the extensive industry experience of the company's promoters and
its established customer relationships.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 70 CRISIL B/Stable (Reaffirmed)
Letter of Credit 15 CRISIL A4 (Reaffirmed)
Outlook: Stable
CRISIL believes DEPL will continue to benefit over the medium
term, from its promoters' extensive industry experience and its
established customer relationships. The outlook may be revised to
'Positive' if the company registers higher-than-expected growth in
its revenue, while substantially improving its profitability,
leading to moderate liquidity. Conversely, the outlook may be
revised to 'Negative' if decline in profitability or revenue, or
stretch in working capital cycle results in lower-than-expected
cash accrual, constraining its financial risk profile.
Incorporated in 2009, DEPL trades in a variety of steel products,
including hot- and cold-rolled coils and plates, angles, channels,
sponge iron, and thermo-mechanically treated bars. Since July
2015, the company has also commenced manufacturing billets, strips
and pipes, with total capacity of 75,000 tonne per annum. The
operations are managed by Mr. Priyank Diwanka. The company has its
registered office at Nagpur, Maharashtra.
GHSPL JEYPORE: CRISIL Assigns B+ Rating to INR76.1MM LT Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of GHSPL Jeypore Healthcare LLP (Jeypore).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 76.1 CRISIL B+/Stable
Proposed Fund-
Based Bank Limits 23.9 CRISIL B+/Stable
The rating reflects Jeypore's below-average financial risk profile
because of high gearing and weak debt protection metrics, and its
early stage of operations. These rating weaknesses are mitigated
by the partners' extensive experience in the medical sector, and
their financial support.
Outlook: Stable
CRISIL believes Jeypore's operations will benefit from its
partners' extensive industry experience. The outlook may be
revised to 'Positive' in case of timely stabilisation of
operations, high occupancy, improved capital structure leading to
substantial growth in revenue and operating margin. Conversely,
the outlook may be revised to 'Negative' if debt protection
metrics weaken because of lesser-than-expected occupancy resulting
in low revenue and profitability, and delays servicing its debts;
or if it undertakes a large, debt-funded capital expenditure
programme.
Incorporated in 2013, Jeypore is a secondary care hospital in
Jeypore, Odisha under the Brand name Glocal Hospital. The hospital
has been operational since June 2015. With a capacity of 100 beds,
Jeypore provides services in several medical facilities including
surgery, gynecology, obstetrics, pediatrics, orthopedics and
critical care. Jeypore is promoted by Glocal Healthcare Systems
Private Limited which is the flagship company of Glocal Group.
GLOBCON INDUSTRIES: ICRA Assigns B+ Rating to INR6.70cr Term Loan
-----------------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B+ to the INR8.70
crore of fund based facilities of Globcon Industries Private
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term fund
based limits
Cash Credit 2.00 [ICRA]B+ assigned
Term Loan 6.70 [ICRA]B+ assigned
The assigned rating is constrained by Globcon Industries Private
Limited's (GIPL) limited track record of operations within the ACC
blocks manufacturing space, highly geared capital structure on
account of weak tangible net worth and debt funded capex, and
stretched liquidity profile on account of high receivables against
tight payable terms. The rating also takes into account the
intense competition in the industry on account of low entry
barriers for new entrants, capacity increase by existing barriers
and presence of substitutes such as clay bricks, which has
evidently led to a decline in realizations over the past two
years.
The rating, however, takes into account the increasing
acceptability of AAC blocks and favorable location of the
company's manufacturing facility in proximity to raw material
sources as well as major consumption centre including Mumbai and
Surat.
Incorporated in November 2013, Globcon Industries Private Limited
(GIPL) commenced the commercial production of Autoclaved Aerated
Concrete (AAC) blocks in January 2014. The company has its
manufacturing unit located in Pipodara, near Surat, with an
installed capacity of 150,000 m3 per annum.
Recent Results:
The company recorded a net profit after tax of INR0.43 crore on an
operating income of INR20.77 crore in the financial year 2014-15.
HUNSUR PLYWOOD: ICRA Reaffirms B+ Rating on INR5.25cr Cash Loan
---------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the INR5.25
crore fund based cash credit limits and INR0.31 crore term loan of
Hunsur Plywood Works Private Limited at [ICRA]B+. ICRA has also
reaffirmed the short-term rating assigned to the INR9.50 crore non
fund based limits at [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash
Credit 5.25 [ICRA]B+; reaffirmed
Fund Based-Term
Loan 0.31 [ICRA]B+; reaffirmed
Non Fund Based 9.50 [ICRA]A4; reaffirmed
The reaffirmation of the ratings take into account the improvement
in the margins of the company due to decrease in selling expenses
and administrative expenses. The ratings also take comfort from
the long standing experience of the promoters in the timber
industry and diversified client base which mitigates counter party
risk to an extent and lends stability to revenues.
The ratings are, however, constrained by the company's modest
scale of operations in a highly competitive and fragmented
industry which limits the bargaining power of the company. The
rating is also constrained by the persisting sectorial
concentration as majority of the company's revenue are driven by
the real estate sector and any slowdown in the construction
activity could impact the revenue growth. The rating factors in
susceptibility of the business to currency exchange risk as
majority of the raw material is imported which keep profitability
under pressure. The rating also considers the decline in revenue
in FY2015, the high gearing, weak coverage indicators and the high
working capital intensity of operations for the company.
HPWL is located at Hunsur, Karnataka in an area spread over 26
acres of land, with an installed capacity of 1.0 msft. The company
is promoted by Mr. Moiz S Vagh, and his family members and is
engaged in the manufacturing of Hardwood Plywood, Block Boards,
Flush Doors and Decorative Veneers. The company's products are
marketed under the brand "Hunsply".
Recent Results
The company reported an operating income of INR36.46 crore and a
profit after tax of INR0.61 crore during FY2015, as compared to an
operating income of INR 39.13 crore and a profit after tax of
INR0.47 crore during FY2014.
INDOMET STEEL: ICRA Suspends B+/A4 Rating on INR6.65cr Loan
-----------------------------------------------------------
ICRA has suspended the [ICRA]B+/A4 ratings assigned to the INR6.65
crore bank facilities of Indomet Steel Industries Private Limited.
The suspension follows ICRAs inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
According to its suspension policy; ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
Incorporated in April 2012, Indomet Steel Industries Private
Limited (ISIPL) is engaged in manufacturing of mild steel ingots.
The company is promoted by Mr. Sachin Mansuri, Mr. Arif Chavda and
Mr. Ahmed Bhilakhiya and started commercial operations in June
2013. Its manufacturing facility is located in Babra, Gujarat with
an installed capacity of 14,400 MTPA of MS Ingots.
ISHWARCHARAN BUILDERS: CRISIL Reaffirms B- Rating on INR160M Loan
-----------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Ishwarcharan
Builders Pvt Ltd (IBPL) continues to reflect its below-average
financial risk profile because of weak debt protection metrics,
susceptibility to risk of low sales, and geographic concentration
of its real estate projects. These rating weaknesses are partially
offset by its promoters' experience in the real estate market in
Ahmedabad (Gujarat).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 140 CRISIL B-/Stable (Reaffirmed)
Bank Loan Facility
Term Loan 160 CRISIL B-/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes IBPL will continue to benefit over the medium term
from its promoters' extensive experience in Ahmedabad's real
estate market, and their financial support. The outlook may be
revised to 'Positive' in case of larger-than-expected customer
advances, strengthening financial flexibility and cash flow
adequacy. Conversely, the outlook may be revised to 'Negative' if
sales are significantly below expectation, leading to
deterioration in liquidity.
Update
IBPL has completed two residential projects: ICB Flora and ICB
City. As on September 30, 2015, the company had 60 unsold flats in
ICB City and 80 in ICB Flora. It is likely to start another
residential project comprising six residential bungalows at Vasna
in Ahmedabad, in March 2016, which is expected to be funded
through term debt of INR48 million. IBPL's net profit was INR11.6
million on net sales of INR474.1 million for 2014-15 (refers to
financial year, April 1 to March 31), against net profit of
INR17.0 million on a net sales of INR649.9 million in 2013-14.
IBPL, incorporated in 2007, undertakes real estate development in
Ahmedabad. The company is promoted by Mr. Suresh Thakkar, Mr.
Dhirajlal Thakkar, and Mr. Kalpesh Thakkar.
JASCH PLASTICS: Ind-Ra Assigns 'IND B+' Long-Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Jasch Plastics
India Limited (JPIL) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable. A full list of rating actions is at the end of
the commentary.
KEY RATING DRIVERS
The ratings factor in JPIL's weak credit profile as depicted by
its interest coverage (operating EBITDA/gross interest expense) of
1.47x in FY15 (FY14: 1.33x) and financial leverage (total Ind-Ra
adjusted net debt/operating EBITDAR) of 6.22x (4.81x). The
ratings further factor in the company's small scale of operations
with revenue of INR364.59m in FY15 (FY14: INR417.68m).
However, the ratings are supported by JPIL's promoter's experience
of over four decades in the plastic industry.
RATING SENSITIVITIES
Negative: A decline in the overall credit metrics could lead to a
negative rating action.
Positive: A sustained improvement in the overall credit metrics
along with a substantial increase in the revenue size will be
positive for the ratings.
JPPL, incorporated in 1998, manufactures coated fabrics at its
plant in Rai, Sonepat. The company has moderate liquidity as
evident from its average working capital utilisation of around 96%
during the 12 months ended December 2015.
JPIL's ratings:
-- Long-Term Issuer Rating: 'IND B+'; Outlook Stable
-- INR117.50m fund-based working capital limit: Long-term 'IND
B+'/Stable and Short-term 'IND A4'
-- INR72.50m non-fund-based working capital limit: Short-term
'IND A4'
-- INR25.95m long-term loans: Long-term 'IND B+'; Outlook Stable
JAYALAXMI ENTERPRISES: ICRA Ups Rating on INR1.25cr LT Loan to B+
-----------------------------------------------------------------
ICRA has upgraded the long term rating assigned to the INR1.25
crore long term -- fund based facilities (CC) of Jayalaxmi
Enterprises from [ICRA]B to [ICRA]B+. ICRA has reaffirmed the
short term rating of [ICRA]A4 assigned to the INR6.25 crore short
term-fund based facilities and INR2.00 crore short term-
interchangeable facilities of JE. The short term-interchangeable
facilities are sub-limits of the short term-fund based facilities.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund
Based (CC) 1.25 [ICRA]B+; upgraded from
[ICRA]B
Short Term-Fund
Based 6.25 [ICRA]A4 reaffirmed
Short Term-
Interchangeable (2.00) [ICRA]A4 reaffirmed
The upgrade in the rating takes into account the significant
growth in the revenues during 2014-15 and H1 2015-16 aided by
acquisition of new customers in the Middle East and the
improvement in the operating margins, and in turn the coverage
indicators, owing to increased proportion of export sales. The
ratings also take into account the improvement in the working
capital intensity owing to the decline in inventory holding during
2013-14 and 2014-15. The ratings draw comfort from the long
standing experience of promoters in the cashew processing industry
and the comfortable capital structure with a gearing of 0.1 times
as on March 31, 2015. The ratings are, however, constrained by the
competitive nature of the industry which limits the firm's pricing
flexibility and exposes the profitability of the firm to
volatility in the prices of the raw materials and finished
products. The ratings are also constrained by the small scale of
operations and low net-worth of the firm which restricts the
operational and financial flexibility. The firm is also exposed to
the inherent risks associated with the partnership nature of the
business, including the risks of capital withdrawal and limited
ability to raise capital, among others.
Established in 1998, Jayalaxmi Enterprises is a partnership firm
promoted by Mr. Vittalaraya Hegde and family. JE is engaged in
processing of raw cashew nuts (RCNs) to plain cashew kernels and
has its manufacturing unit in Hosmar in Udupi District, Karnataka
with an installed capacity of 1320 MT per annum. The firm sources
about 50-60% of its RCN requirements through imports from East and
West African countries and the rest from the traders and resellers
in Kerala and Karnataka. During 2014-15, the firm derived about
30% of its revenues from exports to the Middle Eastern countries.
The firm also trades RCN and processed kernels to a small extent.
Besides Jayalaxmi Enterprises, the promoters also own two other
firms named Laxmidevi Cashews and Manglagowri Exports, also
engaged in the cashew processing, with an installed processing
capacity of 250 MT per annum each. While these entities undertook
cashew processing on a job-work basis for Jayalaxmi Enterprises
until March 2015, JE only pays rent to these entities for the use
of building and machinery, starting from April 2015.
Recent Results
The firm reported a net profit of INR0.3 crore on an operating
income of INR22.2 crore during the financial year 2014-15, as
against a net profit of INR2.8 lakhs on an operating income of
INR16.1 crore during 2013-14.
KAJARIA IRON: CRISIL Assigns 'B' Rating to INR20MM Cash Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Kajaria Iron and Steel Company Private Limited
(KISCPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Pre Shipment
Packing Credit 80 CRISIL A4
Cash Credit 20 CRISIL B/Stable
Post Shipment Credit 50 CRISIL A4
The ratings reflect the exposure to risks related to intense
competition in the fragmented iron castings industry and to
product concentration risk in the revenue profile. The ratings
also factor in the working capital-intensive operations. These
rating weakness are partially offset by the promoters' extensive
industry experience.
Outlook: Stable
CRISIL believes KISCPL will continue to benefit over the medium
term from the promoters' extensive industry experience. The
outlook may be revised to 'Positive' if a substantial improvement
in the scale of operations, better working capital management, or
improvement in profitability improves the financial risk profile.
Conversely, outlook may be revised to 'Negative' if the financial
risk profile, especially liquidity, weakens on account of a
stretch in the working capital cycle, and any debt-funded capital
expenditure plans.
Incorporated in 2008, KISCPL manufactures and exports cast-iron
products to different countries. Its production facility is
located at Howrah (West Bengal), with an installed capacity of
18,000 tonnes per annum. The company is promoted by the Kajaria
family, which has been in the foundry business for over six
decades. The operations are managed by the promoter-directors Mr.
Akhilesh Kajaria and Mr. Ravi Kumar Kajaria.
KHURANA EXPORTS: CRISIL Assigns 'B+' Rating to INR70MM LT Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facility of Khurana Exports -- Kanpur (KE).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 70 CRISIL B+/Stable
Bank Loan Facility
Foreign Bill
Discounting 10 CRISIL B+/Stable
Packing Credit 20 CRISIL A4
The rating reflects KE's modest scale of operations in the
fragmented and competitive leather industry. The rating also
reflects the susceptibility of firm's profitability to fluctuation
in raw material prices and forex rates. These weaknesses are
partially offset by the promoters' extensive experience in leather
industry, and the firm's moderate financial risk profile.
Outlook: Stable
CRISIL believes that KE will continue to benefit over the medium
term from proprietor's extensive industry experience. The outlook
may be revised to 'Positive' if high revenue growth or improvement
in profitability leads to substantial increase in cash accrual and
subsequent improvement in its credit profile. Conversely, the
outlook may be revised to 'Negative' in case of a decline in sales
or profitability resulting in lower-than-expected cash accruals or
if its capital structure weakens due to large debt-funded capital
expenditure or due to increase in working capital requirement.
Set up as a proprietorship firm in 2012-13 (refers to financial
year, April 1 to March 31) by Ms. Sangeeta Khurana, KE
manufactures leather shoes/boots and sandals. The firm is managed
by the Khurana family and its manufacturing plant is based in
Kanpur, Uttar Pradesh.
KE reported a book profit of INR2.02 million on revenue of
INR74.07 million for 2014-15, against a book profit of INR1.36
million on revenue of INR109.55 million for 2013-14.
KIMPLAS PIPING: ICRA Upgrades Rating on INR17cr Cash Loan to BB
---------------------------------------------------------------
ICRA has upgraded the long term rating assigned to the INR40 crore
bank limits of Kimplas Piping Systems Limited to [ICRA]BB from
[ICRA]B+. The outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 17.00 Upgraded to [ICRA]BB (Stable)
from [ICRA]B+
Term Loan 9.00 Upgraded to [ICRA]BB (Stable)
from [ICRA]B+
Bills of Exchange 6.00 Upgraded to [ICRA]BB (Stable)
from [ICRA]B+
Non-Fund Based 8.00 Upgraded to [ICRA]BB (Stable)
Limits Bank from [ICRA]B+
Guarantee/Letter
of Credit
The rating upgrades factors in the healthy improvement in the
financial profile over the last two years characterized by a
strong revenue growth and turnaround of operations since FY14,
supported by judicious change in product mix and demonstrated
financial support extended by the promoters by infusion of funds
to sustain growth, thereby limiting external borrowing. The rating
continues to be underpinned by the experience of its promoters in
manufacturing and development of electro-fusion products.
However, the rating continues to remain constrained by KPSL's
working capital intensive nature of operations due to high
inventory holding requirements and an elongated receivable cycle
resulting in a stretched liquidity. The rating also continues to
remain constrained by the modest scale of operations as the
company manufactures electro-fusion products in the fittings
industry and fittings constitute a small portion of a project
cost. Moreover, the rating also factors in the raw material price
risk due to volatile nature of key raw material and absence of
long term contracts with suppliers and foreign exchange risk in
the absence of a firm hedging policy being adopted. Nonetheless,
the raw material price risk is mitigated as far as exports are
concerned given the presence of raw material price escalations in
its long term contracts.
Kimplas Piping Systems Limited (KPSL) was incorporated on Feb. 8,
1996, as George Fischer Trenton Limited. The company started its
manufacturing facilities in 1997 to produce electro-fusion
fittings required for polyethylene piped city gas distribution
systems used by gas companies like Mahanagar Gas and Gujarat Gas.
KPSL has expanded its product line of electro-fusion fittings and
added compression fittings, valves and components for micro-
irrigation systems. Currently it manufactures a wide range of
electro-fusion fittings, compression fittings, transition fittings
and specialized housing service connections from polyethylene
mains. KPSL also has a wholly-owned subsidiary, Kimplas Limited,
UK to tap the UK market.
For the full year FY15, the reported a profit after tax of INR3.39
crore on a topline of INR61.68 crore, as compared to a profit
after tax of INR2.75 crore on a topline of INR53.32 crore during
the previous year.
M. M. AUTOMOBILES: CRISIL Cuts Rating on INR35MM Cash Loan to D
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of M. M. Automobiles (MMA) to 'CRISIL D' from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 35 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Standby Line of 5 CRISIL D (Downgraded from
Credit 'CRISIL B+/Stable')
The rating downgrade reflects MMA's overdrawn cash credit facility
for more than 30 days owing to its weak liquidity.
MMA is susceptible to economic cyclicality, is exposed to intense
competition in the automobile dealership industry, and its small
net-worth limits its financial flexibility to meet any exigency.
However, the firm benefits from the extensive industry experience
of its promoter in the auto dealership industry.
MMA was set up in 2003 as a proprietorship concern by Mr. Mutchu
Mithi. It is an authorized dealer for passenger vehicles of
Hyundai Motor India Ltd. The firm operates a showroom in Itanagar
(Arunachal Pradesh).
MAHAVEER INFRAENG'G: CRISIL Reaffirms B Rating on INR100MM Loan
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Mahaveer
Infraengineering Pvt Ltd (MIPL) continue to reflect MIPL's limited
track record of operations in the infrastructure construction
sector and its working capital-intensive operations because of
large receivables. These rating weaknesses are mitigated by
healthy order book, which provides revenue visibility over the
medium term, and an above-average financial risk profile, because
of low gearing.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 50 CRISIL A4 (Reaffirmed)
Cash Credit 100 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes MIPL will, over the medium term, continue to
benefit from its sizeable order book and maintain its above-
average financial risk profile. The outlook may be revised to
'Positive' in case of significant revenue growth while maintaining
profitability and capital structure, or if working capital
management improves, particularly through faster realisation of
receivables from customers. Conversely, the outlook may be revised
to 'Negative' if capital structure and debt protection metrics
weaken due to substantially low revenue and profitability, or
increased reliance on debt to fund capacity expansion plans and
incremental working capital requirement.
MIPL was incorporated in 2008, promoted by Mr. Pukhraj Jain and
Mr. Kishore Jain. The company undertakes earthwork, roadwork, and
civil construction projects on a turnkey basis.
MARIANELLA PROPERTIES: ICRA Assigns 'B' Rating to INR15cr Loan
--------------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B to the INR15.00
crore term loan facility of Marianella Properties Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 15.00 [ICRA]B assigned
The rating draws comfort from the long track record and experience
of the promoter group in executing real estate projects in Mumbai
with financial closure achieved for the project and the entire
budgeted equity contribution brought in by the promoters.
The rating, however, is constrained by the significant market risk
with bookings yet to commence and high funding risk with 40% of
the project cost is proposed to be funded by way of advances from
customers which remain contingent on healthy sales and timely
collection of advances. The rating also factors in the high
execution risk given the nascent stage of project with only 15% of
the construction cost incurred as on September 2015. ICRA also
takes cognisance of the company's exposure to the risk of slowdown
in demand, falling property prices and inherent cyclicality in
real estate sector, particularly in the commercial segment.
Incorporated in 2008, Marianella Properties Private Limited (MPPL)
is involved in developing a retail mall in Vasai, Maharashtra with
an area of 0.97 lakh sq. ft. The company is promoted and managed
by Mr. Lancelot D'Souza and his family. The promoters have
executed 13 projects (through Rose Builders) in Mumbai with total
saleable area of 2.5 lakh sq. ft.
MINI DIAMONDS: CRISIL Assigns B+ Rating to INR20MM Cash Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' rating to the
bank facilities of Mini Diamonds India Limited (MDIL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 10 CRISIL B+/Stable
Bank Loan Facility
Cash Credit 20 CRISIL B+/Stable
Export Packing Credit 60 CRISIL A4
& Export Bills
Negotiation/Foreign
Bill discounting
The rating reflect MDIL's below-average financial risk profile
marked by its small net worth, high total outside liabilities to
tangible net worth ratio (TOL/TNW), and average debt protection
metrics. The rating also reflects MDIL's large working capital
requirements and the susceptibility of its profitability margins
to volatility in diamond prices. These rating weaknesses are
partially offset by the extensive experience of MDIL's promoter's
in the gems and jewellery industry, and its established
relationships with customers coupled with moderate scale of
operations.
Outlook: Stable
CRISIL's believes that MDIL will maintain its business risk
profile on the back of extensive experience of promoters and
established relationship with customers and suppliers. The outlook
may be revised to 'Positive' if the company achieves higher scale
of operations, while maintaining its profitability and capital
structure. Conversely, the outlook may be revised to 'Negative' in
case of elongation of working capital cycle or lower-than-expected
cash accrual, leading to deterioration in financial risk profile.
Incorporated in 1987, MDIL is promoted by Mr Upendra Shah and Mr
Himanshu Shah and is listed on the Bombay Stock Exchange. The
company engages in manufacturing and trading of cut and polished
diamonds (CPDs) as well as trading of rough diamonds.
NAV BHARAT: ICRA Reaffirms 'B' Rating on INR6cr LT Loan
-------------------------------------------------------
ICRA has reaffirmed its long term rating of [ICRA]B on the INR6.00
crore long term fund based limits of Nav Bharat Rice & General
Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund
Based Limits 6.00 [ICRA]B; (reaffirmed)
The rating reaffirmation takes into account the elevated gearing
of the firm due to large working capital requirements, which have
been primarily funded by working capital borrowings. Also, the low
value added nature of operations and the intensely competitive
nature of the rice milling industry have led to low profitability
margins. The low margins coupled with the high gearing have
resulted in weak coverage indicators as reflected in low interest
coverage of 1.22 times during FY 2014-15. However, the ratings
favourably take into account the extensive experience of the
promoters and their strong relationships with several customers
and suppliers, coupled with proximity of the mill to major rice
growing areas, which results in easy availability of paddy.
NBRGM was set up in 1987 by Mr. Subash Chand and his family as a
partnership firm. The firm is engaged in the milling and trading
of rice (which includes both basmati and non basmati rice). It has
a plant at Cheeka (Haryana) with a milling capacity of 4 tonnes
per hour.
Recent Results
NBRGM has reported a net profit of INR0.01 crore on an operating
income of INR18.26 crore in FY 2014-15 as compared to a net profit
of INR0.01 crore on an operating income of INR17.86 crore in the
previous year.
NAVEEN POULTRY: CRISIL Cuts Rating on INR40MM LT Loan to 'D'
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Naveen Poultry Farms Pvt Ltd (NPFL) to 'CRISIL D' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 17 CRISIL D (Downgraded from
'CRISIL B/Stable')
Long Term Loan 40 CRISIL D (Downgraded from
'CRISIL B/Stable')
The rating downgrade reflects instances of delay by NPFL in
servicing its debt. The delays have been caused by the weakening
of the company's liquidity with its depressed cash accrual being
inadequate to meet term debt repayment obligations.
NPFL has a weak financial risk profile because of a small net-
worth, high gearing, and weak debt protection metrics. The company
is exposed to intense competition in the poultry industry and to
risks inherent in the industry such as outbreak of epidemics,
while its profitability margins are susceptible to volatility in
raw material prices. However, it benefits from the extensive
industry experience of its promoters.
NPFL was set up in 2011 by Mr. K Kiran Kumar, Mrs. K Saritha Rao,
and Mr. V Narendra Reddy. The company produces commercial eggs at
its facility in Hyderabad.
PARAMOUNT BLANKETS: CRISIL Reaffirms 'C' Rating on INR97.5MM Loan
-----------------------------------------------------------------
CRISIL has reaffirmed the rating for the long-term bank facilities
of Paramount Blankets Pvt Ltd (PBPL) at 'CRISIL C'. The rating
continues to reflect instances of delay by PBPL in repayment of
its debt (not rated by CRISIL). The delays were because of
stretched liquidity, driven by high working capital requirements.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 97.5 CRISIL C (Reaffirmed)
Long Term Loan 1.1 CRISIL C (Reaffirmed)
Proposed Long Term
Bank Loan Facility 57.5 CRISIL C (Reaffirmed)
The rating also reflects PBPL's below-average financial risk
profile because of high gearing and weak debt protection metrics.
These rating weaknesses are partially offset by the promoters'
extensive experience in the blanket industry.
PBPL was incorporated in 2004, promoted by Mr. Satbhushan Gupta.
The company manufactures polyester mink blankets, which it sells
in the domestic market. Its manufacturing unit is at Sonepat
(Haryana).
PBPL reported a net profit of INR7.4 million on net sales of
INR506.9 million for 2014-15 (refers to financial year, April 1 to
March 31), against a net profit of INR5.5 million on net sales of
INR332.1 million for 2013-14.
RACHITECH ENGINEERING: CRISIL Cuts Rating on INR55MM Loan to B+
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Rachitech Engineering Pvt Ltd (REPL) to 'CRISIL B+/Stable/CRISIL
A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 20 CRISIL A4 (Downgraded from
'CRISIL A4+')
Cash Credit 55 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects CRISIL's belief that REPL's business risk
profile will remain susceptible to cyclicality and slowdown in the
capital goods industry over the medium term. Revenue declined
sharply in 2014-15 (refers to financial year, April 1 to March 31)
to INR144.20 million, while it incurred a net loss of INR4.3
million for the year. CRISIL believes that although revenue will
improve over the medium term, it will remain subdued due to an
adverse economic scenario. The downgrade also factors in the
company's lack of ability to significantly scale up its operations
due to a limited product profile catering to only a few end user
industries.
The ratings reflect REPL's small scale of operations in a
fragmented industry, and susceptibility of its operating margin to
fluctuations in raw material prices and foreign exchange rates.
These weaknesses are partially offset by the extensive experience
of the company's promoters in the engineering capital goods
industry.
Outlook: Stable
CRISIL believes REPL will continue to benefit over the medium term
from its promoters' extensive industry experience. The outlook may
be revised to 'Positive' if revenue and profitability increase
substantially, leading to higher-than-expected net cash accrual,
and if working capital management improves. Conversely, the
outlook may be revised to 'Negative' if the company's financial
risk profile, particularly liquidity, weakens on account of a
decline in revenue and profitability, or large debt-funded capital
expenditure, or an increase in working capital requirement.
REPL, incorporated in 1989 and promoted by Mr. Rajendra Lavasa,
based in Faridabad, Haryana, manufactures and exports heavy
engineering equipment, including process-specific machinery,
boiler components, and electrically operated cranes. Its products
are used in industries such as sugar, cement, power, and
construction. Mr. Lavasa and his son, Mr. Rachit Lavasa, manage
its operations.
RAM SARUP: CRISIL Reaffirms 'B' Rating on INR17.5MM Cash Loan
-------------------------------------------------------------
CRISIL ratings on the bank facilities of Ram Sarup Murari Lal
(RSML) continue to reflect a modest scale of operations in the
fragmented timber industry leading to low profitability, and the
susceptibility to unfavourable changes in regulations on timber
import. The ratings also factor in the below-average financial
risk profile because of a leveraged capital structure and subdued
debt protection metrics. These rating weaknesses are partially
offset by the extensive experience of proprietor in the timber
processing and trading business, and the financial support it
receives from him and his family members.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 17.5 CRISIL B/Stable (Reaffirmed)
Letter of Credit 110.0 CRISIL A4 (Reaffirmed)
Outlook: Stable
CRISIL believes RSML will continue to benefit over the medium term
from the proprietor's extensive industry experience. The outlook
may be revised to 'Positive' if the financial risk profile
improves significantly, on account of better-than-expected
accruals led by improvement in scale and operating profitability
or because of capital infusion from partners. Conversely, the
outlook may be revised to 'Negative' if aggressive, debt-funded
capital expenditure, any substantial decline in revenue and
profitability, or a stretch in the working capital cycle weakens
the financial risk profile.
Update
RSML's operating revenue improved by around 27 per cent to
INR441.8 million in 2014-15 (refers to financial year, April 1 to
March 31) vis-a-vis INR346.8 million in 2013-14, and is expected
to remain at similar levels over the near term. The operating
margin is also expected to remain in line with historical levels
at 1.3-1.5 percent over the medium term.
RSML's financial risk profile remains below average because of
high total outside liabilities to tangible networth of 5.22 times
as on March 31, 2015; the ratio is expected to improve to below
4.5 times over the medium term, primarily because of improvement
in networth improving to more than INR20 million over the medium
term. The interest coverage ratio has also remained between 1.4
and 1.5 times, and will continue to improve due to healthy
profitability. The operations are working capital intensive, with
debtors of 92 days and inventory of 37 days as on March 31, 2015,
supported by creditors of 143 days, thus leading to higher
utilisation of letter of credit (LC) limits over the medium term.
The liquidity is further supported by enhancement in LC limits
from INR90 million to INR110 million. For 2014-15, the net cash
accrual is expected to be at INR2.0-2.5 million against debt
obligation of INR0.3 million. Liquidity is also supported by the
absence of any considerable, debt-funded capex plan over the
medium term and funding support in the form of unsecured loans and
capital.
RSML was established in 1976 by Mr. Satya Narayan Bansal. The firm
trades in and saws imported timber. It is based in Jind (Haryana)
and has sawing mills in Gandhidham (Gujarat).
S.R. COLLECTION: CRISIL Assigns 'B' Rating to INR75MM Term Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank loan facilities of S.R. Collection Private Limited (SRCPL).
The rating reflects average financial risk profile and small scale
of operations in highly competitive industry. These rating
weaknesses are mitigated by the promoters' extensive experience in
the textile industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 75 CRISIL B/Stable
Cash Credit 40 CRISIL B/Stable
Proposed Long Term
Bank Loan Facility 3.5 CRISIL B/Stable
Outlook: Stable
CRISIL believes SRCPL will continue to benefit from the promoters'
extensive industry experience. The outlook may be revised to
'Positive' if scale of operations increase significantly while
sustaining profitability along with improvement in capital
structure and financial risk profile. Conversely, the outlook may
be revised to 'Negative' if the financial risk profile
deteriorates because of considerable dip in revenue or
profitability or stretched working capital cycle or large, debt-
funded capital expenditure plan.
SRCPL, weaves and processes yarn into fabric, and is promoted by
Mr. Avinash Somani, Mr. Abhishek Somani and Mr. Ankit Somani.
SRCPL was initially a trading entity, later in 2015-16 (refers to
financial year, April 1 to March 31) it was converted into a
manufacturing concern. The manufacturing unit is in Bhilwara
(Rajasthan).
SHANKAR RICE: ICRA Reaffirms 'B' Rating on INR34cr Loan
-------------------------------------------------------
ICRA has reaffirmed its long-term rating of [ICRA]B on the
INR34 crore fund based facilities of Shankar Rice & Gen. Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 34 [ICRA]B; Reaffirmed
The rating reaffirmation factors in the firm's modest scale of
operations, which coupled with low value additive nature of
business and high competition in the industry, has resulted in low
profitability and weak debt coverage indicators. The rating also
takes into account the working capital intensive nature of the
rice milling business due to the need to maintain substantial
inventories. Further, the incremental working capital requirements
have been primarily funded through bank borrowings, leading to a
highly leveraged capital structure. The rating is also constrained
by agro climatic risks which can affect the availability of paddy
in adverse conditions.
However, the rating is supported by the firm's long track record
of operations and the experience of the promoters in the rice
industry, proximity of the mill to a major rice growing area which
results in easy availability of paddy and stable demand outlook
with rice being an important part of the staple Indian diet.
Going forward, the ability of the firm to increase its scale of
operations and sustain its profitability, while maintaining a
prudent capital structure and optimizing the working capital
intensity will be the key rating sensitivities.
Incorporated in 2001, SSRM is a partnership firm engaged in
milling and processing of basmati and non basmati rice. The firm
has its plant located in Moga, Punjab with a milling capacity of
4.5 tonnes/hour and sorting capacity of 5tonnes/hour. The firm has
been promoted by Mr. Parveen Kumar, Ms. Santosh Rani, Mr. Amandeep
and Mr. Kamaldeep.
Recent Results
The firm reported a net profit of INR0.26 crore on an operating
income of INR71.95 crore in FY2015 as compared to a net profit of
INR0.20 crore on an operating income of INR60.47 crore in the
previous year.
SRI RAM: ICRA Lowers Rating on INR9.0cr Fund Based Loan to D
------------------------------------------------------------
ICRA has revised the long term rating to [ICRA]D from [ICRA]BB for
the INR8.20 crore term loan facilities, and INR9.00 crore fund
based facilities of Sri Ram Spinning Mills Limited. ICRA has
revised the short term rating to [ICRA]D from [ICRA]A4 for the
INR0.78 crore fund based facilities, and INR0.27 crore non-fund
based facilities of SSML. ICRA has also revised long term / short
term rating to [ICRA]D/[ICRA]D from [ICRA]BB/[ICRA]A4 for INR10.46
crore proposed bank facilities of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loan facilities 8.20 Revised to [ICRA]D
from [ICRA]BB (Stable)
Fund based facilities 9.00 Revised to [ICRA]D
from [ICRA]BB (Stable)
Fund based facilities 0.78 Revised to [ICAR]D
from [ICRA]A4
Non-fund based 0.27 Revised to [ICAR]D
facilities from [ICRA]A4
Proposed facilities 10.46 Revised to[ICAR]D/[ICRA]D
from [ICRA]BB/[ICRA]A4
The rating revision factors in the delay in term loan repayments
owing to liquidity constraints with decline in yarn realizations
and high cost inventory leading to significant decline in
operating profitability. In 2014-15, the company witnessed decline
in operating income on account of lower yarn realizations; decline
in the scale of operations coupled with lower operating margins
resulted in net loss of INR0.4 crore in 2014-15. The ratings
consider weak financial profile of the company characterized by
low margins, high gearing, weak coverage indicators, and
constrained liquidity position. The ratings remain constrained by
the modest scale of operations of the company and the intense
competition prevalent in the highly fragmented textiles industry
apart from the susceptibility of earnings to the volatility in the
exchange rates and raw material prices. The ratings also consider
the significant experience of the promoters in the Indian textile
industry and the company's long standing relationships with its
clientele. Going forward, timely servicing of financial
obligations by improving its financial profile remains crucial
from credit perspective.
Sri Ram Spinning Mills Limited (SSML), promoted by Sri Subhash
Chand Sancheti, was established in 1995 with an initial capacity
of 6048 spindles. The company is a part of a textile group
comprising three companies, with the others involved in cotton
trading and yarn trading. SSML manufactures cotton yarn in the
coarser and medium count range, with average count ranging from
30's to 40's. The company largely caters to the hosiery and warp
markets of North and West India, and also directly markets a
portion of its produce to corporates. SSML is currently operating
with a capacity of 23,184 spindles.
Recent Results
According to audited financials, the company recorded net loss of
INR0.4 crore on operating income of INR49.7 crore in 2014-15 as
against net profit of INR0.4 crore on an operating income of
INR52.6 crores for the year 2013-14.
SUBRAMANIAM BOTTLES: CRISIL Assigns B+ Rating to INR200MM Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank loan facility of Subramaniam Bottles LLP (SBL; part of the
Devi group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 200 CRISIL B+/Stable
The rating reflects the Devi group's exposure to regulatory risk
in the distillery and brewery segments, and the customer
concentration in its revenue. These weaknesses are partially
offset by promoters' extensive experience in the bottle washing
industry, and the group's adequate financial risk profile because
of comfortable total outside liabilities to tangible net worth
(TOLTNW) ratio and healthy net worth.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of SBL and Devi Bottles LLP (DBL). This is
because both the entities, together referred to as the Devi group,
have a common management team, and are in the same line of
business, resulting in business synergies.
Outlook: Stable
CRISIL believes the Devi group will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' in case of steady and
sustained improvement in revenue and profitability, leading to a
better financial risk profile. Conversely, the outlook may be
revised to 'Negative' if regulatory changes adversely impact
revenue and operating margin, or if working capital cycle
increases, thereby weakening liquidity.
SBL is a partnership concern based in Thanjavur (Tamil Nadu),
established in 2014 by Mr. V S Natarajan and his wife Ms. N
Sundari. The firm procures and washes old beer bottles and
supplies them to breweries.
DBL, also established in 2014 by Mr. V S Natarajan and Ms. N
Sundari, procures and washes old liquor bottles and supplies them
to distilleries.
SUMMA REAL: ICRA Reaffirms B+ Rating on INR15cr Term Loan
---------------------------------------------------------
ICRA has reaffirmed the long term rating at [ICRA]B+ for INR15
crore term loans and INR4 crore cash credit facility of Summa Real
Media Private Limited. SRMPL's long term non fund based facility
of INR15 crore is a sub limit of the term loan facility, for which
also ICRA has reaffirmed an [ICRA]B+ rating. ICRA has also
reaffirmed a short term rating of [ICRA]A4 for the INR2 crore non
fund based limits of SRMPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 15.00 [ICRA]B+ Reaffirmed
Long Term-Non
Fund Based 15.00 [ICRA]B+ Reaffirmed
Cash Credit 4.00 [ICRA]B+ Reaffirmed
Short Term-Non
Fund Based 2.00 [ICRA]A4 reaffirmed
The reaffirmation of ratings takes into consideration SRMPL's
significant exposure to geographical concentration risks at
present, with revenue generation currently largely being dependent
on a single publication -- the daily "Prameya", being circulated
in Odisha, as sales made in other states remain nominal. The
ratings factor in the low advertising revenue generation,
contributing around 23% to the revenues in FY15, that has kept the
profitability of the company low since the profitability is
largely dependent on revenues from advertisement segment. SRMPL's
financial profile is weak at present, characterised by low net
margins, weak business returns and aggressive capital structure.
The company also remains vulnerable to volatility in the cost of
newsprint, its primary raw material, as any increase in the
newsprint costs are not immediately passed to the customers. The
ratings also factor in the large debt funded capital expenditure
for diversification into a news and current affairs channel (N&CA)
"Prameya News7", which is expected to keep the capital structure
at aggressive levels over the medium term. The stabilization risks
are mitigated to a certain extent due to the presence of SRMPL in
the print media, though the promoter's experience in electronic
media is limited. ICRA expects that the news channel to drive
SRMPL's future growth in revenues and provide diversification in
revenue sources, however stabilising the operations and achieving
desired performance parameters would be a key challenge going
forward. The ratings also take into account the increasing
circulation of the company's daily newspaper which has led to a
significant growth in scale of operations in FY15, which is ably
supported by the presence of an experienced editorial team, and
the established presence of the promoters in the State of Odisha
through educational ventures in group companies. In ICRA's
opinion, the ability of the company to stabilize the news channel
and increase advertisement revenue from the newspaper while
improving profitability would remain key rating sensitivities
going forward.
SRMPL was incorporated in January 2010 and is promoted by Dr.
Manojranjan Nayak. SRMPL is engaged in the business of printing
and distribution of an Odiya language daily newspaper, by the name
of 'Prameya'. The operations commenced in May, 2011, with full
fledged commercial operations being in place from 2013 onwards.
Recent Results
SRMPL reported a net profit of INR0.31 crore during FY15 on an OI
of INR43.88 crore as against a net profit of INR0.32 crore and an
OI of INR27.12 crore during FY14.
SUPER JEWELLERS: CRISIL Assigns B+ Rating to INR100MM Cash Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Super Jewellers Pvt Ltd (SJPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 100 CRISIL B+/Stable
Term Loan 2 CRISIL B+/Stable
The rating reflects the company's modest scale of, and working
capital intensity in, operations and weak financial profile, with
high gearing and average debt protection metrics. These rating
strengths are partially offset by the promoters' longstanding
experience in the gold and diamond jewelry industry, and the
company's moderate operating profitability.
Outlook: Stable
CRISIL believes SJPL will continue to benefit over the medium term
from the extensive industry experience of its promoters in the
gold and diamond jewelry retail segment. The outlook may be
revised to 'Positive' if improved sales and inventory management
lead to stronger debt protection metrics. Conversely, the outlook
may be revised to 'Negative' if the financial risk profile
deteriorates on account of sharp decline in revenue and
profitability, large debt funded capital expenditure, or increase
in working capital requirements.
SJPL began operations as a partnership firm in 2002, and was
incorporated as a private limited company in 2004. Promoted by Mr.
Ajay Garg and Mr. Diniv Singla, the company retails in gold,
diamond and silver jewellery through its showroom at Bhatinda,
Punjab.
SYNERGY GREEN: CRISIL Reaffirms 'D' Rating on INR356.7MM Loan
-------------------------------------------------------------
CRISIL's ratings on the bank facilities of Synergy Green
Industries Pvt Ltd (Synergy) continue to reflect delays by Synergy
in meeting interest obligations on its term loan. The delays were
driven by weak liquidity, because of slower than expected offtake,
partly on account of the current challenging business environment
in the casting and forging industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL D (Reaffirmed)
Cash Credit 110 CRISIL D (Reaffirmed)
Letter of Credit 40 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 13.3 CRISIL D (Reaffirmed)
Term Loan 356.7 CRISIL D (Reaffirmed)
Synergy is exposed to offtake risks inherent in the domestic
casting and forging market, and to risks related to its nascent
stage of operations and highly leveraged capital structure.
However, the company benefits from its promoters' extensive
industry experience. Synergy is a subsidiary of SB Reshellers Pvt
Ltd (SBR), which was incorporated in 1978.
Synergy was established in August 2010 in Kolhapur (Maharashtra).
The company manufactures iron castings for wind turbines, machine
tools, pumps, and valves. It began commercial production in June
2012. It is managed by Mr. Sachin Shirgaokar, Mr. Sohan
Shirgaokar, and Mr. V Srinivas Reddy.
TULSI CONSTRUCTIONS: ICRA Assigns B+ Rating to INR7.90cr Loan
-------------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B+ to the INR7.90
crore fund based bank limits and the INR6.00 crore unallocated
limits of Tulsi Constructions.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term, Fund
Based-Term Loan 7.90 [ICRA]B+/assigned
Long Term,
Unallocated 6.00 [ICRA]B+/assigned
The assigned rating takes into account the firm's exposure to
selling risk for the unsold portion of both Ghansoli and Panvel
projects. The rating also factors in the exposure to risks of time
and cost overruns for the Panvel project as a major portion of
construction cost is yet to be incurred. ICRA also notes the
exposure to risk of slowdown in demand, falling property prices,
the inherent cyclicality in the sector and competition from a
number of ongoing projects in the surrounding areas.
The rating however favourably factors in the availability of clear
land title and key regulatory approvals for the ongoing projects
and the favourable location of ongoing projects in the rapidly
developing Navi Mumbai region. ICRA also notes the strong
execution track record and experience of the promoters in
executing real estate projects. The firm has also achieved
financial closure for the Panvel project with debt tie-up in
place, although the ability to garner timely customer advances
remains a key rating sensitivity.
Set up in 2012, Tulsi Construction is engaged in construction of
residential real estate projects in and around Navi Mumbai and
Raigad region. The promoters have experience of over a decade in
the development of residential real estate projects. The firm is
currently developing two residential projects in the Navi Mumbai
region namely Tulsi Sonata (Panvel) and Tulsi Aura (Ghansoli)
which are at different stages of construction. The company has
completed significant portion of construction work for Tulsi Aura
while the construction work for the Tulsi Sonata project is in
progress. The firm has another project in the pipeline at Ulwe
(Tulsi Alaya) for which it has already purchased land, however no
other activities have commenced yet.
Recent Results
For the financial year ending March 2015, Tulsi Constructions
reported an operating income of INR34.24 crore and a net profit of
INR1.23 crore.
VICEROY EXPORTS: CRISIL Reaffirms B+ Rating on INR100MM Loan
------------------------------------------------------------
CRISIL's ratings on the bank facilities of Viceroy Exports India
Pvt Ltd (VEIPL) continue to reflect VEIPL's below-average
financial risk profile because of high gearing and weak debt
protection metrics, susceptibility of its operating margin to
volatility in raw material prices, and modest scale of operations
in an intensely competitive seafood industry. These weaknesses are
mitigated by the extensive experience of VEIPL's promoters.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Discounting
Bill Purchase 100 CRISIL A4 (Reaffirmed)
Packing Credit 100 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 50 CRISIL B+/Stable (Reaffirmed)
CRISIL had assigned a rating of 'CRISIL B+/Stable/CRISIL A4' to
the facilities of VEIPL vide rating rationale dated October 30,
2015.
Outlook: Stable
CRISIL believes VEIPL will benefit over the medium term from its
promoters' extensive industry experience. The outlook may be
revised to 'Positive' if significant increase in scale of
operations with stable margins results in a sustained improvement
in financial risk profile. Conversely, the outlook may be revised
to 'Negative' if decline in cash accrual, deterioration in working
capital management or any higher-than-expected capital expenditure
programme weakens the financial risk profile.
Incorporated in 2011 by Mr. Roy J Vayalat, Ernakulam (Kerala)-
based VEIPL processes exports marine products, which mainly
include the cephalopods category comprising cuttle fish, squid,
octopus, and tuna.
VIJ AGRO: CRISIL Upgrades Rating on INR600MM Cash Loan to B+
------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Vij Agro Exports Pvt Ltd (Vij Agro; part of the Vij group) to
'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 600 CRISIL B+/Stable (Upgraded from
'CRISIL B/Stable')
The rating upgrade reflects CRISIL's belief that the Vij group's
business risk profile will continue to improve over the medium
term driven by an expected increase in capacity. In 2014-15
(refers to financial year, April 1 to March 31), the group's
operating income increased by 74 percent to around INR3.2 billion
from INR1.8 billion in 2013-14. The growth was on account of
better capacity utilisation. Also, the group plans to further
enhance capacity in group company, K L Sons, by adding a new
sortex plant with a capacity of 16 tonnes per hour. The total
capital expenditure (capex) would be around INR20 million, 75 per
cent of which is likely to financed through buyer's credit payable
over three years and the remaining through internal cash accrual.
The rating continues to reflect the group's modest financial risk
profile because of high gearing and average debt protection
metrics. The rating also factors in large working capital
requirement. These rating weaknesses are partially offset by the
extensive experience of group's promoters in the rice industry.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of Vij Agro and K L Sons. This is because
both the companies, together referred to as the Vij group, are in
similar lines of business and have the same promoters.
Outlook: Stable
CRISIL believes the Vij group will continue to benefit over the
medium term from its promoters' industry experience. The outlook
may be revised to 'Positive' in case of better liquidity, driven
by significant increase in cash accrual due to an expansion in
scale of operations, or if the group's capital structure improves.
Conversely, the outlook may be revised to 'Negative' in case there
is a decline in profitability or substantial increase in working
capital requirement, or larger-than-expected debt-funded capex.
Incorporated in 1999, the Vij group mills and processes basmati
rice (Pusa 1121 quality). The group is promoted by Mr. Sunil Kumar
Vij, his two brothers, Mr. Sachin Kumar and Mr. Pravin Kumar, and
their mother, Mrs. Naresh Kumari Vij. Its processing unit is in
Ferozepur, Punjab.
VNR HOMES: CRISIL Cuts Rating on INR80MM LT Loan to B-
------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of VNR Homes Pvt Ltd (VHPL) to 'CRISIL B-/Stable' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 8.4 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Proposed Long Term 80.0 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B/Stable')
Proposed Working 61.6 CRISIL B-/Stable (Downgraded
Capital Facility from 'CRISIL B/Stable')
The downgrade reflects CRISIL's belief that VHPL's liquidity will
remain under pressure over the medium term due to low bookings for
its project-only 14 percent of units were sold as of September
2015. Consequently, cash flow is expected to be inadequate for
meeting debt obligation. However, promoter is likely to bring in
funds, or resort to refinancing loans.
The rating reflects VHPL's exposure to risks related to completion
and saleability of its project and to risks inherent in the real
estate industry. These weaknesses are mitigated by promoter's
industry experience and proven project execution capabilities.
Outlook: Stable
CRISIL believes VHPL will benefit over the medium term from its
promoter's industry experience. The outlook may be revised to
'Positive' if early completion of project or considerable sales
and customer advances lead to substantially higher-than-expected
cash inflow. Conversely, the outlook may be revised to 'Negative'
if delay in project execution or in receipt of advances from
customers, or any large debt-funded project, weakens financial
risk profile.
VHPL is a Chennai-based real estate development company. Managing
director Mr. V N Raghupathy oversees its operations.
* INDIA: Introduces Bill for Bankruptcy Law in Parliament
---------------------------------------------------------
Reuters reports that the government on Dec. 21 introduced a bill
in parliament aimed at bringing sweeping changes to an outdated
and overburdened bankruptcy system, setting deadlines for the
first time for processing insolvency cases.
Reuters relates that at present, Asia's third-largest economy has
competing laws with unclear jurisdictions to deal with the
liquidation or revival of companies. This often results in the
process dragging on for years, inflating costs for investors and
taxpayers, Reuters says.
The bill, introduced by Finance Minister Arun Jaitley in the lower
house, seeks to enact a single bankruptcy code, the report notes.
Under current rules, even deciding whether to save or liquidate an
ailing company can take years, leaving it in the hands of managers
who can -- and do -- strip assets with impunity, according to
Reuters.
Reuters adds that foreign and domestic investors said the
difficulty in exiting ventures is a deterrent in their investment
decisions.
Jaitley over told business leaders that the government was
planning to pass the bankruptcy bill in the current parliament
session that concluded on Dec. 23, Reuters reports.
=========
J A P A N
=========
TOSHIBA CORPORATION: Moody's Lowers Rating on Sr. Bonds to Ba2
--------------------------------------------------------------
Moody's Japan K.K. has downgraded Toshiba Corporation's long-term
senior unsecured bond ratings to Ba2 from Baa3.
Moody's has also downgraded Toshiba's subordinated debt rating to
B1 from Ba2, and short-term rating to Not Prime from Prime-3.
At the same time, Moody's has downgraded Toshiba's Baa3 issuer
rating to a corporate family rating (CFR) of Ba2, and has
therefore withdrawn the issuer rating.
In addition, Moody's has placed Toshiba's Ba2 CFR and long-term
senior unsecured bond ratings, as well as its B1 subordinated debt
rating under review for downgrade.
RATINGS RATIONALE
"The downgrades were prompted by Toshiba's announcement of its
structural reform plan and financial forecast for the fiscal year
ending 31 March 2016 (FYE3/2016)," says Masako Kuwahara a Moody's
Vice President and Senior Analyst. "The announcement indicated
that earnings and cash flow generation will be significantly below
our previous expectations."
"We expect that Toshiba's leverage will stay high over a prolonged
period, given that its restructuring costs will exceed our
previous estimates, and our expectation of improvement in
earnings, if any, for each business segment will be very gradual
even after the restructuring," adds Kuwahara.
The downgrades also reflect Moody's concerns of a significant
deterioration in the Memories business, which would hinder solid
profit contributions. Moody's points out that Toshiba's Memories
business faces intense global competition, rapid changes in
technology, and increasing price pressures.
Moody's decision to place Toshiba's ratings on review for
downgrade reflects Moody's concerns over Toshiba's funding plan
for its announced structural reforms and the pressure on its
equity from potential further asset write downs.
In its announcement, Toshiba said that the company will post
restructuring cost for unprofitable businesses during FYE3/2016
and expects to improve its profitability starting in FYE3/2017.
However, it is uncertain as to whether or not the company can
complete its restructuring exercise during FYE3/2016, and whether
or not its operating performance will improve thereafter.
On December 21, 2015, Toshiba released its structural reform plan,
"Toshiba Revitalization Action Plan" and its financial forecast
for FYE3/2016. The announcement revealed that Toshiba will
conduct structural reforms in its PC, TV, and home appliance
businesses -- under its Lifestyle Products & Services segment --
and post a total of JPY260 billion in restructuring costs,
including its already announced restructuring costs for its
semiconductor business. The structural reforms will result in a
reduction in headcount of 10,600 employees globally.
According to Toshiba's financial forecast for FYE3/2016, the
company's net loss will rise significantly to JPY550 billion from
the previous year's JPY37.8 billion, due to:
(1) The restructuring of unprofitable businesses and the write
down of selected assets; and
(2) The incurrence of income tax of approximately JPY260
billion, owing to the reversal of a deferred tax asset.
As a result, its shareholders' equity will fall to JPY430 billion
in FYE3/2016 from JPY1.08 trillion in FYE3/2015.
Moody's says it is uncertain as to whether or not Toshiba can
generate strong positive free cash flows in the future -- which
can in turn be used to repay debt -- given the large scale of
capital expenditures the company will need on an ongoing basis to
maintain production capacity and competitiveness in its Memories
business.
Adjusted debt/book capitalization ratio will deteriorate to 74.9%
in FYE3/2016 from 60.5% in FYE3/2015. Moody's does not believe
that the ratio will improve significantly over the next 12-18
months, without a capital strengthening plan, given the company's
weak ability to generate profit.
Moody's review of Toshiba's ratings will focus on these factors:
(1) Toshiba's liquidity profile and its relationship with its
banks, in particular, whether or not the company can obtain
support from the banks to perform its structural reforms as
planned;
(2) Management's ability to control the company;
(3) The likelihood and extent to which Toshiba will strengthen
its capital through asset sales or any other means;
(4) Toshiba's ability to improve earnings and cash flows from
its current businesses; and
(5) The risk of further large asset write downs.
Toshiba's ratings incorporate an uplift given that it is one of
the largest companies in Japan, employing about 200,000 staff, and
the fact that it occupies a significant position in the economy
and society.
The principal methodology used in these ratings was Global
Manufacturing Companies (Japanese) published in August 2014.
Toshiba Corporation, headquartered in Tokyo and founded in 1875,
is one of the largest integrated electronics companies in Japan.
Its businesses range from electronic devices and digital products
to home appliances and electric power generating facilities.
TOSHIBA CORP: S&P Lowers CCR to 'BB+' & Puts on CreditWatch Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered by one notch its long-
term corporate credit rating on Toshiba Corp. to 'BB+' from
'BBB-' and its short-term corporate credit and commercial paper
program ratings to 'B' from 'A-3'. S&P has affirmed the long-term
senior unsecured debt rating at 'BBB-', reflecting its view that
Toshiba is less likely to default on its bonds than on its bank
borrowings. At the same time, S&P has placed the long-term
corporate credit and senior unsecured ratings on CreditWatch with
negative implications.
The downgrade follows Toshiba's announcement of expenses for
restructuring its businesses, mainly its television and home
appliance businesses, that it will report in fiscal 2015 (ending
March 31, 2016), the company's restructuring plan, and a material
downward revision of its estimated operating performance. The
company expects to report an operating loss of JPY340 billion, a
net loss of JPY550 billion, and negative free cash flow of JPY280
billion in fiscal 2015, due to asset devaluation losses, deferred
tax asset write-offs, and significant expenses for restructuring.
S&P had expected Toshiba's business performance to recover
slightly in fiscal 2015 on a year-on-year basis and by a larger
degree in fiscal 2016. However, such a scenario has become
remote, and S&P thinks deterioration of its business results and
financial standing is likely to exceed tolerances in the previous
ratings.
S&P had assumed Toshiba's business performance would stop
declining in fiscal 2015, given that the company generates a
certain level of profit from its core infrastructure-related and
NAND flash memory businesses and given the positive impact of past
business restructuring measures. However, the company's
announcement reflects a deterioration of business results not only
in weak businesses--including digital and white goods and home
appliances and also semiconductors, such as discretes and system
integrated circuits--but also the company's core businesses. As a
result, S&P expects Toshiba's EBITDA margin in fiscal 2015 to fall
further to below S&P's initial assumption of 7-8% and for
operating cash flow generation to weaken materially. The
company's free cash flow will decrease inevitably in fiscal 2015
even if S&P was to incorporate cash proceeds from planned asset
and business sales. Accordingly, Toshiba's funds from operations
(FFO) to debt is highly likely to fall far below S&P's previous
assumption of 20%.
S&P had held the view that Toshiba maintained strong
competitiveness in its core electric power, social infrastructure,
and NAND flash memory businesses, backed by strong technological
capabilities and a global customer base. However, its
competitiveness and operational efficiency have weakened due to a
material deterioration in project management and markets. To
incorporate these views, S&P has lowered its assessment of the
company's business risk profile one notch to fair.
S&P has also lowered its assessment of the company's financial
risk profile one notch to significant. Toshiba's FFO to debt, a
measure S&P uses in its analysis of cash flow and leverage, is
weak for the assessment of significant that S&P gives the company.
Nevertheless, S&P considers Toshiba's financial risk profile
underpinned by the company's strong ties with major banks, which
S&P expects to support its FFO interest coverage at a sound level.
The company maintains strong ties with major banks, as indicated
by a newly established JPY400 billion commitment line of credit.
Accordingly, S&P views the company as having no particular funding
concerns in the foreseeable future.
A fair assessment of Toshiba's business risk profile and a
significant assessment of its financial risk profile indicate a
'bb' anchor for Toshiba. At the same time, S&P views its
assessment of the company's business risk profile as on the upper
side of the fair range, given that the company's core businesses
remain competitive. Consequently, S&P determines the long-term
corporate credit rating is 'BB+', a one-notch upward adjustment
from the anchor.
S&P affirmed the long-term senior unsecured rating at 'BBB-', one
notch higher than the long-term corporate credit rating. This
reflects S&P's view that the probability of default for Toshiba's
bonds is lower than that for its bank borrowings because
defaulting on bank borrowings may take the form of debt
forgiveness by banks, given the strengths of Toshiba's ties with
banks, the material size of its businesses, and the strong
competitiveness of its core businesses.
S&P believes the company's business results and financial standing
may deteriorate further in fiscal 2015. As a result, S&P believes
it needs to examine progress in asset and business sales, its
reconstruction measures, and the possible impact of accounting
inaccuracies on its business performance before S&P removes the
ratings from CreditWatch. S&P may consider downgrading Toshiba if
its forecast consolidated operating loss and net loss deteriorate
further in fiscal 2015 or if the company is unlikely to turn
profitable in fiscal 2016 and continues to suffer negative free
cash flow and S&P believes the ratio of its FFO to debt will
remain below 20%. Nevertheless, any downgrade would likely be by
one notch, in S&P's current view. Conversely, S&P will affirm the
ratings if the company makes progress in asset sales and business
restructuring and S&P believes its profitability will recover
earlier than expected.
====================
N E W Z E A L A N D
====================
HAMMERHEADS RESTAURANT: Sale of Assets Falls Short
--------------------------------------------------
Hamish Fletcher at The New Zealand Herald reports that the sale of
Hammerheads Restaurant's assets won't cover all of what the
collapsed eatery owes Inland Revenue, the liquidators said.
However, the liquidators said they may have a claim over an
"insolvent transaction" after a review of the restaurant's
accounts, the Herald relates.
Hammerheads had been one of the longest-running on Auckland's
waterfront, having operated from its premises on Tamaki Drive for
25 years until Inland Revenue appointed liquidators on April 24.
The Herald says the liquidators revealed in June that the company
operating the eatery owed Inland Revenue NZ$377,818.
According to the report, the latest report from the liquidators,
PwC, said the landlord of Hammerhead's building has entered into
negotiations for someone else to take over the lease.
The Herald relates that the liquidators have also agreed to sell
the business' assets to the party who will take over the site. Co-
liquidator Craig Sanson could not say who this was.
"This agreement is conditional on the purchasers completing
financial due diligence and successfully negotiating a lease
agreement with the landlord," the liquidators said in a report
posted to the Companies Office on Dec. 22, the Herald relays.
Mr. Sanson told the Herald on Dec. 23 that there would still be a
substantial shortfall owing to Inland Revenue following the sale.
However, the liquidators' report also revealed a potential claim
over an "insolvent transaction" from the company's accounts.
"Accordingly, the liquidators sent the recipient a letter of
demand. After reviewing this demand, the recipient responded to us
rejecting the demand and provided an offer to settle the claim.
The liquidators' assessment of the offer determined that it was
not sufficient given the total value of the voidable claim. The
liquidators then engaged solicitors to provide legal assistance on
this matter after further negotiations failed to yield a
settlement. We are awaiting a response from the recipient," Mr.
Sanson, as cited by the Herald, said in the report.
An insolvent transaction is one which liquidators consider they
can claw back from those who received the funds, the report notes.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman,
Editors.
Copyright 2015. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552.
*** End of Transmission ***