/raid1/www/Hosts/bankrupt/TCRAP_Public/170203.mbx
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
Friday, February 3, 2017, Vol. 20, No. 25
Headlines
A U S T R A L I A
AARONS OUTDOOR: First Creditors' Meeting Slated for Feb. 10
CROSSFIT CANADA: First Creditors' Meeting Set for Feb. 10
HYDROCARBON INDUSTRIES: First Creditors' Meeting Set for Feb. 10
MARCS AND DAVID: Collapses Into Voluntary Administration
NEW AGE: First Creditors' Meeting Scheduled for Feb. 9
* Australian Auto Loan ABS and RMBS Delinquencies Up in 2016
C H I N A
YANZHOU COAL: Australian Acquisition No Impact on Fitch B Rating
I N D I A
ADITYA AGRO: CRISIL Assigns B+ Rating to INR9MM Cash Loan
AMALESWARI CONSTRUCTIONS: CRISIL Rates INR2.5MM Cash Credit 'B+'
ANANTHA PVC: CARE Reaffirms 'B' Rating on INR8cr Bank Loan
APOLLO POWER: CRISIL Assigns B+ Rating to INR8.9MM Cash Loan
ARUN INTERNATIONAL: CRISIL Assigns B- Rating to INR3.5MM Loan
BAFNA PHARMACEUTICALS: CRISIL Cuts Rating on INR25MM Loan to D
BANSAL RICE: CRISIL Assigns B+ Rating to INR5.5MM Cash Loan
GMR KAMALANGA: CARE Reaffirms 'D' Rating on INR4,588.54cr Loan
GUPTA FOODS: CRISIL Assigns B+ Rating to INR9.5MM Cash Loan
JAGDAMBAY RICE: CRISIL Assigns B+ Rating to INR7.25MM Cash Loan
KAILASH RICE: CARE Assigns B Rating to INR9.20cr LT Loan
KARANPUR GINNING: CRISIL Assigns 'B' Rating to INR3.5MM Loan
KARIMKUTTIYIL CONSTRUCTIONS: CRISIL Rates INR6MM Cash Loan at B+
KASHIRATAN ENTERPRISES: CRISIL Assigns B+ Rating to INR5MM Loan
KOCHAR ENTERPRISES: CARE Reaffirms B Rating on INR5.78cr LT Loan
NARMADA SPUN: CRISIL Assigns 'B' Rating to INR21MM Term Loan
NEELACHAL ISPAT: CARE Reaffirms D Rating on INR561.19cr Loan
NITIN SAI: CRISIL Assigns 'D' Rating to INR2.0MM LOC
NUZIVEEDU SWATHI: CARE Reaffirms D Rating on INR51cr Bank Loan
PANCHANAN COLD: CARE Lowers Rating on INR4.94cr LT Loan to B
PATIALA DISTILLERS: CARE Reaffirms B+ Rating on INR10cr LT Loan
PRASADHINI ENTERPRISES: CARE Reaffirms B+ INR7.98cr Loan Rating
PRISM ENTERPRISE: CARE Assigns 'B' Rating to INR7cr LT Bank Loan
REDCO HOTELS: CRISIL Reaffirms B+ Rating on INR45MM Term Loan
S. R. INDUSTRIES: CARE Assigns 'C' Rating to INR18cr Cash Credit
SANT AUTOZONE: CARE Reaffirms B+ Rating on INR10.30cr LT Loan
SHALAK EATABLE: CRISIL Assigns B- Rating to INR14.66MM Term Loan
TULSYAN NEC: CARE Reaffirms 'D' Rating on INR615.82cr LT Loan
UMBERTO CERAMICS: CRISIL Upgrades Rating on INR74.50MM Loan to B-
VAMA CONSTRUCTION: CARE Downgrades Rating on INR3cr Loan to B+
N E W Z E A L A N D
VERITAS INVESTMENTS: Sells Nosh Supermarket for NZ$4 Million
P H I L I P P I N E S
BENGUETCORP NICKEL: 21 Mining Companies Face Closure
S I N G A P O R E
EZRA HOLDINGS: Faces "Going Concern" Issue as Claims Pile Up
S O U T H K O R E A
SK HYNIX: Strong Results for 4Q 2016 Support Moody's Ba1 CFR
- - - - -
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A U S T R A L I A
=================
AARONS OUTDOOR: First Creditors' Meeting Slated for Feb. 10
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of
Aarons Outdoor Living Pty Ltd will be held at the offices of
Chartered Accountants Australia and New Zealand, Level 18, 600
Bourke Street, in Melbourne, on Feb. 10, 2017, at 11:00 a.m.
Andrew Beck and Ben Verney of GreyHouse Partners were appointed
as administrators of Aarons Outdoor on Jan. 31, 2017.
CROSSFIT CANADA: First Creditors' Meeting Set for Feb. 10
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Crossfit
Canada Bay Australia Pty Ltd will be held at the offices of
Nicols + Brien, Level 2, 350 Kent Street, in Sydney, on Feb. 10,
2017, at 10:00 a.m.
Steven Nicols of Nicols + Brien was appointed as administrator of
Crossfit Canada on Jan. 31, 2017.
HYDROCARBON INDUSTRIES: First Creditors' Meeting Set for Feb. 10
----------------------------------------------------------------
A first meeting of the creditors in the proceedings of
Hydrocarbon Industries Pty Ltd will be held at the offices of
SV Partners, Level 17, 200 Queen Street, Melbourne, Victoria, on
Feb. 10, 2017, at 11:00 a.m.
Michael Carrafa and Peter Gountzos of SV Partners were appointed
as administrators of Hydrocarbon Industries on Jan. 31, 2017.
MARCS AND DAVID: Collapses Into Voluntary Administration
--------------------------------------------------------
The Sydney Morning Herald reports that high-profile Australian
fashion labels Marcs and David Lawrence have collapsed under
debts of close to AUD30 million, including close to AUD3 million
in worker entitlements and a AUD700,000 debt to the tax office.
The combined companies that operate retail fashion labels in
Australia and New Zealand appointed Voluntary Administrators on
Feb. 1, 2017.
Pursuant to resolutions passed by the sole director of the
Companies on Feb. 1, 2017:
* Geoffrey Reidy and Andrew Barnden, Directors of Rodgers
Reidy, were appointed as Voluntary Administrators to
M. Webster Holdings Pty Limited and Webster Asset Pty
Limited; and
* Andrew Barnden and Paul Vlasic, a Director at Rodgers
Reidy's Auckland office, were appointed as Voluntary
Administrators to M. Webster Holdings (NZ) Limited.
The Companies' sole director, Mr. Malcolm Webster, has informed
the Administrators that the appointment of administrators was
necessary due to factors including deteriorating sales, general
market conditions and poor cash flow.
The Administrators are advised by the Companies that:
* Employee wages have been paid up until Jan. 30, 2017.
* Superannuation has been paid up until Dec. 31, 2016.
All existing gift cards and returns will be handled in accordance
with the Companies' existing policies.
All staff would be advised of their roles within the business by
their direct line managers.
Geoffrey Reidy, Director of Rodgers Reidy said: "We intend to
review the operations of the businesses and continue to trade
while we market the businesses for sale."
According to the Sydney Morning Herald, the appointment of
voluntary administrators to two of the country's best-known
fashion brands leaves close to 1,200 workers facing the loss of
their livelihoods as insolvency specialist Rodgers Reidy reviews
the operation.
The two brands would continue to trade while his team reviews
their operations ahead of a planned sale of the businesses, SMH
relates.
Insiders report Mr. Webster has been "shopping around" the brands
for the past year and invested a lot of his own money to keep the
doors open as sales fell and general market conditions
deteriorated, according to SMH.
According to the report, Rodgers Reidy is optimistic about the
outlook for Marcs and David Lawrence, given the high profile of
the brands but there will be job losses from the Australian
workforce of 1130 and potential store closures, even if the
administrator can successfully sew up a deal.
SMH relates that Rodgers Reidy said costs will need to be
reviewed and staff costs were one of the "highest costs in the
business."
Director Geoffrey Reidy said an outright sale was only one
potential outcome from the administration, SMH relays.
"The alternative is for a sale and restructure of the company
. . . and the third outcome is that we can't find a buyer and the
company goes into liquidation," the report quotes Mr. Reidy as
saying. "We believe these is real potential to deal with the
cost side of things, in terms of the company operation and to
enable a consolidation or rationalised business, be it Marcs and
or David Lawrence to be offered to a potential buyer."
SMH adds that Rodgers Reidy claimed it's too early to discuss any
details of the lease liabilities associated but the insolvency
specialist said getting in front of David Jones and Myer was a
priority.
"We will in all likelihood consolidate and rationalise the
business as our review goes forward and key to what we're looking
at is having a discussion with David Jones and Myer in respect to
the concession stores," SMH quotes Mr. Reidy as saying.
About Marcs and David Lawrence
Retail fashion labels Marcs and David Lawrence has 52 stand alone
stores, 11 outlets and over 140 concession stores operating out
of Australia and New Zealand.
In Australia, the Companies employ approximately 1,130 staff. 640
staff are employed on a casual basis, approximately 260 staff are
employed on a full-time basis and 230 on a part-time basis. There
are 10 stores in New Zealand employing 42 staff.
NEW AGE: First Creditors' Meeting Scheduled for Feb. 9
------------------------------------------------------
A first meeting of the creditors in the proceedings of New Age
Trading Pty. Ltd will be held at the offices of Auxilium
Partners, Level 2, 949 Wellington Street, in West Perth, WA, on
Feb. 9, 2017, at 2:00 p.m.
Bob Jacobs of Auxilium Partners was appointed as administrator of
New Age on Jan. 30, 2017.
* Australian Auto Loan ABS and RMBS Delinquencies Up in 2016
------------------------------------------------------------
Moody's Investors Service says that delinquencies for Australian
auto loan asset-backed securities (ABS) and residential mortgage-
backed securities (RMBS) increased in 2016 based on data received
up to November. Delinquencies for the month of November 2016 also
rose year-over-year.
Specifically, 30+ day delinquencies for Australian auto loan ABS
transactions rose to 1.40% in November 2016 from 1.35% in January
2016 and 1.16% in November 2015.
Delinquencies for prime RMBS transactions also rose to 1.55% in
November 2016 from 1.35% in January 2016 and 1.17% in November
2015.
"Looking ahead, Moody's expects that delinquencies for Australian
auto loan ABS and prime RMBS will continue to rise moderately in
2017," says Alena Chen, a Moody's Vice President and Senior
Analyst.
"Weaker economic conditions in states reliant on the mining
industry, rising underemployment, weak wage growth and less
favorable housing market conditions will drive delinquencies
higher," adds Chen.
Chen was speaking on the release of the latest edition of Moody's
monthly Global Structured Finance Collateral Performance Review
report.
ABOUT MOODY'S GLOBAL STRUCTURED FINANCE COLLATERAL PERFORMANCE
REVIEW REPORT
Moody's Global Structured Finance Collateral Performance Review
Report is updated monthly and covers the collateral performance
of various structured finance sectors located globally.
The report features typical aggregate performance metrics, such
as delinquencies and losses, as well as sector-specific metrics
that include residential and commercial property prices, loans in
special servicing, refinancing profiles, average WARF levels,
senior OC levels, payment rates, and excess spread. The
underlying data is also included. The metrics are accompanied by
sector commentary and outlooks, and projected losses by vintage
where applicable.
The Australian data focus on:
- Australian Auto ABS
- Australian Prime RMBS
- Australian Home Prices
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C H I N A
=========
YANZHOU COAL: Australian Acquisition No Impact on Fitch B Rating
----------------------------------------------------------------
The planned USD2.45bn acquisition of Australian coal mining
assets by the 78%-owned subsidiary of Yanzhou Coal Mining Company
Limited (Yancoal, B/Negative), Yancoal Australia Ltd, has no
immediate impact on Yancoal's ratings, says Fitch Ratings. The
ultimate effect on Yancoal's financial profile will depend on the
transaction's final funding structure, with the company's
liquidity and refinancing risks being the main short-term issues.
Yancoal announced on Jan. 24, 2017, that Yancoal Australia has
entered into a binding agreement to fully acquire Coal & Allied
Industries Limited, an Australian coal producer ultimately wholly
owned by Rio Tinto Ltd (A-/Stable). The transaction, subject to
regulatory and shareholder approval, is expected to be completed
by 3Q17. Yancoal Australia plans to fund the acquisition through
a mix of debt and a rights issue of ordinary shares. Yancoal
intends to subscribe to around USD1bn of its entitlement in
Yancoal Australia's equity offer to maintain a share of at least
51% in Yancoal Australia. Management has not clarified how the
company will finance the rights-issue subscription. Should
Yancoal's ownership in Yancoal Australia decrease, cash flow and
dividend leakage may widen.
Fitch believes Yancoal's key short-term credit weakness is its
refinancing risk. The company's short-term debt reached CNY29.2bn
(USD4.3bn) in June 2016, from CNY23.9bn at end-2015 (end-2014:
CNY10.9bn). The maturity of the USD450m bond in May 2017 and a
higher reliance on domestic local-currency short-term bonds
contributed to the increase in short-term debt. Fitch believes
higher funding costs or weakening market access will
significantly affect Yancoal's financial flexibility, as
reflected by the Negative Outlook on Yancoal's ratings, although
the company's state ownership status should benefit its access to
funding.
Despite its liquidity position, we believe the acquisition is a
long-term positive for the company, based on available
information on Coal & Allied Industries, as it will strengthen
its asset profile. Coal & Allied Industries is the majority owner
and operator of three Australian high-grade thermal coal and
semi-soft coking coal open-cut mines. Yancoal forecasts that
these assets will double Yancoal Australia's production and
marketable coal reserves by over 2x to 830 million tonnes based
on the Australia's Joint Ore Reserve Committee standard.
Fitch expects Yancoal's cash generation to benefit from higher
coal prices - despite our view that there are downside risks to
current coal prices following the strong rally since mid-2016 -
providing a cushion to accommodate the proposed acquisition
without immediately affecting its ratings. We estimate Yancoal's
FFO improved by around 20% yoy in 2016. Based on estimated 2016
results and assuming Yancoal funds its share subscription in
Yancoal Australia with debt and cash on hand, we estimate
Yancoal's consolidated FFO net leverage at around 8.5x, with FFO
fixed-charge coverage at 2.0x-2.5x.
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I N D I A
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ADITYA AGRO: CRISIL Assigns B+ Rating to INR9MM Cash Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long
term bank facilities of Aditya Agro Industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL B+/Stable
The rating reflects AAI's modest scale of operations in a highly
fragmented industry and modest financial risk profile with high
gearing and modest debt protection metrics. These weaknesses are
partially offset by extensive experience of the partners in the
cotton-ginning industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in fragmented industry: The firm has
been in business since past 20 years and has achieved a turnover
of INR34 crores in 2015-16. Cotton ginning industry is largely
unorganized with various players having small capacity. In
addition, the entry barriers are low on account of low capital
and technology intensity and low differentiation in end product.
* Modest financial risk profile: The firm had a modest financial
risk profile marked by gearing at 2.8 times and modest debt
protections metrics with interest coverage and net cash accruals
to total debt at 1.66 times and 0.10 times respectively as on
March 2016.
Strength
* Promoters' extensive experience in cotton industry: AAI was set
up as a partnership firm in 1997 by Mr. Sushil Mittal and his
family. The Mittal family has been in the business of cotton
ginning for around two decades.
Outlook: Stable
CRISIL believes that the AAI will continue to benefit over the
medium term from the extensive industry experience of its
partners in the industry. The outlook may be revised to
'Positive' if there is significant increase in AAI's scale of
operations, while improving its profitability as well as its
financial risk profile. Conversely, the outlook may be revised to
'Negative' in case of a significant decline in the firm's
revenues or profitability or if its financial risk profile
particularly liquidity deteriorates on account of high working
capital requirements.
AAI was set up as a partnership firm in 1997 by Mr. Sushil Mittal
and his family. Mr. Sushil Mittal, Mr. Divakar Mittal and Mrs.
Urmila are the partners in the firm. AAI is engaged in the
ginning of cotton. Its manufacturing unit is located at Sirsa,
with a capacity of around 400 cotton bales daily.
AAI reported a profit after tax (PAT) of INR21 lakhs on net sales
of INR34.64 Crores for fiscal 2016, vis-a-vis INR23 lakhs and
INR54.39 crores, respectively in fiscal 2015.
AMALESWARI CONSTRUCTIONS: CRISIL Rates INR2.5MM Cash Credit 'B+'
----------------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Amaleswari Constructions and assigned its 'CRISIL
B+/Stable/CRISIL A4' ratings to the firm's facilities. CRISIL
had, on December 22, 2016, suspended the ratings as ACS had not
provided the necessary information required for a rating review.
The firm has now shared the requisite information, enabling
CRISIL to assign its ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4 (Assigned;
Suspension Revoked)
Cash Credit 2.5 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Fund- 1.5 CRISIL B+/Stable (Assigned;
Based Bank Limits Suspension Revoked)
The ratings reflect ACS' modest scale of operations, risks
related to tender-based business, working capital-intensive
operations, and average financial risk profile because of small
networth and weak debt protection metrics. These weaknesses are
partially offset by the experience of its promoters in the
construction industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and risks related to tender-based
business
With net sales of INR9.2 crore for fiscal 2016, scale remains
small, leading to low bargaining power against customers.
Furthermore, since entire revenue is tender-based, growth depends
on ability to bid successfully.
* Large working capital requirement
Gross current assets were 369 days as on March 31, 2016, due to
sizeable work-in-progress inventory of 181 days and receivables
of 101 days.
* Average financial risk profile
Networth was small at INR6 crore as on March 31, 2016, on account
of low accretion to reserves. In the absence of significant
capital infusion, networth will remain modest over the medium
term. Debt protection metrics were average, with interest
coverage and net cash accrual to total debt ratios of 2.01 times
and 0.22 time, respectively, for fiscal 2016. However, gearing
was healthy at 0.41 time as on March 31, 2016, as all term loans
have been repaid. Gearing will remain steady over the medium
term.
Strength
* Extensive experience of promoters
Presence of more than 28 years has enabled the promoters to
establish strong relationship with customers and suppliers.
Outlook: Stable
CRISIL believes ACS will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if significant growth in revenue, while sustaining
profitability and gearing, leads to better business and financial
risk profiles. The outlook may be revised to 'Negative' if lower-
than-expected cash accrual or stretched working capital cycle
weakens liquidity.
Established as a partnership firm in 1988 by P. Venkata Rami
Reddy, ACS undertakes civil construction projects for government
departments. The firm is based in Hyderabad.
Net profit was INR0.41 crore on sales of INR9.2 crore in fiscal
2016, against a net profit of INR0.70 crore on sales of INR11.59
crore in fiscal 2015.
ANANTHA PVC: CARE Reaffirms 'B' Rating on INR8cr Bank Loan
----------------------------------------------------------
The ratings assigned to the bank facilities of Anantha PVC Pipes
Private Limited continue to remain constrained by relatively
small scale of operation, risk associated with volatility in raw
material prices, working capital-intensive nature of business and
fragmented nature of the industry with the presence of a large
number of unorganized players which results in intense
competition.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8 CARE B, Stable
Facilities Reaffirmed
Short-term Bank
Facilities 7 CARE A4 Reaffirmed
The rating also factors in improvement in PBILDT albeit decrease
in revenue in FY16 (refers to the period April 1 to March 31).
The ratings are underpinned by experienced promoter group and
moderate industry growth prospects. The ability of the company to
expand the scale of operation while maintaining the profitability
and efficient management of the working capital requirement are
the key rating sensitivities.
Detailed description of the key rating drivers
The total operating income of the company decreased by about 20%
from INR57.80 crore in FY15 to INR46.26 crore in FY16. However,
the PBILDT margin of the company has increased significantly from
2.77% in FY15 to 5.33% in FY16 on account of lower input prices.
The capital structure of the company has improved with the
overall gearing improving from 1.42x as on March 31, 2015 to
1.29x as on March 31, 2016 on account of decrease in the working
capital utilization.
The raw material prices are extremely volatile in nature (with
the prices of PVC resins & chemicals driven by crude oil prices).
Since the raw material cost is the major cost (comprising around
84% of cost of sales), any upward movement in raw material price
would escalate the cost of sales and put pressure on the profit
margins.
The company operates in a working capital intensive industry
marked by supplier concentration and intense competition leading
to low bargaining power.
Anantha PVC Pipes Private Limited (Anantha PVC), incorporated in
2006, is part of Nandyal (Andhra Pradesh) based Nandi Group of
companies. Promoted by Mr Sajjala Sreedhar Reddy, Anantha PVC is
engaged in the business of manufacturing of rigid Polyvinyl
Chloride (PVC) pipes and fittings (installed capacity of 12,800
MTPA) at its facilities located at Hampapuram (Andhra Pradesh).
The products are widely used in irrigation, telecommunication,
potable water supplies, electrical industry, construction
industry, sewerage and drainage etc. Besides, the company is also
engaged in trading of resins and chemicals.
Nandi group, promoted by Mr S P Y Reddy, is a South India based
industrial house having diversified business interests such as
Cement, Dairy, PVC pipes, Construction etc.
During FY16, the company reported total operating income of
INR46.26 crore (FY15 - INR57.80 crore) with PBILDT of INR2.47
crore (FY15 - INR1.60 crore) and a net loss of INR0.49 crore
(FY15- net loss of INR0.90 crore).
APOLLO POWER: CRISIL Assigns B+ Rating to INR8.9MM Cash Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Apollo Power Systems Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Working
Capital Facility 3.5 CRISIL B+/Stable
Bank Guarantee 0.1 CRISIL A4
Cash Credit 8.9 CRISIL B+/Stable
The ratings reflect the company's modest scale of operations and
a below average financial risk profile because of a modest net
worth, high gearing, and below average debt protection metrics.
These rating weaknesses are partially offset by the extensive
experience of the company's promoters in the industry.
Key Rating Drivers & Detailed Description
Strength
* Extensive experience of promoters in the home appliances
distribution: The promoters have been engaged in the same line of
business for over two decades. Over the years, the firm has been
able to develop good relations with the key suppliers and
customers.
Weaknesses
* Modest scale of operations: The firm has a modest scale of
operations at just over INR50 Crores for FY 16. The growth in
revenues is expected to be gradual and therefore remain modest
over the medium term.
* Below Average Financial Risk Profile: The firm has a below
average capital structure marked by high gearing. This is
primarily due to the low net worth. The debt protection metrics
are also below average.
Outlook: Stable
CRISIL believes APSPL will continue to benefit over the medium
term from its promoters' extensive industry experience and
funding support. The outlook may be revised to 'Positive' in case
of significant and sustainable increase in scale of operations
and profitability, or improvement in the company's working
capital cycle, resulting better liquidity. Conversely, the
outlook may be revised to 'Negative' in case of deterioration in
the financial risk profile, especially liquidity, most likely
because of significant increase in working capital requirement,
decline in profitability, or large, unanticipated debt-funded
capital expenditure.
APSPL was established by Mr. N. Srinivas in 1995. APSPL offers
end-to-end solutions in power industry and operation and
maintenance of electrical equipment.
For fiscal 2016, APSPL reported a negative profit after tax (PAT)
of INR0.5 crore on an operating income of INR51.7 crores as
against a PAT of INR0.02 crore on an operating income of INR45.6
crores in fiscal 2015.
ARUN INTERNATIONAL: CRISIL Assigns B- Rating to INR3.5MM Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable/CRISIL A4' ratings to
the bank facilities of Arun International.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Working
Capital Facility 7 CRISIL B-/Stable (Assigned)
Cash Credit 3.5 CRISIL B-/Stable (Assigned)
Packing Credit 7.5 CRISIL A4 (Assigned)
The ratings reflect the firm's weak financial risk profile
because of high total outside liabilities to tangible networth
(TOLTNW) ratio and subdued debt protection metrics, modest scale
of operations in the competitive kitchenware industry, and low
profitability. These weaknesses are partially offset by the
extensive experience of its promoters and established
relationship with customers and suppliers.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: The TOLTNW ratio was 4.5 times as
on March 31, 2016. Debt protection metrics were weak, with
interest coverage and net cash accrual to total debt ratios of
1.3 times and 0.02 time, respectively, in fiscal 2016.
* Modest scale of operations: With an operating income of
INR64.30 crore in fiscal 2016, scale remains small in the
competitive kitchenware industry with scope of low value addition
and hence low operating profitability of 2.4%.
Strength
* Extensive experience of promoters and established relationship
with customers and suppliers: The promoters have industry
experience of over four decades, resulting in established
relationship with customers and suppliers.
Outlook: Stable
CRISIL believes AI will benefit over the medium term from its
established customer relationship. The outlook may be revised to
'Positive' if high operating margin leads to better debt
protection metrics and more-than-expected cash accrual, while
improving working capital management. The outlook may be revised
to 'Negative' if large working capital debt or significant
pressure on profitability further weakens capital structure.
Set up in 1999 as a partnership firm by Mr. Deoki Nandan Bagla
and his son, Mr. Hemant Bagla, AI manufactures kitchenware and
also trades in stainless steel coils and circles. Facility is in
Wazirpur, New Delhi.
AI had a book profit of INR0.23 crore on net sales of INR61.74
crore in fiscal 2016, against a book profit of INR0.22 crore on
net sales of INR54.98 crore in fiscal 2015.
Status of non-cooperation with previous CRA: AI has not
cooperated with SME Rating Agency Of India Limited (SMERA
Ratings), which has suspended its rating vide release dated
April 28, 2016, on account of inability to undertake rating
surveillance in the absence of requisite information from the
company.
BAFNA PHARMACEUTICALS: CRISIL Cuts Rating on INR25MM Loan to D
--------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Bafna Pharmaceuticals Limited to 'CRISIL D/CRISIL D' from 'CRISIL
C/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL D (Downgraded from
'CRISIL C')
Export Packing 8 CRISIL D (Downgraded from
Credit 'CRISIL C')
Foreign Bill 5 CRISIL D (Downgraded from
Discounting 'CRISIL C')
Letter of credit & 9 CRISIL D (Downgraded from
Bank Guarantee 'CRISIL C')
Long Term Loan 1.65 CRISIL D (Downgraded from
'CRISIL C')
Proposed Long Term 5.35 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL C')
Cash Credit 3.00 CRISIL D (Downgraded from
'CRISIL C')
The downgrade reflects recent delays by Bafna in servicing its
term loan obligations for the month of November and December
2016, because of sluggish operating performance in the six months
ended September 30, 2016, resulting in cash loss. Besides,
working capital limits remained overdrawn for over 30 days on
account of weak liquidity owing to significant stretch in
receivables.
Key Rating Drivers & Detailed Description
Weaknesses
* Constrained financial risk profile:
Bafna's financial risk profile is constrained by weak debt
protection metrics and capital structure. Gearing weakened to
1.37 times as on March 31, 2016, from 0.9 time a year earlier,
while interest coverage ratio declined to 0.33 time for fiscal
2016 from 2.27 times in the previous fiscal. The company had a
cash loss in fiscal 2016 due to muted operations, leading to
large working capital debt.
* Working capital-intensive operations
The company had gross current assets of 495 days as on March 31,
2016. Receivables increased to 342 days from 298 days a year
earlier due to delayed payments from domestic institutional
clients; government hospitals in Tamil Nadu, Andhra Pradesh,
Maharashtra, and Karnataka. Liquidity is stretched, reflected by
overdrawn working capital lines of credit.
Strengths
* Extensive experience of promoter
Experience of more than two decades in the pharmaceuticals
industry has enabled the promoter to expand operations both In
India and abroad.
* Healthy growth prospects for the pharmaceuticals industry
The domestic formulations segment is likely to grow 12-14%
between fiscals 2015 and 2019, to INR1.2 trillion, while the
export formulations market is expected to grow 11-13% to USD 20
billion (Approximately INR135000 crores). Bafna's formulation
research & development facility, product approvals, and
accreditations will help it benefit from the healthy growth
prospects for the pharmaceutical formulations industry.
Bafna was set up in 1981 as a proprietary concern by Mr. Bafna
Mahaveer Chand; it was reconstituted as a public limited company
in 1995. The promoter, along with his relatives and friends, owns
40.81% of Bafna's equity; the remaining is owned by the public
and corporate bodies.
Bafna commenced production in October 1984 with a tablet
manufacturing facility at Madhavaram in Chennai, and added
capsule and oral syrup facilities. In 2001, the company set up a
unit for producing betalactam products. While Bafna has focused
on institutional and generic supplies of pharmaceutical products,
it has steadily increased the number of product registrations in
the international market.
The company commissioned its second manufacturing facility at
Grantylon in Tamil Nadu, which has a formulations research and
development unit. The facility manufactures non-betalactam
products for regulated markets in the UK and the US, and new
products for markets in India and Sri Lanka. Bafna acquired the
Raricap brand from Johnson and Johnson Ltd in April 2011.
Bafna sold its branded generics business (including Raricap and
seven other brands) to Strides Arcolab Ltd (Strides Arcolab)
through a special purpose vehicle, Strides Actives Pvt Ltd
(SAPL), for INR48.1 crore and a 26% stake in SAPL. Bafna has the
option to exit SAPL after five years at a minimum floor price of
INR10 crore. Bafna will continue to undertake contract
manufacturing for these products of SAPL for a period of five
years, post which the contract may be renewed.
For fiscal 2016, Bafna had a net loss of INR12.2 crore on net
sales of INR85 crore, against a profit after tax of INR2.85 crore
on net sales of INR100 crore the previous fiscal. For the quarter
ended September 30, 2016, net loss was INR3.75 crore on net sales
of INR16.49 crore, vis-a-vis INR2.41 crore and INR15.99 crore,
respectively, in the corresponding period of fiscal 2015.
BANSAL RICE: CRISIL Assigns B+ Rating to INR5.5MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Bansal Rice Mills - Ismailabad.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 0.5 CRISIL B+/Stable
Cash Credit 5.5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 4.0 CRISIL B+/Stable
The rating reflects a modest scale and working capital-intensive
operations in the highly fragmented basmati rice industry, with
average financial risk profile, because of subpar debt protection
metrics. These weaknesses are partially offset by the extensive
experience of partners in the industry.
Key Rating Drivers & Detailed Description
Weaknesses
*Modest scale of operations in the highly fragmented rice
processing industry: Scale is small as reflected in turnover of
INR19.66 crore in fiscal 2016. Fragmentation and small scale
limit ability to bargain with suppliers and customers.
*Working capital-intensive operations: Operations are working
capital intensive as reflected in gross current assets of 182
days as on March 31, 2016. The large working capital was mainly
due the considerable inventory.
*Average financial risk profile: Modest profitability, small
scale of operations, and sizeable working capital requirement
continue to constrain the financial risk profile. Gearing was
high at 1.9 times as on March 2016 and debt protection metrics
average.
Strength
* Partners' extensive industry experience: The partners have
experience of over three decades in the rice processing industry,
and have sound understanding of the market dynamics, and have
established relationships with suppliers and customers.
Outlook: Stable
CRISIL believes BRM will continue to benefit over the medium term
from its partners' extensive experience and funding support. The
outlook maybe revised to 'Positive' in case of a substantial
improvement in the financial risk profile, driven by higher-than-
expected revenue growth and cash accrual, or capital infusion,
along with efficient working capital management. Conversely, the
outlook may be revised to 'Negative' if lower-than-expected cash
accrual, or large working capital requirement or capital
expenditure puts pressure on liquidity.
Established in 1997, as a partnership between Mr. Naresh Kumar
and his brother Mr. Satish Kumar, BRM mills and processes basmati
and non-basmati rice. The production facilities, in Ismailabad,
Kurukshetra (Haryana), have milling and sorting capacities of 6
and 4 tonne per hour, respectively, which have been utilised at
75%.
BRM had a book profit of INR0.19 crore on sales of INR19.44 crore
in fiscal 2016, against a book profit of INR0.18 crore on sales
of INR18.91 crore in fiscal 2015.
GMR KAMALANGA: CARE Reaffirms 'D' Rating on INR4,588.54cr Loan
--------------------------------------------------------------
The ratings assigned to the bank facilities of GMR Kamalanga
Energy Limited continues to take into account the ongoing delays
in servicing of its debt obligations.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities-Term
Loan 4,588.54 CARE D Reaffirmed
Long-term Bank
Facilities-Fund
Based 310.05 CARE D Reaffirmed
Short-term Bank
Facilities-Non
fund Based 740.00 CARE D Reaffirmed
Detailed description of the key rating drivers
There are ongoing delays in the interest servicing pertaining to
the debt drawn for the project. Also as per the audited annual
accounts for FY16 (refers to the period April 1 to March 31), the
interest accrued and due stood at INR 79.21 crore. The delays
were largely due to plant operating at low Plant Load Factor
(PLF) and late realization of tariff. The company's cash flow
were further impacted due to pending tariff determination and
revision of PPA with Bihar State Power Holding Company (erstwhile
known as Bihar State Electricity Board) which the company has
applied to Central Electricity Regulatory Commission (CERC).
GMR Kamalanga Energy Limited is a Special Purpose Vehicle (SPV)
by GMR Energy Limited, a part of the GMR group to develop and
operate a 1,050 Mega Watt (MW) coal fired power plant in
Kamalanaga Village, Dhenkanal district, Orissa. The project
consisting of three units of 350MW each, achieved Commercial
Operating Date (COD) of Unit-I in April 2013, Unit-II in November
2013 and Unit-III in March 2014 respectively.
During FY16 (refers to the period April 1 to March 31), the
company reported a loss at net level of INR(269.67) crore on a
total operating income of INR 1,968.57 crore. As per H1FY17
(refers to the period from April 01 to September 30), the
company reported loss at net level of INR (192.05) crore on a
total operating income of INR921.61 crore.
GUPTA FOODS: CRISIL Assigns B+ Rating to INR9.5MM Cash Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Gupta Foods.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.5 CRISIL B+/Stable
The rating reflects GF's modest scale of operations, average
financial risk profile, and large working capital requirement in
the fragmented rice industry. These weaknesses are partially
offset by the extensive experience of partners in the rice
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in a highly fragmented industry:
Scale of operations is small as reflected in turnover of INR20.44
crore in fiscal 2016 and its moderate capacity compared to other
large players. The rice industry is highly fragmented due to low
capital intensity and limited value addition, resulting in low
entry barriers.
* Working capital-intensive operations: Operations are working
capital intensive, with gross current assets of 265 days as on
March 31, 2016. Large working capital was mainly due to
considerable inventory. This is because paddy, the major raw
material for rice processors, is available in crop season only
from October to January-February.
* Average financial risk profile: Financial risk profile is
expected to remain average, with high gearing of 3.07 times and
moderate debt protection metrics, with expected interest coverage
ratio at 2.4 times and net cash accrual to total debt ratio at
0.12 time for fiscal 2017.
Strength
* Extensive experience of partners: The partners have an
extensive experience of over 25 years in the rice industry. This
has helped them in establishing a customer base as well as
forging relations with local suppliers. Their experience has also
helped them gain a sound understanding of the market dynamics.
Outlook: Stable
CRISIL believes GF will continue to benefit over the medium term
from its partners' extensive experience over the medium term. The
outlook maybe revised to 'Positive' if substantial improvement in
the financial risk profile, driven by higher-than-expected growth
in revenue leads to high cash accrual or capital infusion, along
with efficient working capital management. Conversely, the
outlook maybe revised to 'Negative' if lower-than-expected cash
accrual or larger-than-expected working capital requirement or
large, debt-funded capital expenditure puts further pressure on
liquidity.
Set up as a partnership firm in 2008 by Mr. Avinash Gupta and his
family, GF mills and processes basmati and non-basmati rice at
its facilities in Tarn Taran, Punjab.
For fiscal 2016, the firm reported a net profit of INR0.27 crore
on net sales of INR20.38 crore as against a net profit of INR0.24
crore on net sales of INR19.77 crore in fiscal 2015.
JAGDAMBAY RICE: CRISIL Assigns B+ Rating to INR7.25MM Cash Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Jagdambay Rice Mills.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.25 CRISIL B+/Stable
The rating reflects the firm's subdued financial risk profile
because of high gearing and weak debt protection metrics, its
small scale of operations, and large working capital requirement
in the highly fragmented rice industry. These weaknesses are
partially offset by its partners' extensive experience in rice
processing and their funding support through unsecured loans, and
its established customer base.
Analytical Approach
Unsecured loans of INR0.59 crore have been treated as neither
debt nor equity as most of these are interest free and will
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
*Subdued financial risk profile: Modest profitability, small
scale of operations, and sizeable working capital requirement
continue to constrain the firm's financial risk profile. Gearing
is high at around 2.38 times and debt protection metrics average.
*Small scale of operations in the highly fragmented rice
processing industry: The rice processing industry has a large
number of players with small capacity because of low capital
requirement and simple operations. Intense competition and
limited value addition restrain JRM's pricing power, leading to
low operating profitability and large working capital requirement
over the three fiscals through March 2016.
Strength
* Partners' extensive industry experience, and established
customer base: The partners have experience of over three decades
in the rice processing industry, and have sound understanding of
the market dynamics, and have established relationships with
suppliers and customers.
Outlook: Stable
CRISIL believes JRM will continue to benefit from its partners'
extensive industry experience and their funding support. The
outlook may be revised to 'Positive' if there is a substantial
improvement in financial risk profile driven by higher-than-
expected revenue growth leading to high cash accrual, or capital
infusion along with efficient working capital management. The
outlook may be revised to 'Negative' if lower-than-expected cash
accrual, or sizeable increase in working capital requirement, or
large debt-funded capital expenditure leads to increased pressure
on liquidity.
JRM was promoted by Mr. Punit Gujral and his family in 1992 as a
partnership firm. It mills and processes basmati and non-basmati
rice, and sells mainly in the domestic market through its Golden
Rath and Rath brands. Its production facilities are in Amritsar,
Punjab. It has milling capacity of 3 tonnes per hour, of which,
95-100% is utilised.
JRM had a book profit of INR0.36 crore on sales of INR20.07 crore
in fiscal 2016, against a book profit of INR0.48 crore on sales
of INR17.13 crore in fiscal 2015.
KAILASH RICE: CARE Assigns B Rating to INR9.20cr LT Loan
--------------------------------------------------------
The rating assigned to the bank facilities of Kailash Rice and
General Mills is constrained by its small scale of operations,
low profitability margins, leveraged capital structure and weak
debt coverage indicators. The rating is further constrained by
elongated operating cycle, susceptibility of margins to
fluctuations in raw material prices, fragmented nature of
industry coupled with high level of government regulation along
with partnership nature of constitution. The rating, however,
derives strength from the experienced promoters along with
established track record of the entity and favorable
manufacturing location.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.20 CARE B; Stable Assigned
Going forward, the ability of the firm to profitably scale-up its
operations while improving its overall solvency position and
efficiently managing its working capital requirements would
remain the key rating sensitivities.
Detailed description of the key rating drivers
The firm's scale of operations has remained small marked by Total
Operating Income (TOI) of INR36.75 crore in FY16 and net-worth
base of INR1.31 crore as on March 31, 2016. Furthermore, the
profitability margins of the firm stood low marked by PBILDT
margin and PAT margin of 2.77% and 0.04% respectively in FY16.
Also, the capital structure of the firm stood highly leveraged
with overall gearing ratio of 6.93x as on March 31, 2016 mainly
on account of firm's high reliance on borrowings to fund various
business requirements. Additionally, the debt coverage indicators
also remained weak with the total debt to GCA at 38.14x for FY16
and interest coverage ratio at 1.30x in FY16. The operating cycle
of the firm stood elongated at 78 days for FY16. Agro-based
industry is characterized by its seasonality, due to its
dependence on raw materials whose availability is affected
directly by the vagaries of nature. Furthermore, the commodity
nature of the product makes the industry highly fragmented with
numerous players operating in the unorganized sector with very
less product differentiation. Also, KRG's constitution as a
partnership firm has the inherent risk of possibility of
withdrawal of the partners' capital at the time of personal
contingency and the firm being dissolved upon the
death/retirement/insolvency of partners. KRG is being managed by
Mr Mohan Lal and Mrs Saroj Bala. Both have an industry experience
of two and a half decades gained through their association with
KRG only. Furthermore, KRG's manufacturing unit is located in
Kaithal, Haryana. The area is one of the hubs for paddy/rice,
leading to its easy availability at competitive prices.
Kailash Rice & Gen. Mills was established in 1991 as a
partnership firm by Mr Mohan Lal and Mrs Saroj Bala as its
partners sharing profit and losses equally. The firm is engaged
in processing of paddy at its manufacturing facility located in
Kaithal, Haryana with an installed capacity of 26,280 Tonnes per
annum as on September 30, 2016. KRG sells basmati and non-basmati
rice through a network of 10-15 brokers to various wholesalers
based in Delhi, Punjab, Haryana, etc.
Furthermore, the firm is also engaged in trading of rice [income
from trading constituted about 2% of the total revenue in FY16
(refers to the period April 01 to March 31)]. The raw material,
primarily paddy, is procured from grain markets through
commission agents based in Haryana and Uttar Pradesh.
In FY16 (refers to the period April 1 to March 31), KRG has
achieved a total operating income of INR36.75 crore with PAT
of INR0.01 crore, as against the total operating income of
INR27.16 crore with PAT of INR0.01 crore in FY15. Furthermore,
the firm has archieved total operating income of INR25 crore in
8MFY17 (Provisional).
KARANPUR GINNING: CRISIL Assigns 'B' Rating to INR3.5MM Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of The Karanpur Ginning and Pressing Co Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 2.5 CRISIL B/Stable
Cash Credit 3.5 CRISIL B/Stable
Proposed Long Term
Bank Loan Facility 2.0 CRISIL B/Stable
The rating reflects themodest scale of operationsin a fragmented
industryand below-average financial risk profile because of a
small net worth andexpected high gearing driven by large working
capital requirements. The rating also factors insusceptibility of
firm's business to changes in government policy regarding the
cotton industry. These weaknesses are partially offset by
theextensive experience of the promotersin the cotton ginning
industry, and their funding support.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in highly fragmented cotton
industry: The scales of operation to remain modest with expected
revenue of around Rs15 crore in fiscal 2017. The operations will
remain exposed to intense competition in the fragmented cotton
ginning industry.
* Susceptibility to volatility in cotton prices and government
regulations: Firm's operations will remain susceptible to any
high volatility in cotton prices of any adverse government
regulation pertaining to industry.
* Below-average financial risk profile: The financial risk
profile of the company is expected to be below-average because of
debt funding of large working capital requirements. Its net worth
was small at INR1.01 crore as on March 31, 2016. The gearing
should remain at about 3 times in near to medium term,
Strength
* Extensive experience of promoters: With over eight decades of
experience in the cotton ginning industry,the promoter family has
in-depth understanding of the dynamics of the industry and local
market. The firm is expected benefit from promoters' extensive
industry experience. Promoters are financially resourceful and
have supported the company in the form of unsecured loans to the
extent of Rs2.0 crore in fiscal 2016.
Outlook: Stable
CRISIL believes that TKGPL will benefit from the extensive
industry experience of its promoters and their funding support.
The outlook may be revised to 'Positive' in case the company
reports significantly better than expected revenue and cash
accruals or substantial capital infusion leads to better capital
structure. Conversely, the outlook may be revised to 'Negative'
in case of deterioration in the financial risk particularly the
liquidity owing to lower than expected cash accruals or larger
than expected working capital requirements or debt funded capital
expenditure.
Incorporated in 1934, TKGPL is engaged in ginning and pressing of
cotton and cotton seed oil extraction. Its manufacturing unit is
located in Srikaranpur, Rajasthan which falls under the
Ganganagar district in Rajasthan. Its promoters, Mr. Gurmeet
Singh Kooner and family members have been engaged in cotton
ginning for over eight decades.
TKGPL reported a profit after tax of Rs0.04 crore on an operating
income of INR1.59 crores for fiscal 2016, against a profit after
tax of INR0.12 crore on an operating income of INR3.82 crores for
previous year.
KARIMKUTTIYIL CONSTRUCTIONS: CRISIL Rates INR6MM Cash Loan at B+
----------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facility of Karimkuttiyil Constructions & Developers and has
assigned its 'CRISIL B+/Stable' ratings to the facilities. CRISIL
had suspended the ratings on July 26, 2016, as KCD had not
provided the necessary information required for a rating review.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable
KCD has now shared the requisite information, enabling CRISIL to
assign ratings to its bank facilities
The ratings reflect the modest scale of operations in the
fragmented civil construction industry, and the large working
capital requirements. These rating weaknesses are partially
offset by extensive experience of KCD's promoters in the civil
construction industry and moderate financial risk profile marked
by comfortable gearing.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirements: The firm's operations are
working capital intensive reflected in its high gross current
asset (GCA) days of around 448 days as on March 31, 2016. The
long working capital cycle limits the firm's ability to scale up
operations without infusion of additional capital.
* Modest scale of operations and susceptibility to intense
competition in a fragmented civil construction industry: The
civil construction industry is intensely competitive and highly
fragmented with presence of a few large companies and a large
number of smaller entities. With a modest turnover of INR13 crore
in 2015-16 (refers to financial year, April 1 to March 31) KCD's
operating margin is exposed to pressures related to competitive
pricing. Based on the unexecuted order-book of about INR15 Crore
as of Dec 2016 and to be executed over the medium term, the
firm's turnover is expected to remain modest.
Strengths
* Extensive industry experience of promoter's in the civil
construction industry: KCD's business risk profile benefits from
the extensive experience of its promoters in the civil
construction industry. The firm is promoted by Mr. Abraham
Thomas and his family members. Since its inception the firm has
been dealing with various government authorities of Kerala.
* Moderate financial risk profile: KCD's financial risk profile
is average as reflected in networth of about INR9.06 crore and
low gearing of 0.78 times as on March 31, 2016. Interest coverage
is adequate, at 2.23 times in fiscal 2016.
Outlook: Stable
CRISIL believes that KCD will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the firm scales up its
operations significantly while maintaining its profitability,
leading to substantial cash accruals and a better financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
KCD reports low revenue or profitability, or if its working
capital management deteriorates resulting in weak liquidity.
Incorporated in 2009 and based out of Ranni (Kerala), KCD is
engaged in execution of civil contracts, primarily construction
of roads and bridges for various government entities in Kerala.
The firm is founded and managed by Mr. Abraham Thomas.
For fiscal 2016, KCD reported a profit after tax of INR1.79 crore
on an operating income of INR13.01 crore as against profit after
tax of INR1.26 crore on an operating income of INR13.24 crore.
KASHIRATAN ENTERPRISES: CRISIL Assigns B+ Rating to INR5MM Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Kashiratan Enterprises.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 2 CRISIL B+/Stable
The rating reflects KE's small scale of operations and low
operating margin owing to trading nature of business. The rating
also factors in a below-average financial risk profile due to
weak capital structure and subdued debt protection metrics. These
weaknesses are partly offset by the extensive experience of
promoters and established relationships with suppliers and
customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: Scale of operations are small as
reflected in revenue of INR33 crore in fiscal 2016. Revenue has
remained at INR33-35 crore over the three years through fiscal
2016 owing to intense competition.
* Low operating margin owing to trading nature of operations: KE
primarily trades in cotton, and hence, value addition is limited.
Consequently, operating margin was low at 1.0-2.4% over the three
years through fiscal 2016. Operating profitability will likely
remain low at 2% over the medium term.
* Below-average financial risk profile: The financial risk
profile is average, because of a small networth, weak capital
structure reflected in gearing of over 3 times, and average debt
protection metrics indicated by interest coverage ratio of less
than 1.5 times in fiscal 2016.
Strengths
* Partners' extensive experience and established relationships
with suppliers and customers: The partners, Mr. Pravin Agarwal
and Mr. Manish Agarwal and their family members, have been
trading in cotton for over two decades. Their extensive
experience helped forge strong relationships with its prominent
suppliers, leading to consistent supply. This, coupled with
established relationships with customers, helped maintain its
scale amid volatile industry.
Outlook: Stable
CRISIL believes KE will continue to benefit over the medium term
from the experience of its promoters and their established
relationships with customers and suppliers. The outlook may be
revised to 'Positive' in case of higher-than-expected revenue and
cash accrual while improving the financial risk profile.
Conversely, the outlook may be revised to 'Negative' in case of a
decline in revenue or profitability, or if the working capital
cycle strengthens leading to deterioration in the financial risk
profile.
Established in 2011 as a partnership between Mr. Pravin Agarwal
and Mr. Manish Agarwal, KE, headquartered in Indore (Madhya
Pradesh), trades in cotton bales.
KE reported a profit after tax (PAT) of INR0.1 crs on net sales
of INR33.04 Crores for fiscal 2016, vis-a-vis INR0.06 crs and
INR34.11 Crores, respectively for fiscal 2015.
KOCHAR ENTERPRISES: CARE Reaffirms B Rating on INR5.78cr LT Loan
----------------------------------------------------------------
The rating assigned to the bank facilities of Kochar Enterprises
Private Limited are constrained by its small scale of operation,
short track record, volatility in agro-commodity (flour) prices,
regulated nature of the industry, intense competition and working
capital intensive nature of business. The aforesaid constraints
are partially offset by its experienced promoters and
satisfactory demand outlook of the products.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.78 CARE B; Stable
Facilities Reaffirmed
Short term Bank
Facilities 0.32 CARE A4 Reaffirmed
The ability of the company to increase its scale of operation,
improve profitability margins and ability to manage its working
capital effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
The scale of operations of KEPL has remained small marked by
total operating income of INR18.77 crore with a PAT of INR0.05
crore in FY16. The company has a low net worth base as on
March 31, 2016. The small size restricts the financial
flexibility of the company in times of stress and deprives it
from the benefits of economies of scale. The company started its
commercial operation in trading business on May 2013 and the
manufacturing of flour products has been started from November
2014. Thus the company has very short track record.
KEPL is primarily engaged in processing of wheat products under
its roller mills. Wheat being an agricultural produce and staple
food, its price is subject to intervention by the government. In
the past, the prices of wheat have remained volatile mainly on
account of the government policies in respect of Minimum Support
Price (MSP) & controls on its exports. Any volatility in the
wheat prices will have an adverse impact on the performance of
the flour mill.
Flour milling industry is highly fragmented and competitive due
to presence of many players operating in this sector owing to its
low entry barriers, due to low capital and technological
requirements. High competition restricts the pricing flexibility
of the industry participants and has a negative bearing on the
profitability.
Wheat is primarily a Rabi crop in India. The millers are required
to carry high levels of raw material inventory in order to
mitigate the raw material availability risk, resulting in
relatively high inventory period. Further, wheat is mainly
sourced on cash payment. Accordingly, the working capital
intensity remained moderately high as reflected through average
utilization of working capital limits restricting the overall
financial flexibility.
KEPL has set up a flour milling & processing unit and also
engaged in sale of its by-products like suji, wheat bran etc. in
the
domestic market. Wheat based products, viz. Maida, Suji and Atta
have large consumption across the country in the form of bakery
products, cakes, biscuits and different types of food dishes in
home and restaurants. The demand has been driven by the rapidly
changing food habits of the average Indian consumer, dictated by
the lifestyle changes in the urban and semi-urban regions of the
country.
The total operating income of the company improved in FY16 over
FY15 on account of higher execution of orders.
However, PBILDT improved in FY16 on account of lower operating
expenses during the period. KEPL's overall gearing ratio remained
high during last two account closing dates. Interest coverage
ratio, improved in FY16 over FY15 due to lower interest cost, was
satisfactory.
KEPL has an experienced management team. The overall management
of the company is looked after by directors Mr. Sushil Kr. Kochar
(25 years of experience), Mr. Navratan Kochar (26 years of
experience) and Mr. Surendra Kochar (25 years of experience)
along with the team of professionals having rich experience in
the same line of business.
Kochar Enterprises Pvt. Ltd., incorporated in December, 2006, was
promoted by one Kochar family of Kolkata, to set up a flour
milling & processing unit and sale of its by-products like suji,
wheat bran etc. in the domestic market. After incorporation, the
company was non-operational for about seven years and during 2013
the company started to install a flour milling unit at Sainthia
in Birbhum district of West Bengal along with an agro commodity
trading business. The commercial operation of the flour mill has
been started from November 2014 with an installed capacity of
38,400 MTPA (128 TPD).
The day-to-day affairs of the company are looked after by Mr.
Sushil Kr. Kochar (Director) with adequate support from other two
directors and a team of experienced personnel.
During FY16 (refers to the period April 1 to March 31), the
company reported a total operating income of INR18.77 crore
vis-a-vis INR4.67 crore in FY15 and a PAT of INR0.05 crore
vis-a-vis net loss of INR0.37 crore in FY15. Furthermore, the
company has achieved a total operating income of INR40.00 crore
during 8MFY17 (refers to the period April 1 to December 31).
NARMADA SPUN: CRISIL Assigns 'B' Rating to INR21MM Term Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Narmada Spun Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 21.00 CRISIL B/Stable
Bank Guarantee 1.25 CRISIL A4
Cash Credit 2.75 CRISIL B/Stable
The ratings reflect the firm's start-up phase in a competitive
industry and exposure to stabilisation risks. These weaknesses
are partially offset by the extensive experience of its promoters
in the cotton ginning business, favorable location of unit, and
established distribution channel.
Key Rating Drivers & Detailed Description
Weaknesses
* Start-up phase: NSPL is setting up a cotton ginning plant that
is expected to commence operations from April 2017. Hence, the
company is exposed to completion risk.
* Modest scale of operations: Scale is likely to be small in the
intensely competitive cotton spinning industry.
* Small networth: Networth is estimated to be INR10 crore and
will mostly comprise equity.
Strength
* Extensive experience of promoters: Promoters have been in the
industry for more than decade, resulting in an already
established distribution network.
Outlook: Stable
CRISIL believes NSPL will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if earlier-than-expected stabilisation of
operations leads to healthy cash accrual and better financial
risk profile. The outlook may be revised to 'Negative' if low
operating margin, sizeable debt-funded expansion, or inefficient
working capital management weakens financial risk profile.
Incorporated in 2016 and promoted by Rajkot-based Mr. Paresh
Dhamsaniya and Mr. Jeram Bhalodia, NSPL is setting up a unit to
manufacture cotton yarn in 30s count. Production is expected to
commence in April 2017.
NEELACHAL ISPAT: CARE Reaffirms D Rating on INR561.19cr Loan
------------------------------------------------------------
The standalone ratings (s.no. (iii) and (iv)) continue to remain
constrained by the weak financial risk profile of Neelachal Ispat
Nigam Limited marked by continued net losses during FY16 (refers
to the period April 1 to March 31), high overall gearing and weak
debt coverage indicators. The ratings also continue to remain
constrained by the cyclicality inherent in the steel industry and
NINL's exposure to raw material price volatility.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
(i) Long-term Bank 782.23 CARE A(SO);Stable
Facilities (Term Revised from CARE A+(SO)
Loan Phase-I)
(ii) Long-term Bank 561.19 CARE D Reaffirmed
Facilities (Term
Loan Phase-II)
(iii) Long-term Bank 140.00 CARE B-;Outlook Negative
Facilities (Cash Reaffirmed
Credit)
(iv) Short-term Bank 157.05 CARE A4 Reaffirmed
Facilities
(v) Non-Convertible 200.00 CARE A(SO);Outlook
Debentures-I (NCD-I) Stable Revised from
CARE A+(SO)
(vi) Non-Convertible 200.00 CARE A(SO);Outlook
Debentures II (NCDII) Stable Revised from
CARE A+(SO)
However, the ratings continue to derive strength from the
experienced promoters and management of NINL, its semi-integrated
nature of operations and wide market reach.
The standalone rating to the long-term loans (Phase-II) of NINL
(s.no. (ii)) continues to remain constrained by the delays in
servicing of term debt obligations due to weak liquidity
position.
Going forward, NINL's ability to profitably scale up the
operations while improving its financial risk profile and
timely servicing of its debt obligations shall be the key rating
sensitivities.
The revision in ratings assigned to long term loans (Phase-I) and
NCDs (s.no. (i), (v) and (vi)) continue to take into account the
credit enhancement in the form of unconditional and irrevocable
corporate guarantee extended by MMTC Limited (MMTC, rated CARE
A/CARE A1).
The revision in the ratings of MMTC takes into account the
weakening of financial performance due to subdued business
scenario in most of its operational segments leading to
sequential decline in operating income, low profitability and
deterioration in debt coverage indicators. Furthermore, the
ratings also take into account the weakened financial profile and
stretched liquidity position of MMTC's associate, Neelachal Ispat
Nigam Limited (NINL), which might necessitate the higher
operational and funding support from MMTC going forward.
The ratings, however, continue to derive strength from MMTC's
position as the largest international trading house in India,
predominant ownership by the Government of India (GoI),
comfortable capital structure as well as long and established
track record of trading in diverse commodities.
Going ahead, the ability of MMTC to improving profitability for
better absorption of fixed overheads while efficiently managing
its working capital requirements and the extent of support
provided to NINL and other subsidiary / associates and its impact
on MMTC's financial risk profile shall be the key rating
sensitivities.
Outlook: Negative
The outlook for the rating is 'Negative' considering the
continued pressure on profitability in view of recessionary trend
in pig iron market coupled with fall in the net sales
realizations of both pig iron and BF coke .The outlook may be
revised to 'Stable' if the company is able to improve its
profitability backed by improvement in demand and net sales
realization.
Detailed description of the key rating drivers
The steel industry is sensitive to the shifting business cycles,
including changes in the general economy, interest rates and
seasonal changes in the demand and supply conditions in the
market. Apart from the demand-side fluctuations, the highly
capital-intensive nature of steel projects along-with the
inordinate delays in the completion hinders the responsiveness of
supply side to demand movements. This results in several steel
projects bunching-up and coming on stream at the same time
creating the oversupply thus affecting the steel sales
realizations.
During FY16 also the financial risk profile of the company
continued to remain weak with declining total operating income
and profitability.
During FY16, the company's financial performance was adversely
affected mainly due to recessionary trend in pig iron market both
in domestic as well as in export market coupled with fall in the
selling prices of pig iron and BF coke and increase in the cost
of production on account of non-availability of adequate raw
material.
The standalone rating to the long-term loans (Phase-II) of NINL
(s.no. (ii)) continues to remain constrained by the delays in
servicing of term debt obligations due to weak liquidity
position.
The revision in ratings assigned to long term loans (Phase-I) and
NCDs (s.no. (i), (v) and (vi)) continue to take into account
the credit enhancement in the form of unconditional and
irrevocable corporate guarantee extended by MMTC Limited
(MMTC, rated CARE A/CARE A1).
Analytical approach:
Standalone approach for facilities in (S.no ii, iii and iv) and
credit enhancement in the form of unconditional and irrevocable
corporate guarantee extended by MMTC Limited (MMTC, rated CARE
A/CARE A1) for facilities and instruments in (s.no i, v and vi
respectively).
Neelachal Ispat Nigam Limited was incorporated in 1982 to set-up
an integrated steel plant (ISP) to undertake the manufacture and
sale of pig iron. Originally, the main promoters were Industrial
Promotion & Investment Corporation of Orissa (IPICOL) and Orissa
Sponge Iron Ltd (OSIL). Subsequently, MMTC Limited, a majority
owned undertaking of Government of India, was inducted as the
main promoters since 1996 with equity share holding of 49.78%.
The other promoters of NINL include IPICOL (15.29%), NMDC Ltd
(12.87%), Orissa Mining Corporation Ltd (OMC; 12.32%) and MECON
Ltd. (0.86%).
NINL's manufacturing unit is located at Kalinga Nagar Industrial
complex, Dubri, Orissa having 1.1 million tonnes per annum (MTPA)
capacity blast furnace and supporting infrastructure like sinter
plant (1.7 MTPA), coke oven plant (0.88 MTPA) and power plant
(based on steam and flue gas) (62.5MW). Furthermore, the company
also has billet manufacturing unit with a capacity of 0.89 MTPA
which was commissioned in FY13.
The company also has iron ore mine in the district to Sundergarh
and Keonjhar (Odisha) with an estimated reserve of 110 million
tons. Currently, the company is seeking environmental clearances
for the same. NINL has been the largest exporter of pig iron in
India for last 9 years exporting mainly to Thailand, Korea,
Indonesia, Malaysia, Taiwan, Japan and China. The company
purchases coking coal and sells its products through MMTC which
charges 3% commission on each sale/purchase to the company. The
company purchases the other raw material, viz, iron ore largely
from the other promoter OMC.
During FY16 (refers to period from April 1 to March 31), the
company reported a PBILDT and net loss of INR4.72cr and
INR334.53crorespectively on a total operating income of INR1,137
crore as against a PBILDT and net loss of INR40 crore and INR233
crore respectively on a total operating income of INR1,342crore
during FY15.
NITIN SAI: CRISIL Assigns 'D' Rating to INR2.0MM LOC
----------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Nitin Sai Constructions Pvt Ltd, and has assigned
its 'CRISIL D/CRISIL D' ratings to the facility. CRISIL had, on
September 28, 2016, suspended the ratings as NCPL had not
provided the necessary information for a rating review. The
company has now shared the requisite information, enabling CRISIL
to assign a rating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL D (Assigned;
Suspension Revoked)
Cash Credit/ 1.5 CRISIL D (Assigned;
Overdraft facility Suspension Revoked)
Inland/Import 2.0 CRISIL D (Assigned;
Letter of Credit Suspension Revoked)
The ratings reflect instances of devolvement in NCPL's letter of
credit (LC) facility, and full utilisation of bank limit, because
of stretched liquidity. The ratings also factor in small scale of
operations and customer concentration in revenue, in the
intensely competitive construction industry. These rating
weaknesses are partially offset by the extensive experience of
the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Stretched liquidity: Instances of devolvement of LC facility
and full utilisation of bank limit of INR1.5 crore in the 6months
through December 2016 indicate strained liquidity.
* Small scale of operations and customer concentration in revenue
profile: With revenue of INR15 crore in fiscal 2016, scale of
operations remains small in the intensely competitive
construction industry. Limited revenue diversity also constrains
cash flows.
Strengths
* Extensive experience of promoters in the civil construction
industry: Benefits of the promoter, Mr. Y Krishna Murali's
presence of over a decade, and healthy relationships with
customers and suppliers should continue to support business risk
profile.
NCPL was set up in 2010 by Mr. Y Krishna Murali and his family.
The company is in the civil construction business, and undertakes
irrigation works and construction of roads and railway bridges.
NCPL is based in Hyderabad.
NCPL's profit after tax (PAT) was INR0.27 crore on net sales of
INR15.31 crores in fiscal 2016, vis-a-vis INR0.35 crore on net
sales of INR20.95 crore, for fiscal 2015.
NUZIVEEDU SWATHI: CARE Reaffirms D Rating on INR51cr Bank Loan
--------------------------------------------------------------
The ratings take into account the delays in servicing of debt
obligations of Nuziveedu Swathi Coastal Consortium on account of
slow progress of the project and stretched working capital
position.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 51 CARE D Reaffirmed
Short-term Bank
Facilities 5 CARE D Reaffirmed
Detailed description of the key rating drivers
NSCC has a stretched working capital cycle which further
increased from 264 days in FY15 to 320 days in FY16 (refers to
the period April 1 to March 31), mainly due to significantly
increased inventory days. This apart, there is a time lag in
receipt of bills for the work executed. Consequently, the working
capital position is stretched resulting in delays in debt
servicing.
Nuziveedu Swathi Coastal Consortium (NSCC) is a partnership firm
engaged in construction of a tunnel [Tunnel I, using Tunnel
Boring Machine (TBM)] as a part of the Veligonda Irrigation
Project in the Prakasam district of Andhra Pradesh.
The Veligonda project comprises single order in hand with work
valued of INR612.80 crore and completion date of December 2018
(revised from June, 2017 and having an initial COD of June,
2014).
NSCC is formed by a consortium comprising Splendid Minerals
Private Limited (SMPL, subsidiary of Mandava Holdings Private
Limited of NSL group of Hyderabad, holding 50% share), Coastal
Projects Limited (CPL, holding 25% share) and Siva Swathi
Constructions Private Limited (SSCPL, holding 25% share), all
belonging to Hyderabad. The Partners have formed NSCC primarily
for execution of the Veligonda Irrigation Project. All the three
partners are established industrial houses of South India having
industrial experience of more than two decades. While NSL group
is providing the financial support, CPL is mainly involved in the
execution of the project and the company is itself engaged in the
construction of Tunnel II for the Veligonda Irrigation project in
the capacity of principal contractor.
During FY16, the company reported a total operating income of
INR47.26 crore (FY15 - INR40.81 crore) with PBILDT of INR17.34
crore (FY15 - INR1.32 crore) and a PAT of INR6.44 crore (FY15-
net loss of INR10.91 crore).
PANCHANAN COLD: CARE Lowers Rating on INR4.94cr LT Loan to B
------------------------------------------------------------
The revision in the rating assigned to the bank facilities of
Panchanan Cold Storage Private Limited is on account of decline
in total operating income of the company in FY16 and
deterioration in capital structure and debt protection metrics as
on March 31, 2016.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 4.94 CARE B; Stable Revised
Facilities from 'CARE B+'
Moreover the rating continues to remain constrained by its
relatively small scale of operations with moderately low
profitability margins, regulated nature of industry, and
seasonality of business with susceptibility to vagaries of
nature, risk of delinquency in loans extended to farmers,
competition from other local players and working capital
intensive nature of operations. The aforesaid constraints are
partially offset by the experienced promoters, satisfactory track
record of operations of the company and its proximity to potato
growing area.
Going forward, ability of PCPL to increase its scale of
operations with improvement in profitability margins, ability to
improve its capital structure and effective management of working
capital would be the key rating sensitivities.
Detailed description of the key rating drivers
PCPL's scale of operations remained modest as compared to its
peers with a net loss of INR0.03 crore on total operating income
of INR2.60 crore during FY16. Furthermore, total capital employed
of the company, increased as on March 31, 2016, remained low at
INR14.28 crore as against INR6.56 crore as on March 31, 2015.
The main promoter of PCPL, Shri Sibaram Samanta (Managing
Director) has more than two decades of experience in similar line
of business and is involved in the day to day operations of the
company. He is being duly supported by the other director Shri.
Ayan Samanta and Shri Sayan Samanta and a team of experienced
personnel. Further, PCPL commenced commercial operation in 1989
and accordingly has a long track record of commercial operations.
PCPL is a relatively small player in the cold storage business
having total operating income and net loss of INR2.60 crore and
INR0.03 crore respectively, in FY16. The total capital employed
was also low as on March 31, 2016. Small scale of operations with
low net worth base limits the credit risk profile of the company
in an adverse scenario.
In West Bengal, basic rental rate for cold storage operations is
regulated by the state government through West Bengal State
Marketing Board. Due to severe government intervention, the cold
storage facility providers cannot enhance rental charge
commensurate with increased power tariff and labour charge.
PCPL's operation is seasonal in nature as potato is a winter
season crop with its harvesting period commencing in March.
The loading of potatoes in cold storages begins by the end of
February and lasts till March. Additionally, with potatoes
having a preservable life of around eight months in the cold
storage, farmers liquidate their stock from the cold storage
by end of season i.e., generally in the month of November. The
unit remains non-operational during the period between December
to February. Furthermore, lower agricultural output may have an
adverse impact on the rental collections as the cold storage
units collect rent on the basis of quantity stored and the
production of potato is highly dependent on vagaries of nature.
Against the pledge of cold storage receipts, PCPL provides
interest bearing advances to the farmers & traders. Before the
closure of the season in November, the farmers & traders are
required to clear their outstanding dues with the interest.
In view of this, there exists a risk of delinquency in loans
extended, in case of downward correction in potato or other
stored goods prices, as all such goods are agro commodities.
In spite of being capital intensive, the entry barrier for new
cold storage is low, backed by capital subsidy schemes of the
government. As a result, the potato storage business in the
region has become competitive, forcing cold storage owners to
lure farmers by providing them interest free advances against
stored potatoes which augments the business risk profile of the
companies involved in the trade.
PCPL's storing facility is situated in the Hooghly district of
West Bengal which is one of the major potato growing regions of
the state. The favorable location of the storage unit, in close
proximity to the leading potato growing areas provides it with a
wide catchment and making it suitable for the farmers in terms of
transportation and connectivity.
Panchanan Cold Storage Private Ltd. was incorporated on January
16, 1989 by Jaiswal family of Hooghly, West Bengal to provide
cold storage services with the facility being located at Hooghly,
and West Bengal. However, the earlier promoters were unable to
run the management efficiently and the current promoters Shri
Ayan Samanta, Shri Sayan Samanta and Shri Sibaram Samanta of
Hooghly, West Bengal took over from the earlier management in
November, 2014.
PCPL is currently engaged in the business of providing cold
storage facility at the same location primarily for potatoes and
is operating with a storage capacity of 1,79,000 quintals.
Besides providing cold storage facility the unit also works as a
mediator between the farmers and marketers of potato, to
facilitate sale of potatoes stored and it also provides interest
free advances to farmers for farming purposes of potato against
potato stored. Further, PCPL commenced trading of potatoes from
FY14 onwards.
In FY16 (refers to the period April 1 to March 31), the company
achieved a total operating income of INR2.60 crore and net loss
of INR0.03 crore as against a total operating income of INR3.15
crore and net loss of INR0.02 crore in FY15. The company has
achieved a turnover of INR2.50 crore during 9MFY17.
PATIALA DISTILLERS: CARE Reaffirms B+ Rating on INR10cr LT Loan
---------------------------------------------------------------
The ratings assigned to the bank facilities of Patiala Distillers
and Manufacturers Limited (PDM) continue to remain constrained by
its low PBILDT margins and net losses in FY16 (refers to the
period April 1 to March 31) leading to further erosion of the
networth.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B+; Stable
Facilities Reaffirmed
Short-term Bank
Facilities 0.35 CARE A4 Reaffirmed
The ratings are further constrained by the susceptibility of
margins to fluctuations in raw material prices and PDM's presence
in a highly regulated industry. The ratings, however, derive
strength from the long track record of operations with location
advantage and increasing operating income with satisfactory
capital structure.
Going forward, the ability of the company to profitably scale-up
its operations along with improvement in the overall solvency
position will remain the key rating sensitivities.
Detailed Description of key rating drivers
The operating income of the company increased by ~8% in FY16 on
account of increase in sales of Indian made foreign liquor.
Though the PBILDT margins improved to 3% in FY16 (as compared to
0.03% in FY15) due to decrease in the raw material prices and
decrease in power & fuel prices, the company continued to remain
in losses at the net level (net loss of INR0.35 crore in FY16
compared with net loss of INR10.19 crore in FY15). The company,
however, reported cash profits of INR4.26 crore in FY16, compared
with cash losses of INR5.72 crore in FY15. The capital structure
of PDM remained satisfactory marked by long-term debt-to-equity
ratio and overall gearing ratio of 0.56x and 0.80x, respectively,
as on March 31, 2016 (as compared with 0.57x and 0.81x,
respectively, as on March 31, 2015). The debt coverage indicators
also remain at a satisfactory level with total debt to GCA of
4.10x, as on March 31, 2016, and interest coverage ratio of
3.13x in FY16 (0.04x in FY15).
In H1FY17 (Prov.), the company has achieved total operating
income of INR64.21 crore. However, the company reported losses at
the net level (net loss of INR2.55 crore in H1FY17) with cash
losses of INR1.05 crore during the period. This was mainly on
account of higher raw materials prices which were not completely
passed on to customers due to competitive nature of the industry.
Liquor policies governing its production and sales are entirely
controlled by respective State governments with States/Union
Territories having their own regulations and entry-exit
restrictions. PDM is susceptible to risks inherent in the liquor
industry in terms of high rates of taxation and stringent
government controls and regulations.
The primary raw material used by the company is molasses (a by-
product of sugar) which it sources from sugar mills and food
grains. The raw material prices are governed by various factors
including its production (due to vagaries of monsoon), government
regulations (MSP) and demand. Thus, the margins of the company
are susceptible to volatility in the prices of the raw materials,
since on account of high industry regulations, the manufacturers
are not able to pass on the increase in raw material costs
completely.
PDM has been engaged in the manufacturing of liquor for more than
four decades which has helped it to establish relationships in
the industry. The company is currently being managed by Mr
Sudarshan Kumar Modi, Mr Sanjeev Kumar Modi, Mr Tarun Kumar Modi,
Mr Kewal Aggarwal and Mr Virendra Swarup Agarwal. All the
directors look after the overall operations of the business and
have professional experience ranging from 20-40 years in
beverages industry through their association with PDM only. Also,
the directors of the company are supported by a team of
experienced and qualified professionals having varied experience
in the technical, financial and marketing fields. Furthermore,
the company has set up its distillery unit in Punjab which
provides location advantage in terms of easy availability of raw
materials and low offtake risk, since Punjab is one of the
highest liquor consuming states in Northern India. This acts in
favour of incumbents such as PDM as new players find it difficult
to get licenses for setting up new units.
Patiala Distillers and Manufacturers Limited (PDM) is a closely-
held public limited company incorporated in November 1974. The
company is currently being managed by the directors- Mr Sudarshan
Kumar Modi, Mr Sanjeev Kumar Modi, Mr Tarun Kumar Modi, Mr Kewal
Aggarwal and Mr Virendra Swarup Agarwal. All the directors look
after the overall operations of the business and have
professional experience ranging from 20-40 years.
The company is engaged in the manufacturing of rectified spirit
(RS) and extra neutral alcohol (ENA) and sells it in the form of
Country Liquor (CL) and India Made Foreign Liquor (IMFL). Its
country made liquor is sold under the brands 'Patiala Rose',
'Patiala Orange' and 'Patiala Sonfi' and IMFL is sold by the
names- 'Commando Rum' and 'Winner Whisky'. The company sells the
CL manufactured to the retailers through its own outlets located
in 12 districts of Punjab and IFML is sold to various wholesalers
in Punjab.
During FY16 (refers to the period April 1 to March 31), PDM has
reported a net loss of INR0.35 crore on a total operating income
of INR178.36 crore as against a net loss of INR10.19 crore on a
total operating income of INR165.14 crore in FY15.
During H1FY17 (Provisional), the company has reported a net loss
of INR2.55 crore on a total operating income of INR64.21 crore.
PRASADHINI ENTERPRISES: CARE Reaffirms B+ INR7.98cr Loan Rating
---------------------------------------------------------------
The ratings assigned to the bank facilities of Prasadhini
Enterprises Private Limited continue to be constrained by small
scale of operations with past losses completely eroding its net
worth, modest occupancy levels of its hotel operations, high
concentration risk of its retail property with entire area leased
out to a single tenant and cyclical nature of the hotel industry.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.98 CARE B+; Stable
Facilities- Reaffirmed
Term Loan
Long-term Bank 3.00 CARE B+; Stable
Facilities-Cash Reaffirmed
Credit
The ratings also take into account decline in total operating
income, net losses incurred, leveraged capital structure and weak
debt coverage indicators albeit increase in occupancy rate and
ARR of its budget hotel (Hotel Airlines) in FY16 (refers to the
period April 1 to March 31). However, the ratings continue to
derive benefits from reasonable track record and promoters'
experience, strong operating profits, favorable location of hotel
and 100% occupancy at its retail mall ensuring regular cash flows
with lease agreement valid till the tenure of the loan.
The ability of the company to improve its hotel operational
performance and occurrence of rental escalations as projected
would be the key rating sensitivity.
Detailed description of the key rating drivers
PEPL has been in the hospitality services industry for 7 years
and has established a reasonable track record of operations with
its ability to increase occupancy from its existing customers and
acquire new customers. Mr Harish Kumar Hegde and Ms Jayapadma
Hegde, promoters of the company, have been in this field for more
than 10 years and they are well acquainted to carry out the
business.
PEPL has strong operating profits during the review period. The
PBILDT margin grew by 1382 bps from 65.96% in FY15 to 79.58% in
FY16 due to decrease in maintenance costs of Hotel Jade Garden,
which was sold by the PEPL during Q4FY15.
The company owns and manages a budgeted hotel Airlines consisting
of 36 rooms (12-AC, 24- Non AC) located in Mysuru.
The hotel is fully operational since 2000. The Company's
occupancy levels (at 35-45% levels) and ARR (Rs.890-Rs.1100
levels) has remained modest during FY14-16, though there is some
improvement in the same during FY16. The RevPar has increased
from INR303 in FY14 to INR346 in FY15 and further to INR488
during FY16. Apart from the hotel, the company also has a retail
mall property in its portfolio situated in Mysuru. The entire
leasable area of 55,000 sft has been leased out to Trinethra
Super retail P Ltd. However, with the entire area leased out to a
single tenant, high vacancy risk persists.
PEPL's financial risk profile is marked with continuous net
losses over the years, negative net worth and weak debt coverage
indicators but healthy operating margins. However, total debt of
the company reduced from INR17.76 crore as on March 31, 2015 to
INR15.66 crore March 31, 2016 due to repayment of term loan
(Lease rental discounting). The company has weak debt coverage
indicators marked by total debt/GCA and PBILDT interest coverage
of 19.47x and 1.44x respectively in FY16.
Prasadhini Enterprises Private Limited, incorporated in the year
2000, is operating a budget Hotel 'Airlines' in Mysuru,
Karnataka. The company also has a retail property situated at
Mysuru, Karnataka with total built up area of 55,000 sq. ft.,
which it has leased to Trinethra Super retail P Ltd. wholly owned
subsidiary of Aditya Birla Retail Limited for running 'More
Hypermarket' for a period up to 2024. PEPL also started luxury
hotel 'Jade Garden' in the year 2009, however, due to loss making
proposition of the hotel, the company sold it in Q4FY15.
The company is promoted by Mr M H Abhishek Hegde and Ms Jayapadma
Hegde, who are directors of the company. The directors have
adequate knowledge and experience in the field of banking, law
and business activities.
In FY16, PA reported a Profit after Tax (PAT) of INR-0.78 crore
on a total operating income of INR3.31 crore, as against a PAT
and TOI of INR0.84 crore and INR4.76 crore respectively in FY15.
PRISM ENTERPRISE: CARE Assigns 'B' Rating to INR7cr LT Bank Loan
----------------------------------------------------------------
The ratings assigned to the bank facilities of Prism Enterprise
remain constrained on account of constitution as a proprietorship
firm, limited experience of the proprietor in the textile
industry, implementation risk associated with new project,
susceptibility of profit margins to volatility in raw material
price, and presence in the highly fragmented and the competitive
textile industry.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7 CARE B; Stable/CARE A4
Facilities/Short- Assigned
term Bank Facilities
The rating, however, continue to derive strength from location
advantage due to presence in Gujarat and eligibility for
Government Subsidy.
PRIs ability to timely completion of the project within envisaged
cost parameters and achievement of envisaged scale of operations
and profitability while maintaining moderate capital structure
would be the key rating sensitivity.
Detailed description of key rating drivers
The constitution as a proprietorship firm restricts PRI's overall
financial flexibility in terms of limited access to external
funds for any future expansion plans.
With the given funding mix, the project gearing stood leveraged
at 2.73 times. Timely completion of the project within envisaged
cost parameters is critical for PRI. Furthermore, post project
implementation, achieving envisaged capacity utilization and
sales realization remains crucial for the firm.
Project is eligible for 7% interest subsidy from Government of
Gujarat, 2% interest subsidy from State Government, 15% capital
subsidy from State Government under RR-TUF scheme and 15% capital
subsidy from Central Government under TUF.
Rajkot-based (Gujarat), Prism Enterprise (PRI) is a
proprietorship firm established in 2016 by Ms Kiran Ghanva with a
main objective of sizing and warping of cotton yarn.
Manufacturing plant is located at Rajkot with a proposed
installed capacity of 2500000 kgs per annum of sized and warped
yarn. The products manufactured by the entity will be used in the
textile industry.
PRI is in the process of acquiring machineries worth INR8.40
crore which primarily includes sizing and warping machine which
will be financed through proprietor's contribution of INR2.25
crore, term loan of INR6.00 crore and the remaining INR0.15 crore
by way of unsecured loan from friends and family. PRI has
envisaged commencing of commercial production from May, 2017.
REDCO HOTELS: CRISIL Reaffirms B+ Rating on INR45MM Term Loan
-------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facility
of Redco Hotels Private Limited at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Rupee Term Loan 45 CRISIL B+/Stable (Reaffirmed)
The rating reflects RHPL's modest scale of operations in the
intensely competitive hotel industry. This weakness is partially
offset by benefits derived from its tie-up with Marriott Hotels
India Pvt Ltd (Marriott) and the promoters' financial support.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans of
INR109 crore as on March 31, 2016, from promoter as neither debt
nor equity as the loans will be retained in the business over the
medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the highly competitive hotel
industry: The business risk profile is constrained by small scale
of operations, as reflected in revenue of INR28.6 crore in fiscal
2016. The scale remains modest because of intense competition in
the hotel industry.
Strengths
* Experience of management and tie-up with Marriott: RHPL has
tied up with Marriott for operating the hotel under the renowned
Courtyard brand. It is actively engaged in the design and
construction activity of the hotel.
* Funding support from promoters: RHPL receives funding support
from promoters in the form of unsecured loans which stood at
INR109.4 crore as on March 31, 2016.
Outlook: Stable
CRISIL believes RHPL will continue to benefit over the medium
term from the promoters' extensive experience and its tie-up with
Marriott. Given constrained liquidity, the management will
continue to extend need-based fund support over the medium term.
The outlook may be revised to 'Positive' in case of substantially
improvement in revenue and cash accrual from the hotel.
Conversely, the outlook may be revised to 'Negative' if revenue
and profitability are adversely affected by lower-than-expected
occupancy or average room rate (ARR) at its hotels, or if any
larger-than-expected, debt-funded capital expenditure weakens its
capital structure.
RHPL was incorporated in 2008 by Mr. Afzal Ladak, his son, Mr.
Shakeel Ladak and son-in-law, Mr. Iqbal Makani. The company has
completed the construction of a four-star hotel at Chakan in Pune
(Maharashtra) in March 2013. RHPL began commercial operations
from September 2013. The company has tied-up with Marriott
International to manage operations of the Courtyard by Marriott.
Net loss stood at INR7.56 crore on net sales of INR28.59 crore in
fiscal 2016, against a net loss of INR13.96 crore on net sales of
INR19.64 crore in fiscal 2015.
S. R. INDUSTRIES: CARE Assigns 'C' Rating to INR18cr Cash Credit
----------------------------------------------------------------
The ratings assigned to the bank facilities of S. R. Industries
Limited are primarily constrained by the ongoing delays in
serving of the term debt obligations. The ratings are further
constrained by weak overall financial risk profile of the company
marked by small & fluctuating scale of operations, negative
networth and working capital intensive nature of business. The
ratings, however, derive strength from experienced promotors and
diversified product profile.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities-Fund-
Based (Term Loan) 11.33 CARE D Assigned
Long-term Bank
Facilities-Fund-
Based (Cash Credit) 18.00 CARE C; Negative Assigned
Short-term Bank
Facilities- Non-
Fundbased (Letter
of Credit) 1.35 CARE A4 Assigned
Short-term Bank
Facilities- Fund-
Based (Standby line
of credit) 0.40 CARE A4 Assigned
Long-term/Short- 1.00 CARE C; Negative/CARE A4
term Bank Facilities Assigned
Fund-based/Non-fund-
based (Cash Credit/
Letter of Credit)
Going forward, profitably scale up of its operations with
improvement in the overall solvency position and efficient
management of working capital requirements will remain the key
rating sensitivities.
Outlook: Negative
The outlook is 'Negative' considering the ongoing delays in
serving term debt obligations, losses in FY16 with negative net
worth and weak liquidity position of the company. The outlook may
be revised to 'Stable' if the company is able to timely repay its
debt obligations with profitably scaling-up its operations while
maintaining a comfortable liquidity position.
Detailed Description of key rating drivers
There are ongoing delays in the servicing of term debt
obligations due to stressed liquidity position of the company.
SRIL has been operational for more than two and half decades.
Till April 2012, the company was engaged in manufacturing
business of terry towels which was sold subsequently and focus
was shifted to footwear manufacturing.
Earlier, the company used to manufacture footwear under company's
own brand name- 'Red Zone' and 'Front Foot'.
Currently, the company is a contract manufacturer for various
other footwear companies.
The scale of operations of the company has remained small and
fluctuating in nature on account of fluctuation experienced in
the demand. Though the company had healthy PBILDT margins in the
past [18.52% in FY16 (PY: 18.78%)], on account of high interest
and depreciation expenses, the company, reported losses on the
net level. The solvency position remained weak marked by negative
net worth and weak debt coverage indicator as on March 31, 2016.
SRIL's operating cycle stood elongated at ~182 days as on March
31, 2016. The average cash credit limit utilization also remained
at a high level of ~95% in the last 12-month period ended
November 2016.
Established in 1989, SRIL is engaged in manufacturing of sports
footwear, chappals and sandals at its manufacturing unit located
in Una, Himachal Pradesh with an installed capacity of 3.1
million pairs per annum. The company was set up by Mr R C Mahajan
and Mr Yash Mahajan in 1989 for manufacturing of terry towel.
Terry Towel business was subsequently sold in FY13 and the
company started manufacturing of footwear. Apart from contract
manufacturing, SRIL also manufactured footwear under its own
brand name 'Red Zone' and 'Front Foot'.
During FY16 (refers to the period April 1 to March 31), SRIL has
reported net loss of INR2.06 crore on a total operating income of
INR33.82 crore as against a PAT of INR1.05 crore on a total
operating income of INR58.72 crore in FY15. During H1FY17
(Provisional), the company has reported a PAT of INR0.60 crore on
a total operating income of INR34.65 crore, compared with a net
loss of INR0.87 crore on an operating income of INR18.72 crore in
the same period last year.
SANT AUTOZONE: CARE Reaffirms B+ Rating on INR10.30cr LT Loan
-------------------------------------------------------------
The rating assigned to the bank facilities of Sant Autozone
Private Limited (SAZ) continues to be constrained by its small
scale of operations with low profitability margins, leveraged
capital structure, weak debt coverage indicators and working
capital intensive nature of operations. The rating is further
constrained by the company's exposure to intense competition,
regional revenue concentration and linkage to fortunes of M&M.
The rating, however, derives strength from the experienced
promoters and association with an established brand name.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.30 CARE B+; Stable
Facilities Reaffirmed
Going forward, the ability of SAZ to increase its scale of
operations while improving its profitability margins and overall
solvency position will be the key rating sensitivities.
Detailed description of the key rating drivers
Owing to short track record of operations, the company's scale of
operations has remained small marked by Total Operating Income
(TOI) of INR67.73 crore in FY16 (refers to the period April 01 to
March 31). The profitability margins of the company stood low
marked by PBILDT margin and PAT margin of 2.58% and 0.24%,
respectively in FY16. The capital structure of SAZ continued to
remain leveraged as reflected by overall gearing ratio of 28.80x
as on March 31, 2016. The average operating cycle of the company
stood elongated at 56 days for FY16. The company has weak debt
coverage indicators marked by interest coverage ratio of 1.45x in
FY16 and total debt to GCA at 27.23x for FY16. Furthermore, the
fortunes of SAZ are closely linked to those of M&M, being the
only supplier for the company. The sales and distribution of
automobiles especially the passenger vehicle is marked by intense
competition attributable to presence of several dealers creating
pressure to pass on the discounts to the customers.
Moreover, the sales of SAZ are generated from Himachal Pradesh
only resulting in stiff competition from other automobile dealers
in the near vicinity.
One of the directors, Mr Ajay Kakkar has business experience of
22 years through his association with SAZ and its group entities.
Additionally, M&M is a market leader in the UV industry and has a
healthy market share in the LCV industry.
SAZ was incorporated as a private limited company in 2013 and
started operations in April 2013. The company is promoted by Mr
Ajay Kakkar along with his wife, Mrs Gagneesh Kakkar and mother,
Mrs Chanchal Kakkar. The company is an authorised dealer of
passenger and utility vehicles of Mahindra and Mahindra Limited
(M&M; rated 'CARE AAA'/ 'CARE A1+'). SAZ operates a 3S facility
(sales, spares and service) and has a showroom located at Kangra
(Himachal Pradesh).
The company has opened three new showrooms (3S Facility) in Una,
Chamba and Kangra districts of Himachal Pradesh in October 2015,
November 2016 and December 2016, respectively. The company has
two group concerns, namely, Sant Autowheels Private Limited
(SAPL; rated 'CARE B+') and Sant & Brothers Petrol Stations
(SBPS). SBPS is a partnership firm and has a petrol filling
station in Amritsar, Punjab, whereas SAPL, incorporated in 2005,
is an authorised dealer of passenger vehicles for Hyundai Motors
India Limited.
In FY16, SKD has achieved a total operating income of INR67.73
crore with PAT of INR0.16 crore, as against the total operating
income of INR35.59 crore with PAT of INR0.06 crore in FY15. In
9MFY17 (Provisional), the company has achieved a total operating
income of INR75.00 crore.
SHALAK EATABLE: CRISIL Assigns B- Rating to INR14.66MM Term Loan
----------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Shalak Eatable Products Pvt Ltd and assigned its
'CRISIL B-/Stable/CRISIL A4' ratings to the bank facilities.
CRISIL had suspended the rating on June 22, 2016, as SEPL had not
provided the necessary information for the rating review. The
company has now shared the requisite information, enabling CRISIL
to assign the rating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Standby Overdraft 1.50 CRISIL A4 (Assigned;
Facility Suspension Revoked)
Term Loan 14.66 CRISIL B-/Stable (Assigned;
Suspension Revoked)
The rating reflects SEPL's start-up nature of operations and the
weak financial risk profile, because of high gearing and subdued
debt protection metrics. These weaknesses are partially offset by
the extensive experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Start-up nature of operations: Commercial operations are
expected to start by June 2017 with expected sales of INR10-12.0
crore in fiscal 2018. The company will have a small scale of
operations in the competitive food processing industry, which
will restrict benefits accruing from economies of scale.
* Weak financial risk profile: Phase-I of the project is funded
with a mix of term loan, equity and unsecured loans leading to
gearing of 2.5 times. Large debt contracted to set up the plant
and low cash accrual during the initial years of operations could
keep the gearing high and debt protection metrics subdued in the
near term.
Strength
* Extensive experience of the promoters: Benefits of the decade-
long industry presence of the promoters, via other group
entities, their keen grasp over market dynamics and strong
relationships with suppliers and customers, will continue.
Outlook: Stable
CRISIL believes SEPL will continue to benefit from the extensive
experience of its promoters in the food processing industry. The
outlook may be revised to 'Positive' if the company completes its
project without any time or cost overruns, and generates better-
than-expected cash accrual during the initial phase. The outlook
may be revised to 'Negative' in case of a time or cost overrun in
project implementation, lower-than-expected cash accrual in the
initial phase, or any additional debt-funded capital expenditure,
weakening liquidity.
SEPL, incorporated in 2008, is setting up a manufacturing unit
for production of 2D and 3D pellet snacks in Mohammadpur,
Lucknow. The company is being managed by Mr. Rajesh Bansal and
Mr. Yogesh Bansal, and is expected to start commercial operations
from June 2017.
TULSYAN NEC: CARE Reaffirms 'D' Rating on INR615.82cr LT Loan
-------------------------------------------------------------
The ratings assigned to the bank facilities of Tulsyan NEC
Limited continues to be constrained by the on-going delays in
servicing the debt obligations, on account of continuing losses
from operations resulting from non-optimal capacity utilization
and weak price of TMT bars.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities-Term
Loan 615.82 CARE D Reaffirmed
Long-term Bank
Facilities-Fund-
Based 215.00 CARE D Reaffirmed
Short-term Bank
Facilities - Non-
fund-based 142.16 CARE D Reaffirmed
Detailed description of the key rating drivers
TNEC approached the bankers for Corporate Debt Restructuring
(CDR) in May 2014 which was formulated and approved by the
bankers on March 26, 2015. CDR was necessitated by the tight
liquidity position faced by the company on account of delay in
implementation of two captive power plants (CPP) of INR35 MW
each, accentuated by slump in the steel industry caused by lower
demand and falling prices for TMT Bars. The CDR was implemented
in April 2015, and the interest payments were scheduled to start
from September 2015 and principal repayments from June 2016
(except certain portion of FITL from December 2015). Though CPP
II of 35 MW is now operational (the company achieved COD in
July 19, 2016 as against the revised COD of January 2016) the
company's steel capacity continues to be operated at sub-optimal
levels on account of subdued demand and unfavorable industry
scenario leading to stretched liquidity position, resulting in
delays.
Analytical approach: Standalone
Incorporated in the year 1947 under the name National Engineering
Company Limited, the company was taken over by the Tulsyan group
of companies in 1986. In the year 1996, Tulsyan Synthetics
Limited, a group company was merged with the NECL and the name of
the company was changed to Tulsyan NEC Limited with effect from
August 1996. TNEC is one of the major manufacturers of thermo
mechanically treated (TMT) bars and billets in South India. It is
also a large manufacturer of High Density Poly Ethelene (HDPE)/
Poly Propylene (PP) sacks and Flexible Intermediate Bulk
Containers (FIBC) in the region. The operation of the company is
divided into three divisions viz. Steel division, Synthetics
division and Power division.
TNEC has an installed capacity of 3,00,000 MTPA of rolling mills
of which TMT Bars capacity constitute 180,000 MTPA, Plain wire
rod capacity constitute 40,000 MTPA and TMT wire rod constitute
80,000 MTPA. Apart from the above, the company also has a
capacity to manufacture 25,797 MTPA of HDPE/PP sacks at its four
plants located in Bangalore (Two units), Malur district and Goa.
The company also has captive power plant I (CPP I) of 35 MW and
another CPP II of 35 MW.
The company registered a net loss of INR28.7 crore in FY16 on a
total income of INR849 crore as against a net loss of INR36.7
crore on a total income of INR1240.3 crore in FY15. During
H1FY17, the company made a net loss of INR34.1 crore on total
income of INR261.1 crore.
UMBERTO CERAMICS: CRISIL Upgrades Rating on INR74.50MM Loan to B-
-----------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Umberto
Ceramics International Private limited to 'CRISIL B-
/Stable/CRISIL A4' from 'CRISIL D/CRISIL D.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5.75 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 20.00 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Inland/Import 5.00 CRISIL A4 (Upgraded from
Letter of Credit 'CRISIL D')
Proposed Long Term 0.24 CRISIL B-/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
Rupee Term Loan 2.50 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Term Loan 74.50 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The upgrade factors in the timely servicing of debt because of
improved liquidity. The firm has been able to ramp up operations
resulting in improving cushion between accruals as against
maturing repayments obligations. Furthermore, there is continuous
timely fund support from the management which also supports
UCIPL's liquidity.
The rating continues to reflect firm's modest financial risk due
to aggressive capital structure and working-capital-intensive
operations. However it also has the extensive experience of the
company's promoters in the ceramic industry and the established
relationship with the customers and suppliers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest financial risk profile: Financial risk profile is marked
by weak gearing and weak debt protection metrics. Continuous
losses have led to erosion of the company's net worth and
weakening of its debt protection metrics. As on March 31, 2016,
firm has reported gearing of around 2.9 times and NCA/TD of
(0.01) times.
* Working capital intensive operations: Firms operations are
working capital intensive with Gross current assets of 297 days
as on March 31, 2016, because of sizeable inventory following
import of raw materials and high finished goods inventory due to
various types of products and designs.
Strength
* Extensive experience of the promoters and established
relationship with the customers: Promoters have more than 2
decades of experience in the ceramic industry and established
relationship with customers and suppliers. CRISIL believes that
this strengths will support the offtake of its products.
Outlook: Stable
CRISIL believes that Umberto will continue to benefit over the
medium term from its promoters' extensive industry experience.
The outlook may be revised to 'Positive' if the company registers
a significant increase in its revenue while maintaining its
healthy operating profitability, leading to substantial cash
accruals, or if it improves its capital structure, supported by
capital infusion by its promoters. Conversely, the outlook may be
revised to 'Negative' if the company's capital structure weakens
further due to debt-funded capex, or if its liquidity
deteriorates because of low sales or profitability, or a stretch
in its working capital cycle.
Incorporated in 2011, UCIPL is promoted by Dr. Khater Massaad,
Mr. Jainendra Malesha, and Mr. Kapoorchand Malesha. The company,
based in Gujarat, is engaged in manufacturing of porcelain-based
tableware products in various shapes and sizes. Umberto markets
its products under the brand name Ariane. The company commenced
commercial operations from June 2014.
UCIPL reported a net loss of INR9.22 crore on net sales of
INR60.16 crore for 2015-16 (refers to financial year, April 1 to
March 31), against a net loss of INR2.37 crore on net sales of
INR16.98 crore in 2014-15.
VAMA CONSTRUCTION: CARE Downgrades Rating on INR3cr Loan to B+
--------------------------------------------------------------
The revision in the rating assigned to the bank facilities of
Vama Construction Company takes into account significant decline
in its scale of operations and stretched liquidity position
during FY16 (refers to the period April 1 to March 31) along with
low revenue visibility. The ratings continue to remain
constrained on account of moderate profit margins, moderate debt
coverage indicators, moderate order book position apart from its
proprietorship nature of constitution, geographical revenue risk,
limited revenue diversity, competitive and fragmented nature of
industry and fluctuations in raw material prices and tender
driven nature of business.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3 CARE B+; Stable Revised
from CARE BB-
Short-term Bank
Facilities 2 CARE A4 Reaffirmed
The ability of the firm to tap more projects and diversify the
client base geographically as well with increasing scale of
operations will be the key rating sensitivities. Furthermore,
improving liquidity, capital structure and debt coverage
indicators would also remain crucial.
Detailed description of key rating drivers
The total operating income (TOI) of KSRM increased by around 144%
during FY16 over FY15 and The total operating income (TOI) of VCC
decreased by around 64% during FY16 over FY15 and remained
at INR6.95 crore due to late receipt of work orders. The PBILDT
margin of the firm improved by 1255 bps to 28.74% during FY16 as
against 16.19% during FY15. On account of decrease in total debt,
VCC's overall gearing stood 1.73 times as on March 31, 2016. With
the decrease in GCA and PBILDT, the debt coverage indicators
deteriorated and remained moderate.
The operating cycle has shortened to negative 167 days during
FY16 (Audited) as compared with negative 48 days during FY15
mainly on account of increase in creditor's period. The average
working
capital utilisation of the firm remained 90% during the 12 months
ended December 2016. VCC's partners have almost one decade of
experience in the construction industry. Mr Vijay Patel, manages
the overall operations of the firm.
Valsad-based (Gujarat) VCC, commenced its operations as a
proprietorship firm in the year 1996. VCC is established by Mr
Vijay Patel and is engaged in the construction of protection
walls such as sea walls, check dam, road and other civil work.
VCC is registered as 'A' class contactor with Government of
Gujarat (GoG) and also involved in sub-contractor work for other
companies.
As per the audited results for FY16 (refers to the period April 1
to March 31), VCC reported a Profit after Tax (PAT) of INR0.31
crore on a total operating income (TOI) of INR6.95 crore as
against a PAT of INR0.98 crore on a TOI of INR19.38 crore during
FY15 (Audited). Till December 31, 2016, the firm had clocked a
turnover of INR5 crore.
====================
N E W Z E A L A N D
====================
VERITAS INVESTMENTS: Sells Nosh Supermarket for NZ$4 Million
------------------------------------------------------------
Stuff.co.nz reports that a consortium of New Zealand investors
who do not want to be named have bought troubled gourmet
supermarket brand Nosh for NZ$4 million.
For now, it would be regular service for shoppers, and there were
plans to expand the "great" brand within the country and
overseas, the report says.
Veritas Investments, the listed company which owns Nosh, said on
Feb. 2 it would sell Nosh to a company called Gosh Holding, and
use the money to repay debt to ANZ, according to Stuff.co.nz.
Stuff.co.nz, citing Companies Office records, says Gosh Holding
was incorporated on Feb. 2 and its sole shareholder was Sydney-
based Andrew Phillips.
Mr. Phillips, a New Zealand corporate finance specialist who has
been based in Australia for 15 years, helped a consortium of
New Zealand investors buy Nosh, the report notes.
He would not identify the "two or three people" behind the
purchase, but said they were involved with consumer products in
New Zealand, Stuff.co.nz relays.
According to Stuff.co.nz, the group thought Nosh was a "great
brand" and believed there was an opportunity to develop it and
the chain.
Stuff.co.nz relates that Mr. Phillips, the new Nosh chairman,
said his Australian base was also a hint as to what the future
might hold for the business.
In New Zealand, there would be an internal restructure, but no
change for customers with all stores open for business, the
report relays.
"We'll grow the brand there and then assess our options," the
report quotes Mr. Phillips as saying. He said the company and
its overhead costs needed to be looked at, but would not go into
any possible job losses. "We see this as a good opportunity.
There will be more stores, certainly."
Mr. Phillips was confident it could turn Nosh around, and said
private ownership would prove a better fit than being publicly
listed, the report adds.
Nosh made a loss of NZ$1.9 million last year, and Veritas had
been working to franchise Nosh stores, Stuff.co.nz discloses.
The new owner agreed to take on Nosh's creditor liabilities as
part of the transaction, Stuff.co.nz notes.
According to Stuff.co.nz, the supermarket's sale comes after
ANZ's deadline for a proposal on the future of Nosh was pushed
back for a second time on Jan. 31. If it failed to find a buyer
Veritas, which also owned the Mad Butcher franchise, had to wind
down Nosh by the end of March, adds Stuff.co.nz.
=====================
P H I L I P P I N E S
=====================
BENGUETCORP NICKEL: 21 Mining Companies Face Closure
----------------------------------------------------
Inquirer.net reports that Environment Secretary Gina Lopez on
Feb. 2 said 21 mines are facing closure, mainly for ruining
bodies of water because of "indiscriminate mining."
The firms are:
* Benguetcorp Nickel Mines Inc. (Zambales)
* Eramen Minerals Inc. (Zambales)
* Zambales Diversified Metals Corporation (Zambales)
* LNL Archipelago Minerals Inc. (Zambales)
* Mt. Sinai Mining Exploration and Development Corp.
(Homonhon Island, Eastern Samar)
* Emir Minerals Corp. (Homonhon Island, Eastern Samar)
* Techiron Mineral Resources Inc. (Homonhon Island, Eastern
Samar)
* AAMPHIL Natural Resources Exploration (Dinagat Islands)
* Krominco Inc. (Dinagat Islands)
* SinoSteel Philippines H.Y. Mining Corporation (Dinagat
Islands)
* Oriental Synergy Mining Corporation (Dinagat Islands)
* Wellex Mining Corporation (Dinagat Islands)
* Libjo Mining Corporation (Dinagat Islands)
* Oriental Vision Mining Philippines Corp. (Dinagat Islands)
* ADNAMA Mining Resources Corporation (Surigao del Norte)
* Claver Mineral Development Corp. (Surigao del Norte)
* Platinum Development Corp. (Surigao del Norte)
* CTP Construction and Mining Corp. (Surigao del Norte)
* Carrascal Nickel Corporation (Surigao del Norte)
* Marcventures Mining and Development Corporation (Surigao del
Norte)
* Hinatuan Mining Corporation (Eastern Samar)
Ms. Lopez also suspended Oceanagold, Lepanto, Citinickel (Narra),
Berong Nickel, Ore Asia in Bulacan, Inquirer.net relates.
=================
S I N G A P O R E
=================
EZRA HOLDINGS: Faces "Going Concern" Issue as Claims Pile Up
------------------------------------------------------------
The Strait Times reports that more uncertainty surrounds Ezra
Holdings as financial claims against the offshore and subsea
contractor pile up while its talks with lenders seem to crawl
along after a fiasco involving Malaysian associate Perisai.
It came out on Jan. 31 that subsea services provider Bibby
Offshore had filed for arbitration against Emas Chiyoda Subsea,
claiming it is owed a reported US$14.7 million (SGD20.8 million)
from US$18.1 million of contracts performed in Trinidad last
year, according to the report.
ST notes that this is the subsea business that Ezra sold to
Chiyoda Corp and Nippon Yusen Kabushiki Kaisha (NYK) last year.
Emas Chiyoda Subsea is 40% owned by Ezra. Chiyoda has a 35%
interest and NYK holds a 25% stake.
Although few analysts still cover Ezra, many believe its fate
hangs on the patience of its bankers, including all three local
lenders, says ST.
The report relates that in an update last month, Ezra said it was
still in talks with various stakeholders to consolidate its
funding requirements.
Ezra will face a "going concern" issue if these efforts do not
achieve a favorable and timely outcome, the report notes.
A spokesman for Ezra declined to comment on the firm's solvency
in the light of recent developments, stating that Emas Chiyoda
Subsea is a joint-venture company, ST says.
On Jan. 31, Chiyoda said it expects to incur risks and expenses
of about JPY38 billion (SGD475 million) from its stake in Emas
Chiyoda Subsea; NYK expects an extraordinary loss of about
JPY13 billion (SGD162 million), the report discloses.
In December, Norwegian shipowner Forland Subsea AS said a unit of
Emas Chiyoda had defaulted on a charter payment due Nov. 30 for
the vessel Lewek Inspector, which the unit said it was unable to
settle "due to financial distress," ST recalls. A temporary
agreement was reached and the Lewek Inspector allowed to resume
work offshore Congo.
ST notes that during the same time, the Emas Chiyoda unit sought
a short-term standstill agreement from another trade creditor -
Ocean Yield ASA - relating to charter payments for the Lewek
Connector for the months of December and January.
Both the obligations to Forland Subsea and Ocean Yield are
guaranteed by Ezra, according to ST.
ST says Ezra has bought time with the standstills, but much
depends on when it will resolve a US$43 million put option with
defaulted associate Perisai Petroleum Teknologi, which triggered
cross defaults at other Emas Offshore (EOL) entities. Ezra unit
EOL said last month that though all its lenders had agreed to a
refinancing, this was delayed due to a lack of resolution with
Perisai.
Ezra has applied to the Singapore Exchange for a 30-day extension
from Jan. 14 to announce its financial statements for the first
quarter ended Nov. 30 last year, adds ST.
====================
S O U T H K O R E A
====================
SK HYNIX: Strong Results for 4Q 2016 Support Moody's Ba1 CFR
------------------------------------------------------------
Moody's Investors Service says that SK Hynix Inc.'s strong
results for 4Q 2016 support the company's Ba1 corporate family
rating and the positive rating outlook.
"SK Hynix's 4Q 2016 results continued to show pricing recovery in
DRAM, amid strong demand and disciplined industry supply," says
Gloria Tsuen, a Moody's Vice President and Senior Analyst.
"These favorable dynamics will likely continue into 2017," adds
Tsuen. "In particular, Moody's expects that the company's
adjusted debt/EBITDA will trend towards 0.5x in 2017 compared
with 0.6x in 2016."
SK Hynix's 4Q 2016 revenue rose 26% quarter-over-quarter, and its
reported operating margins rose to 29% from 17% in 3Q 2016.
DRAM bit shipment and average selling price (ASP) gained 13% and
14% respectively quarter-over-quarter, driven by strong demand
for server and mobile products, as well as higher PC DRAM prices.
At the same time, NAND bit shipments fell 3%, while ASP increased
14% quarter-over-quarter, due to a shift in the company's product
mix towards NAND products with higher price premiums but
relatively lower content.
For full-year 2016, SK Hynix's revenue fell 8% year-on-year and
reported operating margins fell 11 percentage points to 19%,
mainly due to weak ASP in 1H 2016 during the DRAM market's
downcycle, which started in 4Q 2015 and bottomed in 2Q 2016.
SK Hynix has maintained a strong financial profile. While its
adjusted debt/EBITDA registered 0.6x in 2016 compared with 0.5x
in 2015, the deterioration represented only a rise of 0.1x.
For 2017, Moody's expects that SK Hynix's leverage will decline,
as its revenue and margins improve, on the back of continued
strong DRAM demand and limited supply growth. At the same time,
3D NAND products will remain in short supply until 2H 2017.
SK Hynix will increase its capex to KRW7 trillion in 2017 from
around KRW6 trillion in 2016, and its dividends to KRW600 per
share (around KRW437 billion) from KRW500 per share.
Nevertheless, an increase in debt -- if any -- would be modest,
given the company's strengthened earnings and operating cash
flow.
In addition, SK Hynix's KRW4.1 trillion in cash and short-term
investments, and modest KRW200 billion in net debt, both at end-
2016, provide a solid buffer for the increased investment and
payout.
SK Hynix's liquidity profile remains strong, with only KRW705
billion in short-term debt.
SK Hynix's Ba1 corporate family rating continues to factor in one
notch of uplift for support from its parent, SK Telecom Co., Ltd.
(A3 stable).
The principal methodology used in this rating was Semiconductor
Industry Methodology published in December 2015. Please see the
Rating Methodologies page on www.moodys.com for a copy of this
methodology.
SK Hynix Inc., a Korea-based company, is engaged in the design,
manufacture and sale of memory chips, such as DRAM and NAND flash
memory. It is 20.07%-owned by SK Telecom Co., Ltd.
This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com for the
most updated credit rating action information and rating history.
*********
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
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Friday's edition of the TCR-AP features a list of companies with
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latest balance sheets publicly available a day prior to
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*********
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-
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Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
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Copyright 2017. All rights reserved. ISSN: 1520-9482.
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