/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170208.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 Wednesday, February 8, 2017, Vol. 20, No. 28 Headlines A U S T R A L I A CLIFFS NATURAL: BlackRock Holds 6% Equity Stake as of Dec. 31 HOVAN PTY: First Creditors' Meeting Set for Feb. 15 QUIKFIT ALUMINIUM: First Creditors' Meeting Set for Feb. 15 ZATAM PTY: First Creditors' Meeting Slated for Feb. 15 C H I N A REWARD INTERNATIONAL: Fitch Assigns B+ Rating to Senior Notes I N D I A ASTRA CHEMTECH: CRISIL Upgrades Rating on INR7MM Cash Loan to B+ BHARGAVI AUTOMOBILES: CRISIL Reaffirms B+ Rating on INR33MM Loan DIAMOND ENGINEERING: CRISIL Reaffirms D INR126.44MM Loan Rating DWARKADHEESH HAVELI: CRISIL Assigns 'D' Rating to INR8.5MM Loan GANGA R K: CARE Upgrades Rating on INR7.0cr LT/ST Loan to BB- JAYPEE HEALTHCARE: CARE Lowers Rating on INR450cr LT Loan to D JENIOUS CLOTHING: CRISIL Assigns B- Rating to INR63MM Loan KANDLA PACKAGING: CARE Assigns B+ Rating to INR12cr LT Loan KBR HOMES: CRISIL Assigns B+ Rating to INR23.8MM Tern Loan KIRPA RICE: CRISIL Reaffirms B+ Rating on INR29MM Cash Loan KOTECHA STEEL: CARE Upgrades Rating on INR5.0cr LT Loan to BB- KRS PHARMACEUTICALS: CRISIL Cuts Rating on INR7.61MM Loan to B- MANDHANA INDUSTRIES: CARE Reaffirms D Rating on INR879.63cr Loan MKHITARYAN SBL: Ind-Ra Assigns 'BB+' Rating to INR85.3MM Certs. MORMONT IFMR: Ind-Ra Assigns 'B+' Rating to INR24.42MM A2 PTCs MUDHAI DAIRY: CRISIL Assigns 'D' Rating to INR3.75MM LT Loan NGD JEWELS: CRISIL Reaffirms B Rating on INR6.95MM Cash Loan PONGALUR PIONEER: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating PUNEET IRON: Ind-Ra Assigns 'BB' Long-Term Issuer Rating R.R. ORNAMENTS: CARE Reaffirms B+ Rating on INR6.76cr LT Loan RHYTHM KNIT: CRISIL Reaffirms B+ Rating on INR0.3MM LT Loan RR ENERGY: Ind-Ra Assigns 'D' Long-Term Issuer Rating SAGAR INDUSTRIES: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating SHREE BISHNU: CRISIL Lowers Rating on INR8.35MM Cash Loan to D SHREE GAJANAN: Ind-Ra Raises Long-Term Issuer Rating to 'B' SHUBHAM INDUSTRIES: CRISIL Reaffirms B+ Rating on INR6.05MM Loan SHYAM DHANI: CARE Reaffirms B+ Rating on INR7.73cr LT Loan SINGHAL BUSINESS: CRISIL Assigns B+ Rating to INR9MM Cash Loan SREE GURUDEVA: Ind-Ra Affirms 'BB-' Rating on INR148.02MM Loans STEEL FORGE: CARE Raises Rating on INR4.50cr Loan to BB- TIRUPUR PANDIT: CRISIL Reaffirms 'B' Rating on INR17.2MM Loan T S R COTTON: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan YATHARTH HOSPITAL: Ind-Ra Assigns 'BB' Long-Term Issuer Rating I N D O N E S I A PAKUWON JATI: Fitch Rates Proposed US$ Sr. Unsec. Notes 'BB-' PAKUWON JATI: Moody's Assigns Ba3 Rating to Proposed Senior Notes J A P A N TAKATA CORP: Faces Fresh Bankruptcy Fears as KSS Picked as Backer N E W Z E A L A N D CAPITAL + MERCHANT: Investors to Get Second Payment in March CONFIGURE EXPRESS: Director Resigns, More Franchises Close POWDERPAK PARKS: Indoor Ski Park Placed in Liquidation P A K I S T A N PAKISTAN: Fitch Affirms Issuer Default Ratings at 'B' P H I L I P P I N E S * PDIC to Sell 69 Assets Via Public Bidding on Feb. 28 S I N G A P O R E IBC CAPITAL: Moody's Changes Outlook to Negative; Affirms B2 CFR S O U T H K O R E A HYUNDAI MERCHANT: Attempts Recovery After Hanjin Disaster - - - - - ================= A U S T R A L I A ================= CLIFFS NATURAL: BlackRock Holds 6% Equity Stake as of Dec. 31 ------------------------------------------------------------- In a Schedule 13G filed with the Securities and Exchange Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2016, it beneficially owns 13,916,169 shares of common stock of Cliffs Natural Resources Inc. representing 6 percent of the shares outstanding. A full-text copy of the regulatory filing is available for free at https://is.gd/ZlXYEx About Cliffs Natural Resources Cliffs Natural Resources Inc. -- http://www.cliffsnaturalresources.com/-- is a mining and natural resources company. The Company is a major supplier of iron ore pellets to the U.S. steel industry from its mines and pellet plants located in Michigan and Minnesota. Cliffs also produces low-volatile metallurgical coal in the U.S. from its mines located in West Virginia and Alabama. Additionally, Cliffs operates an iron ore mining complex in Western Australia and owns two non-operating iron ore mines in Eastern Canada. Driven by the core values of social, environmental and capital stewardship, Cliffs' employees endeavor to provide all stakeholders operating and financial transparency. On Jan. 27, 2015, Bloom Lake General Partner Limited and certain of its affiliates, including Cliffs Quebec Iron Mining ULC commenced restructuring proceedings in Montreal, Quebec, under the Companies' Creditors Arrangement Act (Canada). The initial CCAA order will address the Bloom Lake Group's immediate liquidity issues and permit the Bloom Lake Group to preserve and protect its assets for the benefit of all stakeholders while restructuring and sale options are explored. Cliffs Natural reported a net loss attributable to Cliffs common shareholders of $788 million on $2.01 billion of revenues for the year ended Dec. 31, 2015, compared to a net loss attributable to Cliffs common shareholders of $7.27 billion on $3.37 billion of revenues for the year ended Dec. 31, 2014. As of Sept. 30, 2016, Cliffs Natural had $1.77 billion in total assets, $3.17 billion in total liabilities and a $1.40 billion total deficit. * * * As reported by the TCR on April 19, 2016, Standard & Poor's Ratings Services said it raised its corporate credit rating on Cleveland-based Cliffs Natural Resources Inc. to 'CCC+' from 'SD'. As reported by the TCR on Sept. 13, 2016, Moody's Investors Service upgraded Cliffs Natural Resources Inc.'s Corporate Family Rating (CFR) and Probability of Default Rating to Caa1 and Caa1- PD respectively from Ca and Ca-PD respectively. The upgrade reflects the improving trends evidenced in Cliffs performance on strengthened fundamentals in the US steel industry, the dominant market for Cliffs iron ore pellets, and an improving order book as well as the successful renegotiation of the contracts with ArcelorMittal USA LLC, which had expiry dates of late 2016 and early 2017. HOVAN PTY: First Creditors' Meeting Set for Feb. 15 --------------------------------------------------- A first meeting of the creditors in the proceedings of Hovan Pty Ltd ATF Grandma Moses Unit Trust, trading as Grandma Moses Bakery and Deli, will be held at Level 2, 151 Macquarie Street, in Sydney, NSW, on Feb. 15, 2017, at 12:00 p.m. Antony Resnick and David Solomons of de Vries Tayeh were appointed as administrators of Hovan Pty on Feb. 3, 2017. QUIKFIT ALUMINIUM: First Creditors' Meeting Set for Feb. 15 ----------------------------------------------------------- A first meeting of the creditors in the proceedings of Quikfit Aluminium Installations Pty Ltd (Formerly trading as Complete Outdoor Concepts) will be held at the offices of Hall Chadwick, Level 10, 575 Bourke Street, in Melbourne, on Feb. 15, 2016, at 11:00 a.m. Steven Gladman and David Ross of Hall Chadwick were appointed as administrators of Quikfit Aluminium on Feb. 6, 2017. ZATAM PTY: First Creditors' Meeting Slated for Feb. 15 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Zatam Pty, trading as Total Poly Services, will be held at the offices of FTI Consulting (Australia) Pty Limited, Level 6, 30 The Esplanade, in Perth, WA, on Feb. 15, 2017, at 10:00 a.m. Ian Charles Francis and Michael Joseph Patrick Ryan of FTI Consulting were appointed as administrators of Zatam Pty on Feb. 3, 2017. ========= C H I N A ========= REWARD INTERNATIONAL: Fitch Assigns B+ Rating to Senior Notes ------------------------------------------------------------- Fitch Ratings has assigned Reward International Investment Co. Ltd's 7.25% US dollar Senior Notes a final rating of 'B+' and Recovery Rating of 'RR4'. Reward International is a 100% owned subsidiary of Reward Science and Technology Industry Group Co., Ltd. (Reward Group, B+/Stable). The notes are rated at the same level as Reward Group's senior unsecured debt rating as they represent unconditional, unsecured and unsubordinated obligations of the company. The final rating follows the receipt of documents conforming to information already received, and is in line with the expected rating assigned on Jan. 11, 2017. KEY RATING DRIVERS Solid Balance Sheet Profile: Reward Group's leverage is healthy, with FFO-adjusted net leverage of 1.3x at the end of 2015. Fitch expects FFO fixed-charge coverage to remain above 3x in the next few years after the acquisition of Panrosa US. Reward Group's debt maturity profile is also improving as the company has been refinancing its short-term debt with longer-term domestic bonds throughout 2016. As of 30 June 2016, Reward had readily available cash of CNY4.2bn, restricted cash of CNY272m and unutilised credit facilities of CNY232m, sufficient to cover short-term borrowings of CNY1.7bn. Diversifying Operations: Prior to 2015, Reward Group mainly operated as a manufacturer of household cleaning products (such as laundry detergent) and a dairy producer supplying whole milk power (WMP) to packaged food companies such as Wahaha and Kraft. Reward Group has diversified its product offerings in the past two years. It successfully expanded into formula milk and soy milk, which already accounted for CNY1.2bn or 20% of total revenue in 2015. In the consumer product segment, it aims to expand in personal care products through the acquisition of Panrosa US. Weak Market Position, Execution Risks: Reward Group's market position in each of its markets is relatively weak - it only had 1% share in China's laundry products market in 2015 and 7.6% share in China's industrial milk power market in 1H16. There is also limited product differentiation, and most of Reward Group's products face fierce competition from both local and overseas brands. Reward Group's new-business initiatives have limited synergy with existing businesses, and execution risk is high due to the company's short track record in these areas. Concentrated Shareholding, Low Transparency: Reward Group is a privately owned company, and the level of financial disclosure is weaker than listed companies. It is also not audited by one of the Big 4 accounting firms. Mr. Hu Keqin, the founder of Reward Group, holds 72.3% of the company's shares while his family holds another 23.6%. The concentrated shareholding means that there is limited board oversight, with the two independent board members only appointed in 2016. Food Safety Risks: Reward Group's dairy operations were briefly suspended in April 2016 after a review by China Food and Drug Administration. No problematic product sample was found, but the review flagged issues with the condition of the production facilities, quality control, record-keeping, and implementation of food safety regulations. Although operations resumed shortly after that, the incident highlights food safety as a potential risk. Any regulatory violations may inadvertently damage Reward Group's reputation and pressure the company's profits and cash flows. Bond Issuance to Fund Acquisition: Reward Group plans to use the bond proceeds to acquire Panrosa US for CNY1.3bn, after having acquired Panrosa Jiangsu, the China production facility, in 2015. Panrosa US produces daily products such as hand creams and shower gels, and has a complete distribution network in the US, including wholesalers and budget supermarkets like Dollar Tree and Dollar General. Following the acquisition, Reward Group plans to expand Panrosa's business in both China and international markets. DERIVATION SUMMARY Reward Group is rated one notch below PT Japfa Comfeed Indonesia TBk (BB-/Stable), which mainly reflects Reward Group's weaker business profile and market position. Reward Group is rated at the same level as Avon Products, Inc (B+/Negative). Reward Group has smaller scale than Avon, and a weaker business profile but higher margins and lower leverage. Reward Group is rated one notch above Labeyrie Fine Foods SAS (B/Stable) and Picard Bondco S.A. (B/Stable), given its stronger balance-sheet profile. KEY ASSUMPTIONS Fitch's key assumptions within the rating case include: - 3%-5% revenue growth in 2017-18, driven by new businesses and the Panrose US acquisition - 20% EBITDA margin in 2016-19 - No common dividends RATING SENSITIVITIES Negative: Further developments that may, individually or collectively, lead to negative rating action include: - Sustained decline in revenue - FFO-adjusted net leverage sustained above 2x - Sustained negative free cash flow - EBITDA margin sustained below 15% - Failure to provide regular accounting disclosures Positive: No positive rating is likely in the next 12-18 months due to the small scale of Reward Group's individual businesses, and limited regulatory oversight over the company. LIQUIDITY Sufficient Liquidity: As of June 30, 2016, Reward Group had cash and cash equivalents of CNY4.2bn, which is sufficient to cover its short-term debt of CNY1.7bn. ========= I N D I A ========= ASTRA CHEMTECH: CRISIL Upgrades Rating on INR7MM Cash Loan to B+ ---------------------------------------------------------------- CRISIL has upgraded its ratings on the long-term bank facilities of Astra Chemtech Private Limited to 'CRISIL B+/Stable' from 'CRISIL B/Stable' while reaffirming the ratings on the short-term bank facilities at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Letter of Credit 3 CRISIL A4 (Reaffirmed) Packing Credit 1.5 CRISIL A4 (Reaffirmed) Proposed Long Term 4.0 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') Working Capital 7.0 CRISIL B+/Stable (Upgraded Demand Loan from 'CRISIL B/Stable') The upgrade follows improvement in ACPL's liquidity reflected in reflected in repayment of outstanding term debt obligations along with moderate buffer in bank limit utilisation. The improvement in ACPL's liquidity profile is on the back of stable business performance and an absence of major capital expenditure (capex). The company's revenue improved marginally by about 7 per cent during fiscal 2016 to INR63.5 crore along with improved margins of 7.9 percent. The company is not expected to incur any major capex over the medium term which will support the liquidity profile. The ratings continue to reflect ACPL's average financial risk profile, marked by modest net worth and average debt protection metrics and working capital intensive operations. These weaknesses are partially offset by the longstanding experience of ACPL's promoters in the adhesives industry and its moderate scale of operation supported by well establish brand and diversify product range. Key Rating Drivers & Detailed Description Weaknesses * Working capital intensive operations The operations continue to remain working capital intensive with gross current assets (GCA) of about 185 days during fiscal 2016. Large working capital requirements emanate from high inventory levels and high receivable days. Moreover, owing to moderate scale of operations and intense industry competition, the entity has low bargaining power with customers. CRISIL believes ACPL's working-capital intensive will continue to constrain financial flexibility. * Average financial risk profile, marked by modest net worth and average debt protection metrics ACPL's financial risk profile is average. With absence of significant equity infusion and small accretion to reserves in the past, the company's net worth continues to remain modest at around INR6.37 crore as on March 31, 2016. With working capital intensive operations leading to moderate dependence on debt, gearing continues to remain moderately high at about 1.9 times as on March 31, 2016. The interest coverage and net cash accrual to total debt ratios were average at 1.6 times and 12 percent, respectively, during fiscal 2016. Strengths * Longstanding experience of ACPL's promoters in the adhesives industry ACPL has been operating in the chemicals industry for more than a decade and is one of the larger manufacturers of adhesives for the Indian packaging industry. The company also benefits from its promoters' extensive industry experience. ACPL exports some of its products to Sri Lanka, Pakistan, Bangladesh, and the UAE. The company will continue to benefit over the medium term from its established track record, and its promoters' extensive experience, in the chemicals industry. * Moderate scale of operation supported by well establish brand and diversify product range The scale of operations are moderate with net sales of about INR63.5 crore during fiscal 2016. The business risk profile is also supported by a diversified product range along with presence in various end-user industries and a well-established brand. Diverse product range including adhesives (consumer and industrial), construction chemicals, specialty coating and others add stability to revenue. ACPL also has a varied end-user/customer base spread across India catering to industries such as packaging, furniture, paper converting, and construction and retail customers. ACPL's moderate scale of operations will improve over the medium term backed by diverse product range, end-user industry and customer base. Outlook: Stable CRISIL believes that ACPL will benefit over the medium term from the healthy demand for adhesives on account of growth in end- user, packaging and construction, industries. The outlook may be revised to 'Positive' in case of significant improvement in its financial risk profile, most likely because of large equity infusion and significant improvement in its turnover and profitability. Conversely, the outlook may be revised to 'Negative' if the company's financial risk profile deteriorates because of delays in receivable collection, or a large debt- funded capex programme. ACPL, established in 2000 by Mr. Rashid Ibrahim Sorathiya, manufactures water- and solvent-based synthetic adhesives. It also manufactures, on a small scale, construction chemicals, textile specialty chemicals, specialty resins, specialty coating, and specialty esters. ACPL reported a profit after tax (PAT) and net sales of INR0.72 crore and INR63.5 crore respectively for fiscal 2016. The company reported a PAT and net sales of INR0.32 crore and INR59.5 crore respectively for fiscal 2015. BHARGAVI AUTOMOBILES: CRISIL Reaffirms B+ Rating on INR33MM Loan ---------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on the bank facilities of Bhargavi Automobiles Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1 CRISIL A4 (Reaffirmed) Cash Credit 33 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect the company's below-average financial risk profile, marked by small networth, high total outside liabilities to tangible networth ratio, and below-average debt protection metrics. The ratings also factor in susceptibility to economic cyclicality, and intense competition. These rating weaknesses are partially offset by the extensive entrepreneurial experience of its promoters, and the company's efficient working capital management. Key Rating Drivers & Detailed Description Weaknesses * Susceptibility to cyclicality, and to intense competition: Operations are entirely dependent on those of its principal Maruti Suzuki India Ltd (MSIL). Intense competition in the automobile industry also constrains profitability. * Below-average financial risk profile: Networth was modest at INR6.7 crore, and total outside liabilities to tangible networth (TOL/TNW) ratio was high at 7.6 times as on March 31, 2016. Debt protection metrics are weak, with interest coverage of 1.3 times in fiscal 2016. Strengths * Extensive experience of the promoter: Benefits from the two- decade-long experience of Mr. K Bala Ram Reddy and his family, and his healthy relationships with principal, MSIL, should continue to support business risk profile. * Efficient working capital management: Working capital cycle is managed efficiently, as reflected in low gross current assets, inventory and receivables of 88, 50 and 17 days, respectively, as on March 31, 2016. Outlook: Stable CRISIL believes that BAPL will continue to benefit over the medium term from the promoter's extensive experience in the automobile dealership business. The outlook may be revised to 'Positive' if substantial and sustained increase in scale of operations, profitability, and accrual, or a sizeable equity infusion by the promoters strengthens financial metrics. Conversely, the outlook may be revised to 'Negative' in case of a steep decline in profitability, or significant deterioration in capital structure caused most likely by a stretch in working capital cycle. Incorporated in 1997, BAPL is the authorized dealer for Maruti Suzuki India Ltd (MSIL; rated 'CRISIL AAA/Stable/CRISIL A1+') in Andhra Pradesh. The company is being promoted by Mr. K Balarami Reddy. Profit after tax (PAT) of INR0.57 crore was reported on net sales of INR187.2 crore for fiscal 2016, vis-a-vis INR0.63 crore and INR155.5 crore, respectively, for fiscal 2015 DIAMOND ENGINEERING: CRISIL Reaffirms D INR126.44MM Loan Rating --------------------------------------------------------------- CRISIL has removed from 'Notice of Withdrawal' on the ratings of INR75.79 crore bank facilities of Diamond Engineering (Chennai) Pvt Ltd, due to non-receipt of No Objection Certificate (NOC) from bankers in line with the requirement of CRISIL's revised withdrawal policy. CRISIL's policy change follows the revised Securities and Exchange Board of India (SEBI) guidelines that became effective from January 01, 2017. These ratings were earlier placed on 'Notice of Withdrawal' for a period of 180 days on July 7, 2016, at the company's request. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 40.79 CRISIL D (Removed from 'Notice of Withdrawal'; Reaffirmed) Funded Interest Term Loan 15.71 CRISIL D (Reaffirmed) Letter of credit 15.00 CRISIL D (Removed from & Bank Guarantee 'Notice of Withdrawal'; Reaffirmed) Long Term Loan 15.0 CRISIL D (Reaffirmed) Term Loan 18.83 CRISIL D (Reaffirmed) Working Capital Term Loan 126.44 CRISIL D (Reaffirmed) Cash Credit 20.00 CRISIL D (Removed from 'Notice of Withdrawal'; Reaffirmed) Further, CRISIL has also reaffirmed its ratings of 'CRISIL D' on the company's bank facilities. The rating reaffirmation is based on information available in the public domain. CRISIL keeps all its outstanding ratings on continuous surveillance. Accordingly, it seeks regular updates from companies on business and financial performance. CRISIL is taking all possible efforts to get the company to cooperate with the rating process for enabling CRISIL to carry out the rating review. The ratings continue to reflect delays by DECPL in servicing its debt due to weak liquidity. Operations are highly susceptible to downturns in the capital goods industry. Moreover, financial risk profile is below average, with weak credit metrics and limited financial flexibility due to losses. However, the company benefits from established position in the steel fabrication business, and strong relationships with key customers. Key Rating Drivers & Detailed Description Weakness * Below average financial risk profile and weak liquidity leading to continued delays in servicing debt obligations: DECPL's financial risk profile is marked by high gearing and weak debt protection metrics due to sizeable losses, significant stretch in working capital and high dependence on external borrowings. Further high bank limit utilisation and weak cash flow from operations continue to exert pressure on liquidity leading to continued delays in servicing term loan obligations. * Working capital-intensive operations: Operations are highly working capital intensive. The company's inventory holding has been high (over 350 days on average) primarily because of long order execution period. Moreover, any delay in off take of goods by customers will also result in inventory build-up. * Exposure to cyclicality in the capital goods industry: Revenue in the engineering and capital goods industry is linked to economic cycles as products are mainly sold to the construction, power, and cement sectors, which follow the overall economic investment cycle. Thus DECPL's revenue will remain susceptible to cyclicality in the capital goods industry, over the medium term. Strengths * Established position in the steel-fabrication business, with strong customer and supplier relationships: DECPL's promoters have over three decades of industry experience. The company is one of the largest steel fabricators in India, with an installed capacity of more than 5000 tonne per month (tpm), which enables it to undertake large and complex steel structure orders and execute them on time. The company has strong relationships with suppliers and customers. DECPL has a reputed customer base, both in domestic and export markets, including Bharat Heavy Electricals Ltd (rated 'CRISIL AA+/Negative/CRISIL A1+'), FL Smidth Pvt Ltd, Dangote Cement Plc, Aumund Engineering Pvt Ltd, and L&T MHI Boilers Pvt Ltd. DECPL, established in 1987, is one of the larger players operating in the light engineering and steel structural fabrication business. The company fabricates steel components based on the engineering designs and requirements of its customers in the construction, cement, power, sugar, and automotive components industries. Products include structural steel, bulk material handling equipment, and industrial process equipment for domestic and overseas projects of international original equipment manufacturers and engineering, procurement, and construction companies. Services offered include heavy machining, surface finishing, packing, and forwarding. DWARKADHEESH HAVELI: CRISIL Assigns 'D' Rating to INR8.5MM Loan --------------------------------------------------------------- CRISIL has assigned its 'CRISIL D' rating to the long-term bank facility of Dwarkadheesh Haveli Builders. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 8.5 CRISIL D The rating reflects recent delays in servicing term loan because of weak liquidity. Cash flow was significantly constrained due to sluggish demand for project and adverse effect of demonitisation on new bookings. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile due to leveraged capital structure: Neworth was small and capital structure leveraged due to dependence on external borrowing to fund project. * Exposure to demand risk: Ongoing projects are exposed to saleability risks, reflected in sluggish bookings. Although the projects are in advance stage of implementation, slower pace of bookings has affected cash flow and constrained liquidity. Strength * Extensive experience of promoters: The promoters have been in the real estate development segment for around two decades and have a healthy track record of project execution. Established in 2010 as a partnership firm by Mr. Vijay Singh, Mr. Rakesh Kumar Rai, Mr.Kishan L Sharma, Mr.Ajab Singh, Mr.Gulab Singh, and Mr. D K Rai, DHB develops residential real estate in Bhopal. GANGA R K: CARE Upgrades Rating on INR7.0cr LT/ST Loan to BB- ------------------------------------------------------------- The revision in the ratings assigned to the bank facilities of Ganga R K Industries Private Limited (GRK) is driven by improvement in profitability as well as debt coverage indicators of RGK Group (RGK) during FY16 (refers to the period April 1 to March 31) and its moderately leveraged capital structure. The ratings also factor in the vast experience of the promoters and well-established presence of RGK in the international market. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- Term Bank Facilities 7.00 CARE BB-; Stable/CARE A4 Revised from CARE B+/ CARE A4 Short-term Bank Facilities 1.50 CARE A4 Reaffirmed The ratings are, however, constrained by continuously declining scale of operations, RGK's working capital intensive operations, susceptibility of its profit margins to raw material prices and foreign exchange rate fluctuations and its presence in the highly competitive casting and forging industry. RGK's ability to increase its scale of operations, improving profitability and capital structure would remain the key rating sensitivity. Efficient management of working capital and maintaining better liquidity profile would also remain crucial. Description of key rating drivers Mr Ramniklal Kotecha, key promoter of RGK group holds more than three decades of experience in the casting business and manages technical aspects of goods manufactured. RGK group has strong presence in international market with around 60% of revenue being generated from the export market. During FY16, on the back of decline in material cost of iron and steel PBILDT margin of RGK improved by 286 bps. Consequently, with decline in interest costs, PAT margin improved by 195 bps during FY16. GCA of RGK also reported healthy growth of 54.88% y-o-y. With improved profitability, debt coverage indicators marked by total debt to GCA and interest coverage ratio improved compared to the previous year. Solvency position marked by overall gearing stood moderate as on March 31, 2016 on the back of moderate level of net worth base and debt level. During FY16, TOI of RGK declined by 14.65% y-o-y on the back of decline in export sales. RGK generates around 60% of revenue from the export market out of which exports to Yemen constituted major portion of revenue. Due to on-going political disruptions in Yemen, the exports level declined significantly from 30% of net sales during FY15 to 15% of net sales during FY16. Simultaneously, RGK has added new export markets such as Morocco, USA, Uganda, Zambia, Malawi etc. to de-risk itself from single geographical concentration. Overall operations remained working capital intensive in nature marked by high utilization (75%) of working capital bank borrowing for the last 12-month period ended December 2016 and elongated operating cycle. Analytical Approach - Consolidated For arriving at the rating of Ganga R K Industries Private Limited (GRK), CARE has considered the consolidated financial and business profile of the three entities of RGK Group (RGK), namely, Kotecha Steel Forge Private Limited (KSF), Steel Forge and Cast Industries (SFC) and Ganga R K Industries Private Limited (GRK) due to their managerial and financial linkages. Mr. Ramnik Kotecha and Mrs Kiran Kotecha are common directors/partners in the group. Rajkot-based (Gujarat) GRK belongs to RGK group of industries. GRK was incorporated in April 2007 by its key promoter Mr. Ramnik Kotecha. The company was set up as a partnership firm in 1980 in the name of "R. K. Industries". Subsequently, in 2007, it was converted into a private limited company. It is engaged in manufacturing and export of metal casting products such as agricultural diesel engine, grinding mill, vertical turbine pump, graded casting and ductile iron casting components and parts etc. Presently GRK is managed by four promoters' viz. Mr. Ramnik Kotecha, Mr. Bhavesh Pabari, Mr. Samir Kotecha and Mrs Kiran Kotecha. During FY16 (A), RGK reported PAT of INR0.91 crore on a TOI of INR45.36 crore as against PAT of INR0.03 crore on a TOI of INR53.14 crore during FY15. Till 9MFY17 (Provisional), RGK has achieved a turnover of INR47.82 crore. JAYPEE HEALTHCARE: CARE Lowers Rating on INR450cr LT Loan to D -------------------------------------------------------------- The revision in the rating assigned to the bank facilities of Jaypee Healthcare Limited takes into account delay in servicing of debt obligations by the company due to its weak liquidity position. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 450 CARE D Revised from CARE BB Detailed description of the key rating drivers During FY16 (refers to the period April 1 to March 31), the company reported net loss of INR55.49 crore on total operating income of INR143.85 crore. Although there has been gradual improvement in revenues, the hospital is in its initial stages in which occupancy levels are relatively low, leading to dependence on the promoters for funding support. On account of weak financial performance of JHL as well as weak liquidity of the promoters, liquidity position of JHL was stretched leading to delays in debt servicing. Jaypee Healthcare Ltd, a 100% subsidiary of Jaypee Infratech Ltd (JIL, rated 'CARE D'), has set up a multi-specialty tertiary hospital with a capacity of 504 beds. The hospital is located at Jaypee Wish Town, Noida, a large township project being developed by JIL along the Noida-Greater Noida Expressway in Sector 128, Noida. The company is also in the process of setting up a secondary care hospital at Anoopshahr, U.P. and a tertiary care hospital at Bulandshahr, U.P., with a total investment of INR160 crore, proposed to be funded through equity of INR60 crore and debt of INR100 crore. JENIOUS CLOTHING: CRISIL Assigns B- Rating to INR63MM Loan ---------------------------------------------------------- CRISIL has assigned its 'CRISIL B-/Stable' rating to the long- term bank loan facilities of Jenious Clothing Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 30 CRISIL B-/Stable Corporate Loan 63 CRISIL B-/Stable The ratings reflect the company's below average financial risk profile, marked by negative net worth and working capital intensive nature of operations. However, these rating weaknesses are partially offset by the extensive industry experience of its promoters in the ready-made garments industry. Key Rating Drivers & Detailed Description Weaknesses * Below average financial risk profile because of a negative net worth: The company has a negative net worth on account of carry forward losses from the past. * Working capital intensive nature of operations: JCPL's operations are working capital intensive. The company maintains an inventory of about 2 months and offers a credit period of about two months to its customers. The working capital intensity is mitigated to a certain extent by the moderate credit period that it receives from its suppliers Strength * Extensive industry experience of its promoters in the ready- made garments industry: JCPL benefits from the extensive experience of its promoters in the readymade garment industry. The company manufactures night wear and under wear garments and has a leased facility in Bengaluru. Its customers are large multinational apparel retailers with established presence and significant market shares in their respective segments in USA and Europe. Outlook: Stable CRISIL believes that JCPL will continue to benefit from the industry experience of the promoters. The outlook may be revised to 'Positive' in case of sustainable increase in the company's scale of operations and profitability or in case of significant equity infusion by the promoters thereby resulting in improving its financial risk profile. Conversely, the outlook may be revised to 'Negative' if the company undertakes a large, debt- funded capital expenditure programme, leading to deterioration in its capital structure, or if its volumes or margins decline steeply. Established in 2011, Bangalore based JCPL is in the textile industry. The company is involved in manufacture and export of readymade garment and is promoted by Mr. Sunil Raheja. JCPL's profit after tax (PAT) was INR0.37 crore on net sales of INR53.9 crore in fiscal 2016. KANDLA PACKAGING: CARE Assigns B+ Rating to INR12cr LT Loan ----------------------------------------------------------- The rating assigned to the bank facilities of Kandla Packaging Private Limited is constrained due to its leveraged capital structure, moderate debt coverage indicators, weak liquidity position and working capital intensive nature of operation. The rating is also constrained by KPPL's presence in the highly fragmented industry, susceptibility of operating margins to raw material price fluctuation and customer concentration risk associated with the operations of the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12.00 CARE B+; Stable Assigned The rating, however, derives comfort from the experienced promoters into similar line of business operations. The ability of KPPL to increase its scale of operations and profitability along with improvement in capital structure and efficient working capital management would be the key rating sensitivities. Detailed description of the key rating drivers KPPL's total operating income (TOI) witnessed a healthy growth y-o-y on the back of increased sales volume of corrugated boxes as well as increase in income from civil construction work. Consequently, PBILDT and PAT increased significantly in FY16 (refers to the period April 1 to March 31) and stood at moderate level. Revenue from civil construction works contributed about 64% to the total revenue of KPPL in FY16. The company's business is diversified with its presence in civil construction works, corrugated box manufacturing and trading of various commodities. However, it is facing customer concentration risk as more than 65% of total revenue comes from a single customer (Welspun India Ltd.) for its construction business. On account of low net worth base and high debt level, solvency position stood weak marked by high overall gearing level as on March 31, 2016. However, with improvement in GCA level during FY16 and decline in debt level as on March 31, 2016, compared with previous year, total debt to GCA improved and stood at moderate level. Liquidity position remained weak marked by below unity current ratio along with long working capital cycle of 74 days in FY16 due to higher collection period and inventory days. Furthermore, average working capital utilization of the company also remained high at about 90% during 12 months ended November 2016. KPPL's directors possess more than two decades of experience in various businesses. All the directors are actively involved in both packaging and civil construction business. Kutch-based (Gujarat) KPPL was incorporated as a private limited company in January 2004 by Mr. Dhanpat Parekh and Mr. Pravin Agarwal. However, KPPL was taken over by present management i.e. Mr. Dayalrajan Pillai, Mr. Kaushik Pinara, Mr. Raj Kangad and Mr. Somesh Rathod who are also directors of KPPL in FY13. KPPL is engaged in the manufacturing of corrugated boxes and trading of salt. From September 2014 onwards, it also commenced civil construction work through its division named Siddharth Associates. KPPL operates from its sole manufacturing facility located in Kutch (Gujarat) with an installed capacity of 18000 Metric Tonne Per Annum (MTPA) for corrugated boxes as on March 31, 2016. During FY16, KPPL has reported a PAT of INR2.08 crore on a total operating income of INR60.00 crore as against a PAT of INR0.05 crore on a total operating income of INR10.93 crore in FY15. During H1FY17 (refers to the period April 1 to September 30), the company has reported a total operating income of INR28.92 crore. KBR HOMES: CRISIL Assigns B+ Rating to INR23.8MM Tern Loan ---------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the long term bank facility of KBR Homes India Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 23.8 CRISIL B+/Stable The rating reflects the exposure to cyclicality in Indian real estate industry and intense competition in the real estate sector and low demand arising out of the current market scenario. These rating weaknesses are partially offset by the promoters' extensive experience in real estate industry and their funding support and low funding risk given 50 per cent of the existing projects are funded by the promoters. Key Rating Drivers & Detailed Description Weakness * Exposure to cyclicality in Indian real estate industry and intense: The real estate sector in India is cyclical and is marked by volatile prices, opaque transactions, and a highly fragmented market structure. The execution of the real estate projects in India is affected by multiple property laws and non- standardised government regulations across the states. The risk is compounded by aggressive timelines for completion with shortage of manpower (project engineers and skilled labour) in this sector. The recent slowdown in the real estate sector has adversely affected the execution and salability of several ongoing and future projects. Strengths * Promoters' extensive experience in real estate industry and their funding support: Mr. Konduru Babu Raju has two decades of business experience in Real estate investments and Development. Over the years, he has developed strong relationships with government departments and raw materials suppliers. In 1992, he set up a proprietorship concern, K Babu Raju, and started executing various government civil construction works. In 2010, the firm was reconstituted as a public limited company. Over the years, company has developed strong relationships with its major customers and raw material suppliers. In 2012, Konduru Babu Raju promoted KHIPL as a marketing arm for the real estate projects undertaken by Infratech Limited. * Low funding risk given 50 per cent of the existing projects are funded by the promoters and built on their own land: Around 50 per cent of the projects currently undertaken by the company are built on the land owned by the promoters and funded by the promoters itself. This reduces the funding risk for the company. Outlook: Stable CRISIL believes that KHIPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if sizeable customer advances and timely implementation of on-going project lead to healthy cash inflows. Conversely, the outlook may be revised to 'Negative' if time and cost overruns in on-going project, or delays in receipt of customer advances, leads to low cash inflows and pressure on MPPL's liquidity. Incorporated in 2012, KHIPL is promoted by Mr. Konduru Babu Raju and Mrs. Konduru Rajeswari head-quartered in Bangalore. The company is engaged in real estate development. KHIPL generated net sales of INR6.82 crores in 2015-16 (Refers to financial year from 1st April 2015 to 31st March 2016) with Profit after Tax of INR0.31 crores during the same period. KIRPA RICE: CRISIL Reaffirms B+ Rating on INR29MM Cash Loan ----------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of Kirpa Rice Mills (KRM) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 29 CRISIL B+/Stable (Reaffirmed) The business risk profile is likely to remain stable driven by expected revenue growth of 5% per fiscal over the medium term. Operating profitability was moderate at 6.2% in fiscal 2016, and is expected to remain at a similar level over the medium term. The financial risk profile is expected to remain weak over this period, owing to a modest networth, low profitability, and moderate reliance on external debt to fund working capital requirement. Liquidity is supported by unsecured loans from the partners, and cash accrual will be adequate to meet incremental working capital requirement in the absence of any term debt repayment obligation. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: The total outside liabilities to tangible networth ratio was high at 3.00 times as on March 31, 2016, due to a modest networth of INR3.74 crore, and moderate reliance on bank borrowing for funding incremental working capital requirement. The debt protection metrics are weak as indicated by an interest coverage ratio of 1.21 times for fiscal 2016. * Moderate scale of operations: KRM has moderate scale of operations as reflected in its operating revenue of INR59.48 crore in fiscal 2016. It is expected that operating revenue will remain moderate owing to the intense competition in the rice industry and presence of large players. Further, there are no direct exports and all the global sales are made through indirect exporters, thus restricting the firm's ability to scale up operations significantly. * Large working capital requirement: Operations are working capital intensive, as reflected in gross current assets of 227 days in March 31, 2016. That's because of large inventory (116 days) as paddy, the main raw material, is seasonal and has to be procured during October-November for the entire year's requirement, and substantial debtors (112 days) due to the high credit allowed to customers. Aged rice is procured all year round from mandis either on a cash basis from farmers or at limited credit of 10-15 days from traders. Against this, the firm has to offer large credit to customers due to intense competition. Strength * Extensive experience of the partners in the rice industry: The partners have about 20 years of experience in this industry. Over the years, they have successfully established a procurement network that has been able to meet the needs of the firm. It has a presence in the local mandis of Fazilka, Malout, Abohar, and Mukstar (all in Punjab) for procurement of paddy. Outlook: Stable CRISIL believes KRM will continue to benefit from the extensive industry experience of its partners. The outlook may be revised to 'Positive' if the financial risk profile improves significantly, driven most likely by a considerable increase in net cash accrual due to a substantially higher scale of operations, or infusion of capital. The outlook may be revised to 'Negative' if liquidity deteriorates because of higher-than- expected working capital requirement or pressure on profitability. KRM, established in 1998, processes and sells basmati rice. Its facility in Ladhu Ka (district Firozpur), Punjab, has milling and sortex capacity of 4 tonne per hour. Profit after tax (PAT) was INR0.40 crore on operating revenue of INR59.48 crore for fiscal 2016, against PAT of INR0.44 crore on operating revenue of INR66.40 crore for fiscal 2015. KOTECHA STEEL: CARE Upgrades Rating on INR5.0cr LT Loan to BB- -------------------------------------------------------------- The revision in the ratings assigned to the bank facilities of Kotecha Steel Forge Pvt Ltd (KSF) is driven by improvement in profitability as well as debt coverage indicators of RGK Group (RGK) during FY16 (refers to the period April 1 to March 31) and its moderately leveraged capital structure. The ratings also factor in the vast experience of promoters and well-established presence of RGK in the international market. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- Term Bank Facilities 5.00 CARE BB-; Stable/CARE A4 Revised from CARE B+/ CARE A4 Short-term Bank Facilities 0.95 CARE A4 Reaffirmed The ratings are, however, constrained by continuously declining scale of operations, RGK's working capital intensive operations, susceptibility of its profit margins to raw material prices and foreign exchange rate fluctuations and its presence in the highly competitive casting and forging industry. RGK's ability to increase its scale of operations, improving profitability and capital structure would remain the key rating sensitivity. Efficient management of working capital and maintaining better liquidity profile would also remain crucial. Description of key rating drivers Mr Ramniklal Kotecha, key promoter of RGK group holds more than three decades of experience in the casting business and manages technical aspects of goods manufactured. RGK group has a strong presence in international market with around 60% of revenue being generated from the export market. During FY16, on the back of decline in material cost of iron and steel PBILDT margin of RGK improved by 286 bps. Consequently, with decline in interest costs, the PAT margin improved by 195 bps during FY16. GCA of RGK also reported healthy growth of 54.88% y-o-y. With improved profitability, debt coverage indicators marked by total debt to GCA and interest coverage ratio improved compared to previous year. Solvency position marked by overall gearing stood moderate as on March 31, 2016 on the back of moderate level of net worth base and debt level. During FY16, TOI of RGK declined by 14.65% y-o-y on the back of decline in export sales. RGK generates around 60% of revenue from the export market out of which exports to Yemen constituted major portion of revenue. Due to on-going political disruptions in Yemen, the exports level declined significantly from 30% of net sales during FY15 to 15% of net sales during FY16. Simultaneously, RGK has added new export markets such as Morocco, USA, Uganda, Zambia, Malawi etc. to de-risk itself from a single geographical concentration. Overall operations remained working capital intensive in nature marked by high utilization (75%) of working capital bank borrowing for the last 12-month period ended December 2016 and elongated operating cycle. For arriving at the rating of Kotecha Steel Forge Pvt Ltd, CARE has considered the consolidated financials and business profile of the three entities of RGK Group (RGK), namely, Kotecha Steel Forge Private Limited (KSF), Steel Forge and Cast Industries (SFC) and Ganga R K Industries Private Limited (GRK) due to their managerial and financial linkages. Mr. Ramnik Kotecha and Mrs Kiran Kotecha are common directors/partners in the group. Rajkot-based KSF is a part of RGK group and it was incorporated by its key promoter Mr. Ramnik Kotecha in April 2007 to carry out trading and export of steel casting products such as diesel engine, pump sets, agriculture machineries, construction equipments etc. Presently KSF is managed by four promoters' viz. Mr. Ramnik Kotecha, Mr. Bhavesh Pabari, Mr. Samir Kotecha and Mrs Kiran Kotecha. KSF is a government recognized '1 Star Export House' with an ISO 9002:2001 certification. KSF books around 90% of total revenue from export sale primarily to regions like Yemen, Morocco, Zambia, Uganda and Kenya etc. During FY16 (A), RGK reported PAT of INR0.91 crore on a TOI of INR45.36 crore as against PAT of INR0.03 crore on a TOI of INR53.14 crore during FY15. Till 9MFY17 (Provisional), RGK has achieved a turnover of INR47.82 crore. KRS PHARMACEUTICALS: CRISIL Cuts Rating on INR7.61MM Loan to B- ---------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of KRS Pharmaceuticals Private Limited to 'CRISIL B-/Stable' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 1.72 CRISIL B-/Stable (Downgraded from 'CRISIL B+/Stable') Proposed Long Term Bank Loan Facility .28 CRISIL B-/Stable (Downgraded from 'CRISIL B+/Stable') Term Loan 7.61 CRISIL B-/Stable (Downgraded from 'CRISIL B+/Stable') The downgrade reflects deterioration in liquidity due to high bank limit utilisation, lower cash accrual against debt obligation, and stretch in working capital cycle. Only a sustained improvement in working capital management will lead to a better liquidity. Gross current assets increased to 188 days as on March 31, 2016, from 150 days as on March 31, 2014, resulting in high bank limit utilization of 98% on average over the four months ended December 2016. The rating reflects KPPL's small scale of operations in the intensely competitive bulk drugs industry and working capital- intensive operations. These weaknesses are partially offset by the extensive experience of its promoters. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in competitive segment With revenue of INR24.2 crore for fiscal 2016, scale remains modest in the intensely competitive bulk drugs industry. * Large working capital requirement Gross current assets were 188 days as on March 31, 2016, due to stretched receivables of 79 days. Strength * Extensive experience of promoters Presence of more than a decade in the pharmaceuticals bulk drugs industry has enabled the promoters to establish strong relationship with suppliers, and clients such as Cipla and Cadila. Outlook: Stable CRISIL believes KPPL will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' in case of a substantial and sustained increase in scale of operations, while maintaining profitability margins, or if there is a significant improvement in networth on the back of sizeable equity infusion by promoters. The outlook may be revised to 'Negative' if profitability margins decline sharply, or if capital structure deteriorates due to a stretch in working capital cycle or large, debt-funded capital expenditure. Set up in 2004 by Mr. B Narendra and Mr. B L Swamy, KPPL manufactures bulk drugs and intermediates at its plant in Hyderabad and Visakhapatnam. In fiscal 2016, profit after tax (PAT) was INR0.4 crore on operating income of INR24.2 crore, as against PAT of INR0.53 crore on operating income of INR18.1 crore in fiscal 2015 MANDHANA INDUSTRIES: CARE Reaffirms D Rating on INR879.63cr Loan ---------------------------------------------------------------- The revision in the ratings assigned to the non-convertible debentures (NCDs) of Mandhana Industries Limited takes into account delays in servicing of its debt obligations on account of stretched liquidity position. Furthermore, reaffirmation of the rating of the bank facilities factors in continued delays in servicing debt obligation on account of stretched liquidity position. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 879.63 CARE D Reaffirmed Short-term Bank Facilities 87.50 CARE D Reaffirmed Non-Convertible Debentures 57.00 CARE D Revised from CARE C MIL's ability to improve its cash flows and regularize its debt servicing are the key monitorables. Mandhana Industries ltd is engaged primarily in manufacturing of textile fabric (grey and finished fabric). As on March 31, 2015, MIL had a yarn dyeing capacity of 4.3 mn kg per annum, weaving capacity of 36 mn mtrs of grey fabric per annum, fabric processing capacity of 72.60 mn mtrs per annum and garmenting capacity of 6.60 mn pieces per annum. The garmenting facility is located at Bangalore while all other facilities are located at MIDC, Tarapur. Apart from this, MIL has also commenced 1 mn piece garmenting facility at Baramati in March 2015. Sale of fabric (Textile division) is the major revenue contributor and contributed around 88% of total revenues in FY16 (80% in FY15; refers to the period April 1 to March 31); the rest is contributed by sale of garments. During FY16, MIL reported operating revenue of INR1,663.28 crore and a PAT of INR57.13 crore as against an operating revenue and PAT of INR1,561.04 crore and INR62.72, respectively, in FY15. MKHITARYAN SBL: Ind-Ra Assigns 'BB+' Rating to INR85.3MM Certs. --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Mkhitaryan SBL IFMR Capital 2016 (an ABS transaction) provisional ratings as: -- INR1.4 bil. Pass through certificates (PTCs)-Series A1 assigned provisional IND A+(SO)/stable rating; and -- INR85.3 mil. PTCs-Series A2 assigned provisional IND BB+(SO)/stable rating The final ratings are contingent upon the receipt of final documents conforming to the information already received. The microfinance loan pool to be assigned to the trust is originated by Ujjivan Financial Services Limited. The current pool comprises mainly of individual loans. KEY RATING DRIVERS The provisional ratings are based on the origination, servicing, collection and recovery expertise of Ujjivan, the legal and financial structure of the transaction, and the credit enhancement (CE) provided in the transaction. The provisional ratings of Series A1 pass-through certificates (PTCs) addresses the timely payment of interest on monthly payment dates and the ultimate payment of principal by the final maturity date of Nov. 17, 2018, in accordance with transaction documentation. The provisional rating of Series A2 PTCs addresses the timely payment of interest on monthly payment dates only after the complete redemption of Series A1 PTCs and the ultimate payment of principal by the final maturity date of Nov. 17, 2018, in accordance with transaction documentation. The transaction benefits from the internal CE on account of excess interest spread, subordination and over-collateralization. The level of over-collateralization available to Series A1 and Series A2 PTCs is 16% and 11% of the initial pool principal outstanding (POS), respectively. The total internal CE (includes excess cash flow and subordination) available to Series A1 and A2 PTCs is 28.8% and 23.1% respectively of the POS. The transaction also benefits from an external CE of 3.75% of the initial POS in the form of fixed deposits in the name of the originator with a lien marked in favour of the trustee. The collateral pool to be assigned to the trust at par had the initial POS of INR1,705.7 million as of the pool cut-off date of Dec. 31, 2016. The external CE will be used in case of a shortfall in a) the complete redemption of all Series of PTCs on the final maturity date, b) the monthly interest payment to Series A1 investors, c) the monthly interest payment of Series A2 investors after the complete redemption of Series A1 investors, and d) any shortfall in Series A2 maximum payout on the Series A2 final maturity date. RATING SENSITIVITIES As part of its analysis, Ind-Ra built a pool cash flow model based on the transaction's financial structure. The agency also analysed historical data to determine the base values of key variables that would influence the level of expected losses in this transaction. The base values of the default rate, recovery rate, time to recovery, collection efficiency, prepayment rate and pool yield were stressed to assess whether the level of CE was sufficient for the current rating levels. Ind-Ra also conducted rating sensitivity tests. If the assumptions about the base case default rate worsen by 30%, the model-implied rating sensitivity suggests that the ratings of Series A1 PTCs will be downgraded by one notch, the rating of Series A2 PTCs will not be affected. Ind-Ra believes that demonetisation would have a short-term impact on the cash flows from the underlying pool. To include the impact of demonetisation, the agency had a discussion with the originator on the prevailing collection scenario. Ind-Ra analyzed the monthly collection trends of the originator for the month of November 2016 and December 2016 based on the collections done up to Jan. 19, 2017; the trends were provided by the issuer. Based on these facts, the agency has included the assumptions of lower collection efficiency (both for current and overdue collections) than the long-term average for the three months starting the first collection month. COMPANY PROFILE Incorporated in 2005, Ujjivan commenced operations in January 2006. It is a microfinance institution focused on providing financial services to the economically active poor in urban and semiurban areas. It is listed on the National Stock Exchange and the Bombay Stock Exchange. It was founded by CEO and Managing Director Mr Samit Ghosh. Ujjivan's loan portfolio increased 43.5% yoy to INR65.87 billion at the end of 3QFY17. Gross and net NPA levels were 0.25% and 0.05%, respectively, at the end of 3QFY17. Ujjivan's portfolio is well distributed across states. As of December 2016, Ujjivan was present in 24 states and union territories and 209 districts. MORMONT IFMR: Ind-Ra Assigns 'B+' Rating to INR24.42MM A2 PTCs -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Mormont IFMR Capital 2016 (an ABS transaction) these final ratings: -- INR212.52 mil. Series A1 pass-through certificates (PTCs) assigned IND A-(SO)/Stable rating -- INR24.42 mil. Series A2 PTCs assigned assigned IND B+(SO)/Stable rating The microfinance loan pool assigned to the trust is originated by Disha Microfin Private Limited (Disha). KEY RATING DRIVERS The final ratings are based on the origination, servicing, collection and recovery expertise of Disha, the legal and financial structure of the transaction and the credit enhancement (CE) provided in the transaction. The final rating of Series A1 PTCs addresses the timely payment of interest on monthly payment dates and the ultimate payment of principal by the final maturity date of Oct. 1, 2018, in accordance with transaction documentation. The final rating of Series A2 PTCs addresses the timely payment of interest on monthly payment dates only after the complete redemption of Series A1 PTCs and the ultimate payment of principal by the final maturity date of Oct. 1, 2018, in accordance with transaction documentation. The transaction benefits from the internal CE on account of excess interest spread, subordination and over-collateralization. The levels of over-collateralization available to Series A1 and Series A2 PTCs are 13% and 3% of the initial pool principal outstanding (POS), respectively. Total excess cash flow or internal CE available to Series A1 and A2 PTCs is 30.23% and 17.83%, respectively, of the initial POS. The transaction benefits from an external CE of 5.0% of the initial POS in the form of fixed deposits in the name of the originator held with RBL Bank Ltd, with a lien marked in favor of the trustee. The collateral pool assigned to the trust at par had an initial POS of INR244.28 million, as of the pool cut-off date of Dec. 11, 2016. Investor payouts derive support from 3% principal over- collateralization and 5% of cash collateral, in addition to excess interest spread. Principal payouts to Series A2 PTCs are subordinated to Series A1 PTCs and provide an additional 10% support to Series A1 PTCs. The external CE will be used in case of a shortfall in a) the complete redemption of all Series of PTCs on the final maturity date, b) the monthly interest payment to Series A1 investors, c) the monthly interest payment of Series A2 investors after the complete redemption of Series A1 investors and d) any shortfall in Series A2 maximum payout on the Series A2 final maturity date. RATING SENSITIVITIES As part of its analysis, Ind-Ra built a pool cash flow model based on the transaction's financial structure. The agency analyzed historical data to determine the base values of key variables that would influence the level of expected losses in this transaction. The base values of the default rate, recovery rate, time to recovery, collection efficiency, prepayment rate and pool yield were stressed to assess whether the level of CE was sufficient for the current rating levels. Ind-Ra conducted rating sensitivity tests. If the assumptions about the base case default rate worsen by 30%, the model-implied rating sensitivity suggests that the rating of Series A1 PTCs will not be impacted and that of Series A2 PTCs will be downgraded by two notches. COMPANY PROFILE Incorporated in 1995, Disha is registered with the Reserve Bank of India (RBI) as a non-banking financial company - microfinance institution. In September 2015, it received in-principle approval from the RBI to start operations as a small-finance bank. In October 2016, Disha acquired Future Financial Services Pvt Ltd, a part of Fincare group, which comprises Disha, Future Financial Services Pvt. Ltd, Lok Management Services Pvt. Ltd., India Finserve Advisors Pvt. Ltd. and Fincare Business Services Pvt. Ltd. MUDHAI DAIRY: CRISIL Assigns 'D' Rating to INR3.75MM LT Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL D' rating to the long-term bank facility of Mudhai Dairy Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan 3.75 CRISIL D Rating reflects weak liquidity as reflected in instances of delay in repayment of term loans and weak financial risk profile. These weaknesses are partially offset by extensive industry experience of promoters. Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: Modest networth (Rs 1.4 crore as on March 31, 2016), high gearing (6.01 times) and low interest coverage (1.6 times in fiscal 2016) reflect weak financial risk profile. Strength * Extensive experience of promoters: Business risk profile is strengthened by the partners' extensive experience of three decades in the liquor industry. Incorporated in 2008, MDPL has dairy farm in Satara with total installed capacity of 30,000 litres per day. It also has four retail shops in Mumbai and Navi Mumbai. Profit after tax was INR0.13 crore on net sales of INR24 crores in fiscal 2016, against INR0.05 crore and INR23 crore, respectively, in fiscal 2015. NGD JEWELS: CRISIL Reaffirms B Rating on INR6.95MM Cash Loan ------------------------------------------------------------ CRISIL has reaffirmed its rating on the long-term bank facilities of NgD Jewels (NGD) at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.95 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility .45 CRISIL B/Stable (Reaffirmed) Term Loan .60 CRISIL B/Stable (Reaffirmed) The rating continues to reflect working capital-intensive, and a small scale of, operations in the competitive retail jewellery segment. The ratings also factor in a below-average financial risk profile due to below-average debt protection metrics and an aggressive capital structure. These weaknesses are partially offset by the extensive industry experience of the proprietor. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in the competitive retail jewellery segment Revenue was INR16.8 crore in fiscal 2016, and is expected to remain modest due to high fragmentation and intense competition in the jewellery industry. * Below-average financial risk profile Gearing was high at 2.39 times and networth small at INR2.89 crore, as on March 31, 2016. The debt protection metrics are below-average: interest coverage ratio was 1.5 times in fiscal 2016. The financial risk profile will remain below-average over the medium term because of continued high reliance on working capital debt. * Working capital-intensive operations Gross current assets were high at 210 days as on March 31, 2016, because of large inventory, and will remain high over the medium term. Strength * Extensive industry experience of the proprietor The proprietor has extensive experience in the gold jewellery industry; the experience has helped to gain an insight into customers' buying patterns and identify trends in jewellery designs. This should enable the firm to maintain its business risk profile over the medium term. Outlook: Stable CRISIL believes NGD will continue to benefit from the extensive industry experience of its proprietor. The outlook may be revised to 'Positive' in case of significant and sustainable improvement in cash accrual driven by increasing revenue and stable profitability, or substantial infusion of capital, leading a better financial risk profile. The outlook may be revised to 'Negative' if the financial risk profile, especially liquidity, weakens, most likely due to lower cash accrual, stretched working capital requirement, or capital withdrawal. NGD was set up in the 1989 as a proprietorship firm, Neettukattil Gold Park, by Mr. Ali Neettukattil; it was renamed in 2013. The firm retails jewellery at its showroom at Valanchery, Kerala; it offers a wide range of gold, silver, diamond, and platinum jewellery. For 2015-16, NGD reported a profit after tax (PAT) of INR0.18 cr on net sales of INR16.01 cr; the firm reported a PAT of INR0.19 cr on net sales of INR17.58 cr for 2014-15. PONGALUR PIONEER: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Pongalur Pioneer Textiles Private Limited's Long-Term Issuer Rating at 'IND BB+'. The Outlook is Stable. KEY RATING DRIVERS The ratings affirmation reflects PPTPL's continued moderate scale of operations, indicated by a revenue of INR1,001 million in FY16 (FY15: INR863 million), and moderate credit profile, as reflected in a gross interest coverage (operating EBITDA/gross interest expense) of 2.3x (2.4x) and a net financial leverage (total adjusted net debt/operating EBITDAR) of 2.4x (2.2x). The increase in revenue was due to healthy order execution for clients. Moreover, PPTPL's revenue was INR700 million in 9MFY17. The ratings factor in a decline in operating margin to 11.3% in FY16 from 15.1% in FY15 due to an increase in the cost of raw materials. The ratings continue to remain constrained by the company's tight liquidity situation, as evident from nearly 100% use of fund- based limits over the 12 months ended December 2016. The ratings, however, continue to be supported by the promoters' experience of two-and-half decades in cotton yarn manufacturing. RATING SENSITIVITIES Negative: A decline in operating margin leading to a deterioration in credit metrics may lead to a negative rating action. Positive: An improvement in the scale of operations, along with the maintenance of the credit profile, would lead to a positive rating action. COMPANY PROFILE PPTPL was established in 1990 by Mr V Selvapathy in Tirupur. The company is primarily engaged in the manufacturing of warp cotton yarn. It has an installed capacity of 66,856 spindles and manufactures combed warp cotton yarn in the higher count ranges from 66s, 72s and 91s. It sells yarns in Somanur (Coimbatore) and Mumbai through dealers, brokers and directly. PPTPL sources raw materials from brokers. It does not have any long-term contracts for sourcing and pricing raw materials from suppliers. Pricing is dependent on demand and market conditions. The company has five wind mills, which meet 35% of the company's power requirements. The generating capacity of the wind mills is 1.675MW. The wind mills have an overall generating capacity of 1.675MW and are situated in Edayarpalayam, Coimbatore and Karungulam. PUNEET IRON: Ind-Ra Assigns 'BB' Long-Term Issuer Rating -------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Puneet Iron and Steel Private Limited (PISPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. KEY RATING DRIVERS The rating reflects PISPL's moderate scale of operations and moderate credit metrics. In FY16, revenue was INR947.57 million (FY15: INR987.17 million), net interest coverage (operating EBITDA/net interest expense) was 1.56x (1.09x) and net leverage (total adjusted net debt/operating EBITDA) was 3.26x (9.03x). The ratings are constrained by the company's weak EBITDA margins of 1.31% in FY16 (FY15: 1.99%). The ratings, however, are supported by PISPL's comfortable liquidity position as evident from around 36.60% utilization of its fund-based working capital limits during the nine months ended December 2016. The ratings are further supported by promoter's experience of more than two decades in the steel trading business. RATING SENSITIVITIES Negative: A decline in the EBITDA margins leading to deterioration in the credit metrics could lead to a negative rating action. Positive: Substantial revenue growth along with an improvement in the operating margins leading to improvement in the overall credit metrics, could lead to a positive rating action. COMPANY PROFILE PISPL was formed in 1991 as Puneet Steels, a partnership firm engaged in the trading of steel rounds and squares in Faridabad, Haryana. The company was reconstituted as a private limited company and renamed Puneet Iron and Steel Private Limited in 2000. PISPL is an authorized distributor of Steel Authority of India Limited (SAIL - 'IND AA'/Negative) and Rashtriya Ispat Nigam Limited (RINL - 'IND A'/ Negative) and sells in the domestic market, majorly to the auto sector. R.R. ORNAMENTS: CARE Reaffirms B+ Rating on INR6.76cr LT Loan ------------------------------------------------------------- The ratings of R.R. Ornaments Private Limited continue to remain constrained on account of its modest scale of operations with thin profitability and leveraged capital structure, working capital intensive nature of operations and susceptibility of operating profitability to volatile gold prices. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.76 CARE B+; Stable Reaffirmed Short-term Bank Facilities 0.60 CARE A4 Reaffirmed The ratings further, continued to remain constrained on account of its presence in a highly competitive and fragmented Gems & Jewellery (G&J) industry. The ratings, however, continue to draw strength from experienced promoters and wide range of product offerings. The ratings, further, continue to draw comfort from continuous infusion of share capital by the promoters during the past three financial years ended FY16 (refers to the period April 1 to March 31). The ability of the company to increase its scale of operations with improvement profitability and better management of working capital would be the key rating sensitivities. Detailed description of the key rating drivers During the last three financial years ended FY16, the promoters has infused share capital including share premium. TOI of the company has declined and stood modest along with low net worth base as on March 31, 2016, further, the profitability of the company stood thin. The capital structure of the company stood moderately leveraged with the high working capital requirements for the company are primarily to fund the high inventory levels. Bhilwara-based (Rajasthan) RROPL was incorporated in the year 2009 by Mr. Vikas Samdani, Mr. Ankit Samdani and other family members. RROPL is engaged in the business of manufacturing and wholesale of gold, silver, diamond and precious stones studded jewellery. The company is also engaged in the retailing of jewellery through its single showroom located in Bhilwara. The company offers wide range of products that include rings, earrings, pendants, necklaces, bracelets, bangles, colour stones and medallions. RROPL manufactures its own designs in 18, 20, 22 carat gold based on demand of the customers in the brand name RR. As per audited results of FY16 (refers to the period April 1 to March), RROPL reported a total income of INR22.04 crore with a PAT of INR0.07 crore. RHYTHM KNIT: CRISIL Reaffirms B+ Rating on INR0.3MM LT Loan ----------------------------------------------------------- CRISIL has reaffirmed its ratings on bank facilities of Rhythm Knit India Private Limited at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan .3 CRISIL B+/Stable (Reaffirmed) Packing Credit 6.7 CRISIL A4 (Reaffirmed) Post Shipment Credit 5.0 CRISIL A4 (Reaffirmed) The ratings on the bank facilities of RKIPL continue to reflect RKIPL's average financial risk profile because of a small net worth and average protection metrics. The ratings also factor in the small scale of operations in the highly fragmented knitted garments industry. These rating weaknesses are partially offset by the promoters' extensive experience in the textile industry and established relationships with customers. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in the highly fragmented knitted garments industry: RKIPL has a modest scale of operations, as reflected in its sales of around INR42.0 Crores in fiscal 2016. Because of its small scale of operations, the company is unable to exploit economies of scale. This limits its bargaining power with suppliers as well as customers. Also, the company's revenue are primarily derived from export, which is marked by high competition from many small- medium size players in the ready- made garment market in India as well as from players from other developing low-cost countries. * Average financial risk profile because of a small net worth and average protection metrics: The company has small net worth of about INR4.8 Crores as on March 31, 2016. This is on account of low accretion to reserves due to small scale of operations reflected. The company's moderate profitability and working capital requirements have resulted in moderate debt protection metrics. RKIPL's gearing was moderate at 1.4 times as on March 31, 2016 because of moderate working capital intensive nature of operations. Strength * Promoters' extensive experience in the textile industry and established relationships with customers: RKIPL's promoters have been in the readymade garments industry for over 13 years. This has helped the promoters acquire technical know-how as well as market knowledge. The extensive experience of the promoters has helped the company establish good relationships with its suppliers and customers, especially in Europe, the US, and Africa. This is reflected in repeat orders the company gets from its existing customers. Outlook: Stable CRISIL believes RKIPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the company significantly scales up its operations while it improves its profitability, thereby improving the cash accrual. Conversely, the outlook may be revised to 'Negative' if the financial risk profile, particularly its liquidity, deteriorates, most likely because of a substantial increase in its working capital requirements, or debt-funded capital expenditure (capex), or low cash accrual. RKIPL was incorporated in 2010 to take over the business of the promoters' proprietary firm, Rhythm Fashions. RKIPL manufactures and exports knitted garments, mainly to Europe, the US, and Africa. The company has its manufacturing facility at Tirupur (Tamil Nadu). RKIPL's profit after tax (PAT) was INR0.4 crore on net sales of INR41.9 crores in fiscal 2016, vis-a-vis a PAT of INR0.38 crore on net sales of INR42.64 crore, for fiscal 2015. RR ENERGY: Ind-Ra Assigns 'D' Long-Term Issuer Rating ----------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned R.R. Energy Limited (RREL) a Long-Term Issuer Rating of 'IND D'. KEY RATING DRIVERS The ratings reflect RREL's tight liquidity leading to delays in debt servicing for the 12 months ended December 2016. RATING SENSITIVITIES Positive: Timely debt servicing for three consecutive months could result in a positive rating action. COMPANY PROFILE Incorporated in 2004, the company has a ferro alloy manufacturing plant and a 15MW biomass-based power plant in Raigarh, Chhattisgarh. SAGAR INDUSTRIES: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Sagar Industries & Distilleries Private Limited's Long-Term Issuer Rating at 'IND BB-'. The Outlook is Stable. KEY RATING DRIVERS The affirmation reflects Sagar's continued small scale of operations and moderate credit metrics. FY16 financials indicate revenue of INR641 million (FY15: INR457 million). Revenue declined in FY15 to INR457 million from FY14 of INR736 million due to shortage of molasses (raw material). Interest Coverage (operating EBITDA/gross interest expense) improved to 3.3x in FY16 (FY15:2.4x) on account of improvement in EBITDA margin and net financial leverage (total adjusted net debt/operating EBITDA) deteriorated to 11.6x in FY16 (FY15:17.1x) due to reduction in debt. EBITDA margin was in the range of 6.4%-13.6% during FY13- FY16 due to raw material price fluctuation as the main raw material is a seasonal product. The ratings, however, continue to be supported by the company's comfortable liquidity position with the fund-based facilities being utilized at an average of 80% over the 12 months ended December 2016. The ratings further derive support from more than two decades of experience of the founders in portable and non-portable alcohol business. RATING SENSITIVITIES Positive: Substantial growth in the company's top-line and improvement in profitability leading to sustained improvement in the overall credit metrics will lead to a positive rating action. Negative: Any further decline profitability resulting in a sustained deterioration in overall credit metrics of the company will lead to a negative rating action. COMPANY PROFILE Incorporated in 1999, Sagar is engaged in manufacturing of portable and non-portable alcohol. The manufacturing facility is located in Nashik, Maharashtra. The company has a total installed capacity of 10m liters per day and the current capacity utilization is around 60-70% due to shortage of molasses. SHREE BISHNU: CRISIL Lowers Rating on INR8.35MM Cash Loan to D -------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility of Shree Bishnu Feed Industries to 'CRISIL D' from 'CRISIL B- /Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8.35 CRISIL D (Downgraded from 'CRISIL B-/Stable') The downgrade reflects delays in regularising ad hoc limits in December 2016 and January 2017. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations: Gross current assets were 183 days as on March 31, 2016. Receivables increased to 128 days from 114 days a year earlier due to delayed payments by customers. Liquidity is stretched, reflected in an overdrawn working capital line of credit. * Constrained financial risk profile: Debt protection metrics and the capital structure are weak. Gearing remained high at 4.36 times as on March 31, 2016, while the interest coverage ratio was below average at 1.3 times in fiscal 2016. Strength * Extensive industry experience of the proprietor: The proprietor has over four decades of experience in the poultry business. SBFI was established in 1995 as a proprietorship concern by Mr. Bharatji Prasad. The firm produces poultry feed, cattle feed, and hatched chicks. It also trades in maize grain and soya bean de- oiled cakes. Its manufacturing facility is in Howrah, West Bengal. Profit after tax (PAT) was INR17 lakh on revenue of INR56.3 crore in fiscal 2016, against PAT of INR16.59 lakh on revenue of INR53.17 crore in fiscal 2015. SHREE GAJANAN: Ind-Ra Raises Long-Term Issuer Rating to 'B' ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Shree Gajanan Industries' (SGI) Long-Term Issuer Rating to 'IND B' from 'IND D'. The Outlook is Stable. KEY RATING DRIVERS The upgrade reflects timely debt servicing by SGI during the three months ended December 2016. Although the company reported multiple instances of over-utilization of working capital limits over the 12 months ended August 2016, the utilization regularized over September-December 2016. Its liquidity position was tight, indicated by a near full utilization of working capital limits over the 12 months ended December 2016. The ratings derive support from moderate scale of operations and weak credit metrics. In FY16, SGI's revenue was INR1,098 million (FY15: INR1,111 million), EBITDA interest coverage (operating EBITDA/gross interest expense) was 1x (1.1x) and net financial leverage (adjusted debt net of cash/EBITDA) was 8.3x (17.7x). SGI registered INR890 million in revenue for 9MFY17. The ratings, however, were constrained by a continued volatile EBITDA margin, which fluctuated between 3.1% and 6.7% during FY13-FY16, due to fluctuating raw material prices. The ratings continue to factor in the partnership structure of SGI and its strong track record of over four decades in the rice milling industry in Andhra Pradesh. RATING SENSITIVITIES Negative: A deterioration in the liquidity profile will be negative for the ratings. Positive: An increase in scale of operations, along with an improvement in the liquidity position, will be positive for the ratings. COMPANY PROFILE Established in 1969, SGI manufactures various varieties of rice (basmati and non-basmati). SGI has a 5 TPH capacity modern rice mill in Nizamabad. SHUBHAM INDUSTRIES: CRISIL Reaffirms B+ Rating on INR6.05MM Loan ---------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of Shubham Industries - Hyderabad (SI) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.05 CRISIL B+/Stable (Reaffirmed) The rating continue to reflect SI's modest scale of operations with susceptibility to volatility in cotton prices and to changes in government regulations, below-average financial risk profile, marked by a small net worth, low gearing, and moderate debt protection metrics, These rating weaknesses are partially offset by the extensive experience of SI's partners in the cotton industry and an established customer relationship. Key Rating Drivers & Detailed Description Weaknesses *Modest scale of operations with susceptibility to volatility in cotton prices and to changes in government regulations: With revenue of INR60 crore for fiscal 2016, the scale of operations remains modest and is susceptible to volatility in cotton prices and changes in government regulations. * Below average financial risk profile: Networth was modest at INR1. crore and gearing high at 4.3 times as on March 31, 2016. Debt protection metrics were weak, with interest coverage at around 1.0 times for fiscal 2016. Strength * Extensive industry experience of the promoters and an established customer relationship: The promoters have been operating in the cotton industry for over five decades; this has enabled them to establish a strong relationship with customers and suppliers. Outlook: Stable CRISIL expects SI to continue to benefit over the medium term from its partners' extensive industry experience and established relationship with traders The outlook may be revised to 'Positive' in case of substantial and sustained increase in profitability, or sizeable capital infusion, leading to a better capital structure. The outlook may be revised to 'Negative' in case of a steep decline in profitability, further capital withdrawal, or a stretched working capital cycle, leading to weakening of the capital structure. SI was established as a partnership firm in 2013 by Mr.Rajesh Soni and Mr. Krishnakumar Partani. The firm gins and presses raw cotton (kapas) to make cotton bales, and sells cotton seed. SI's manufacturing facility in Tandur (Andhra Pradesh) has capacity of 45,000 bales per annum. SI commenced its commercial operations from December 2013. In fiscal 2016, profit after tax (PAT) was INR0.26 crore on operating income of INR59.8 crore, as against PAT of INR0.3 crore on operating income of INR44.9 crore in fiscal 2015 SHYAM DHANI: CARE Reaffirms B+ Rating on INR7.73cr LT Loan ---------------------------------------------------------- The rating of Shyam Dhani Industries Private Limited continue to remain constrained on account of its presence in the highly competitive and fragmented food processing industry and seasonality associated with agro based raw materials leads to fluctuations in the prices and vulnerability to margins. The rating is, further, constrained on account of stabilization risk associated with its recently completed greenfield project. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term bank 7.73 CARE B+; Stable Facilities Reaffirmed The rating, however, continue to favorably take into account experienced management with strong group support having strong marketing and distribution network. Ability of the firm to achieve the envisaged level of TOI and profitability with better management of working capital would be the key rating sensitivities. Detailed description of the key rating drivers SDPL has completed its greenfield project for processing of spices within time and cost parameters and has started commercial production from April 1, 2017. The stabilization risk is associated with this project owing to its presence in the highly fragmented and competitive food processing industry and vulnerability of margins to fluctuation in raw material prices. This risk is offset to an extent with experienced promoters in the industry and presence of group concern in the same line of business. Jaipur-based (Rajasthan) SDPL was incorporated in October, 2010 by Mr. Ramavtar Agarwal, Mr. Mahesh Agrawal and Mrs. Mamta Agarwal with an objective to set up greenfield project for manufacturing and processing of spices at Jaipur. It has completed its project and started started commercial operations from April 1, 2016. During FY16 (refers to the period of March 31 to April 1), BCC has reported a total operating income of INR25.21 crore with a net profit of INR0.86 crore. SINGHAL BUSINESS: CRISIL Assigns B+ Rating to INR9MM Cash Loan -------------------------------------------------------------- CRISIL has assigned 'CRISIL B+/Stable' ratings to the long term bank facility of Singhal Business Private Limited. The ratings reflect the company's modest scale and profitability, large working capital requirement and exposure to intense competition. These weaknesses are partially offset by the extensive industry experience of promoters and comfortable capital structure. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9 CRISIL B+/Stable Key Rating Drivers & Detailed Description Weaknesses * Modest scale and profitability SBPL's scale and profitability has remained modest with operating income of INR32.15 crore and operating margin of 2.1% for fiscal 2016. The modest scale restricts benefits from economies of scale. * Exposure to intense competition The iron ore fines and steel product trading industry is marked by intense competition and leads to low bargaining power for small players, including SBPL. The same is also reflected in the modest profitability levels. * Large working capital requirements Working capital requirements continue to be large marked by gross current assets (GCAs) of 159 days as on March 31, 2016 and 127 days as on March 31, 2015. Strengths * Extensive experience of promoters The promoters have been in the iron ore, coal and mill scale trading business for close to a decade, which has enabled them to develop good industry insight and this is likely to benefit SBPL. * Comfortable capital structure The capital structure is comfortable marked by low gearing of 0.7 time as on March 31, 2016 against 0.85 time as on March 31, 2015. The total outside liabilities to tangible networth ratio too has remained comfortable at 1.45 times and 1.48 times, respectively, for the corresponding periods. Outlook: Stable CRISIL expects SBPL will maintain its business risk profile over the medium term backed by the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if a substantial and sustained increase in its scale of operation and cash accrual along with improved working capital management improves financial risk profile. The outlook may be revised to 'Negative' if low operating income or accrual, stretch in working capital cycle, or any large debt funded capital expenditure weakens financial risk profile, particularly liquidity. Incorporated in October 2010, SBPL in engaged in domestic trading of iron ore fines, coal, mill scale and other steel products. The company is promoted by Raipur-based Mr. Rahul Agarwal and his brother Mr. Ram Awatar Agrawal, who also manage operations. In fiscal 2016, SBPL reported profit after tax (PAT) of INR0.15 crore on operating income of INR32.15 crore against INR0.17 crore and INR40.50 crore the previous fiscal. SREE GURUDEVA: Ind-Ra Affirms 'BB-' Rating on INR148.02MM Loans --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has revised the Outlook on Sree Gurudeva Charitable and Educational Trust's (SGCET) INR148.02 million bank loans to Negative from Stable, while affirming the Long-term rating at 'IND BB-'. KEY RATING DRIVERS The Negative Outlook reflects SGCET's tight liquidity profile and weak debt servicing. Available funds declined to INR5.75 million in FY16 (FY15: INR25.57 million) due to deployment of funds towards its ongoing capital investment plan. Consequently, the available fund/total debt and available fund/total operating expenditures deteriorated to 2.42% in FY16 (FY15: 12.04%) and 6.12% (34.52%), respectively. SGCET's debt service coverage ratio (DSCR) remained below 1x over FY13-FY16. Although debt service in relation to total income declined to 52.74% in FY16 (FY15: 71.48%), the DSCR remained below 1x in FY16. Ind-Ra does not expect any major improvement in the DSCR due to high debt service commitments during FY17- FY18. The Outlook revision also reflects the fall in capacity utilisation to 80.7% in FY16 from 89.75% in FY15. The drop in capacity utilisation indicates tough competition for the courses offered by the trust. The rating continues to be constrained by SGCET's limited demand flexibility. The trust had accepted nearly all applications to fill the seats as reflected by 100% acceptance rate over FY15-FY16. The absence of brand equity, as well as affiliation with industries translates into limited demand flexibility. The trust's debt burden remained moderately high as reflected by its debt/income (FY16: 146.05%; FY15: 158.42%) and debt/current balance before interest and depreciation (CBBID) ratios (FY16: 3.46x; FY15: 3.54x). Borrowings increased 11.79% yoy to INR237.46 million in FY16, driven by a rise in short-term borrowings to INR65.77 million (FY15: INR29.8 million). The trust plans capex of INR110 million over FY17-FY18 for the construction of additional academic blocks. This capex will be funded through a mix of debt (73%) and internal accruals (27%). SGCET's liquidity profile is unlikely to improve in FY17-FY18 due to its capital investment plan. SGCET's operating margins fell 2.53pp to 41.81% in FY16, although remained comfortable. The decline resulted from a 26.91% yoy increase in operating expenditures to INR94 million in FY16, as against a 21.38% yoy increase in operating income to INR161.53 million. Tuition fee was the primary source of income with an average contribution of 91.47% over FY12-FY16. Staff cost was the major cost (average contribution of 33.96% over FY12-FY16), followed by depreciation (24.99%) and other operating expenditures (21.81%), while interest cost proportioned 19.25%. RATING SENSITIVITIES Positive: A significant improvement in the operational effectiveness of the trust-run institute, resulting in an improvement in the coverage ratios and liquidity profile could lead to a positive rating action. Negative: A decline in student enrolments along with unplanned capital investment, leading to a significant deterioration in the operating margins and debt metrics could lead to a negative rating action. COMPANY PROFILE SGCET was established in 2008 in Pallickal (Kerala). The trust manages Sri Vellappally Natesan College of Engineering since 2008 and offers B.Tech and M.Tech courses. Mr Tushar Vellapally is the chairman of the trust. STEEL FORGE: CARE Raises Rating on INR4.50cr Loan to BB- -------------------------------------------------------- The revision in the ratings assigned to the bank facilities of Steel Forge and Cast Industries (SFC) was primarily on account of improvement in profitability as well as debt coverage indicators of RGK Group during FY16 (refers to the period April 1 to March 31) and its moderate capital structure. The ratings also factor in the vast experience of promoters and well-established presence of RGK in the international market. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- 4.50 CARE BB-; Stable/CARE A4 Term Bank Facilities Revised from CARE B+/ CARE A4 Short-term Bank Facilities 1.50 CARE A4 Reaffirmed The above-mentioned strengths are partially offset by its declining scale of operations, RGK's working capital intensive nature of operations, susceptibility of its profit margins to raw material prices and foreign exchange rate fluctuations and its presence in the highly competitive casting and forging industry. Going forward, RGK's ability to increase its scale of operations, improve profitability by managing raw material price fluctuations and improving capital structure and debt coverage indicators would remain the key rating sensitivities. Furthermore, efficient management of working capital and maintaining better liquidity profile would also remain crucial. Description of key rating drivers Mr. Ramniklal Kotecha, key promoter of RGK group, holds more than three decades of experience in the casting business and manages technical aspects of goods manufactured. RGK group has strong presence in international market with around 60% of the revenue being generated from the export market. During FY16, on the back of decline in material cost of iron and steel PBILDT margin of RGK improved by 286 bps. Consequently, with decline in interest costs, PAT margin improved by 195 bps during FY16. GCA of RGK also reported healthy growth of 54.88% y- o-y. With improved profitability, debt coverage indicators marked by total debt to GCA and interest coverage ratio improved compared to previous year. Solvency position marked by overall gearing stood moderate as on March 31, 2016, on the back of moderate level of net worth base and debt level. During FY16, TOI of RGK declined by 14.65% y-o-y on the back of decline in export sales. RGK generates around 60% of revenue from the export market out of which exports to Yemen constituted major portion of revenue. Due to on-going political disruptions in Yemen, the exports level declined significantly from 30% of the net sales during FY15 to 15% of net sales during FY16. Simultaneously RGK has added new export markets such as Morocco, USA, Uganda, Zambia, Malawi, etc, to de-risk itself from single geographical concentration. Overall operations remained working capital intensive in nature marked by high utilization (75%) of working capital bank borrowing for last 12-month period ended December 2016 and elongated operating cycle. Analytical Approach - Consolidated For arriving at the rating of Steel Forge and Cast Industries, CARE has considered the consolidated financial and business profile of the three entities of RGK Group, namely, Kotecha Steel Forge Private Limited, Steel Forge and Cast Industries and Ganga R K Industries Private Limited due to their managerial and financial linkages. Mr. Ramnik Kotecha and Mrs Kiran Kotecha are common directors/partners in the group. Rajkot-based SFC, a part of RGK Group of Industries, was established by its key promoter Mr. Ramnik Kotecha in April 2010 for manufacturing of steel casting products such as agriculture diesel engine, pump sets, agriculture machineries, cast iron parts, etc. Presently, SFC is managed by two partners, viz, Mr. Ramnik Kotecha and Mrs. Kiran Kotecha having profit and loss sharing ratio of 40% and 60%, respectively. The manufacturing facility of SFC is located at Surendranagar district. It started its operations from April 2013 with total installed capacity of 500 ton per annum. During FY16 (A), RGK reported PAT of INR0.91 crore on a TOI of INR45.36 crore as against PAT of INR0.03 crore on a TOI of INR53.14 crore during FY15. Till 9MFY17 (Prov.), RGK has achieved a turnover of INR47.82 crore. TIRUPUR PANDIT: CRISIL Reaffirms 'B' Rating on INR17.2MM Loan -------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Tirupur Pandit Hosiery Millss Private Limited at 'CRISIL B/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Foreign Bill Discounting 6 CRISIL A4 (Reaffirmed) Foreign Bill Discounting 1.5 CRISIL B/Stable (Reaffirmed) Foreign Letter of Credit 1.5 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 17.2 CRISIL B/Stable (Reaffirmed) Packing Credit 24.8 CRISIL A4 (Reaffirmed) Overdraft 1.0 CRISIL B/Stable (Reaffirmed) The rating reflects TPHMPL's modest scale of and working capital intensive operations in a fragmented industry, susceptibility to volatility in raw material prices and weak financial risk profile. However, these weaknesses are offset by the extensive industry experience of its promoters. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations amid intense competition: Business risk profile is constrained by the modest scale of operations'as reflected in revenues of INR68 crores during fiscal 2016. * Susceptibility to volatility in raw material prices: Profitability remains susceptible to volatility in raw material prices and forex rates'profitability declined to 7.2% in fiscal 2016 from 14.3% in fiscal 2015. * Working capital intensive operations: Gross current assets of 166 days as March 31, 2016, driven by high inventory and receivables days reflect working capital intensive operations. * Weak financial risk profile: Financial risk profile is weak on account of continuous losses eroding its networth, which was negative. Debt protection metrics are subdued marked by net cash accrual to total debt and interest coverage ratios of 4% and 1.32 times during fiscal 2016. Strength * Extensive experience of promoters: Incorporated in 1974 in Tirupur (Tamil Nadu), TPHMPL is promoted by Mr. N Subramanian. The extensive experience of promoters has helped the company to grow at a healthy compound annual growth rate of 36%. Outlook: Stable CRISIL believes TPHMPL will continue to benefit from its long track record in the textile business. The outlook may be revised to 'Positive' if increase in scale of operations and profitability improves financial risk profile. The outlook may be revised to 'Negative' if cash accrual declines or working capital management is inefficient or sizeable debt-funded capital expenditure programme weakens financial risk profile. TPHMPL, incorporated in 1974, manufactures ready-made garments. Its operations are managed by Ms S Latha and Mr. S Jothimanikandan For fiscal 2016, TPHMPL made a profit after tax (PAT) of INR45.70 lakh on total income of INR67.98 crore, against a PAT of INR29.70 lakh on total income of INR23.71 crore for the previous fiscal T S R COTTON: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of T S R Cotton Ginning Mill at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 10 CRISIL B+/Stable (Reaffirmed) The rating reflects a modest scale of operations with susceptibility to volatility in cotton prices and to changes in government regulations. The rating also factors in a weak financial risk profile because of an aggressive capital structure and below-average debt protection metrics. These rating weaknesses are partially offset by the extensive experience of the promoters in the cotton industry and an established customer relationship. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations with susceptibility to volatility in cotton prices and to changes in government regulations: With revenue of INR41 crore for fiscal 2016, the scale of operations remains modest and is susceptible to volatility in cotton prices and changes in government regulations. * Weak financial risk profile: Networth was modest at INR4.4 crore and gearing high at 2.3 times as on March 31, 2016. Debt protection metrics were weak, with interest coverage and net cash accrual to total debt ratios at around 1.7 times and 5%, respectively, for fiscal 2016. Strength * Extensive industry experience of the promoters and an established customer relationship: The promoters have been operating in the cotton industry for over three decades; this has enabled them to establish a strong relationship with customers and suppliers. Outlook: Stable CRISIL believes TCGM will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' in case of substantial and sustained increase in profitability, or sizeable capital infusion, leading to a better capital structure. The outlook may be revised to 'Negative' in case of a steep decline in profitability, further capital withdrawal, or a stretched working capital cycle, leading to weakening of the capital structure. Established in 1985 and based in Guntur, Andhra Pradesh, TCGM undertakes cotton ginning, and processing of cotton seed oil. In fiscal 2016, profit after tax (PAT) was INR0.34 crore on operating income of INR41.4 crore, as against PAT of INR0.26 crore on operating income of INR38.2 crore in fiscal 2015 YATHARTH HOSPITAL: Ind-Ra Assigns 'BB' Long-Term Issuer Rating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Yatharth Hospital and Trauma Care Services Private Limited (YHTCSPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. KEY RATING DRIVERS The ratings reflect the company's ongoing partly debt-funded capex plan, which has led to deterioration in net leverage to 3.08x in FY16 (FY15: 2.67x). The company has a 440-bed capacity in place and plans to add an incremental 250 beds until FY18. Therefore, Ind-Ra expects the net adjusted leverage to become stable from FY18, when new capacities start contributing to revenue and profits. However, the ratings are supported by YHTCSPL's improving scale of operations and stable EBITDA margins of 25%-30% over FY13- FY16. Revenue grew to INR718.99 million in FY16 (FY15: INR584.64 million) due to better occupancy levels, thereby increasing average revenue per bed day. The company recorded EBITDA margins of 25.67% in FY16 (FY15: 31.38%). The ratings are further supported by YHTCSPL's strong cash flows and adequate liquidity. Fund flow from operations margin was around 15% in FY16 and cash flow from operations margin was about 7%. Although free cash flow has been negative due to capex of INR736.9 million incurred over FY13-FY16, the company had cash and equivalents of INR6.94 million at FYE16 (FYE15: INR6.32 million). RATING SENSITIVITIES Negative: Weakening of margins leading to deterioration in the credit metrics will be negative for the ratings. Positive: A significant improvement in the top line and/or diversification of the revenue sources while maintaining and/or improving the credit profile will be positive for the ratings. COMPANY PROFILE YHTCSPL was formed in 2008 as a private limited hospital by Dr. Ajay Tyagi, Dr. Kapil Tyagi, Dr Neena Tyagi and Dr. Manju Tyagi. The company has a 150-bed hospital in Greater Noida and a 340-bed hospital in Noida specialising in obstetrics and gynecology, cardiology, general medicine, pediatrics and neonatology, general surgery, ENT, microbiologist and pulmonology services. ================= I N D O N E S I A ================= PAKUWON JATI: Fitch Rates Proposed US$ Sr. Unsec. Notes 'BB-' ------------------------------------------------------------- Fitch Ratings has assigned Indonesia-based property developer PT Pakuwon Jati Tbk's (Pakuwon, BB-/Stable) proposed US dollar- denominated senior unsecured notes an expected rating of 'BB- (EXP)'. The notes will be issued by Pakuwon's wholly owned subsidiary Pakuwon Prima Pte Ltd, and guaranteed by Pakuwon and certain subsidiaries. Pakuwon intends to use the net proceeds of the proposed notes to redeem its existing USD200m 7.125% senior unsecured notes, which are due in 2019. Fitch expects Pakuwon's financial profile to remain within the parameters of its 'BB-' Long-Term Issuer Default Rating as the new notes will be used mainly for refinancing and to extend the maturity profile of the company's debt, allowing more flexibility to manage cash flows. The notes are rated at the same level as Pakuwon's senior unsecured rating as they represent the company's unconditional, unsecured and unsubordinated obligations. The final rating on the notes is contingent upon the receipt of final documents conforming to information already received. KEY RATING DRIVERS Solid Investment Property Portfolio: Pakuwon's ratings reflect its strong investment property (IP) portfolio, which is driven mainly by its mall operations and generated around 80% of its total recurring revenue in 2015. Pakuwon's malls have an average occupancy rate of over 90%, and have lease expiry profiles of over five years on average, with most of the leases on a fixed- rent basis. Fitch expects Pakuwon's recurring EBITDA/interest coverage ratio to remain above 2x and for recurring EBITDA to comfortably cover loan amortisation and dividend payments in 2016-2018. More Volatile Development Business: Pakuwon also has significant exposure to development properties, where cash flows are inherently cyclical and more volatile. Pakuwon reported contracted sales of IDR1.6trn in 9M16, down by 36% yoy, and accounting for about 75% of management's 2016 contracted sales forecast. Pakuwon's IP portfolio moderates this exposure; recurring income from the IP portfolio contributed around 50% of total cash inflow in the past three years. Pakuwon also benefits from its market leadership in Surabaya and its ability to create value from its large integrated mixed-use developments, despite being a smaller developer than its similarly rated peers. Limited Scale and Diversification: Pakuwon's rating also reflects its relatively small development property scale and limited project diversification compared with higher-rated international peers. Pakuwon's current land bank of around 450 hectares still allows for over 10 years of development, but the relatively low number of projects, modest contracted sales and lack of geographical diversification will remain a constraining factor for the medium term. Conservative Financial Policy, Leverage: Pakuwon has maintained a conservative financial profile and has a record of low leverage. The company has managed to keep its leverage (net debt/adjusted inventory ratio) below 30% over the past three years and Fitch expects its leverage to fall to around 20% by 2018, as demand and the cash-collection cycle improve. Fitch believes Pakuwon's leverage remains appropriate for its 'BB-' rating. Manageable US Dollar Exposure: Fitch believes Pakuwon's solid recurring EBITDA generation provides a comfortable buffer against depreciation of the Indonesian rupiah versus the US dollar. Fitch estimates that Pakuwon's recurring EBITDA/interest coverage ratio will remain above 2x should the rupiah depreciate to 15,000 per dollar, all else remaining equal. Furthermore, Pakuwon has hedged the full principal of its US dollar bond against depreciation of the rupiah using a number of call spread agreements, with an overall upper-lower strike range of 13,000-17,500 per dollar. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: - Contracted sales of around IDR2trn in 2017 - Recurring EBITDA margin of around 55% in 2017 - Average IP rental charge growth of around 5% yoy in 2017 and 2018 - Construction capex of around IDR2trn in 2017 RATING SENSITIVITIES Fitch does not foresee positive rating action in the next two years. However, an upgrade might be considered if the IP assets increase to above USD1bn and its top-three IP assets generate less than 60% of recurring revenue (2015: 78.2%). Developments that may, individually or collectively, lead to negative rating action include: - Sustained deterioration in the ratio of recurring EBITDA from investment properties to interest to below 2.0x (2016F: 2.5x) - Net debt/adjusted inventory (adjusted inventory defined as investment properties + inventory + landbank + advances for land acquisitions - advances from customers) rising above 35% on a sustained basis (2016F: 26%) - Weakening of the business profile that would be reflected in a significant rise in vacancy rates or a sustained fall in rentals - Share of cash flows generated from investment property falls to less than 40% (2016F: 53%) PAKUWON JATI: Moody's Assigns Ba3 Rating to Proposed Senior Notes ----------------------------------------------------------------- Moody's Investors Service has assigned a senior unsecured bond rating of Ba3 to the proposed senior unsecured notes to be issued by Pakuwon Prima Pte. Ltd -- a wholly owned subsidiary of Pakuwon Jati, Tbk (Ba3 stable). The notes are unconditionally and irrevocably guaranteed by Pakuwon Jati, Tbk. The outlook on the ratings is stable. Pakuwon Jati will use the net proceeds towards redeeming in full the USD200 million 2019 senior unsecured notes issued by Pakuwon Prima Pte. Ltd. and for general corporate purposes. RATINGS RATIONALE "Pakuwon Jati's refinancing exercise is credit positive as the company's weighted average debt maturity will be extended," says Jacintha Poh, a Moody's Vice President and Senior Analyst. "We expect the company to continue to manage its exposure to foreign exchange-rate risk by hedging the principal portion of the proposed US dollar notes," adds Poh, who is also Moody's Lead Analyst for Pakuwon Jati. Over the next 12-18 months, Moody's expects Pakuwon Jati's revenue to grow between 5% and 10%. Over the same period, about 50%-54% of the revenue will be from recurring sources. Also, Moody's expects the company's adjusted debt/homebuilding EBITDA will measure around 2.0x and adjusted homebuilding EBIT/interest coverage will stand at around 4.5x. The stable ratings outlook reflects Moody's expectation that Pakuwon Jati's credit profile will remain well-supported by the recurring income from its investment properties, as well as its ongoing financial discipline, while pursuing growth. Upward ratings pressure is limited given the company's small revenue base and geographic concentration. However, growth in revenue over time to above IDR8 trillion, while maintaining (1) solid liquidity position in the form of cash balances and committed facilities; (2) adjusted debt/EBITDA of less than 2.5x; and (3) adjusted homebuilding EBIT/interest coverage of above 6.0x will be positive for the rating. Pakuwon Jati's ratings could face downward pressure if: (1) the company fails to implement its business plans such that proportion of recurring revenue falls below 40% of total revenue; and (2) there is a deterioration in the property market, leading to protracted weakness in its operations and credit profile. Moody's considers an adjusted debt/EBITDA of more than 3.0x and adjusted homebuilding EBIT/interest coverage of less than 4.0x on a sustained basis, as indications that a ratings downgrade may be necessary. The principal methodology used in these rating was Homebuilding And Property Development Industry published in April 2015. Pakuwon Jati, listed on the Indonesia Stock Exchange and controlled by the Tedja family, is engaged in the development, management and operation of retail malls, office buildings, hotels, condominium towers and residential townships in Surabaya and Jakarta. ========= J A P A N ========= TAKATA CORP: Faces Fresh Bankruptcy Fears as KSS Picked as Backer ----------------------------------------------------------------- The Financial Times reports that investors in Takata Corp. have begun to price in the growing risk of a court-led bankruptcy after Chinese-owned Key Safety Systems emerged as the leading bidder for the Japanese automotive supplier mired in a global recall crisis over exploding airbags. The FT relates that Takata said in a statement that a steering committee of outside experts, commissioned by the company, had recommended KSS, a US airbag manufacturer owned by China's Ningbo Joyson Electronic, as the preferred financial sponsor, although a final decision has yet to be made. KSS was among several bidders for Takata that preferred a court- led restructuring to minimise their exposure to the company's liabilities, the FT report citing people close to the talks. KSS declined to comment. "Investors now see Takata's bankruptcy as a high possibility so it doesn't help them to buy the stock even if the company finds a sponsor," the report quotes Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, as saying. According to the FT, Takata said it continued to hope for an out- of-court restructuring agreement with carmakers to avert bankruptcy and supply disruption. It added that it was unaware of the veracity of several reports that carmakers, which are footing the estimated $10bn-plus bill to replace potentially defective Takata airbags in their vehicles, are seeking a court- led restructuring for the company both in the US and Japan, the FT relays. 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. ==================== N E W Z E A L A N D ==================== CAPITAL + MERCHANT: Investors to Get Second Payment in March ------------------------------------------------------------ Paul McBeth at BusinessDesk reports that some 7,500 investors left out of pocket by Capital + Merchant Finance will get their second payment next month, almost a decade after the lender collapsed. BusinessDesk relates that receiver Brendon Gibson of KordaMentha told investors a second distribution of NZ$2 million will be made next month, taking the total returned so far to NZ$12 million, or 7.2c in the dollar, in his latest report. A third payment is expected to be made once the receiver's final claim is completed, although a potential rival has emerged for that money which Gibson said the receivers are investigating, says BusinessDesk. BusinessDesk says a NZ$94 million claim backed by Australian litigation funders Litigation Lending Services for damages against Capital + Merchant's former trustee, Perpetual Trust, and law firm Stace Hammond was settled out of court last year, and while the latest report said the terms of the deals were confidential it shows the receiver recouped some NZ$4.6 million from legal claims. Before those settlements, the receivers got NZ$10.3 million from the NZ$18.5 million settlement between Capital + Merchant's liquidator and the company's audit firm BDO Spicers, according to BusinessDesk. BusinessDesk notes that the Capital + Merchant receivership is one of the more protracted, with another set of managers, Richard Simpson and Tim Downes of Grant Thornton, acting in the interests of the first-ranking creditor Fortress Credit Corp controlling the administration until their retirement in 2012. In their final report, Messrs. Simpson and Downes said the only recoveries they anticipated for debenture holders would be through legal claims. According to BusinessDesk, former Serious Fraud Office boss Adam Feeley has described the collapse of Capital + Merchant as being as bad as anything that occurred in the industry because nothing had been recovered for investors. Former Capital + Merchant directors Wayne Douglas and Neal Nicholls and chief executive Owen Tallentire were jailed for fraud in 2012 for what the Court of Appeal later called "theft on a grand scale," BusinessDesk adds. About Capital + Merchant Capital + Merchant Finance Limited was placed into receivership on Nov. 23, 2007, with the appointment of Timothy Downes and Richard Simpson of Grant Thornton as Receivers. A second receivership also commenced on Nov. 29, 2007, with the appointment of Grant Graham and Brendon Gibson of Korda Mentha as Receivers. The first receivership was concluded on March 21, 2012, and the second receivership continues. The Official Assignee was appointed liquidator of the company on Dec. 15, 2009, on the petition of the Registrar of Companies. Three former directors of C+M (Nicholls, Douglas and Tallentire) were convicted of offences under the Crimes Act and the Securities Act as a result of prosecutions by the Serious Fraud Office (SFO) and the Financial Markets Authority (FMA). They received total prison sentences of between six and eight and a half years' imprisonment. Two of the directors (Ryan and Sutherland) were ordered to pay reparation totaling NZ$160,000. CONFIGURE EXPRESS: Director Resigns, More Franchises Close ---------------------------------------------------------- Chloe Winter at Stuff reports that the director of troubled women's gym Configure Express, which is caught up in legal action, has resigned. Greg Peters stood down as a director of the company in October, following the closure of three franchises in the North Island, Stuff discloses. As of January, three more gyms -- Papatoetoe, Manukau and Kilbirnie -- have shut up shop, says Stuff. According to Stuff, Mr. Peters said on Feb. 4 that Wendy MacKay had taken over as the director and was "coming up to speed." On the Companies Office site, Ms. MacKay's name is recorded as MacKay-Peters and she has the same residential address as Peters. In a statement, Ms. McKay said she could not comment about specific gyms as there were legal issues involved, relates Stuff. "Legal action . . . has commenced against several franchisees that have breached the terms of their franchise agreements, and we will be doing what we can to assist members with refunds once we ascertain the exact position," the report quotes Ms. McKay as saying. "We have already stopped the payments of all those who were paying by direct debit to the affected gyms and that transaction services (the direct debit collection company) are holding funds for any refund payments required." Stuff relates that in the meantime, a number of members have vented their frustration on the company's Facebook page to no avail. One said she was forced to move her membership from the Papakura branch to the Manukau branch, following the closure of the former, the report relays. "I strongly suspect that the franchise owners of Manukau and Papatoetoe fought to keep the good name going and their own businesses above water - but I don't think they could have expected any compensation for all those new members from . . . Greg Peters," she said, notes the report. She wrote to the company's head office to get some reassurance she would get what she was owed, adds Stuff. POWDERPAK PARKS: Indoor Ski Park Placed in Liquidation ------------------------------------------------------ Stuff reports that an indoor ski field terrain park in Queenstown is in liquidation, three months after opening. PowderPak Parks is said to be the world's largest indoor dry slope terrain park. The company opened its doors in Frankton in December but was shut on Waitangi Day. Stuff, citing Companies Office, says liquidator Thomas Rodewald was appointed on February 2. His first liquidator's report is due on Feb. 10. Rodewald and PowderPak Parks Queenstown Ltd directors Shaun Leathley and Shane Logmans could not be contacted for comment, the report notes. When they opened in December the directors told Stuff the 600sq m indoor terrain park cost over NZ$500,000 to build. A public announcement on the closure was made on PowderPak's Facebook page on Feb. 6, Stuff discloses. "We gave it a red hot crack Queenstown, but unfortunately we have to close our doors. We would like to thank all of the people that have come through our doors, and absolutely loved their time inside our facility," it said. =============== P A K I S T A N =============== PAKISTAN: Fitch Affirms Issuer Default Ratings at 'B' ----------------------------------------------------- Fitch Ratings has affirmed Pakistan's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B' with Stable Outlooks. The issue ratings on Pakistan's senior unsecured foreign- and local-currency bonds, Country Ceiling as well as the Short-Term Local- and Foreign-Currency IDRs and are also affirmed at 'B'. The issue ratings on The Third Pakistan International Sukuk Company Limited's foreign-currency global certificates have also been affirmed at 'B'. The company was incorporated primarily for the purpose of facilitating sukuk transactions and is wholly owned by Pakistan. KEY RATING DRIVERS Pakistan's ratings balance broad gains achieved over the International Monetary Fund (IMF) programme against a high public debt/GDP ratio, low scores on the World Bank governance indicators and heightened security risks. Pakistan completed a three-year IMF Extended Fund Facility (EFF) in September 2016. The country has entered 12 IMF programmes since 1988, but this the first programme that it has completed. Under the program, reserves were strengthened, the fiscal deficit reduced and significant progress was made on structural reform. Pressure related to the 2018 elections could test the government's commitment to maintaining the policy framework set out by the IMF. The country's economic outlook has brightened since the start of the programme, with annual GDP growth rising to 4.7% in the financial year ending June-2016 (FY16), from 3.7% in FY13, above the 'B' median of 3.6%. Fitch expects growth to strengthen to 5.3% in FY17, lifted by a recovery in agricultural output following poor weather conditions in the previous season and an influx of investment linked to the China-Pakistan Economic Corridor (CPEC). Fitch forecast continued strong domestic demand, with private consumption aided by faster credit growth. Remittances have moderated, as over half come from Gulf economies that are adjusting to lower energy prices, but a sharper slowdown is a downside risk. A sharp slowdown in remittances is a downside risk, as over half come from Gulf economies that are still adjusting to lower energy prices. Inflation slowed to 2.9% in FY16, a positive development for a country that has experienced higher and more volatile inflation than the 'B' median. Fitch expects inflation to increase to 4.5% in FY17 and 4.8% in FY18, as commodity prices slowly recover. Inflation is then forecast to remain stable in the medium term. Central bank financing of the fiscal deficit is an upside risk to inflation; government borrowing is shifting back towards the State Bank of Pakistan after moving towards private banks under the IMF programme. The banking sector has performed well, with improvements shown across IMF's Financial Soundness indicators. Non-performing loans remained high at 11.1% of total loans at FYE16, though this is down from a peak of 14.8% at end-June 2013. Pakistan's public debt/GDP ratio of 64.8% at end-FY16 was higher than the 'B' median of 56.7%, but Fitch expects the ratio to gradually fall in the medium-term if the country can sustain its progress with fiscal consolidation. The general government budget deficit fell to 4.6% of GDP in FY16, from 5.3% in FY15, with revenues boosted by structural reforms, including the lowering of the number of tax concessions. Fitch projects the budget deficit to continue narrowing gradually if the economy performs in line with our baseline scenario and the government remains committed to the policy plans set out during the IMF programme. The accumulation of losses in public sector enterprises (PSE), particularly electricity distribution companies, has in the past lead to injections of funds from the federal government budget to clear debt. Efficiency improvements, higher tariffs and lower energy prices have helped cut PSE losses. However, plans to sustain long-term efficiency gains through privatisation have been delayed due to objections from workers and political opposition. PSE losses could rise considerably if Pakistan suffers an economic shock or there is a sharp rise in energy prices, ultimately feeding through to the government balance sheet. Fitch does not expects Pakistan to face external liquidity difficulties in our baseline scenario, but increasing gross external financing needs could increase the country's vulnerability to shifts in investor sentiment. External debt service costs are likely to increase in the medium-term, with USD2.75bn of international bonds maturing between FY17 and FY20. The country will also start paying back the USD6.4bn IMF facility and USD11.7bn of rescheduled Paris Club debt in FY18 and FY17, respectively, albeit over an extended timeframe. Fitch also expects the current account deficit to widen as energy prices start to recover and capital imports increase with higher infrastructure investment, although such investments will be heavily funded by Chinese entities as part of the CPEC. Pakistan demonstrated market access in October 2016 by issuing a USD1bn sukuk at an historically low yield of 5.5%. Geopolitical tension and security threats could negatively affect the economic outlook and investor sentiment. Pakistan has had a series of disagreements with India in 2016 over violent incidents along the shared border, marking a turn in relations that had shown tentative signs of improvement in the previous two years. Domestic terrorist incidents remain frequent, particularly in Baluchistan province and along the Afghanistan border, although the number of attacks fell in 2016 compared with the previous year, and annual civilian casualties from terrorist activities are at the lowest point since 2006. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Pakistan a score equivalent to a rating of 'B+' on the Long-Term Foreign-Currency IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR by applying its QO, relative to rated peers, as follows: - Structural factors: -1 notch, to reflect domestic security threats and geopolitical risks arising from tension with neighbouring countries. Pakistan also has a low rank on the World Bank's Ease of Doing Business index relative to 'B' rated peers, despite a small improvement in 2017. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable or are not fully reflected in the SRM. RATING SENSITIVITIES The main factors that could, individually or collectively, lead to positive rating action are: - Sustained fiscal consolidation, strengthening of the revenue base, lower government debt ratios and smaller contingent liabilities from state-owned entities. - Progress with structural reforms that lead to an improved business environment, stronger economic growth and higher investment. - A better security situation and decreased political risk. The main factors that could, individually or collectively, lead to negative rating action are: - Policy slippage that leads to renewed pressure on economic and financial stability, which may be evident in a rapid loss of reserves or a sharp rise in inflation. - Deterioration in the fiscal position that leads to a sharp or sustained rise in government debt ratios, including contingent liabilities from state-owned entities. KEY ASSUMPTIONS - Fitch's economic base case assumes Pakistan's economic policy framework remains broadly unchanged over the political cycle. - The ratings incorporate an assumption that Pakistan's relations with India do not deteriorate to the point of renewed armed conflict. - The global economy is presumed to perform broadly in line with Fitch's latest Global Economic Outlook report. ===================== P H I L I P P I N E S ===================== * PDIC to Sell 69 Assets Via Public Bidding on Feb. 28 ------------------------------------------------------ The Philippine Deposit Insurance Corporation (PDIC), through its Real & Other Properties Acquired (ROPA) Disposal Committee, is set to dispose on an "as-is, where-is" basis 69 assets consisting of 68 assets owned by various closed banks and an asset acquired by the Corporation via a public bidding to be conducted on Feb. 28, 2017. Interested buyers may submit their sealed bids to the ROPA Disposal Committee Secretariat at the 9th Floor PDIC Training Room, SSS Building, 6782 Ayala Avenue, cor. V.A. Rufino St., Makati City from 9:00 a.m. to 2:00 p.m. Bids will be opened starting 2:00 p.m. Up for bidding are real properties with an aggregate minimum disposal value of PHP186.15 million located in Aklan, Albay, Batangas, Bulacan, Cavite, Cebu, Iloilo, Metro Manila, North Cotabato, Pampanga, Pangasinan, Rizal and Tarlac. In addition to the real properties, three motor vehicles and two generator sets with an aggregate minimum disposal value of PHP0.72 million are included in the properties for bidding. Bidders are advised to bring proper identification document (ID) with photo and to register at least one hour prior to the deadline for submission of bids. Bid documents such as Bid Forms, the February 28, 2017 Conditions of Bid, and required format of the Special Power of Attorney and Secretary's Certificate may be downloaded free of charge from the PDIC website, www.pdic.gov.ph. Prospective buyers are also advised to physically inspect the properties they are interested to buy, examine and verify the titles and other evidence of ownership, and determine any unpaid taxes, fees, charges and/or expenses before submitting their bids. Each bid should be accompanied by a bond/deposit equivalent to at least 10% of the submitted bid, in cash or Manager's or Cashier's Check, or a combination thereof. The Manager's or Cashier's Check should be issued by a universal or reputable commercial bank and payable to PDIC. The winning bidder should pay the balance of the bid no later than March 9, 2017. PDIC also clarified that the Value Added Tax (VAT) corresponding to the bid price of properties owned by PDIC shall be shouldered by and collected from the winning bidder in addition to the bid price in accordance with Bureau of Internal Revenue (BIR) Revenue Regulations No. 16-2011 dated October 27, 2011. The expeditious conversion and resolution of assets are among the strategic directions outlined in PDIC's Roadmap. PDIC, as liquidator of closed banks, conducts various asset disposal initiatives such as biddings, auctions and negotiated sale. Proceeds from the sale of closed banks' properties are added to the pool of liquid assets of these banks for distribution to uninsured depositors and other creditors in accordance with the rules on concurrence and preference of credits. The disposal of these assets increases the chances of recovery of uninsured depositors and creditors of their trapped funds. Meanwhile, gains from the sale of corporate assets are added to the Deposit Insurance Fund, PDIC's main fund source for payment of valid deposit insurance claims. Interested parties may get in touch with the ROPA Disposal Committee Secretariat at telephone number (02) 841-4747 or (02) 841-4748 for more information. ================= S I N G A P O R E ================= IBC CAPITAL: Moody's Changes Outlook to Negative; Affirms B2 CFR ----------------------------------------------------------------- Moody's Investors Service has changed the ratings outlook for IBC Capital Limited (Goodpack) to negative from stable. At the same time, Moody's affirmed the B2 corporate family rating (CFR), the B2 rating on the $550mm 1st lien term loan due 2021 and the B3 rating on the $170 million 2nd lien term loan due 2022. IBC Capital Limited, which acquired Goodpack in September 2014 for $1.1 billion, is an indirect wholly owned subsidiary of a fund affiliated and advised by Kohlberg Kravis Roberts & Co L.P. (KKR). RATINGS RATIONALE "The negative outlook reflects Moody's view that expected earnings growth has not materialized in recent years preventing Goodpack from reducing its financial leverage, which has been high since the acquisition by KKR," says Brian Grieser, a Moody's Vice President and Senior Analyst. Moody's estimates Goodpack's leverage -- as measured by adjusted debt/EBITDA -- will be around 6.5x at the end of fiscal 2017, which is considered high for its current rating level and exerts pressure on Goodpack's B2 CFR. "While revenues improved in the first quarter of fiscal 2017, due largely to better trip revenue in its synthetic rubber business and new contracts, increased logistics and handling costs have weighed on EBITDA margins resulting in a relatively flat earnings performance," added Grieser, also Moody's Lead Analyst for Goodpack. Moody's base case anticipates leverage to fall to around 6.0x over the next 12 to 18 months largely driven by revenue growth, from new contract wins, and cost initiatives undertaken by the company during the current fiscal year to lower its logistic costs. Any deviation from this expectation would increase the likelihood of a downgrade. The B2 CFR continues to reflect (1) Goodpack's leading position in the niche and growing logistics market for natural and synthetic rubber; (2) high profitability levels with adjusted EBITDA margin of over 45%; and (3) its well staggered debt maturity profile, with the next debt maturity in September 2019. We expect liquidity to remain solid over the next twelve months with access to cash and committed revolving credit availability remaining above $50 million at all times, which supports the rating despite Goodpack's high leverage profile. Goodpack held cash of $28 million as of 30 September 2016. The ratings could be downgraded if Goodpack fails to grow revenues, margins weaken further and the company is unable to reduce leverage over coming quarters. A negative ratings action is likely to occur if leverage remains at current levels or it becomes apparent that it will not fall below 6.0x in fiscal 2018 or if available liquidity, defined as cash plus committed revolver availability, falls below $40 million. Ratings are unlikely to be upgraded in the next 12-18 months given the negative outlook. Ratings stabilization could occur if Goodpack demonstrates the ability to reduce its financial leverage such that it approaches 5.5x and EBIT/interest exceeds 2.0x over a sustainable period while maintaining its good liquidity profile. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Goodpack, headquartered in Singapore, owns a fleet of 3.6 million IBCs used for the packaging, transportation and storage of cargo, primarily natural rubber and synthetic rubber. ==================== S O U T H K O R E A ==================== HYUNDAI MERCHANT: Attempts Recovery After Hanjin Disaster --------------------------------------------------------- Kyunghee Park at Bloomberg News reports that Hyundai Merchant Marine Co. said it will post losses through the first half of 2018 as the container-shipping industry attempts to recover from Hanjin Shipping Co.'s bankruptcy and years of excess capacity. As a hedge against adverse conditions plaguing shipping, Hyundai Merchant has initiated talks to invest in box terminals in Southeast Asia, Chief Executive Officer Yoo Chang-keun, 64, said in an interview on Feb. 6, Bloomberg relates. Once the company starts to turn around to profit, Hyundai Merchant plans to order new ships to meet new emission rules scheduled to take effect at the end of the decade. "This year will be the year to strengthen our financials," Bloomberg quotes Yoo as saying. "We are targeting to make an operating profit in the third quarter of next year. By early next year, we expect much of the overcapacity in the market will be resolved." Hyundai Merchant, whose accumulated operating losses have exceeded $2 billion since 2011, is counting on a recovery in freight rates as a spate of mergers globally helps pare capacity and prevents rivals from undercutting each other, Bloomberg says. According to Bloomberg, the company agreed to a tie-up with the world's biggest shipping alliance led by A.P. Moeller-Maersk A/S in December and is buying overseas terminal assets, filling a gap left by Hanjin, which is set to be declared bankrupt next week by a Seoul court. "There appears to be a consensus that the industry won't be able to sustain with the level of freight rates we saw last year," Yoo said, says the report. "We are cautiously expecting rates this year to recover." Shares of the company fell 1.2 percent to KRW7,990 on Feb. 7 in Seoul, the biggest drop in two weeks, Bloomberg discloses. They have declined 53 percent in the past year, compared with an 11 percent gain in the benchmark Kospi index. Bloomberg notes that while Hanjin collapsed last year after credit stopped flowing, Hyundai Merchant managed to stay afloat by revamping its debt, selling assets, adjusting charter rates on leased vessels and extending the maturity of bonds. The measures won financial support from state-owned Korea Development Bank, which is now its biggest shareholder with a stake of 14 percent, Bloomberg says. Following the restructuring, Hyundai Merchant's debt-to-equity ratio is about 186 percent, down from as high as 5,000 percent, Yoo said, adding the company will take advantage of the government's KRW6.5 trillion ($5.7 billion) financial package designed to help Korean shipping companies tide over the crisis, according to Bloomberg. Hyundai Merchant, which counts Samsung Electronics Co., LG Electronics Inc., Best Buy Co., Wal-Mart Stores Inc. and Target Corp. among its customers, posted an operating loss of KRW647.3 billion in the first nine months of last year, widening from KRW145.9 billion a year earlier, Bloomberg discloses. Hyundai Merchant Marine Co., Ltd., is a Korea-based company specializing in the provision of shipping services. The Company provides its services under two main segments: container and bulk. Hyundai Merchant Marine is currently under a creditor-led restructuring scheme. ********* 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 ***