/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170206.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 Monday, February 6, 2017, Vol. 20, No. 26 Headlines A U S T R A L I A QUEENSLAND NICKEL: Palmer Ordered to Open Business Empire's Books I N D I A BALAJI MOTORS: ICRA Raises Rating on INR11.80cr Loan to 'B' BSL ENGINEERING: CRISIL Reaffirms B Rating on INR1MM Cash Loan DECO GOLD: CRISIL Reaffirms B- Rating on INR6.0MM Cash Loan DINCO 4: CRISIL Upgrades Rating on INR22MM Loan to B+ GKC PROJECTS: ICRA Lowers Rating on INR1,116.83cr Loan to 'D' GOA SPONGE: ICRA Reaffirms 'D' Rating on INR52.30cr Loan GRESS CERAMICA: ICRA Ups Rating on INR6.36cr Loan from D GTN ENTERPRISES: CARE Ups Rating on INR18.80cr LT Loan to 'B' GULSHAN FASHIONS: CARE Assigns B+ Rating to INR6.0cr LT Loan GWET COLD: CARE Assigns 'B' Rating to INR35.98cr LT Loan HARESH OVERSEAS: ICRA Reaffirms 'C' Rating on INR5.0cr Loan JHARKHAND MEGA: CRISIL Lowers Rating on INR33.95MM LT Loan to D KRISHNA COTTON: ICRA Lowers Rating on INR5.20cr Loan to B- LANFORD CERAMIC: CRISIL Ups Rating on INR7.12MM Term Loan to B+ LEXUS MOTORS: ICRA Reaffirms B+ Rating on INR69.5cr Loan MATIX FERTILIZERS: CARE Reaffirms 'D' Rating on INR3263cr LT Loan MUSTANG SERVICES: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan N P RAJAGOPAL: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan PRACHI (INDIA): CARE Assigns B+ Rating to INR15cr LT Loan PRAMUKH COPPER: ICRA Assigns D Rating to INR6.75cr LT Loan R.P. SINGH: CRISIL Assigns 'B' Rating to INR7.07MM Cash Loan RAJ VEHICLES: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan RESHMA FABRICS: CRISIL Reaffirms B+ Rating on INR6.5MM Term Loan S R HAPPY: CRISIL Assigns 'B' Rating to INR4.5MM Long Term Loan SARDAR COTTON: CARE Assigns B+ Rating to INR10.87cr LT Loan SATWI INFRA: ICRA Assigns 'B' Rating to INR20cr Long Term Loan SAURASHTRA GINNING: CRISIL Reaffirms B Rating on INR6.75MM Loan SILICA INFO: ICRA Assigns B+ Rating to INR7cr Cash Credit SIYARAM META: ICRA Raises Rating on INR35cr Loan to B- SOLAS FIRE: CRISIL Reaffirms B+ Rating on INR4.45MM Cash Loan SPI PROPERTIES: ICRA Withdraws 'B' Rating on INR4.60cr Loan SURAJ TRADELINK: CRISIL Reaffirms B+ Rating on INR3MM Cash Loan TALREJA TEXTILES: CRISIL Ups Rating on INR4.5MM Cash Loan to B+ TULSI DALL: CRISIL Reaffirms 'B' Rating on INR9.9MM Cash Loan TURBO CAST: CRISIL Reaffirms B+ Rating on INR5.08MM Term Loan VISHWA INFRASTRUCTURES: CARE Reaffirms D Rating on INR494cr Loan I N D O N E S I A XL AXIATA: Declining Leverage Support Moody's Ba1 CFR J A P A N TAKATA CORP: Selects Key Safety Systems as Preferred Bidder M A L A Y S I A 1MALAYSIA DEVELOPMENT: Swiss Orders Coutts to Pay CHF6.5MM N E W Z E A L A N D DESERT ROSE: Restaurant Shuts Due to Lack of Patrons S I N G A P O R E EZRA HOLDINGS: May Take US$170MM Writedown from Emas Chiyoda S O U T H K O R E A DONGWHA DUTY FREE: To Transfer Majority Stake to Hotel Shilla HANJIN SHIPPING: South Korea Court to Declare Firm Bankrupt - - - - - ================= A U S T R A L I A ================= QUEENSLAND NICKEL: Palmer Ordered to Open Business Empire's Books ----------------------------------------------------------------- The Sydney Morning Herald reports that Clive Palmer has been ordered to lay bare the bulk of his business empire as the Federal Court continues to probe the collapse of Queensland Nickel. The Herald relates that the mining magnate must produce financial and management accounts, asset registers and tax returns for more than half a dozen companies and his political party when questioning resumes on Feb. 9. According to the report, the liquidators want to look at the books for Mineralogy, the Palmer United Party and the companies behind the Palmer Coolum resort and the stalled Titanic II project. They also want to examine Mineralogy subsidiary Fairway Coal, which is part of a bid to start a new open-cut coal mine on land Queensland Nickel creditors had tried to sell, the report says. The Herald notes that the hearings are probing Queensland Nickel's crash into voluntary administration in January last year, putting roughly 800 workers out of jobs. Taxpayers picked up a AUD70 million worker's entitlement bill, which special purpose liquidator PPB Advisory was trying to recoup questioning Mr. Palmer last year, the report says. The Herald relates that general purpose liquidator FTI Consulting is expected to take its turn from Feb. 9, trying to recover AUD300 million owed to creditors. Mr. Palmer's wife, Anna, and nephew Clive Mensink have also been summoned to appear at the hearings, says the Herald. According to the Herald, acting District Registrar Murray Belcher issued the latest orders on Feb. 2, calling for the documents to presented. He also ordered Mr. Palmer disclose details of the 2006 agreement between Mineralogy and Citic Pacific to set up the Sino Iron mine, the report states. The Herald adds that liquidators will have access to all royalties the company receives, its bank statements and June 2015 loan, valuations for the Austeel Mill Project and Balmoral South Iron Ore Project, along with any sale contract for the AUD20 million Mineralogy House in Queen Street, which was put on the market last year. Queensland Nickel operates the Palmer Nickel and Cobalt Refinery in Queensland, Australia. Queensland Nickel directors appointed John Park, Stefan Dopking, Kelly-Anne Trenfield and Quentin Olde of FTI Consulting as voluntary administrators on Jan. 18, 2016. FTI went from being administrators to liquidators at the second creditors meeting in April, after issuing a damning report into Queensland Nickel's finances, The Courier-Mail reported. ========= I N D I A ========= BALAJI MOTORS: ICRA Raises Rating on INR11.80cr Loan to 'B' ----------------------------------------------------------- ICRA has assigned a long-term rating of [ICRA]B to the INR4.80 crore term loan, INR7.00 crore cash credit facilities and INR0.20 crore unallocated limits of Balaji Motors. The outlook on the long-term rating is 'Stable'. Earlier, the rating was suspended in the month of August, 2016 in the absence of the requisite information from the company, which currently stands revoked. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 11.80 Upgraded from [ICRA]B- to [ICRA]B (Stable); suspension revoked Unallocated Limits 0.20 Upgraded from [ICRA]B- to [ICRA]B (Stable); suspension revoked Rationale The upward revision in the rating takes into account stabilisation of operations at a recently-commissioned showroom at Jagdalpur in the Bastar district of Chhattisgarh. The rating also takes into account the limited track record of BM's promoters in the automobile dealership business, relatively small scale of operations and inherently low margins of the firm on account of industry dynamics and commission structure decided by the principal. Its weak financial profile is reflected by an aggressive capital structure and subdued level of coverage indicators. The rating also considers BM's exposure to the cyclical nature of the Indian auto industry and the competition faced from other automobile dealers in the region. The rating further incorporate the risks associated with the entity's status as a partnership firm, including the risk of capital withdrawal by the partners. The rating, however, derives comfort from BM's established market position as the firm is the sole authorised dealer of Mahindra & Mahindra Limited in Bastar, Sukma, Bijapur, and Dantewada districts of Chhattisgarh. Besides, the firm has a diversified revenue stream through the sale of new vehicles, old vehicles, and spare parts/ accessories and service income. In ICRA's opinion, the ability of the firm to scale up operations while improving its profitability, capital structure and coverage indicators, and manage its working capital requirement efficiently would remain key rating sensitivities, going forward. Key rating drivers Credit Strengths * Stabilisation of operations at a recently-commissioned showroom in Bastar * Established position as an authorised dealer of MML in Chhattisgarh Credit Weakness * Limited track record of the promoters in the automobile dealership business * Relatively small scale of current operations * Intense competition among dealers of various automobile companies and the commission structure decided by the principal, leading to thin margins * Weak financial profile characterised by an aggressive capital structure and subdued level of coverage indicators Description of key rating drivers highlighted: The firm was established in 2004 by the Jagdalpur-based Kapoor family. It became an authorised dealer of MML on September 25, 2015 and has a 3-S facility located at Jagdalpur, Bastar. The firm sells and services passenger and commercial vehicles, spare parts and accessories and used vehicles. It operates and is the sole MML dealer in Bastar, Sukma, Bijapur, and Dantewada districts of Chhattisgarh. The experience of the promoters in the automobile-dealership business remains limited, however, stabilisation of operations at the showroom strengthens its position to some extent. Vehicle dealership business comprises several revenue streams - the primary one being the sale of new cars, augmented by income from sale of spares and accessories, servicing of vehicles, and incentives from vehicle manufacturer. Since the firm's operating income (OI) primarily depends on the sale of new vehicles, it remains exposed to the cyclical nature of the Indian auto industry. With rapid expansion of dealership by the new OEMs and aggressively-priced products, the competition has increased much over the last few years. As a result, BM faces stiff competition from other OEM dealers in the region. In ICRA's view, the Indian auto industry's domestic volumes is likely to grow in the near future, supported by return of first-time buyers and replacement demand owing to large base of 2009-10/ 2010-11. The firm started its commercial operations from September, 2015 and registered an operating income of INR34.94 crore in FY2016. The operating profit margin of auto dealers, including BM, is inherently low due to the nature of the industry, which is characterised by intense competition among dealers in a high volume, low-margin business. Besides, they are regulated by the OEM to a large extent. The dealership business has most of the borrowings related to funding of working capital as it requires considerable inventory stocking which makes the capital structure of the firm aggressive. High debt level, coupled with low profitability has kept the coverage indicators weak. The firm's working capital intensity of operations has remained modest, as reflected by net working capital relative to operating income (NWC/OI) of 17% during FY2016. However, the liquidity position of the firm has remained stretched in view of high utilisation of working capital limits. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt servicing track record of BM, its business risk profile, financial risk drivers and the management profile. Established in 2004, Balaji Motors started commercial operations from September 25, 2015 as an authorised dealer of Mahindra & Mahindra Limited (MML). The firm sells and services passenger and commercial vehicles besides selling spare parts and accessories. BM also sells used vehicles through Mahindra First Choice. BM has one 3-S facility (sales-services-spares), located at Jagdalpur in the Bastar district of Chhattisgarh. Apart from Bastar, the firm also operates in other surrounding districts- Sukma, Bijapur, and Dantewada and is the sole MML dealer in those districts. The firm is promoted by the Jagdalpur-based Kapoor family. BSL ENGINEERING: CRISIL Reaffirms B Rating on INR1MM Cash Loan -------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of BSL Engineering Services Limited at 'CRISIL B/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4 CRISIL A4 (Reaffirmed) Cash Credit 1 CRISIL B/Stable (Reaffirmed) The ratings continue to reflect a modest scale of operations, high working capital requirement, and average financial risk profile. These rating weaknesses are mitigated by the extensive experience of the promoters in the engineering industry, and established relationship with customers. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: Revenue was INR18.89 crore in fiscal 2016. Though there is revenue visibility as indicated by an order book of INR54.29 crore to be executed by March 2017, project execution is dependent on the ability to manage working capital requirement for these orders. * High working capital requirement: Gross current assets (GCAs) ranged between 250-300 days in the four years fiscals ended March 31, 2015. The GCA days were lower, but remained high at 151 days as on March 31, 2016, due to substantial debtors. *Average financial risk profile: The networth was small, though debt protection metrics were comfortable. Interest coverage and net cash accrual to total debt ratios were 4.11 times and 0.74 times, respectively, in fiscal 2016. Strength * Extensive industry experience of the promoters: The promoters have been in the industry for about three decades through other group companies. * Established relationship with customers: The extensive promoter experience has resulted in repetitive orders from key customers such as National Thermal Power Corporation and Power Machine India Limited. Outlook: Stable CRISIL believes BEPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' in case of a substantial increase in sales and profitability leading to higher cash accrual, along with improvement in working capital management, or considerable fund infusion. The outlook may be revised to 'Negative' if the financial risk profile weakens due to a stretched working capital cycle or delayed payment by debtors. BEPL was established in 2009 by Mr. Hansraj Shiv and is now managed by his son, Mr. Neerav Hans. It specialises in engineering, procurement, and construction (EPC) services and fabrication of steel structures, high-pressure pipes, low- pressure pipes, and supply of power equipment. The company has well laid out workshops in India at Roorkee and Haridwar in Uttarakhand, and Nasik in Maharashtra, and overseas (UAE and Ukraine), with adequate plant and equipment to undertake fabrication support. Status of non-cooperation with previous CRA: BESL has not cooperated with ICRA Ltd (ICRA), which has suspended its rating vide its release dated May 23, 2016, on account of non-provision of information required for monitoring of ratings. Any other information: Net sales for fiscal 2016 were INR18.89 crore, in line with CRISIL's expectations. Revenue in the first half of fiscal 2017 was INR9 crore, and is expected at INR30 crore for the full fiscal. Gross current assets have decreased to 151 days as on March 31, 2016, from 207 days a year earlier. This was mainly due to execution of some supply contracts at the year- end leading to much lower inventory of 32 days as on March 31, 2016. The financial risk profile continues to be average because of low gearing of around 0.31 times as on March 31, 2016, in the absence of any long-term debt. The gearing is expected to remain at a similar level over the medium term as there are no major capital expenditure (capex) plans. The networth was, however, small at INR3 crore, as on March 31, 2016. CRISIL expects the financial risk profile to remain average over the medium term with no capex or equity infusion plans. Liquidity remained stretched, as indicated by high bank limit utilisation. However, in the absence of any major debt on the books, the net cash accrual can be used to support any increase in working capital requirement. DECO GOLD: CRISIL Reaffirms B- Rating on INR6.0MM Cash Loan ----------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Deco Gold Glazed Tiles Limited at 'CRISIL B-/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.5 CRISIL A4 (Reaffirmed) Cash Credit 5.0 CRISIL B-/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 6.0 CRISIL B-/Stable (Reaffirmed) The ratings reflect DGGTL's large working capital requirement and small scale of operations in the fragmented tiles industry. Financial risk profile remains constrained by small networth. Also, liquidity remained stretched, with high bank limit utilisation and corporate guarantee extended to a group company of INR34 crore as of March 2016. Moreover, operations remain highly working capital intensive, with high debtor and inventory days. These weaknesses are partially offset by promoters' experience and established relationships with clients. Key Rating Drivers & Detailed Description Strengths Weaknesses * Modest scale in a fragmented industry: Operations remain small, with operating revenue of INR24.82 crore as of March 2016, and is expected to remain at similar levels over the medium term. * Working capital-intensive operations: Working capital requirement should remain large, with debtor and inventory days of over 70 and 110 days, respectively. Although operations are supported by creditors, it remains on higher side affecting liquidity of company. Strength * Promoter's extensive experience: Promoter has extensive experience in the ceramic industry and has longstanding relationships with customers and suppliers which help manage its working capital cycle. Outlook: Stable CRISIL believes DGGTL will continue to benefit over the medium term from the extensive experience of promoter and moderate debt protection metrics. The outlook may be revised to 'Positive' in case of strong accrual and improvement in working capital cycle. Conversely, the outlook may be revised to 'Negative' if decline in accrual, large, debt-funded capital expenditure, or increase in working capital requirement, weakening the financial risk profile. Established in 1999, DGGTL manufactures non-vitrified floor tiles, and has a manufacturing facility in Morbi, Gujarat. Mr Dinesh Kundariya manages operations. For fiscal 2016, DGGTL reported a net profit of INR0.64 crore on net sales of INR24.76 crore, against a net profit of INR0.07 crore on net sales of INR21.99 crore for fiscal 2015. DINCO 4: CRISIL Upgrades Rating on INR22MM Loan to B+ ----------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Dinco 4 Wheels LLP to 'CRISIL B+/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 2 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Electronic Dealer 22 CRISIL B+/Stable (Upgraded Financing Scheme from 'CRISIL B/Stable') (e-DFS) The upgrade reflects expectation that business risk profile will continue to improve over the medium term, as addition of customers and increased demand sustain growth in revenue and operating profitability. Operating income was INR60 crore in fiscal 2016 and should exceed INR120 crore in fiscal 2017, while operating margin improves to around 2.5% from 1.9% during this period. Key Rating Drivers & Detailed Description Weakness * Moderate total outside liabilities to adjusted networth (TOLANW) ratio: Dinco is expected to have a TOLANW of around 3 times as on March 31, 2017. Despite a small networth, the TOLANW has remained moderate on account of moderate debt levels, majority of the debt being short-term in nature used for funding working capital. The TOLANW ratio is expected to remain at similar levels over the medium term. Strengths * Extensive experience of promoters in the auto dealership industry: Benefits from the partners' experience in auto dealership should continue to support business risk profile. The partners entered the business in 2007 through group entity, Dinco Motors Pvt Ltd, which had dealership of two wheelers of Suzuki India and passenger cars of Tata Motors Ltd. These dealerships were surrendered in 2015. Dinco, which began operations in 2015, deals in passenger cars of MSIL for Rewari, and has a sub- dealership in Bawal and Kosli. * Healthy sales outlook due to new and existing models from MSIL: Sales has been healthy since the start of operations in October 2015, and should exceed INR120 crore in fiscal 2017, backed by demand for the new models of MSIL. Outlook: Stable CRISIL believes Dinco will benefit from the partners' extensive experience and the healthy demand for the passenger cars of Maruti Suzuki India Ltd. The outlook may be revised to 'Positive' if scale of operations increases sustainably while cost structure and working capital cycle continue to be managed efficiently. Conversely, the outlook may be revised to 'Negative' if financial risk profile weakens because of low profitability or stretch in working capital cycle. Dinco, is a partnership firm set up in August 2015 by Mr Hitesh Kumar Goyal and Mr Dinesh Kumar Goyal. The firm is an authorised dealer of passenger cars of MSIL in Rewari. The firm began operations in October 2015, and reported a profit after tax (PAT) of INR0.33 crore on net sales of INR62 crore in fiscal 2016. GKC PROJECTS: ICRA Lowers Rating on INR1,116.83cr Loan to 'D' ------------------------------------------------------------- ICRA has downgraded the long term rating outstanding on the INR334.08 crore cash credit limits, INR546.57 crore term loans, INR1116.83 crore bank guarantees, INR195.00 crore Letter of Credit and INR7.52 crore unallocated limits of GKC Projects Limited to [ICRA]D from [ICRA]BB-. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based-Cash Credit 334.08 [ICRA]D/Downgraded from [ICRA]BB-(Stable) Fund based-Term Loans 546.57 [ICRA]D/Downgraded from [ICRA]BB-(Stable) Non Fund based- Bank Guarantee 1116.83 [ICRA]D/Downgraded from [ICRA]BB-(Stable) Non Fund based- Letter of Credit 195.00 [ICRA]D/Downgraded from [ICRA]BB-(Stable) Long term Unallocated limits 7.52 [ICRA]D/Downgraded from [ICRA]BB-(Stable) Rationale The downgrade in the rating factors in the recent delays in debt servicing by the company. Further, there is overdrawal of cash credit facility more than 30 days due to tight liquidity position. ICRA notes that the lenders of the company have invoked S4A (Scheme for Sustainable Structuring of Stressed Assets) scheme with October 26, 2016 as the reference date, which has been cleared by the Overseeing Committee. The lenders are in the process of obtaining the sanction for the same from their respective competent authorities. Going forward, GKC's ability to service its debt obligations in a timely manner will be the key rating sensitivity. Key rating drivers Credit Strengths * Established presence with over two decades of promoters' experience in the civil construction industry supported by technically competent personnel * Orders worth INR1260 cr have been received during 9M FY2017 post which the order book position of the company stood at INR2578 cr( as on December 31,2016) which is 2.20 times the operating income for FY2016 providing revenue visibility for the medium term Credit Weakness * Recent delays in debt servicing of its term loans and overdrawal in CC for more than 30 days * Decline in the operating revenues in H1FY2017 at INR371.15 cr against INR530.66 cr in H1FY2016 caused by delay in getting clearances and approvals from the Government agencies and the clients leading to slower execution * Net cash losses during H1FY2017 at INR26.36 cr due to decline in operating revenues and high interest costs GKC's revenues witnessed significant decline of 30% y-o-y in H1FY2017 due to delay in getting clearances and approvals from the Government agencies and the clients leading to slower execution. As a result of slower execution and high interest burden, the company posted net cash losses to the extent of INR26.36 cr during H12017.Stretched liquidity position has resulted in the delays in debt servicing. ICRA notes that the lenders of the company have invoked S4A (Scheme for Sustainable Structuring of Stressed Assets) scheme with October 26, 2016 as the reference date. The implementation of S4A would reduce the debt servicing obligation of the company. The sustainable and unsustainable portion of debt has been identified as 55% and 45% respectively. Further, there is overdrawal of cash credit facility for more than 30 days. The promoters of GKC have over two decades of experience in the civil construction industry supported by technically competent personnel. Orders worth INR1260 cr have been received during 9M FY2017 post which the order book position of GKC stood at INR2578 cr( as on December 31,2016) which is 2.20 times the operating income for FY2016 providing revenue visibility for the medium term. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt-servicing track record of GKC, its business risk profile, financial risk drivers and the management profile. GOA SPONGE: ICRA Reaffirms 'D' Rating on INR52.30cr Loan -------------------------------------------------------- ICRA has reaffirmed the long term rating at [ICRA]D for the INR46.00 crore cash credit facility and INR52.30 crore term loans of Goa Sponge & Power Limited. ICRA has also reaffirmed the short term rating at [ICRA]D for the INR5.00 crore fund based, INR4.00 crore non-fund based and INR13.53 crore unallocated facilities of GSPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 46.00 [ICRA]D reaffirmed Term loan 52.30 [ICRA]D reaffirmed Short term fund based limits 5.00 [ICRA]D reaffirmed Short term non- fund based limits 4.00 [ICRA]D reaffirmed Unallocated Amount 13.53 [ICRA]D reaffirmed Rationale The reaffirmation of ratings takes into account the continuing delays in debt servicing in FY2016 and in the current year owing to stretched liquidity caused by significant inventory pile-up. The ratings also factor in the company's weak financial profile characterised by depressed coverage indicators and its exposure to cyclicality associated with the steel industry, which is likely to keep the cash flows volatile. The ratings, however, take into account the equity infusion of INR8 crore by the promoters in FY2016, which provides comfort to the capital structure of the company. The ratings also favourably factor in the forward integration of GSPL in the form of billet manufacturing facility and the use of captive power plant which improves the cost structure for billet manufacturing. Going forward, GSPL's ability to improve its working capital cycle by reducing inventory levels would remain a key rating sensitivity. Key rating drivers Credit Strengths * Equity infusion of INR8 crore by the promoters in FY2016, which lends support to the capital structure of the company * Forward integration of GSPL in form of billet manufacturing facility, which fetches better realisation for the company; use of captive power plant (CPP) improves the cost structure for billet manufacturing Credit Weakness * Continuing delays in debt servicing in FY2016 and in the current year owing to tight liquidity situation caused by significant inventory pile-up * Weak financial risk profile characterised by modest coverage indicators * Exposure to the cyclicality associated with the steel industry, which is likely to keep cash flows volatile * Exposure to forex risks, given the fact that almost 50% of the company's iron ore procurement is in foreign currency Description of key rating drivers highlighted: The key raw materials required for manufacturing sponge iron are iron ore, thermal coal and dolomite. The company also has a captive power plant (CPP) of 12 megawatts (MW), which is operated using waste heat recovered from the sponge iron kiln and residual coal from sponge iron manufacturing. To reduce to its overall production cost, GSPL started importing iron ore with high Fe content from South Africa from FY2016 onwards. ICRA notes that since ~50% of the company's total iron ore procurement is in foreign currency, its margins remain exposed to forex risk in absence of any firm hedging mechanism. Around 70% of sponge iron manufactured by GSPL is used in house for manufacturing billets. The company's sponge iron production volume increased by 25% and the same was accompanied by a 28% increase in MS billet production during FY2016. However, decline in MS billet realization led to 13% revenue de-growth during that fiscal. The high inventory levels maintained by the company results in its high working capital intensity and in turn a stretched liquidity position which is also reflected from high utilisation of its bank limits. As a result, delays in debt servicing continued in FY2016 and in the current year. Incorporated in 2002, Goa Sponge & Power Limited (GSPL) manufactures sponge iron and mild steel (MS) billets from its manufacturing unit at Sanguem, Goa. The company has an installed capacity of 90,000 metric tonnes per annum (MTPA) for sponge iron and 72,000 MTPA for MS billets. GSPL also has a captive power plant (CPP) of 12 megawatt (MW). GSPL recorded a net profit of INR2.37 crore on an operating income of INR201.08 crore for the year ending March 31, 2016. GRESS CERAMICA: ICRA Ups Rating on INR6.36cr Loan from D -------------------------------------------------------- ICRA has upgraded the long-term rating to [ICRA]B- from [ICRA]D on the INR6.36-crore fund-based facility of Gress Ceramica Private Limited. ICRA has also upgraded the rating on GCPL's INR1.00-crore non-fund based facility to [ICRA]A4 from [ICRA]D. Furthermore, ICRA has also assigned the [ICRA]B- and [ICRA]A4 ratings on the INR1.89-crore unallocated limits of GCPL. The outlook assigned on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Non-fund Based Limits 1.00 Upgraded to [ICRA]A4 from [ICRA]D Fund-based Limits 6.36 Upgraded to [ICRA]B- (Stable) from [ICRA]D Unallocated Limits 1.89 [ICRA]B- (Stable) and [ICRA]A4; Assigned Rationale The rating upgrade reflects the regularisation of debt servicing by Gress Ceramic Private Limited over the last six months. The ratings also consider the long experience of the key promoters in the ceramic industry and the favorable location of the company's plant, resulting in easy access to raw material sources. The ratings, however, continue to remain constrained by GCPL's modest operating scale and financial profile, which is characterised by losses at net levels, moderate capital structure, and weak debt coverage indicators. The ratings also take into account the decline in revenues in FY2016, primarily on account of weak domestic demand, limited product diversification and significant deterioration in working capital intensity because of stretched receivables and inventory pile-up. The ratings also take note of the company's vulnerability to the performance of its key consuming sector - the real estate industry - and the stiff industry competition. ICRA expects GCPL's turnover to witness marginal growth in FY2017 and remain stagnant over the next two to three years, considering the current demand scenario and lower realisations in the ceramic industry, mainly in wall tiles segment. The profitability at net levels is expected to improve, resulting from lower depreciation and finance costs as a consequence of term loan repayments. Ability to meet the high repayment obligation against the likely lower cash accruals would be important to the credit metrics. Furthermore, the company's ability to increase the scale of operations and manage its working capital efficiently would be the key rating sensitivity. Key Rating Drivers Credit Strengths * Experience of the promoters in the ceramic industry * Favorable location of the company's plant resulting in easy access to raw material sources Credit Weaknesses * Modest scale of operations, financial profile characterized by losses at net levels, moderate capital structure, and weak debt coverage indicators * Substantial decline in operating income by ~25.0% in 2016, due to unfavourable domestic demand scenario and limited product diversification * Significant deterioration in working capital intensity levels due to inventory pile-up and stretched receivables position * Competitive business environment due to the presence of large, established tile manufacturers as well as unorganised players. GCPL's financial profile is characterised by stretched liquidity position, arising from high receivables in FY2016. The company procures raw materials in anticipation of demand and maintains an inventory of upto 90 days. Procurement is done against a credit period of around 60-90 days; however, it remained high on year- end due to sluggish market demand and delay in realisations from debtors. Due to working capital-intensive business, the company funds its working capital requirements largely through borrowings from bank and its creditors. The capital structure of the company is moderately high because of high borrowings and deterioration of net-worth, resulting from losses at net levels. Furthermore, the company's subdued profitability has led to weak debt protection metrics. The company's presence in the highly fragmented ceramic industry, which is characterised by intense competition, limits its pricing flexibility and thereby its ability to effectively pass on the increase in raw material prices to customers. However, the decline in gas prices and application of coal-based gasifiers for meeting the fuel requirements is expected to alleviate cost pressures and increase the margins. GCPL's promoters have a long experience in the ceramic industry. Furthermore, the favorable location of the company provides it easy accessibility to quality raw materials. For arriving at the ratings, ICRA has taken into account the debt servicing track record of GCPL, its business risk profile, financial risk drivers and the management profile. Incorporated in December 2011, Gress Ceramica Private Limited is a glazed wall tiles manufacturer with its plant in Wankaner, Gujarat. GCPL commenced its operations in July 2012 and currently manufactures wall tiles of four sizes 12"X18", 12"X12", 8"X24" and 10"X24", which find wide application in commercial as well as residential buildings. The company is managed and promoted by Mr. Bhadresh R. Bhadoliya, Mr. Nitin Panchotiya and Mr. Hasmukh Panchotiya. It has an installed capacity to manufacture 18,72,000 boxes of wall tiles per annum. On March 31, 2016, the firm reported an operating income of INR13.67 crore with a net loss of INR0.11 crore against an operating income of INR18.15 crore with a net profit of INR0.07 crore as on March 31, 2015. GTN ENTERPRISES: CARE Ups Rating on INR18.80cr LT Loan to 'B' ------------------------------------------------------------- The revision in the long-term ratings assigned to the bank facilities of GTN Enterprises Limited takes into the improvement in the debt servicing track record of the company and improvement in financial position consequent to sale of windmill asset during Q3FY17 (refers to the period October 1 to December 31). Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 18.80 CARE B; Stable Revised Facilities from CARE D Short-term Bank Facilities 91.00 CARE A4 Reaffirmed The ratings continue to be constrained by GEL's volatile operating profit margins, moderate capital structure and cyclical nature of the textile industry. The ratings favorably factors in the vast experience of the promoters in the textile industry, synergy of operations among the group companies and improved industry scenario. Going forward, the ability of the company to increase its scale of operations, improve profitability and capital structure are the key rating sensitivities. Detailed description of the key rating drivers Established track record of the promoters and management GEL is part of GTN-BKP group which is operating three textile mills with total spinning capacity of around 2,15,000 spindles. The promoters have an established track record for over 46 years. The promoters are assisted by a well experienced and professional management team. Major activities of the group companies such as procurement, marketing and allocation of orders to different units are done at the group level. The group has been a pioneer in bringing several new technologies into the Indian spinning industry and is among the few early exporters of textile products from India. Inherent volatility associated with the raw material and its impact on profitability The profitability of spinning mills depends largely on the prices of cotton and cotton yarn which are governed by various factors such as area under cultivation, monsoon, international demand- supply situation, etc. The cotton being the major raw material of spinning mills, volatility in the prices of cotton impacts the profitability of the company. It is to be noted that as the company sells fine and superfine counts, it maintains inventory of imported cotton. The profitability of GEL was adversely impacted in FY16 due to volatile cotton price. PBILDT margin decreased marginally to 7.43% in FY16 as against 7.81% in FY15. The group is operating three textile mills in the states of Tamil Nadu & Kerala. Major activities such as procurement, marketing and allocation of orders to different units are done at the group level. Companies are likely to benefit from this synergy of operations. Improvement in Capital Structure and Significant reduction in debt levels post sale of windmill assets Overall gearing ratio and debt equity ratio has improved to 2.89 x and 0.90 x respectively as on March 31, 2016 as against 3.29 x and 1.55 x as on March 31, 2015. Furthermore, with sale of windmills and repayment of respective debt, overall gearing is expected to improve going forward. Amount of term debt outstanding as on March 2016 was INR22.18 crore. On account of sale of windmill, term loan have been prepaid/repaid and amount of term debt outstanding as on December 31, 2016 was INR8.80 crore. Besides, the company has outstanding ICD of INR10 crore as on December 31, 2016 (Rs.12.90 crore as on March 31, 2016). It is to be noted that during FY16 due to relatively lower cash accruals repayments were primarily funded out of mobilisation of funds through ICDs. GULSHAN FASHIONS: CARE Assigns B+ Rating to INR6.0cr LT Loan ------------------------------------------------------------ The rating assigned to the bank facilities of Gulshan Fashions is primarily constrained on account of its leveraged capital structure, stressed liquidity position and its constitution as a partnership concern. The rating is, further constrained on account of its presence in a highly fragmented nature of readymade garments industry leading to intense competition and vulnerability of margins to fluctuations in raw material prices. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.00 CARE B+; Stable Assigned The rating, however, favorably takes into account experienced management and continuous growth in Total operating income (TOI) with moderate profitability margins. The ability of the firm to increase in the scale of operations with improvement in profitability and efficient management of working capital are the key rating sensitivities. Detailed description of the key rating drivers During FY16 (refers to the period April 1 to March 31), the firm has registered TOI of INR24.31 crore, grew at a Compounded Annual Growth Rate (CAGR) of around 502.86% over the past three financial years (FY14-FY16). Furthermore, the profitability of the firm stood moderate with PBILDT and PAT margin of 7.88% and 2.82% respectively in FY16. The capital structure of the firm stood highly leveraged marked by an overall gearing of 6.49 times as on March 31, 2016, which improved from 8.91 times as on March 31, 2015, and debt service coverage indicators of the firm stood moderate with total debt to GCA of 8.19 times as on March 31, 2016, improved from 11.20 times as on March 31, 2015. Liquidity position of the company remained stressed with an average 90-95% utilization of its working capital bank borrowing limits for last 12 months ended December 2016. The partners of the firm have vast experience and has an established customer base. Jaipur-based (Rajasthan) Gulshan Fashions was formed in 2009 as a partnership concern. GFS is engaged in the business of manufacturing of ladies readymade garments. During 12MFY16 (refers to the period of January 1, 2015 to March 31, 2016), GFS has reported a total operating income of INR24.31 crore with a net profit of INR0.68 crore. GWET COLD: CARE Assigns 'B' Rating to INR35.98cr LT Loan -------------------------------------------------------- The rating assigned to the bank facilities of Gwet Cold Chain Private Limited is primarily constrained by limited experience of the promoters in warehousing business, project execution and stabilization risk associated with debt funded project, debt funding not tied up and presence of GCCL in the highly competitive nature of industry. The rating constraints are partially offset by positive outlook for the Indian cold chain industry. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 35.98 CARE B; Stable Assigned Going forward, the ability of the company to complete the project within envisaged time and cost estimated and achievability of envisaged revenue and profitability shall be the key rating sensitivity. Detailed description of the key rating drivers GCCL is setting up a cold storage unit at Nayabans, Haryana with total project cost of INR63.83 crore. The green field project would be funded through term loan of INR30.98 crore, subsidy from the government of INR17.59 crore and balance through promoter's contribution of INR15.25 crore. As on August 31, 2016 the company had incurred an expenditure of INR8.00 crore towards the project through promoter's contribution. The debt funding of the project is not yet tied up. The execution of the project with the envisaged time and cost remains a risk for the company. The company is setting up a new warehousing facility for storage of agriculture products which is a new venture for its promoters who do not have any previous experience in the business. Mr. Brijesh Tomar and M. Satish Sharawat holds nearly two decades of experience in the agriculture related activity through their association with family run business of agriculture and allied activities. Mr. Roop Kishor Gola has two decade of experience in managing different business ventures engaged into dairy farming and trading of food products. GCCL would be operates in a highly fragmented industry wherein there is presence of a large number of players in the unorganized and organized sectors. Delhi-based, Gwet Cold Chain Private Limited was incorporated in September 2015 by Mr. Brijesh Tomar, Mr. Roop Kumar Gola, Mr. Satish Sharawat, Mr. Pravin Gupta and Mr. Uma shankar Gola. GCCL was incorporated with an aim to establish a warehouse for providing cold storage facility at Nayabans, Haryana. The cold chain will have 32 chambers of 210 MT each with proposed installed capacity of 6500MT. The commercial operations are expected to be commenced in June 2017. HARESH OVERSEAS: ICRA Reaffirms 'C' Rating on INR5.0cr Loan ----------------------------------------------------------- ICRA has reaffirmed the long-term rating assigned to the INR5.92 crore (reduced from INR8.23 crore) fund based facility of Haresh Overseas Private Limited to [ICRA]C. The rating committee has reaffirmed the short-term rating assigned to the INR34.37 crore non fund based facility of Haresh Overseas Private Limited to [ICRA]A4. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term: Working Capital Term Loan 0.92 [ICRA]C/reaffirmed Long term: Fund based 5.00 [ICRA]C/reaffirmed Short term: Non Fund Based 34.37 [ICRA]A4 ; reaffirmed Rationale The ratings reaffirmation continues to take into account HOPL's weak financial profile characterised by significant losses in the past three years which has led to complete erosion of the company's networth base. Further, ICRA takes note of the company's declining operating income in the past two years owing to dip in traded volumes resulting from the muted demand scenario in the chemical trading business. Further, the ratings are constrained by the high competitive pressures in the chemical trading industry and vulnerability of profitability to fluctuations in the input prices as well as exchange rate fluctuations given the company's high dependence on imports of the traded chemicals. The ratings, however, continue to favourably factor in the long experience of the directors in the chemical trading industry. Going forward, the company's ability to improve its profitability metrics especially by optimising its input costs and efficiently hedge its forex exchange risk position will be critical for generating adequate accruals in the business and to improve its networth base and thereby the capital structure will be critical and hence will be the key rating sensitivities. Key rating drivers Credit Strengths * Long experience of promoters in trading of petrochemicals and specialty chemicals Credit Weakness * Weak financial profile characterized by significant losses in the past three years which has led to total erosion of networth base * Significant decline in operating income in the past two years owing to dip in traded volumes resulting from muted demand scenario * Stretched liquidity position as reflected in high utilization of working capital limits * Profitability remains susceptible to fluctuation in input prices as well as foreign exchange fluctuations given its large dependence on imports * Competitive pressure from other players in the industry Description of key rating drivers highlighted: Over the past few years, trading of petrochemicals and solvents (industrial alcohols, ketones, monomers, chlorinated solvents, plasticizers) continued to remain the key revenue driver contributing ~99% of the total sales in FY2016 while the sale from the manufacturing of gaur gum powder has witnessed a sharp decline. The decline in sale of gaur gum powder is attributable to surge in guar gum prices which led to muted demand for the product in key consuming market due to ready availability of cheaper substitutes. The company has large dependence on imports for sourcing various chemicals and solvents (industrial alcohols, ketons, monomers, chlorinated solvents, plasticizers) from countries like China, Korea and Thailand etc. which are mostly sold in the domestic markets. Thus the company remains exposed to vagaries of currency market and risk is accentuated in the absence of any hedging policies. Evidently, the company has incurred high exchange fluctuation losses of INR9.03 crore in FY2014, INR1.73 crore in FY2015 and INR1.96 crore in FY2016 respectively. Recent Results: The Company recorded operating income of INR75.92 crore and profit after tax of INR-4.48 crore in FY2016 as compared to an operating income of INR91.60 crore and profit after tax of INR-4.62 crore in FY2015. Haresh Overseas Private Limited was incorporated in 1983 and is engaged in the business of trading, marketing and distribution of petrochemicals and solvents (industrial alcohols, ketons, monomers, chlorinated solvents, plasticizers). The company is also a manufacturer and supplier of Guar Gum powder and has a manufacturing unit of 4500 MTPA capacity with in-house laboratory at Boronada Agro park Jodhpur (Rajasthan) which started production in 2006. HOPL is currently managed by Mr. Kailash S. Kasat. The company is headquartered in Mumbai with branch offices in Cochin, Gandhidham & Jodhpur. The group companies include Kailash & Company which provides services like storing, clearing & survey of solvents and chemicals imported in bulk, Haresh Petrochem Private Limited which is a global supplier for solvents and petrochemicals and Mahi Integrated Logistics which provides services for storage, survey, custom clearance and transportation of goods for its customers JHARKHAND MEGA: CRISIL Lowers Rating on INR33.95MM LT Loan to D --------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility of Jharkhand Mega Food Park Pvt Ltd to 'CRISIL D' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan 33.95 CRISIL D (Downgraded from 'CRISIL B/Stable') The rating downgrade reflects instances of delay by JMFPPL in servicing its interest and instalments on term loan. The delays have been caused on account of delays in commercialization of the park due to delay in obtaining the necessary clearances from the government. Key Rating Drivers & Detailed Description Weakness * Delays in implementing integrated food processing park project in Ranchi: JMFPPL's food park is being implemented under a scheme proposed by Government of India (GoI); the scheme envisages developing clusters for the progress of the food processing industry. Though the project is in advance stage of completion, it has been significantly delayed on account of delay in receiving the necessary regulatory permissions from the government for sub-leasing the food park land to individual units planning to set up processing facilities in the food park. * Offtake risks associated with the project: Despite the project in its advance phase, JMFPPL is yet to tie up with companies willing to set up units in the park though it is at present under discussion with many companies for setting up units in the food park. In the absence of firm commitments from the clients, the company will, be exposed to offtake risk over the near term. Moreover, revenue visibility will emerge only after processing units are set up in the park. Strengths * Favourable government policies and financial grant: The plan of opening mega food parks was envisioned to facilitate the achievement of Vision 2015 of the Ministry of Food Processing Industries. GoI's effort is essential for the development of the food processing industry in India. This is because basic infrastructure such as warehousing, cold chains, and processing facilities, requires large investments, which may not be financially viable for private players on a standalone basis. GoI is promoting the establishment of mega food parks in the country through financial assistance, tax benefits to member units, and faster clearances. JMFPPL was incorporated in 2009 as a special-purpose vehicle (SPV) by a group of entities, the primary stakeholders are GenX Venture Capital Inc, Empower India Limited, Patanjali Avurved Ltd, Ranchi Industrial Area Development Authority, and Green Coast Nurseries India Pvt Ltd. The SPV is setting up an integrated food processing park in Ranchi. The park is being set up under the Mega Food Park Scheme of the Ministry of Food Processing Industries, GoI. The project is expected to be commissioned by June 2017. KRISHNA COTTON: ICRA Lowers Rating on INR5.20cr Loan to B- ---------------------------------------------------------- ICRA has revised the long-term rating from [ICRA]B to [ICRA]B- assigned to the INR5.00 crore1 cash credit facility, INR0.20 crore term loan facility and INR0.80 crore unallocated limits of Krishna Cotton. The outlook on long term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 5.20 [ICRA]B- (Stable) revised from [ICRA]B Unallocated Limits 0.80 [ICRA]B- (Stable) revised from [ICRA]B Rationale The rating revision takes into account the small scale of operations, the decline in revenues and the weak financial risk profile marked by operating losses, adverse capital structure, weak debt-coverage indicators and high working capital intensity. The rating also factors in the vulnerability of the firm's profitability to agro-climatic risks; the inherently low value- adding ginning business; and the high fragmentation and competition due to numerous small and unorganised players in the industry. Furthermore, being a partnership firm, any significant withdrawals from the capital accounts could adversely impact its net worth and thereby the credit profile. The rating, however, continues to draw comfort from the long experience of partners in the industry and logistical advantage enjoyed by the firm by virtue of its location in the cotton- producing region, which gives it easy access to quality raw cotton. Going forward, ICRA expects the firm to witness a decline in its top-line in FY2017 against the back drop of lower sales volumes due to supply shortage of raw cotton post demonetisation. KC's profitability is generally low because of the low value-adding operations and is vulnerable to raw material price fluctuations. The firm's ability to scale up its operations would be largely contingent on the availability of raw cotton and improvement in domestic demand. Furthermore, the firm's ability to improve its profitability, manage its working capital requirements efficiently, thereby improving its capital structure and coverage indicators would remain important from a credit perspective. Key rating drivers Credit Strengths * Long experience of promoters in the cotton ginning industry * Favourable location of the unit in Rajkot (Gujarat), a cotton producing belt of India, giving easy access to quality raw cotton Credit Weakness * Weak financial risk profile marked by revenue decline in FY2016, operating losses, small net worth base and weak debt-coverage indicators * High working capital-intensive operations leading to adverse capital structure * Low profitability because of limited value addition and highly competitive and fragmented industry structure given the low- entry barriers * Profitability is vulnerable to fluctuations in agricultural produce prices, which are subject to seasonality and crop harvest * Exposure to regulatory risks with regards to Minimum Support price (MSP) for raw cotton * Risks inherent in partnership firm with respect to capital withdrawals and its potential impact on the credit profile Description of key rating drivers highlighted: The firm's scale of operations remains small with KC reporting an operating income of INR20.47 crore in FY2016. Owing to limited value-adding operations, firm's profitability remains low. KC's inventory levels are linked to cotton prices. The firm tends to procure higher quantities of raw cotton in a falling price regime and stores the finished products in case the management expects higher realisations in the short-term, leading to high working capital requirements. The firm relies on external borrowings to fund these requirements leading to a leveraged capital structure as depicted by a gearing of 1.77 times as on March 31, 2016. Furthermore, the cotton ginning and crushing industry is a highly fragmented and competitive with numerous organised and unorganised players due to low entry barriers, which further restricts the pricing flexibility of the firm. However, the long experience of partners in the industry and firm's location in Rajkot, Gujarat, provides some comfort. Established in 2011 as a partnership firm, Krishna Cotton (KC or the firm) is in the business of ginning and pressing of raw cotton. The firm commenced commercial production in October 2012 from its manufacturing facility at Rajkot in Gujarat. The unit is equipped with 24 ginning machines, one pressing machine and four expellers and has a processing capacity of ~19000 metric tonnes per annum (MTPA) of raw cotton. The promoters of KC have a decade long experience in the cotton ginning business by virtue of their association with other related companies. During FY2016, KC reported an operating income of INR20.47 crore and net loss of INR0.91 crore as against the operating income of INR23.04 crore and profit after tax of INR0.16 crore in FY2015. LANFORD CERAMIC: CRISIL Ups Rating on INR7.12MM Term Loan to B+ --------------------------------------------------------------- CRISIL has upgraded its ratings on the bank facilities of Lanford Ceramic Private Limited to CRISIL B+/Stable from CRISIL B/Stable while reaffirming its short term rating. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.5 CRISIL A4 (Reaffirmed) Cash Credit 6.0 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Proposed Long Term 3.0 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') Term Loan 7.12 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The rating upgrade reflects adequate liquidity due to sufficient net cash accrual against repayments, promoters support in the form of unsecured loans and cushion in working capital limits. The rating reflects modest networth and working capital intensive operations. These weakness are partially offset by the extensive experience of promoters in the ceramic industry and proximity to customers and suppliers. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations: Gross current assets are sizeable on account of high levels of receivables and inventory. * Modest scale of operations: Scale of operations should remain small due to low capacity and nascent stage of operations. Strengths * Extensive experience of promoters: Presence of more than a decade through group entities (Hollis Vitrified Pvt Ltd and Vasant Ceramics) has enabled the promoters to understand the dynamics of the local market and establish strong relationship with suppliers and customers. * Proximity to customers and suppliers: Manufacturing facilities in Morbi (hub of the ceramic industry in India) derive significant benefits such as easy access to clay and availability of contractors and skilled labourers. Outlook: Stable CRISIL believes LCPL will benefit over the medium term from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if increase in cash accrual is backed by improved scale of operations and/ or operating margin is high and working capital management is efficient. The outlook may be revised to 'Negative' if low topline or operating margin weakens financial risk profile, particularly liquidity or sizeable debt funded capital expenditure leads to higher leverage. LCPL is a Morbi, Gujarat based company which was incorporated in 2013 and commenced commercial operations from July, 2014 onwards. The company manufactures glazed ceramic porcelain (non-vitrified) floor tiles and has a capacity of 4,000 boxes per day. LCPL is promoted by Mr. Nilesh Desai, Mr. Jayeshbhai Desai, Mr. Jayantilal Desai, and Mr. Parthkumar Godhani'all belonging to the promoter family. Net profit was INR0.06 crore on net sales of INR38.8 crore for fiscal 2016, against a net profit of INR0.07 crore on net sales of INR8.80 crore for fiscal 2015. LEXUS MOTORS: ICRA Reaffirms B+ Rating on INR69.5cr Loan -------------------------------------------------------- ICRA has reaffirmed the long term rating of [ICRA]B+ assigned to the INR99.50 crore fund based facilities of Lexus Motors Limited. ICRA has also reaffirmed the short term rating of [ICRA]A4 assigned to the INR0.50 crore non-fund based bank facility of LML. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limit- Cash Credit 30.00 [ICRA]B+ (Stable) reaffirmed Fund Based Limit- Cash Credit (e-DFS) 69.50 [ICRA]B+ (Stable) reaffirmed Non Fund Based Limits-Bank Guarantee 0.50 [ICRA]A4 reaffirmed Detailed Rationale The reaffirmation of the ratings takes into account the intense competition and inherently low margins in the automobile dealership business, on account of the industry dynamics and the commission structure decided by the principal, and LML's weak financial profile characterized by an aggressive capital structure and depressed level of coverage indicators. Moreover, ICRA notes that the overall sales volume of the company has witnessed steady de-growth during past few years, owing to the weak macro-economic environment. The ratings continue to be impacted by the persistent delay witnessed in implementation of the showroom cum real estate project, which in turn lead to a cost overrun; any further delay in commissioning of the same might impact its cash flows adversely. Besides, significant debt service obligations in the near term, may lead to cash flow mismatches; although proposed plans to sale out the existing showroom might mitigate such risk to a large extent. ICRA also notes the vulnerability of the project to off-take risk, given current slack in demand in the commercial real estate segment in Kolkata, and the lack of bookings for the property till date. The ratings, however, derive comfort from the promoters' experience in the automobile dealership business, with a track record of over two decades and the established market position of LML in Kolkata as an authorized dealer of Tata Motors Limited (TML) for both commercial vehicles (CV) and passenger vehicles (PV) segment. Going forward, the company's ability to sale out the existing commercial space, while maintaining its profitability and servicing the debt obligations in timely manner, would be the key rating sensitivities. Key rating drivers Credit Strengths * Longstanding experience of the promoters in the automobile dealership business, with a track record of over two decades * Established position as an authorized dealer of Tata Motors Limited (TML) in Kolkata, West Bengal Credit Weaknesses * Highly leveraged capital structure and depressed level of coverage indicators * High competitive intensity among dealers of TML as well as other automobile dealers which keeps margins under pressure * Continuing delay witnessed in implementation of the showroom cum real estate project, leading to cost overrun; any further delay in the commissioning is likely to adversely impact the cash flows of the company, going forward * Significant debt service obligations in the near term, may lead to cash flow mismatches; although proposed plans to sale out the existing showroom might mitigate such risk to a large extent Detailed description of key rating drivers highlighted: LML is an authorized dealer of TML's CV and PV, and is engaged in the sale of vehicles (new and pre-owned), spare parts and servicing/repair of PVs since 1991. The company is also engaged in the dealership of PVs of Jaguar Land Rover (JLR) in an arrangement with TML and has two showrooms for JLR vehicles at Kolkata and Cuttack. There has been a decline in the sales volume since past few years, owing to the weak macro-economic environment and competition from other OEMs. In FY2016, the sales volume of vehicles declined to 6,868 units from 6,908 units in FY2015 primarily due to decrease in sales volume of new passenger cars and commercial vehicles. CV segment has always remained a major contributor to the top-line for LML and accounted for around 80% of the total sales in FY2016. However, the revenue contribution from PV segment excluding JLR vehicles has remained nominal at around 9% in FY2016 primarily due to slowdown in the automobile segment and stiff competition from other major OEMs as TML being left only with few PV models. Moreover, sales volume for JLR also declined by around 17% in FY2016. Apart from revenue from sale of vehicles, LML earns income also in the form of incentives from TML, payout/ commission from financiers and insurance companies, sale of spare parts, and service income from its workshops. The company is in the process of constructing a showroom cum real estate property at 'Auto Hub' in Rajarhat, Kolkata since last few years. The project is being developed in two basements + nine storey building. LML has developed an area of around 125,000 sq. ft. (square feet) in the property, out of which around 50,000 sq. ft. will be sold to the customers, while remaining area will be used by LML for its own showroom. There has been significant escalation in the estimated project cost and till date the company has already incurred around INR49 crore for the project (includes land cost and interest during construction period). Also, there have been persistent delays in construction activity, leading to a deferment in the scheduled commissioning of the project, which was earlier planned in January 2016. Till date, the construction for the commercial building is completed; though the company has not been able to sale the commercial space, except a small portion sold to a group entity. The company earlier planned to commence its JLR showroom in its newly constructed Rajarhat showroom; however, formal approval for the same could not be obtained from TML till date. The management expects the approval to be received soon and commission its JLR showroom by July 2017. However, LML is in process of setting-up a centralized administrative office in 8th and 9th floor of their Rajarhat showroom and expects to shift all its administrative office in April 2017. LML has earlier taken a term loan of INR20 crore for the project, though the same was refinanced by other lender as the debt repayment for the earlier taken loan commenced before the commissioning date. LML has taken a new term loan of INR25 crore, replacing the old term loan of INR20 crore, with elongated repayment tenure of 10 years. However, ICRA expects that debt repayment obligations for the same might lead to cash flows mismatch in near to medium term; although proceeds from the sale of existing JLR showroom and sale of a portion of property at 'Auto Hub' may mitigate such risk to a large extent. Nevertheless, ongoing slowdown in the commercial real estate market in Kolkata and the lack of bookings till date exposes the project to off-take risks and also expected realizations. Despite the marginal decline in overall sales volume by 1%, the operating income of LML has witnessed an improvement from INR652.00 crore in FY2015 to INR703.60 crore in FY2015, mainly on account of increase in the average realization of vehicles. On account of intense competition in the automobile dealership business and also the basic margin set by the principal, the operating profit margin is thin and has remained in the range of 2.5-2.7% during the past three years. The net profit margin was impacted by high interest and finance costs, and remained at a low level of 0.21% in FY2016. LML's working capital requirement in the past few years has remained high, resulting in sizeable working capital and trade advance loans; which increased further in FY2016 as compared to the previous year. This coupled with borrowing of loan for the ongoing capex has resulted into an aggressive capital structure, which deteriorated from 7.80 times as on March 31, 2015 to 8.04 times as on March 31, 2016. On account of low profitability and high gearing, the coverage indicators continue to remain at a depressed level, as reflected by OPBDITA/ Interest & charges of 1.34 times (1.30 times in FY2015), NCA/Total Debt of 2% (3% in FY2015) and Total debt / OPBDITA of 9.04 times (8.87 times in FY2015) during FY2016. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt-servicing track record of LML, its business risk profile, financial risk drivers and management profile. LML, incorporated in 1991, is TML's authorized dealer for the sale of its entire range of commercial vehicles and passenger cars, as well as for services of passenger cars and sale of spares in and around Kolkata, West Bengal. LML has seven showrooms, four workshops and nine customers connect points spread across Kolkata for TML's vehicles. LML also has two showrooms for Jaguar Land Rover (JLR) vehicles at Kolkata and Cuttack. The company also trades in pre-owned cars. MATIX FERTILIZERS: CARE Reaffirms 'D' Rating on INR3263cr LT Loan ----------------------------------------------------------------- The rating reaffirmation factors in the ongoing delays for repayment of interest and principal of the long term facilities by Matix Fertilizers and Chemicals Limited. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- term Facilities 3263.00 CARE D/CARE D Reaffirmed The company has approached its bankers for revision in Scheduled Commercial Operation Date (SCOD) to April 1, 2017. While, the lead bank has approved the revision in SCOD, other lenders of the Joint Lenders' Forum (JLF) are currently processing the same. The plant of the company is expected to commence operations by April 2017. Incorporated in July 2009, Matix Fertilizers and Chemicals Limited (Matix) is setting up a Greenfield Ammonia (capacity: 0.73 mtpa) and Urea Plant (capacity: 1.27 mtpa) along with a combined gas fired captive power plant, railway siding and other utilities in Panagarh Industrial Park at Panagarh, West Bengal (WB). Matix is promoted by Mr. Yogendra S Kanodia and Mr. Nishant Kanodia of the Datamatics Group. MUSTANG SERVICES: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan ---------------------------------------------------------------- CRISIL has reaffirmed its rating on the long term bank facilities of Mustang Services at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Open Cash Credit 6 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 3 CRISIL B+/Stable (Reaffirmed) The rating reflects MS's modest scale of operations in the intensely competitive jewellery industry and geographic concentration in revenue profile. The rating also factors in a weak financial risk profile marked by high gearing and weak debt protection metrics. These weaknesses are partially offset by the benefits derived from the promoter's extensive experience. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and Geographic concentration in revenue profile: Scale of operations has been moderate with turnover of INR25.8 crores in fiscal 2016. Hence the firm faces intense competition from small and large players in a highly unorganised sector. Moreover MS derives its entire revenues from its showroom in Hyderabad, thus exposing the firm to risks related to revenue concentration. * Weak financial risk profile: The financial risk profile of the company is marked by modest net worth, high gearing and weak debt protection metrics. The company has modest net worth of around INR2.6 crores as on March 31, 2016. Consequently, the gearing stood at around 3 times as on the same date. Majority of the total debt includes working capital borrowings. The promoters have infused unsecured loans of around INR1.08 crores as on March 31, 2016. The company has weak debt protection metrics as indicated by its NCATD of around 4 percent and interest coverage ratio of around 1.43 times for fiscal 2016. Strength * Extensive experience of promoter: ABL benefits from its promoter's extensive industry experience. The company is promoted by Mr. Anil Kumar Kundoo. The promoter has been in the jewellery business for more than 20 years, gaining deep insight into the consumer buying pattern and identifying trends in designs. MS would continue to benefit from the promoter's extensive experience over the medium term. Outlook: Stable CRISIL believes MS will continue to benefit from its promoter's extensive industry experience. The outlook may be revised to 'Positive' in case of healthy growth in revenue and profitability and efficient working capital management improve the financial risk profile. Conversely, the outlook may be revised to 'Negative' if any aggressive debt-funded expansion is undertaken or revenue and profitability weaken. Incorporated in 1998 as a proprietorship firm, MS retails in jewellery through one showroom in Secunderabad, Telangana. It is managed by Mr. Anil Kumar Dundoo. MS reported a profit after tax (PAT) of INR23 lakhs on operating income of INR25.8 Crores for fiscal 2016, vis-a-vis INR22 lakhs and INR22.2 Crores, respectively in fiscal 2015. N P RAJAGOPAL: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan ------------------------------------------------------------- CRISIL ratings on the bank facilities of N P Rajagopal Chetty and Co continues to reflect its's small scale of operations in a highly fragmented and intensely competitive gold jewellery business, and below-average financial risk profile marked by modest net worth and weak debt protection metrics. These rating weaknesses are partially offset by the promoter's extensive experience in the gold jewellery business, and the firm's established market presence in Theni, Tamil Nadu. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6 CRISIL B+/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in a highly fragmented and intensely competitive gold jewellery business: The business risk profile of the firm is constrained by its small scale of operations. During 2015-16 (refers to financial year, April 1 to March 31) the firm has recorded revenues of around INR45 crore. The revenues are expected to dip in the current year given the slowdown in the gold and jewellery industry in fiscal 2017. Further, the firm records its entire sales from single store in Theni which renders the firm to risks related to geographic concentration * Below-average financial risk profile marked by modest net worth and weak debt protection metrics: The firm had a modest net worth estimated at INR4.7 crs as on March 31, 2016. This is mainly on account of limited accretions to reserves due to modest scale of operations of the firm with modest profitability. The firm has a weak debt protection metrics with estimated net cash accruals to total debt (NCATD) and interest coverage at 6 per cent and 1.7 times respectively due to the firm's small accruals. Strength Promoter's extensive experience in the gold jewellery business, and the firm's established market presence in Theni, Tamil Nadu: The promoter family has been engaged in the gold retailing business since 8 decades. This is the third generation of the family who is now managing the operations of the firm. They had started trading of gold jewellery on a small scale. Currently the firm is operated out of a 3500 sq.ft show room in Theni (Tamil Nadu). Over the years the firm has developed a strong brand image for itself in the region and the promoters have developed strong insight into consumer buying patterns and identify trends in the jewellery designs. Outlook: Stable CRISIL believes NPRC will continue to benefit over the medium term from the promoter's extensive industry experience. The outlook may be revised to 'Positive' if significant improvement in the scale of operations and profitability leads to an improvement in the financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of a decline in revenue or operating profitability resulting in lower cash accrual or weakening of the capital structure owing to large, debt-funded capital expenditure or increased working capital requirement, resulting in deterioration in the financial risk profile. Incorporated in 1928, NPRC retails gold and silver jewellery. The firm has a retail showroom in Theni, and the operations are managed by Mr. R. Sathyanarayanan, Mr. R. Shyam Sai Sunder and Mr. R. Ganeshraj Kumar. NPRC reported net profit (PAT) of INR24 lakhs on revenue of INR45.4 croers for 2015-16 (refers to financial year, April 1 to March 31), against a net profit of INR10.9 lakhs on revenue of INR16.7 crore for 2014-15. PRACHI (INDIA): CARE Assigns B+ Rating to INR15cr LT Loan --------------------------------------------------------- The ratings assigned to the bank facilities of Prachi (India) Private Limited are primarily constraint by modest scale of operations along with project execution risk with debt funding yet to be tied up. The ratings are further constrained by low profitability margins, leveraged capital structure, weak coverage indicators, elongated operating cycle and competitive nature of industry. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 15 CARE B+;Stable Assigned Short-term Bank Facilities 3 CARE A4 Assigned The rating, however, draws comfort from experienced management, established track record of operations, growing scale of operations and established marketing network. Going forward, the ability of PIPL to increase its scale of operations with improvement in profitability margins, capital structure and efficient working capital management shall be the key rating sensitivities. Detailed description of the key rating drivers Though the scale of operations of the company have been growing on y-o-y basis, however it stood modest which restricts the company's financial flexibility in times of stress and deprives it of scale benefits. The company's profitability margins have been historically on the lower side owing to the limited value addition and intense market competition given the highly fragmented nature of the industry. This apart, interest burden on working capital borrowing also restricts the net profitability of the company. The capital structure of the company stood leveraged on account of high dependence on external borrowings to meet the working capital requirements coupled with low net worth base. Furthermore, the company's debt coverage indicators as marked by interest coverage and total debt to GCA stood weak on account of low profitability as against debt levels. PIPL is currently undertaking capital expenditure to set up printing and publishing unit and the debt with respect to the same is yet to be tied up. The company is exposed towards project execution in terms of debt yet to be tied-up, completion of the project with-in the envisaged time and cost. The collection period stood elongated since majority of income accrue during the last quarter the same results into high receivable as on balance sheet date. The average working capital limits of the company remained almost fully utilized during the past 12 month period ending December 31, 2016. The printing and publication industry is characterized by a high level of fragmentation and regional concentration, with very little differentiation in terms of service offering. PIPL faces direct competition from various organized and unorganized players in the market. Delhi-based Prachi (India) Private limited established in 1999 by Mr. Mukesh Tyagi, Mr. Rakesh Tyagi and Mrs Savitri Tyagi. The company is primarily engaged in distribution of text books, study material for classes ranging from nursery to class 12. The company outsourced the activities related to printing, publishing and binding of books. The company supplies to public schools, spread out across India. During FY16 (refers to the period April 1 to March 31), PIPL has achieved a total operating income (TOI) of INR72.10 crore with PAT of INR0.17 crore, respectively, as against TOI of INR65.09 crore with PBILDT and PAT of INR3.11 crore and INR0.67 crore, respectively. Moreover, the company has achieved total TOI of INR16 crore till 7MFY17 (refers to the period April 1 to October 31) (as per unaudited results). PRAMUKH COPPER: ICRA Assigns D Rating to INR6.75cr LT Loan ---------------------------------------------------------- ICRA has assigned the long-term rating of [ICRA]D to the INR6.751-crore fund-based limit of Pramukh Copper Private Limited. It has also assigned the short-term rating of [ICRA]D to the INR6.10-crore non fund-based limits of the company. ICRA has also assigned the [ICRA]D rating to the INR2.15-crore unallocated limits of the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Fund- based Limit 6.75 Assigned [ICRA]D Short-term Non fund-based Limit 6.10 Assigned [ICRA]D Unallocated limits 2.15 Assigned [ICRA]D Rationale The assigned ratings reflect the continuous delays in repayment of term loan installments and the LC devolvement by Pramukh Copper Private Limited. Additionally, the company's liquidity profile is stretched because of accumulated inventory and stretched receivables, leading to overutilisation of bank borrowings. Consequently, the capital structure has become highly stretched given the erosion of net worth due to heavy losses in FY2014. The rating also factors in the vulnerability of profit margins to the adverse fluctuation in raw material prices. Furthermore, the ratings take note of PCPL's small scale of operations in the highly fragmented industry, which is characterised by intense competition from organised as well as unorganised players. The assigned ratings, however, take into account the location of the manufacturing facility at Dadra, an area that has no sales tax and low power tariff rate. Early regularisation of debt servicing is crucial and remains the key rating sensitivity. Key rating drivers Credit Strengths * Location of the unit in Dadra Nagar Haveli offers various fiscal benefits such as no sales tax and lower power tariff Credit Weakness * Delay in repayment of term loan obligation and LC devolvement * Stressed liquidity emanating from mounting inventory levels and delays in receivables has resulted in delay in TL repayment and consistent overutilisation of bank borrowings * Consistently reduction in scale of operation * Adverse financial profile characterised by a low margin, negative net worth and inadequate coverage indicators * Low-entry barriers, less capital-intensive business and simple manufacturing process result in intense industry competition Description of key rating drivers highlighted: From FY2014 onwards, OI of PCPL has consistently reduced on account of adverse market scenario, fluctuations in prices of copper and reduced demand from its established customer base. In line with the operating income, the operating margin of the company has been fluctuating in the range of 22.9% to 5.4% in the last four years. Low operating margin, coupled with high interest and financial charges, has reduced the net margin over the last few years. The high debt level and the erosion of net worth due to heavy losses in FY2014 have impacted the gearing of the company adversely, which stood at around -8.77 times as on March 31, 2016. The low profitability and the adverse capital structure led to subdued debt protection metrics, reflected in the interest coverage of 1.33 times and the NCA/Debt ratio of 3% and the TOL/TNW ratio of -9.51 times in FY2016. The overall downtrend in operation and the delay in receivables increased the working capital intensity to 113% in FY2016 from 40% in FY2015, resulting in weak cash flows and tight liquidity position. Driven by stretched liquidity, the company has been highly dependent on working capital borrowings from bank, which have remained over utilised during the last fifteen months. Weak cash accrual has also resulted in instances of delays in term loan and interest payments and LC devolvement. Early regularisation of debt servicing is crucial and remains the key rating sensitivity. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt servicing track record of PCPL, its business risk profile, financial risk drivers and management profile. Established in January 2011, Pramukh Copper Private Limited (PCPL) is a private limited company involved in processing copper cathodes and copper scraps to produce copper bus bar and profiles, round copper rods, copper strips and copper coils. PCPL also procures copper rods from outside and modifies them in terms of sizing and length before selling them to the final customers. Furthermore, PCPL also does production on jobwork basis. PCPL's plant is located at Silvassa, Dadra Nagar Haveli, and has an installed capacity of around 1500 MTPA. R.P. SINGH: CRISIL Assigns 'B' Rating to INR7.07MM Cash Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank loan facility of R.P. Singh Crusher and Construction Company. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.07 CRISIL B/Stable The rating reflects a limited track record and a modest scale of operations in the highly fragmented construction material industry, and a below-average financial risk profile because of weak debt protection metrics. These rating weaknesses are partially offset by the extensive industry experience of the promoter, and a healthy order book. Analytical Approach Unsecured loans of INR0.53 crore as on March 31, 2016, have been treated as neither debt nor equity as these are only from the proprietor's family members. Key Rating Drivers & Detailed Description Weaknesses * Limited track record and modest scale of operations: In fiscal 2016, the first full year of operations, sales were modest at around INR42.88 crore. * Average financial risk profile: The total outside liabilities to tangible networth ratio was 2.4 times as on March 31, 2016, while the interest coverage was around 1.2 times in fiscal 2016. Strengths * Extensive industry experience of the proprietor: The proprietor has industry experience of over five years, which has led to an established relationship with customers and suppliers. * Healthy order book: The firm has healthy order book providing revenue visibility over the medium term. Outlook: Stable CRISIL believes RSC will continue to benefit from the extensive industry experience of its proprietor. The outlook may be revised to 'Positive' in case of higher-than-expected revenue growth and profitability along with improvement in working capital management, leading to a better financial risk profile. The outlook may be revised to 'Negative' in case of deterioration in working capital management, most likely because of stretched debtors. Lower-than-expected revenue and profitability, resulting in low cash accrual, or large, debt-funded capital expenditure, leading to pressure on liquidity, may also result in a 'Negative' outlook. RSC was established in 2014 by Mr Raj Pal. The firm trades in stone aggregate, stone dust, grit, stone crushers, and other such products, and lays ballast. For fiscal 2016, book profit was INR0.14 crore on an operating income of INR42.88 crore RAJ VEHICLES: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating on the long term bank facilities of Raj Vehicles Private Limited at 'CRISIL B+/Stable' while assigning 'CRISIL A4' to the short term bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 11 CRISIL B+/Stable (Reaffirmed) Inventory Funding Facility 8 CRISIL A4 (Reassigned) Proposed Short Term Bank Loan Facility 6 CRISIL A4 (Reassigned) The business risk profile is stable because of revenue growth of around 9% in fiscal 2016 driven by higher sales volume of ehicles. Revenue is expected to decline slightly by 4-5% in fiscal 2017 on account of the effect of demonetisation. However, revenue is expected to grow at a moderate rate of around 10% per fiscal over the medium term. This will be supported by business stability as the company is the exclusive dealer of M&M in Patiala, Punjab, and nearby districts and there is an increase in the disposable income of people. The operating margin is expected to hover at 3.5-3.7% over this period. Liquidity is adequate, as indicated by average bank limit utiliation of around 85% during the 12 months through November 2016 and sufficient internal cash accrual to meet repayment obligation. Liquidity is also supported by need-based funding by the promoters and positive cash flow from operations. Working capital intensity is low as reflected in gross current assets of just 69 days as on March 31, 2016. These primarily comprise vehicle and spare parts inventory of 45-50 days, which has to be maintained. Working capital intensity of the operations is likely to remain low over the medium term. Analytical Approach Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: Debt protection metrics were low. However, the networth and return on capital employed were moderate, and the total outside liabilities to adjusted networth ratio low. Low profitability margins would continue to constrain the financial risk profile over the medium term. * Low operating margin due to intense competition: Though RVPL is the sole dealer for M&M in the districts it which it operates, the company faces intense competition from dealers of other original equipment manufacturers such as Hyundai Motor India Ltd ('CRISIL A1+') and Tata Motors Ltd ('CRISIL AA/Positive/CRISIL A1+'). These companies, which manufacture a variety of utility and passenger vehicles, are encouraging more dealerships to improve penetration and sales, thereby increasing competition. Furthermore, the stability of the business would depend on the business profile of M&M. RVPL's margins are likely to remain under pressure over the medium term because of competition in the automobile industry and low bargaining power with its principal, M&M. Strengths * Established relationship with the principal, M&M The company has had a relationship of over 10 years with M&M, and would continue to benefits from the relationship over the medium term. The exclusivity of the dealership in the different districts of Punjab supports the stability of the business risk profile. * Extensive experience of the promoters in the automobile dealership business: The promoters have been in this business for more than a decade. Over the years, they have expanded the number of showrooms in the districts of Patiala, Sangur, and Barnala, all in Punjab. Outlook: Stable CRISIL believes RVPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if the financial risk profile improves, most likely due to better operating profitability and cash accrual, or significant capital infusion. The outlook may be revised to 'Negative' if the financial risk profile weakens because of large, debt-funded capital expenditure, or substantial increase in working capital requirement. RVPL was incorporated in 2007, promoted by Mr. Rajvinder Singh and his family. The company is an authorised dealer for M&M's entire range of passenger vehicles, utility vehicles, and two- wheelers in districts of Punjab - Patiala, Sangrur, and Barnala. It operates four showrooms in the sales, service, and spares format, of which two are in Patiala and one each in Barnala and Sangrur. RVPL, on a standalone basis, had a profit after tax (PAT) of INR0.35 crore on net sales of INR197.13 crore in fiscal 2016, vis-a vis INR1.27 crore and INR180.70 crore, respectively, in fiscal 2015. RESHMA FABRICS: CRISIL Reaffirms B+ Rating on INR6.5MM Term Loan ---------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable' rating to the long- term bank facilities of Reshma Fabrics Ltd. The rating continues to reflect RFL's modest scale of operations, working-capital- intensive operations, below average financial risk profile because of a modest net worth and extensive experience of the promoters in the textile industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 2.5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.0 CRISIL B+/Stable (Reaffirmed) Term Loan 6.5 CRISIL B+/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in the highly fragmented textile industry: RFL's limited capacities and fragmentation in the textile industry have led to a modest scale, as reflected in revenue of INR9.8 crore in fiscal 2016. Modest scale also restricts benefits of economies of scale and limits pricing flexibility, constraining profitability. * Working Capital Intensive operations: Operations are working capital intensive reflected in gross current asset days of 207 days as on March 31, 2016, on account of debtors of 133 days and inventory of 40 days. CRISIL believes that RFL's working capital requirements will remain moderate over the medium term. * Below average financial risk profile: As on March 31, 2016, the networth was small at INR3.6 crore and gearing high at over 2.2 times. With continued large working capital debt, gearing is expected to remain high over the medium term. Strength * Extensive experience of promoters in the textile industry: The promoter has been in the business of manufacturing grey fabric for over 20 years. The promoters' extensive experience and understanding of the dynamics of the local market have helped establish healthy relations with customers, leading to regular orders from them. Outlook: Stable CRISIL believes RFL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case there is a significant and sustained improvement in revenue and profitability, and hence better financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of a significant decline in revenue or profitability, or a stretch in working capital cycle, or larger-than-anticipated debt-funded capital expenditure, resulting in further weakening of the financial risk profile. RFL was incorporated in 1993. In December 2014, the management was taken over by Mr. D N Patel, who has an experience of more than 20 years in the industry. RFL currently undertakes weaving of grey cloth on a job-work basis at its facility in Ahmedabad (Gujarat). For 2015-16 (refers to financial year, April 1 to March 31), PFPL reported profit after tax (PAT) of INR9 lakh on total sales of INR9.81 cr as against PAT of INR12 lakh on total sales of INR3.62 cr in 2014-15. S R HAPPY: CRISIL Assigns 'B' Rating to INR4.5MM Long Term Loan --------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facilities of S R Happy Valley Farms. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan 4.5 CRISIL B/Stable The rating reflects SRH's susceptibility to implementation and demand risks related to its on -going resort project and weak financial risk profile. These rating weaknesses are partially offset by the extensive experience of SRH's partners in the hospitality industry. Key Rating Drivers & Detailed Description Weakness * Susceptibility to implementation and demand risks related to its resort project SRH is constructing a resort in Anaikatti, near Coimbatore. Around 70 per cent of the work is complete and the resort is expected to be operations from May 2017. The total cost of the project including the land and buildings is around INR 17.76 cores, to be funded vide term loan of INR 4.5 crores and the rest through equity infusion by partners. The firm is exposed to risks related to implementation of the current project and demand risk post commercialization of operations. * Weak financial risk profile: The financial risk profile of the firm is expected to be weak over the term, despite conservative debt philosophy of the management, driven by modest accretion to reserves, on account of start-up nature of operations. Strengths * Extensive experience of SRH's partners in the hospitality industry: Mr T Janardhan and Mr. Shanmugavel, the managing partners of SRH have been in the hospitality industry and real estate business for over two decades. Outlook: Stable CRISIL believes SRH would benefit over the medium term from favorable location of the hotel and extensive experience of the promoters in the hospitality industry. The outlook may be revised to 'Positive' if the firm completes its ongoing resort project as expected in stipulated timelines and ramps up its operations earlier than expected. The outlook may be revised to negative in case there is a cost or time over run in the project or if the ramp up in operations is not as expected. Further the timely servicing of term debt obligations will remain a key rating sensitivity factor. SRH was set up in 2016 as a partnership firm and is currently constructing a 35 room resort in Anaikatti, near Coimbatore (Tamil Nadu). The resort is expected to be operational from May 2017. The firm is promoted by Mr. T Janardhan and Mr. Shanmugavel. SARDAR COTTON: CARE Assigns B+ Rating to INR10.87cr LT Loan ----------------------------------------------------------- The rating assigned to the bank facilities of Sardar Cotton is primarily constrained on account of its moderate scale of operations with thin profit margin along with leveraged capital structure and weak debt coverage indicators; moderate liquidity position during FY16 (refers to the period April 1 to March 31). The rating is further constrained on account of susceptibility to the raw material price fluctuations and presence in the highly fragmented and competitive industry. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 10.87 CARE B+; Stable Assigned The rating however, continues to derive strength from experienced partners and proximity to the cotton growing area of Gujarat. SC's ability to increase its scale of operations with improvement in profitability, capital structure and debt coverage indicators along with efficient management of its working capital would be the key rating sensitivity. Detailed description of key rating drivers During past three year period ended FY16, SC reported moderate scale of operation. During FY16, TOI of SC dipped by 2.52% over the previous year and stood at INR55.14 crore as against INR56.56 crore as the company is into ginning and pressing of cotton, its prices remain volatile in nature due to fluctuation in the prices of raw cotton. During FY16, the PBILDT margin of SC improved to 2.60% from 2.28% due to lower cost of raw materials consumed. PAT margin of SC remained thin and in line with FY15 at 0.03% in FY16. As on March 31, 2016 the capital structure of SC remained leveraged marked by overall gearing of 2.65 times (4.25 times as on March 31, 2015); The debt protection metrics stood weak marked by interest coverage of 1.16 times and total debt to GCA of 55.35 times in FY16 as against 1.22 times and 55.75 times, respectively in FY15. SC's liquidity position as indicated by current ratio and quick ratio stood moderate at 1.39 times and 0.06 times respectively as on March 31, 2016 as against 1.30 times and 0.19 times respectively as on March 31, 2015. Rajkot-based (Gujarat), Sardar Cotton is a partnership firm incorporated in 2012 by Mr. Pravinbhai Kurjibhai Mendpara, Mr. Ajaybhai Haribhai Zalavadiya and Mr. Dineshbhai Virjibhai Tada. The firm is engaged into the business of cotton ginning and pressing of raw cotton to produce cotton bales and cottonseeds. SC spreads across 2 acres and possesses set of 24 cotton ginning machines with an installed capacity of manufacturing 200 bales per day. During FY16 (A), SC reported net profit of INR0.02 crore on a TOI of INR55.14 crore as against PAT of INR0.02 crore on a TOI of INR56.56 crore during FY15. Till 9MFY17 (Provisional) SC has achieved a turnover of INR2.94 crore. Status of non-cooperation with previous CRA: As on press release dated October 23, 2015, ICRA has suspended rating assigned to the bank facilities of Sardar Cotton on the back of ICRA's inability to carry out a rating process in the absence of the requisite information from Sardar Cotton. SATWI INFRA: ICRA Assigns 'B' Rating to INR20cr Long Term Loan ------------------------------------------------------------- ICRA has assigned a long-term rating of [ICRA]B to INR20.0 crore proposed term loan facilities of Satwi Infra. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Proposed term loan 20.0 [ICRA]B (Stable) assigned Rationale The rating factors in the long standing experience of the promoters of Satwi Infra in the construction and real estate industry and the favorable location of the project - Satwi's Thavil located in Panathur, Bellandur, Bangalore, which is close to developed social infrastructure including tech parks, schools, social clubs, shopping malls and multispecialty hospitals. The rating takes into account the inventory in the completed project - Satwi's Veille, which can support the ongoing project cash flows. ICRA also notes that all requisite approvals for ongoing project are in place; however, the debt funding is yet to be tied-up. The rating is constrained on account of the initial stage of development of Satwi's Thavil project (~29% of total project cost has been incurred till December, 2016), which exposes the company to high execution risk and the moderate project execution capabilities of the firm demonstrated through completion of 0.3 million square feet of development. The rating accounts in the significant market risk associated with Satwi's Thavil project given the modest level of bookings (13% bookings) and collection efficiency till December 2016. ICRA also takes note of the vulnerability of sales to any further downturn in the real estate demand and the competition within the region from various established real estate developers. The rating is further constrained by the risks inherent in the proprietorship nature of business such as risk of capital drawdown, limited ability to raise capital, among others. Going forward, the ability of the firm to achieve financial closure and healthy sales for the ongoing project, while completing the project in a timely manner will be the key rating sensitivities. Key rating drivers Credit Strengths * Long standing experience of promoters in construction and real estate industry * Favorable location of the ongoing project Satwi's Thavil, located in Panathur, Bangalore close to developed social infrastructure * All requisite approvals for the projects are in place * Inventory of the completed project can support cash flows of ongoing project Credit Weakness * Moderate project execution capabilities demonstrated through completion of 0.3 million square feet (msf) of development * Exposed to significant market risk with ~87% of unsold saleable area (as on Dec 31, 2016) in the ongoing project, however, sales velocity remains moderate * Initial stages of construction for the ongoing project exposes the company to significant execution risk * Financial closure yet to be achieved; further significant part of the project cost is planned to be met by customer advances, which is contingent upon healthy sales velocity and timely collection from customers * Inherently cyclical and competitive nature of real estate industry; sensitivity to decline in property prices, slowdown in economy, and decrease in housing demand Description of key rating drivers highlighted: The company has developed two projects in Horamavu, Bangalore in the recent past. Launched in February 2016, SI's ongoing project 'Satwi's Thavil' is exposed to significant execution risks as it is in initial stage of completion and is expected to be completed by September, 2018. All the requisite approvals for the ongoing project have been received. All the projects are approved by various housing finance companies. As of December, 2016, the firm had achieved booking levels of 0.16 lakh sft, translating to a modest booking position of ~12% in this project. The market risk is moderate for the completed project, Satwi's Vielle, with around 75% of the units being sold as on December, 2016. The additional sales from this project can help fund the cost of Satwi's Thavil project. Ability to tie up debt for the Satwi's Thavil project and raise the planned advances from customers will remain crucial for the timely completion of the project. Satwi Infra, incorporated in year 2011, is engaged in real estate business in residential and commercial projects in Bangalore. The firm laid its footage in the construction, development and real estate business in the year 2011 through Satwi's Clarinet project in Bangalore. Over the years, the firm has completed two projects, Satwi's Clarinet and Satwi's Vielle in Horamavu, Bangalore. Currently the firm has one ongoing residential project, Satwi's Thavil at Panthur, Bangalore. The firm reported a net profit of INR1.15 crore on an operating income of INR25.38 crore in FY2016 as compared to a net profit of INR0.05 crore on an operating income of INR0.91 crore in FY2015. SAURASHTRA GINNING: CRISIL Reaffirms B Rating on INR6.75MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long- term bank facilities Saurashtra Ginning Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.75 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 0.41 CRISIL B/Stable (Reaffirmed) Term Loan 1.84 CRISIL B/Stable (Reaffirmed) The rating reflects the small scale of operations in the highly competitive cotton ginning industry, and working capital- intensive nature of operations. These rating weaknesses are partially offset by the extensive experience of the promoters. Analytical Approach For arriving at the ratings, CRISIL has treated unsecured loans extended by the promoters, as neither debt nor equity as the loans bear a lower interest rate than the market rate, and will remain in the business. Key Rating Drivers & Detailed Description Weaknesses * Working capital intensive operations Operations are highly working capital intensive, mainly due to the large inventory procured during the cotton season. Cotton is a seasonal crop, and generally available between October and March. Though this lowers the procurement cost, it increases the working capital requirement during the season. Gross current assets (GCAs) ranged from 83 to 125 days for the five years ended March 31, 2016. Moreover, the company does not get any credit as it procures raw kapas, mainly from mundis and farmers against cash. *Susceptibility to changes in cotton prices: Cotton is an agricultural commodity and hence, availability is highly dependent on the monsoon. Furthermore, government interventions and fluctuations in global cotton output have led to sharp price volatility. SGPL maintains large inventory of around 120 days, and hence any such volatility in cotton prices, willimpact the operating margin. Strengths * Extensive experience of the promoters in the cotton industry, and healthy relationships with customers and suppliers Benefits from the three decade-long experience of the Bhilakhiya family, their keen grasp over local market dynamics, and established relationships with suppliers, farmers and customers,will continue. * Proximity to cotton growing belts The production facility is located close to Bhavnagar, which is part of the cotton-growing belt in Gujarat(the state accounts for nearly one-third of India's total cotton production). This will enable SGPL to procure raw cotton directly from local farmers, and make operations more cost-effective. Outlook: Stable CRISIL believes SGPL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if a significant improvement in the scale of operations and operating margin, and the capital structure, strengthens the financial risk profile. The outlook may be revised to 'Negative' in case of lower-than-expected cash accrual, or if any substantial, debt-funded capital expenditure, or stretch in the working capital cycle, weakens the financial risk profile. SGPL was incorporated in 2004 by Mr. Bhilakhiya and his family members. The Bhilakhiya family has more than four decades of experience in cotton ginning. Ginning and pressing operations are carried out at the production facility, located at Gariyadhar, Gujarat. In fiscal 2016, profit after tax of Rs0.03 crore was reported on operating income of Rs21.50crore, against Rs0.03crore and INR25.50crore, respectively, in fiscal 2015. SILICA INFO: ICRA Assigns B+ Rating to INR7cr Cash Credit --------------------------------------------------------- ICRA has assigned its long-term rating for the enhanced bank facilities at [ICRA]B+ on the INR8.25-crore (enhanced from INR5.00-crore) fund-based limits of Silica InfoTech Private Limited. ICRA has also assigned the short-term rating at [ICRA]A4 on the INR11.25-crore (enhanced from INR7.00-crore) non-fund based limits of SIPL. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term-Cash credit 7.00 [ICRA]B+ (Stable); assigned/outstanding Long term-Term Loan 1.25 [ICRA]B+(Stable); assigned Short term- Fund based facilities 0.75 [ICRA]A4; outstanding Short term-Non- fund based facilities 10.00 [ICRA]A4; assigned/outstanding Short term- Unallocated 0.50 [ICRA]A4; assigned/outstanding Detailed Rationale The rating reaffirmation factors in the company's recent diversification into Liquefied petroleum gas (LPG) bottling contracts exclusively for Hindustan Petroleum Corporation Limited. The company is setting-up seven units of which three each are in Uttar Pradesh and Bihar, and one in Himachal Pradesh. ICRA takes cognisance of the company's high gearing levels, given the debt funding of the capital expenditure incurred in FY2017. The ratings also take into account the company's scheduled debt repayment obligations, which are large relative to its projected cash accruals. ICRA also notes the company's reduced proportion of high margin service revenues to total sales which have resulted in weakening of its coverage indicators, with interest coverage of 1.80 times, NCA/TD at 13% and DSCR of 1.76x for FY2016 as compared to 2.93 times, 28% and 2.42 times respectively in FY2014. The ratings also factor SIPL's tight liquidity position with ~100% utilisation of working capital limits during the last 12 months owing to high debtor days. The ratings however derive comfort from SIPL's association with several reputed government organsations such as Air India, Ministry of Defence, Indian Railways, Centre for Railway Information Systems (CRIS) etc. ICRA also notes the favourable outlook for LPG owing to the growing demand from industrial and automobile segments. Key Rating Drivers Credit Strengths * Significant experience of the management in the industry * Association with reputed government organisations ensures near-term revenue visibility and mitigates counterparty risk * Demand for commercial cylinders is expected to increase following the DBTL2 scheme that curbs illegal diversion of subsidised cylinders Credit Weakness * Sensitivity of the company's profitability and cash flows to fluctuations in crude-oil prices and changes in Government regulations Detailed Description of Key Rating Drivers Highlighted: Silica InfoTech Private Limited trades in Information Technology hardware and also provides annual maintenance services of the same. It was promoted by Mr. Amrendra Kumar, who has more than 15 years of relevant experience. The company's customer base includes several reputed government organisations ensuring near- term revenue visibility and mitigating the counter party risk. However, since the business is tender-based, future revenue visibility is largely dependent on the company's ability to successfully bid for tenders. In FY2016, the company diversified into bottling of LPG cylinders, under a contract agreement with Hindustan Petroleum Company Limited. The company has set up seven units, of which three each are in Uttar Pradesh and Bihar, and one in Himachal Pradesh. The company underwent a debt-funded capex of ~Rs.18 crore. The company has been sanctioned a term loan of INR14.06 crore (financial closure not achieved) from J&K Bank Limited, and the promoters have infused INR4.8 crore in the new LPG bottling units. The company's debt obligation in the coming years is higher than its projected accruals, which will keep the capital structure leveraged. Lower profits and increasing interest dues during FY2016 also impacted the coverage indicators with interest cover at 1.8x and the NCA/TD ratio at 13% during the year. The company has an elongated receivable cycle, thus keeping the operations working capital intensive. SIPL's stretched liquidity position is reflected in its almost fully utilised working capital limits. Silica InfoTech Private Limited was established in 2001 by Mr. Amrendra Kumar, who has more than 15 years of relevant experience. The company trades in Information Technology hardware and also provides annual maintenance services. Hardware includes laptops, peripherals, networking equipment such as routers, switches and servers. Services include annual maintenance service contracts with government clients such as Indian Railways, Indian Airlines, and Defence Ministry. In FY2016, the company diversified into bottling of LPG cylinders, under a contract agreement with Hindustan Petroleum Company Limited. The company has set up seven units, of which three each are in Uttar Pradesh and Bihar, and one in Himachal Pradesh. In FY2016, SIPL reported an operating income of INR47.56 crore and a net profit of INR0.48 crore, as against an operating income of INR46.99 crore and a net profit of INR0.19 crore in the previous year. Status of non-cooperation with previous CRA: CRISIL had suspended the CRISIL B+/Stable and CRISIL A4 ratings for Silica InfoTech Private Limited in July 2014. The suspension of ratings was on account of non-cooperation by SIPL with CRISIL's efforts to undertake a review of the ratings outstanding. SIYARAM META: ICRA Raises Rating on INR35cr Loan to B- ------------------------------------------------------ ICRA has revised the long term rating to [ICRA]B- from [ICRA]B for the INR35.00 crore cash credit facility of Siyaram Metal Udyog Private Limited. The outlook on the long term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 35.00 [ICRA]B- revised from [ICRA]B; stable outlook Rationale The rating revision takes into account the de-growth in SMUPL's scale of operations during the past two fiscals and its reliance on single product. Further, the rating remains constrained by the weak financial profile of the company characterised by low profitability, continuous increase in debt and inventory levels coupled with full utilisation of the cash credit facility, have stretched the capital structure of the company. The rating also considers the exposure of profits to volatility in brass and copper LME prices as well as to foreign exchange rate fluctuations due to higher reliance on imports. The rating however, continues to favourably consider the experience of the promoters in the non-ferrous metal industry and the established relationships with customers and suppliers. In ICRA's view, the operating income and profitability is expected to remain modest considering the low value addition and highly competitive nature of the business. The ability of the company to scale up the operations while managing the inventory risks amidst the fluctuations in commodity prices as well as the volatility in foreign exchange rates will remain crucial to the profitability. The ability of the company to ease up on it liquidity position through prudent inventory management system, infusion of capital so as to moderate the gearing levels will remain key rating monitorables. Key rating drivers Credit Strengths * Experienced management with over two decades of experience in the non-ferrous metals industry * Established business relations with customers and suppliers; although primarily caters to industries in Jamnagar Credit Weakness * Limited diversification of product profile * Revenue de-growth and increased inventory levels in FY2015 and FY2016; * Weak financial profile characterized by low profitability, stretched capital structure, weak coverage indicators and high working capital intensity; * Tight liquidity position with full utilisation of working capital limits; * Profitability exposed to volatility in brass prices which are linked to international copper prices; * Exposure to foreign exchange rate fluctuations due to reliance on imports for procurement and the absence of any formal hedging policy. Description of key rating drivers highlighted: The company continues to trade in brass scrap and ingots, copper scrap and zinc ingots while deriving majority portion of the revenues from brass scrap and ingots through high sea sales. With primary focus on trading of copper and copper alloy-based products; the firm's profitability remains exposed to volatility in copper prices as well as foreign exchange fluctuations which has also resulted in low margins over the years. The company has witnessed de-growth in operating income by ~16% and ~13% in FY2015 and FY2016 followed by low profitability margins due to unfavorable market conditions. The increasing inventory days to 304 days as on FY2016 end from 175 days as on FY2015 end coupled with infusion of unsecured loans and full utilization of working capital limits in FY2016 has led to deterioration in capital structure. To scale up the operations so as to manage the impact of inventory risk on profitability while managing the working capital efficiently will remain the key rating sensitivity. Siyaram Metal Udyog Private Limited is a metal merchant based out of Jamnagar, Gujarat and has been in operations for the last two decades. The company has primarily been involved in the business of trading of non-ferrous metallic scrap. SMUPL mainly imports non-ferrous scrap; the product profile largely includes brass scrap, ingots and other copper alloys, besides zinc and caters majorly in and around Jamnagar. SMUPL recorded a net profit of INR0.34 crore on an operating income of INR197.92 crore for the year ending March 31, 2016. SOLAS FIRE: CRISIL Reaffirms B+ Rating on INR4.45MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its ratings on the INR14 crore-bank facilities of Solas Fire Safety Equipment Private Limited at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 5.50 CRISIL A4 (Reaffirmed) Cash Credit 4.45 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 4.05 CRISIL B+/Stable (Reaffirmed) The rating reflects the exposure to risks related to small scale of operations, dependence on tenders and the high working capital requirement. The rating also factors in the moderate financial risk profile because of modest gearing and networth, and adequate debt protection metrics. These weaknesses are mitigated by an established regional market position in the supply and installation of fire protection and security systems, and healthy relationships with key customers and suppliers. Key Rating Drivers & Detailed Description Weaknesses * Small scale and tender-based nature of operations: The small scale of operations (as reflected in revenue of INR40 crore in fiscal 2016) and the high dependence on tenders, limits revenue visibility. * High working capital requirement: Operations are working capital intensive, as indicated by large gross current assets, inventory and receivables of 210, 135 and 90 days, respectively, as on March 31, 2016. * Moderate financial risk profile: Gearing was moderate at 1.14 times as on March 31, 2016, while debt protection metrics were adequate (interest coverage and net cash accrual to total debt ratios of 3.32 and 0.37 times, respectively, for fiscal 2017) Net worth was however low INR5 crore as on March 31, 2016. Strength * Established regional presence and healthy relationships with key customers and suppliers: Benefits from the decade-long presence in the supply and installation of fire safety equipment, the reputed clientele, which includes Hindustan Unilever Ltd (HUL), Caterpillar Inc and Infosys Technologies Ltd, and exclusive distributorship rights for products of companies such as Honeywell International Inc and Tyco International Ltd, will continue, going forward, too. Outlook: Stable CRISIL believes SFSEPL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if higher-than-expected cash accrual or better working capital management, enhances liquidity. The outlook may be revised to 'Negative' if a stretch in the working capital cycle, any large, debt-funded capital expenditure, or decline in profitability or revenue, weakens the financial risk profile, especially liquidity. Incorporated in 1999, SFSEPL supplies and installs fire hydrant systems, automatic fire sprinklers, and access control systems, primarily in south India. The promoter, Mr Shenoy, manages the daily operations. For 2015-16, SFSEPL reported a profit after tax (PAT) of INR40 lakhs on net sales of INR40.06 cr; the company reported a PAT of INR1.1 cr on net sales of INR43.35 cr for 2014-15. SPI PROPERTIES: ICRA Withdraws 'B' Rating on INR4.60cr Loan ----------------------------------------------------------- ICRA has withdrawn the long-term rating of [ICRA]B outstanding on the INR8.75 crore long-term LOC of SPI Properties Private Limited. The aforesaid ratings have been withdrawn as there is no amount outstanding against the rated instruments. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term-Term Loan facilities 4.60 [ICRA]B/withdrawn Long term- Unallocated 4.15 [ICRA]B/withdrawn SPI Properties Private Limited, the erstwhile Ultramarine Investments Private Limited, was incorporated in 2003, and was primarily involved in acquiring land parcels in Tamil Nadu and Andhra Pradesh, and developing them in Joint Venture (JV) with other real estate developers. UIPL was renamed in 2005 as Ultramarine Property Developers Private Limited, and then again in 2008 as SPI Properties Private Limited. SPIPPL forayed into wind power generation with its acquisition of a 1.5 MW windmill in 2007, supplying power to various group entities. SPIPPL has since expanded and currently owns seven wind mills with a cumulative capacity of 4.7 MW at Theni and Tirunelveli districts of Tamil Nadu. The company is part of the Samayanallur Power Investments Group promoted by Mr. Kiran Reddy and his family, which has a presence across varied businesses in South India. Samayanallur Power Investments Private Limited is the holding company for the group's operations and has significant shareholding in all the group entities, namely, Madurai Power Corporation Private Limited which owns and operates a 106 MW liquid fuel-based power plant - and SPI Cinemas Private Limited which owns two multiplexes - Sathyam Cinemas and Escape - besides other entertainment outlets such as Blur, Thinkmusic, and Ecstasy, in Chennai. SURAJ TRADELINK: CRISIL Reaffirms B+ Rating on INR3MM Cash Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of Suraj Tradelink Private Limited at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bill Discounting 1.75 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.00 CRISIL B+/Stable (Reaffirmed) Proposed Cash Credit Limit 1.25 CRISIL B+/Stable (Reaffirmed) Cash Credit 3.00 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect STPL's below-average financial risk profile, because of leveraged capital structure and subdued debt protection metrics, and low profitability in an intensely competitive industry. These weaknesses are partially offset by the promoters' extensive experience in the textile industry and strong relationships with customers. Key Rating Drivers & Detailed Description Weaknesses * Below-average financial risk profile: Financial risk profile is below average with modest networth of Rs1.77 crore and gearing of over 3 times as on March 31, 2016. Equity infusion in fiscal 2017 may, however, help improve networth to over INR3 crore; nonetheless gearing will remain high at about 2 times. The total outside liabilities to tangible networth ratio may also remain high over the medium term. Debt protection metrics are expected to be subdued, with interest coverage and net cash accrual to total debt ratios expected at about 1.1 times and 0.3 times respectively in fiscal 2017 on account of modest profitability. * Low profitability and exposure to intense competition: STPL operates at a thin operating margin of 1-1.2%. Although the scale has been increasing, operating margin remains low constraining profitability and cash accrual. Intense competition continues to exert pricing pressure. Extent of improvement in operating margin will be a key monitorable over the medium term. Strengths * Promoters' extensive experience and established customer relationships: Benefits from the promoters' decade-long experience, keen insights into industry trends, and strong relationships with customers should continue to support business risk profile. * Improved scale of operation: Scale of operations has improved steadily and sustainably, with revenue increasing to INR136.9 crore in fiscal 2016, from INR70.9 crore in fiscal 2014. Working capital management has also improved, with gross current assets (GCAs) reducing to 71 days as on March 31, 2016 from 145 days a year ago. Sustained improvement in working capital cycle will provide a positive direction to ratings. Outlook: Stable CRISIL believes STPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case of improved profitability along with efficient working capital management, leading to higher cash accrual and strengthening of financial risk profile. Conversely, the outlook may be revised to 'Negative' if STPL's financial risk profile deteriorates further owing to a decline in revenue and/or profitability, or a significant elongation in working-capital cycle, or a large unanticipated debt-funded capital expenditure. Incorporated in 2001 by Mr. Anjani Agarwal and Mr. Madhur Todi, STPL is part of the Anjani group. The company manufactures and exports home textiles such as bed sheets, curtains, towels, table linen, cotton fabrics, pillow cover, and cushion covers. The manufacturing cum warehouse facility is located in Piplaj (Gujarat). The day-to-day operations of the company are managed by the directors, Mr. Premchand Gupta and Mr. Khetaram Purohit. STPL reported a profit after tax of INR0.17 crore on an operating income of INR136.9 crores for fiscal 2016, against a profit after tax of INR0.09 crore on an operating income of INR94.2 crores for previous year. TALREJA TEXTILES: CRISIL Ups Rating on INR4.5MM Cash Loan to B+ --------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Talreja Textiles Industries Private Limited to 'CRISIL B+/Stable' from 'CRISIL B/Stable', and reaffirmed the short-term facility at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 4.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Export Packing Credit 1.5 CRISIL A4 (Reaffirmed) Import Letter of Credit Limit 1.25 CRISIL A4 (Reaffirmed) Long Term Loan 0.18 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Proposed Long Term 0.57 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') The upgrade reflects expected improvement in TTIPL's financial risk profile and liquidity over the medium term on account of increased profitability. Operating margin improved to 5.4% in fiscal 2016 from 3.9% in fiscal 2015 led by lower raw material cost, and is expected at 5-6% over the medium term. Higher profitability will lead to increased accretion to reserves, and consequently, to rise in networth, improvement in gearing to 3.5- 4.0 times, and better debt protection metrics. Analytical Approach CRISIL has treated TTIPL's interest-bearing unsecured loans of INR4.88 crore as on March 31, 2016, as neither debt nor equity as the loans will remain in the business over the long term. Key Rating Drivers & Detailed Description Weaknesses * Below-average financial risk profile: Although expected to improve, TTIPL's financial risk profile is below average because of modest networth, high gearing, and subdued debt protection metrics. * Modest scale and exposure to intense competition in the textile industry: TTIPL's modest scale is indicated by revenue of INR34.52 crore in fiscal 2016. Intense competition has constrained the company's ability to scale up operations. Strength * Promoters extensive industry experience: The company was promoted in 1980 by late Mr. Laxmandas Talreja and Mr. Suresh Talreja. Currently the operations are handled by a well-qualified team consisting of Mr. R.N. Fotedar, Mr. Manish Rupani, Mr. Varun Chabbria and Mr. varun Fotedar led by Mr. Ashok Talreja and Mr. Mukesh Talreja The promoters have over two decades of experience in fusible interlining manufacturing business. Outlook: Stable CRISIL believes TTIPL will continue to benefit from its promoters' extensive industry experience and fund support. The outlook may be revised to 'Positive' if there is a substantial and sustained improvement in financial risk profile, backed by healthy growth in accrual, efficient working capital management, or significant equity infusion. The outlook may be revised to 'Negative' if the financial risk profile weakens because of sizeable, debt-funded capital expenditure, large working capital requirement, or low cash accrual. TTIPL, incorporated in 1980, manufactures fusible interlinings. Its operations are managed by Mr. Ashok L Talreja and Mr. Mukesh L Talreja. Loss was INR0.21 crore on an operating income of INR35.5 crore for fiscal 2016, against a profit after tax (PAT) of INR0.13 crore on an operating income of INR34.75 crore for the previous fiscal. TULSI DALL: CRISIL Reaffirms 'B' Rating on INR9.9MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed the bank loan rating of Tulsi Dall Mill at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9.9 CRISIL B/Stable (Reaffirmed) TDM registered sales of INR45.11cr in fiscal 2016 which are 38% higher than INR32.5cr in fiscal 2015. The higher sales are on account of higher prices of Tur dall in fiscal 2015-16. Firm achieved operating margin of 3% which is in line with CRISIL's expectation. The company has achieved sales of INR32cr till December 2016 and is expected to achieve sales of around INR50cr in fiscal 2017. Financial risk profile continues to remain below average with small networth of INR2.46cr and gearing of 3.65 times as on March 31, 2016. Firm has weak debt protection metrics with interest coverage of 1.2 times and NCATD of 0.02 times in fiscal 2016. Liquidity is stretched due low cash accruals and high bank limit utilisation. Firm is expected to generate cash accruals of INR18 lakh against nil repayment obligations. The bank limits have remained highly utilised at 98% in last 12 month through December 2016. Liquidity is supported by the unsecured loan from promoters of INR2.6cr as on March 31, 2016. Analytical Approach CRISIL has treated the unsecured loan of INR2.6 Crore from promoters as neither debt nor equity since it is low-interest- bearing and expected to remain in the business over the long term. Key Rating Drivers & Detailed Description Weaknesses * Below average financial risk profile: The financial risk profile is driven by small networth of INR2.4 Crore and high gearing of 3.6 times as on March 31, 2016. The company had weak interest coverage and NCATD ratio of 3.5 times and 0.23 times, respectively in fiscal 2016. * Modest scale of operation: Sales were INR45.1 crore in fiscal 2016. The small scale of operations will restrict pricing flexibility and lessen bargaining power with suppliers and customers. This also limits the benefits and economies associated with a larger scale. Strength * Promoter's extensive industry experience: The promoters have been in the dal processing industry for more than 20 years, over which period they have established a strong relationship with customers and suppliers. The promoters thus have a sound understanding of the dynamics of the industry. CRISIL expects the company to benefit from the promoters' extensive industry experience. Outlook: Stable CRISIL believes TDM will continue to benefit from the longstanding experience of the promoters. The outlook may be revised to 'Positive' if significant improvement in operating margin, working capital management, and net cash accrual strengthens financial risk profile, particularly liquidity. The outlook may be revised to 'Negative' if any large capital expenditure, stretch in working capital cycle, or decline in operating margin weakens financial metrics. TDM, a partnership firm based in Nagpur, was set up in 1987 by Mr. Mohandas Aswani, and Mr. Tulsi Aswani. The firm processes and trades in pulses such as toor dal and chana dal (split chickpeas) and green peas. For 2015-16, TDM reported a profit after tax (PAT) of INR 9 cr on net sales of INR4.4 cr; the company reported a PAT of INR5 cr on net sales of INR3.2 cr for 2014-15. TURBO CAST: CRISIL Reaffirms B+ Rating on INR5.08MM Term Loan ------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable' rating to the long- term bank facilities of Turbo Cast India Private Limited. The rating continues to reflect TCIPL's modest scale of operations due to start-up nature of operations, exposure to intense industry competition, large working capital requirement and promoters' extensive experience in the industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit .5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.77 CRISIL B+/Stable (Reaffirmed) Term Loan 5.08 CRISIL B+/Stable (Reaffirmed) Analytical Approach Unsecured loans of INR1.37 crore (as on March 31, 2016) from promoters have been treated as neither debt nor equity. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations due to start-up nature of operations: TCIPL is a modest player, with limited capacity, which leads to limited bargaining power and pricing flexibility. The scale is modest as the company commenced operations from April 2015. * Exposure to intense industry competition: The casting industry is intensely competitive and highly fragmented due to low entry barriers. TCIPL faces intense competition from such existing and upcoming players in the industry. * Large working capital requirement: Working capital requirements are high marked by large debtors and inventory, and will continue to remain at similar levels over the medium term. Weakness * Promoter's extensive experience in the castings industry: TCIPL's promoter, Mr. Mavani has an experience of 20 years in the casting industry, which has lead to established relations with customers and suppliers. Outlook: Stable CRISIL believes that TCIPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case of a significant improvement in the scale of operations and profitability or working capital management, resulting in a better financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of a slowdown in top line growth, decline in profitability, and deterioration in the capital structure or debt protection metrics, or further stretch in the working capital cycle. Incorporated in February 2013, TCIPL has set-up 225-tonnes per annum investment castings unit at Rajkot (Gujarat). The company is promoted by M. R N Mavani, who will oversee its overall operations. For 2015-16 (refers to financial year, April 1 to March 31), TCIPL reported loss of INR77 lakh on total sales of INR1.66 cr. VISHWA INFRASTRUCTURES: CARE Reaffirms D Rating on INR494cr Loan ---------------------------------------------------------------- The ratings assigned to the bank facilities of Vishwa Infrastructures and Services Private Limited takes into account stretched liquidity position of the company resulting in delays in servicing debt obligations. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 482.71 CARE D Reaffirmed Long-term/Short- term Bank Facilities 494.00 CARE D Reaffirmed Detailed description of the key rating drivers The liquidity position of the company deteriorated further in FY16 (refers to the period April 1 to March 31) due to cash loss reported in FY16 and stretched receivable days. The same resulted in delays in debt servicing post commencement of debt servicing obligation as per the approved Corporate Debt Restructuring package. The lenders have acquired 51.24% stake in the company (as on March 31, 2016) post invocation of Strategic Debt Restructuring Scheme. Vishwa Infrastructure & Services Pvt Ltd started its operations as Vishwa Construction Company in 1992 and was converted into private limited in December 2004. The company is involved mainly in the execution of water supply and sewerage infrastructure projects. VISPL is also into manufacturing of MS Pipes (Mild Steel Pipes), PSC Pipes (Pre Stressed Concrete Pipes) and RCC Pipes (Reinforced Cement Concrete Pipes). During FY16, the company reported total operating income of INR395.19 crore (FY15 - INR454.81 crore) with net loss of INR124.57 crore (FY15 - INR56.62 crore). ================= I N D O N E S I A ================= XL AXIATA: Declining Leverage Support Moody's Ba1 CFR ----------------------------------------------------- Moody's Investors Service says that although XL Axiata Tbk (P.T.)'s 2016 revenues declined 7% year-on-year (YoY), stable profitability and declining leverage continue to support the company's Ba1 corporate family rating and positive outlook. Reported revenue declined to IDR21.3 trillion in 2016 from IDR22.9 trillion in 2015 as large falls in voice and SMS (-21%) and interconnection services (-27%) more than offset strong growth in cellular data services (+31%). "Still, Moody's expects XL's revenue decline will reverse in 2017 - with revenue increasing by the mid-single digits - as the company focuses on increasing data monetization on the back of strong demand for 3G/4G LTE services, the increasing proliferation of smartphones and moderate growth in its subscriber base," says Annalisa Di Chiara, a Moody's Vice President and Senior Credit Officer. A gradual decline in quarter-on-quarter ARPUs during the year - which Moody's believes is indicative of a reduction in prices or increase in subsidies - corresponded with a 11% growth in subscribers YoY to 46.5 million in December 2016, helping XL re- capture market share. In spite of the 7% revenue fall, reported EBITDA decline was muted at only 4% YoY to IDR8.1 trillion in 2016, In addition, EBITDA margin improved 1% YoY to 37.6%, primarily driven by better management of network-related costs, such as lower rentals on renewed tower lease contracts. "We expect EBITDA margins in 2017 to remain stable at current levels or decline slightly, due to the increasing proportion of data services revenues, which have lower margins than voice and SMS revenues. At the same time, generous allowance and subsidies on data usage will continue to exert some pressure on margins," adds DiChiara, also the lead analyst for XL. XL reduced reported debt by about IDR11 trillion in 2016 mainly through the proceeds from a rights issue and the sale-and- leaseback of 2,500 towers. As a result, adjusted leverage -- as measured by adjusted debt/EBITDA -- declined meaningfully to around 2.5x from 3.3x in 2015. "Our upward rating guidance for XL includes leverage remaining below 2.5x on a sustained basis. As Moody's do not anticipate further sizable reductions in absolute debt levels, further improvements in leverage will primarily be driven through EBITDA growth," adds DiChiara. XL's reported capex for 2016 was around IDR5.6 trillion, a 35% YoY increase from 2015. Given the continued investments needed to enhance its 3G and 4G LTE networks, Moody's expects XL's capex in 2017 to remain elevated at around 27%-30% of revenue versus 26.1% in 2016. Moody's also expects a large portion of XL's IDR4.0 trillion near-term debt maturities to be refinanced, as cash on hand of IDR1.4 trillion as of 31 December 2016, and projected cash flow from operations of around IDR7.5 trillion in the next 12 months will be insufficient to cover projected capex requirements, debt maturities, and dividend payments. However, given XL's strong track record of securing both USD and IDR financing, refinancing risk is unlikely. XL's rating continues to reflect its fundamental credit strength, underpinned by its strong market position, established network, high margins, improving financial profile and strong liquidity, despite the competitive nature of the environment. As a result, it is well positioned to benefit from favorable growth dynamics in the wider industry environment. The rating also incorporates expected extraordinary support from Axiata which results in a one-notch uplift to XL's fundamental credit strength to a final rating of Ba1. The positive outlook reflects Moody's expectations that XL will continue to grow and de-lever in accordance with its business plan, and that the competitive and regulatory environments remain relatively benign. The rating could be upgraded over the next 6-12 months if the (1) company maintains its market position and growth momentum, (2) competition remains prudent and relatively benign, (3) the regulatory environment remains stable, and (4) dividends and shareholder returns remain within expectations. Positive rating pressure could arise if the company's credit metrics improve, such that adjusted gross debt/EBITDA falls below 2.5x and RCF/adjusted debt is above 30-35% on a sustained basis. Given the positive outlook, downward pressure on the rating is absent. However, the outlook could return to stable if there is a material deterioration in its underlying credit strength, which would arise from diminishing operating margins, weaker operating cash flows, or rising foreign-exchange risk; all of which may be reflected in adjusted debt/EBITDA remaining above 2.5x, or retained cash flow/adjusted debt falling below 30% on a sustained basis. In addition, the one-notch uplift -- based on expected support from parent company, Axiata --, could be removed if its stake falls below 50%, or if it indicates that XL is no longer a core asset. The principal methodology used in this rating was Telecommunications Service Providers published in January 2017. XL Axiata Tbk (P.T.) is the third largest cellular provider in Indonesia in terms of revenue. As of 31 December 2016, it had 46.5 million subscribers. It owns a nationwide cellular network covering all major cities in Java, Bali and Sumatra, as well as populated centers in Sulawesi and Kalimantan. XL is 66.4%-owned by Axiata Group Berhad (Baa2 stable). Axiata is in turn 60% owned by Khazanah Nasional Berhad and related entities of the Government of Malaysia (A3 stable). The UAE-based Emirates Telecommunications Grp Co PJSC (Aa3 negative) holds 4.2% of XL's shares and the public the rest. ========= J A P A N ========= TAKATA CORP: Selects Key Safety Systems as Preferred Bidder ----------------------------------------------------------- Nikkei Asian Review reports that U.S.-based Key Safety Systems has been selected as the favored candidate to help rehabilitate Takata Corp, the Japanese company struggling to regain its feet following a crippling scandal over defective air bags. An external committee tasked with devising Takata's turnaround plan told automakers on Feb. 3 that Key Safety, a manufacturer of air bags and seat belts owned by China's Ningbo Joyson Electronic, was the best option, according to Nikkei. Sweden's Autoliv, the world leader in air bags, apparently has been taken out of the running due to antitrust concerns, Nikkei relates. Nikkei says the automakers are among Takata's largest creditors, and they wield influence over the rehabilitation plans. They expressed support for the pick on the condition that the Japanese air bag maker pursues a court-mediated turnaround in both Japan and the U.S. Though Takata is considering the option in the U.S., management wants to keep the courts out of the core company in Japan. If the company refuses the automakers' proposal, they could instead file for a court-mediated rehabilitation, says Nikkei. Ningbo Joyson was founded in 2004 and has been expanding since 2011, such as by acquiring a German parts maker. The Chinese company, which bought Key Safety in 2016, employs 22,000 people and is said to have generated CNY20 billion ($2.91 billion) in sales last year, Nikkei discloses. About Takata Corp Japan-based Takata Corporation (TYO:7312) -- http://www.takata.com/en/-- develops, manufactures and sells safety products for automobiles. The Company offers seatbelts, airbags, steering wheels, child seats and trim parts. The Company has subsidiaries located in Japan, the United States, Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea, China and other countries. In May 1995, a voluntary recall in the U.S. affecting 8 million predominantly Japanese built vehicles made from 1986 to 1991 with seat belts manufactured by the Takata was conducted. Large recalls of vehicles due to faulty Takata-made airbags began in 2013. Takata is presently facing massive costs of recalling 100 million defective airbag inflators worldwide and lawsuits tied to at least 16 deaths and numerous injuries. As of May 19, 2015, Takata has already recalled 40 million vehicles across 12 vehicle brands for defective airbags. In November 2015, Takata was fined $200 million by U.S. federal regulators for mishandling the way it recalled its air bag inflators. The fine is the largest civil penalty in NHTSA history. =============== M A L A Y S I A =============== 1MALAYSIA DEVELOPMENT: Swiss Orders Coutts to Pay CHF6.5MM ---------------------------------------------------------- Hugo Miller and Alan Katz at Bloomberg News report that Switzerland's financial regulator fined Coutts & Co. Ltd. for violating money-laundering rules and illegally profiting from transactions associated with 1Malaysia Development Bhd, prompting Swiss prosecutors to review the decision to see if the bank should face a criminal investigation. Coutts, owned by Royal Bank of Scotland Group Plc, allowed a total of $2.4 billion worth of assets related to the Malaysian development fund to flow through accounts in Switzerland even though it had good reason to be suspicious of the transactions, Finma said, Bloomberg relates. According to Bloomberg, the Swiss Financial Market Supervisory Authority, known as Finma, ordered the bank to pay back CHF6.5 million ($6.57 million) in unlawfully generated profits from the transactions, saying Coutts had "seriously breached money- laundering regulations by failing to carry out adequate background checks into business relationships and transactions" associated with 1MDB. Bloomberg relates that the bank also ignored internal warnings from some of its employees, Finma said. In December, the Monetary Authority of Singapore imposed a SGD2.4 million ($1.7 million) fine on Coutts for anti-money-laundering breaches at its branch there. Finma said it was also considering enforcement proceedings against those Coutts employees responsible for the bank's actions, Bloomberg relays. A young Malaysian businessman opened an account in the summer of 2009 with the expectation that $10 million would be transferred to it from the holder's family assets. Instead, about $700 million was moved to the account late that year from 1MDB. A Finma spokesman declined to name the businessman, Bloomberg says. Several Coutts employees raised concerns with the bank's compliance department about its dealing with the businessman, Finma said, Bloomberg relays. In the case of the $700 million transfer, the names of the sender and recipient were transposed, a compliance officer noted, Bloomberg reports citing the regulator's statement. Coutts's legal department even raised the risk of "a total fabrication" with the transaction, according to Finma. About 1MDB Kuala Lumpur-based 1Malaysia Development Bhd (1MDB) operates as a government agency. The Company offers financial assistance, analysis, and advice through investors, corporations, and consultants to startups and growth companies. 1MDB focuses on investments with strategic value and high multiplier effects on the economy, particularly in energy, real estate, tourism, and agribusiness. As reported in the Troubled Company Reporter-Asia Pacific on July 23, 2015, Reuters said Singapore Police Force has frozen two bank accounts to help with an investigation in to Malaysia's troubled state-owned investment fund 1Malaysia Development Bhd (1MDB), which is being probed by authorities in Malaysia for financial mismanagement and graft. Reuters said the freezing of the Singapore bank accounts follows a similar move in Malaysia where a task force investigating 1MDB said earlier in July that it had frozen half a dozen bank accounts following a media report that nearly $700 million had been transferred to an account of Malaysia's Prime Minister Najib Razak. The Wall Street Journal reported on July 3, 2015, that investigators looking into 1MDB had traced close to US$700 million of deposits moving through Falcon Bank in Singapore into personal bank accounts in Malaysia belonging to Najib. The TCR-AP, citing Bloomberg News, reported on Nov. 26, 2015, that 1MDB agreed to sell its power assets to China General Nuclear Power Corp. for MYR9.83 billion ($2.3 billion) as the state investment company moved one step closer to winding down operations after its mounting debt raised investor concern. Bloomberg related that the company faced cash-flow problems after a planned initial public offering of Edra faced delays amid unfavorable market conditions, President Arul Kanda said Oct. 31, 2015. The listing plan was later canceled as the company opted for a sale of the assets, Bloomberg noted. The TCR-AP, citing The Wall Street Journal, reported on April 27, 2016, that the company defaulted on a $1.75 billion bond issue, triggering cross defaults on two other Islamic notes totaling MYR7.4 billion ($1.9 billion). Asian Nikkei Review reported in June 2016 that Malaysia has replaced the board of 1Malaysia Development Berhad with treasury officials, paving the way for the dissolution of the troubled state investment fund . ==================== N E W Z E A L A N D ==================== DESERT ROSE: Restaurant Shuts Due to Lack of Patrons ---------------------------------------------------- Stuff.co.nz reports that a restaurant that started life as a business run by a controversial asylum seeker shut down due to a lack of diners. Desert Rose Cafe & Restaurant, a middle Eastern restaurant and cafe on the corner of Rangitikei and Cuba Streets in Palmerston North, shut up shop during the Christmas/New Year break, the report discloses. The reasons for the closure were a mystery. A notice in the window gave clues, saying the lease was ended by the landlord. But Companies Office records show the company behind Desert Rose was placed into liquidation on Feb. 1. Stuff.co.nz, citing report compiled by CS Insolvency, says the restaurant ceased trading in December. "The business struggled with a lack of patronage and the ability to meet owners wages and repay the costs of setting the business up and overheads," the report, as cited by Stuff.co.nz, said. The report estimates equipment owned by Desert Rose would fetch NZ$15,000. However, there were debts owed to Inland Revenue, staff, a finance company and suppliers. Stuff.co.nz adds that the liquidators estimated there would be a shortfall of NZ$23,000. ================= S I N G A P O R E ================= EZRA HOLDINGS: May Take US$170MM Writedown from Emas Chiyoda ------------------------------------------------------------ The Strait Times reports that Ezra Holdings revealed on Feb. 3 that it may have to take a US$170 million (SGD240 million) writedown for its exposure to the troubled joint venture company Emas Chiyoda Subsea. Ezra has a 40 per cent stake in Emas Chiyoda, and US$170 million represents Ezra's total investment in, loans to and inter-company balances owed by Emas Chiyoda, the report says. "The full amount may have to be written down after the company's assessment," ST quotes Ezra as saying in a filing with the Singapore Exchange. ST relates that the company added that it reported a net current liability position of US$887.2 million for the financial year ended August 31, 2016. According to the report, Ezra said it has been working with its advisors to review all options to restructure its businesses, operations and balance sheet "in light of the severe and protracted downturn in the global oil and gas industry". As it ST previously disclosed, Ezra will be faced with a going concern issue if the restructuring is not favorably completed in a timely manner. The report adds that Ezra also said in Feb. 3 filing that Norwegian shipowner Forland Subsea AS has agreed not to pursue repayment of a defaulted charter payment due November last year from a unit of Emas Chiyoda. The obligation to Forland was guaranteed by Ezra, and Forland has not called upon Ezra as guarantor to repay the default, Ezra said, reports ST. Ezra is Petroleum Teknologi Bhd's largest shareholder with a 19.47 per cent stake through two units. With the Perisai bond default, Ezra's joint-venture loan facilities with Perisai have also reportedly been affected through cross-default clauses, according to Business Times. Singapore-based Ezra Holdings Limited, an investment holding company, provides integrated offshore solutions for the oil and gas industry. The company operates in three divisions: Subsea Services, Offshore Support and Production Services, and Marine Services. ==================== S O U T H K O R E A ==================== DONGWHA DUTY FREE: To Transfer Majority Stake to Hotel Shilla ------------------------------------------------------------- Korea Joongang Daily reports that the local duty-free industry on Feb. 2 was shocked by news that Dongwha Duty Free was attempting to sell its management rights. If the store fails to find a new owner, it will have to return its operation license and liquidate, Korea Joongang Daily relates. It would mean the end of a legacy store that has been in its central Seoul location since 1973, and some in the industry fear it portends the downfall of Korea's overall duty-free industry. Korea Joongang Daily notes that Dongwha Duty Free's financial troubles began in 2013 after its parent company, Lotte Tour, suffered a huge loss from a failed development project in Yongsan District, central Seoul. The report relates that to save itself from the brink of bankruptcy, Lotte Tour sold 19.9 percent of its 61.56 percent share in Dongwha Duty Free to Hotel Shilla with a put option where Hotel Shilla could sell back its shares after three years and collect on the investment. In June, Hotel Shilla exercised that option, but Dongwha Duty Free was unable to cough up the KRW71.5 billion ($62 million) by the Jan. 19 due date. If Lotte Tour fails to compensate by Feb. 23, it will have to offer an additional 30.2 percent of Dongwha Duty Free shares as collateral. This would make Hotel Shilla the largest shareholder with 50.1 percent, meaning Lotte will have to hand over management rights to Dongwha Duty Free. In a separate report, Yonhap News Agency said that Dongwha Duty Free on Feb. 2 confirmed it will hand over a majority stake to Hotel Shilla in a put option obligation but denied it was pulling out of the business. Dongwha, South Korea's first duty-free shop in the downtown area, will transfer a 30.2 percent stake, or 543,600 shares, to Hotel Shilla, Yonhap discloses. Combined with the 19.9 percent stake it already purchased in 2013 with the put option, Hotel Shilla will own 50.1 percent and become the largest shareholder. Dongwha said Kim Kee-byung, head of Lotte Tour Development, and people with special relations with him will retain the remaining 49.9 percent. According to the report, Dongwha officials said it has notified Hotel Shilla of its decision on Dec. 16. They denied they will giving up the duty-free business, claiming it is still competitive in the industry. "Despite a number of new duty-free shops opening last year, we reached record sales of 354.9 billion won [$309.47 million]," the report quotes an official as saying. "Louis Vuitton did withdraw to move to a new duty-free shop, but we still have Chanel, Hermes and other luxury brands and have enough competitiveness." Hotel Shilla, however, has said it is not interested in operating the downtown duty-free shop and wants Dongwha to repay the debt, arguing that Dongwha is financially capable of doing so, the report notes. The Korea Customs Service said it was not looking into the matter yet since there may be a number of varying circumstances along the way, says Yonhap. HANJIN SHIPPING: South Korea Court to Declare Firm Bankrupt ----------------------------------------------------------- The Korea Herald reports that Hanjin Shipping is expected to be declared bankrupt this month, a court said on Feb. 2, resulting in thousands of job losses. According to the report, the Seoul Central District Court said in a statement it would end court receivership and declare the company bankrupt on February 17 following a two-week period for appeals. The Korea Herald relates that Hanjin's demise would reportedly cost about 3,000 jobs, including those employed by the company and others working for its suppliers. The court made its decision after it became clear that Hanjin's liquidation value would be greater than its worth as a going concern, the statement said, the report relays. Hanjin had sold most of its assets and the court determined there was little possibility of it being kept afloat, the report adds. About Hanjin Shipping Hanjin Shipping Co., Ltd., is mainly engaged in the transportation business through containerships, transportation business through bulk carriers and terminal operation business. The Debtor is a stock-listed corporation with a total of 245,269,947 issued shares (common shares, KRW 5000 per share) and paid-in capital totaling KRW 1,226,349,735,000. Of these shares 33.23% is owned by Korean Air Lines Co., Ltd., 3.08% by Debtor and 0.34% by employee shareholders' association. The Company operates approximately 60 regular lines worldwide, with 140 container or bulk vessels transporting over 100 million tons of cargo per year. It also operates 13 terminals specialized for containers, two distribution centers and six Off Dock Container Yards in major ports and inland areas around the world. The Company is a member of "CKYHE," a global shipping conference and also a partner of "The Alliance," another global shipping conference to be launched in April 2017. Hanjin Shipping listed total current liabilities of KRW 6,028,543 million and total current assets of KRW 6,624,326 million as of June 30, 2016. As a result of the severe lack of liquidity, Hanjin applied to the Seoul Central District Court 6th Bench of Bankruptcy Division for the commencement of rehabilitation under the Debtor Rehabilitation and Bankruptcy Act on Aug. 31, 2016. On the same day, it requested and was granted a general injunction and the preservation of disposition of the Company's assets. The Korean Court's decision to commence the rehabilitation was made on Sept. 1, 2016. Tai-Soo Suk was appointed as the Debtor's custodian. On Sept. 2, 2016, Hanjin Shipping Co. filed in the U.S. a voluntary petition under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is pending in New Jersey (Bankr. D.N.J. Case No. 16-27041) before Judge John K. Sherwood. Cole Schotz P.C. serves as counsel to Tai-Soo Suk, the Chapter 15 petitioner and the duly appointed foreign representative of Hanjin Shipping. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman, Editors. Copyright 2017. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. *** End of Transmission ***