/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170302.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 Thursday, March 2, 2017, Vol. 20, No. 44 Headlines A U S T R A L I A A & J GREEN: First Creditors' Meeting Set for March 9 BADGE SEAGLE: First Creditors' Meeting Set for March 10 DAVIS GROUP: First Creditors' Meeting Slated for March 8 ENERGY DRINKS: First Creditors' Meeting Set for March 8 POLLENIZER: Startup Incubator to Close down in June C H I N A COUNTRY GARDEN: Fitch Affirms 'BB+' LT Issuer Default Rating H O N G K O N G CHINA FISHERY: Fitch Affirms 'D' Issuer Default Rating NOBLE GROUP: 2016 Results No Impact B2 CFR, Moody's Says I N D I A AKS ALLOYS: ICRA Reaffirms C+ Rating on INR14cr LT Loan BUILDQUICK INFRA: CRISIL Assigns B+ Rating to INR4.5MM Loan CHABBRA'S ASSOCIATES: Ind-Ra Affirms 'BB' Long-Term Issuer Rating DWARKA GEMS: CARE Reaffirms 'B-' Rating on INR10.38cr Loan EROS INTERNATIONAL: S&P Assigns 'B+' CCR; Outlook Stable ESSEM ENTERPRISE: CARE Assigns 'B' Rating to INR8.86cr LT Loan GARG RICE: CARE Assigns 'B' Rating to INR13.75cr LT Loan GOLDEN APPLE: CRISIL Assigns 'B+' Rating to INR18MM LT Loan INDCON PROJECTS: CRISIL Reaffirms B+ Rating on INR13.5MM Loan INDUSTRIAL FORGING: ICRA Assigns B+ Rating to INR11.95cr Loan JEYA SATHYA: CRISIL Upgrades Rating on INR14MM Cash Loan to B LAXMI SOPAN: CARE Reaffirms 'B' Rating on INR5.22cr LT Loan LUNI POWER: CRISIL Lowers Rating on INR15MM Term Loan to 'D' MAHAVIR POLYPLAST: CARE Reaffirms B+ Rating on INR8.75cr Loan MANJEERA CONSTRUCTIONS: ICRA Cuts Rating on INR30cr Loan to C MANJEERA RETAIL: ICRA Reaffirms 'D' Rating on INR300cr Loan MATHIYAN CONSTRUCTION: ICRA Cuts Rating on INR10cr Loan to C+ MID INDIA: ICRA Upgrades Rating on INR105cr LT Loan to BB- NUWAY ORGANIC: ICRA Assigns 'D' Rating to INR18cr Term Loan PALLAVI MOTORS: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating PKM PROJECTS: ICRA Reaffirms 'D' Rating on INR40cr LT Loan PLUTO PLAZA: ICRA Assigns B+ Rating to INR35cr Term Loan PROTAC FOODS: ICRA Assigns 'B' Rating to INR18cr Term Loan RAJARAMSEVAK MULTIPURPOSE: CARE Puts B Rating on INR12.94cr Loan RAMA PAPER: ICRA Reaffirms 'D' Rating on INR53.81cr Term Loan SCAN ENERGY: CRISIL Reaffirms 'D' Rating on INR80.83MM LT Loan SENTHUR TEXTILES: CARE Reaffirms 'B' Rating on INR8.04cr Loan SHETRON LIMITED: Ind-Ra Lowers Long-Term Issuer Rating to 'D' SHIV SUNDER: CARE Reaffirms 'B' Rating on INR9cr LT Loan SKILLED CONSTRUCTION: CARE Ups Rating on INR2.90cr Loan to BB- SPARSH FAB: CRISIL Raises Rating on INR6MM Term Loan to BB SRI CHAITANYA: CRISIL Assigns B+ Rating to INR16MM Cash Loan SRI SOMESHWARA: ICRA Reaffirms B+ Rating on INR12cr LT Loan TEAM INTERVENTURE: CRISIL Lowers Rating on INR127MM Loan to 'D' TEAM UNIVERSAL: CARE Lowers Rating on INR18cr LT Loan to 'D' VEDBHUMI BUILDERS: CARE Assigns 'D' Rating to INR32cr LT Loan VICTORIAN MARKETING: CRISIL Reaffirms 'B' Rating on INR8.5MM Loan VIJAYA RAJA: ICRA Assigns B+ Rating to INR10cr Unallocated Loans VINAYAK INTERNATIONAL: CARE Reaffirms B+ Rating on INR1.5cr Loan WINSOME INTERNATIONAL: Ind-Ra Lowers Issuer Rating to 'D' J A P A N TAKATA CORP: Four Automakers Knew of Airbag Hazard, Suit Says TOSHIBA CORP: Not Aware of Westinghouse Considering Chapter 11 N E W Z E A L A N D BOUTIQUE HAIR: Placed in Receivership; Owner Seeks Buyer HERBERT CONSTRUCTION: Liquidators Seeks to Bankrupt Owner P H I L I P P I N E S TV5 NETWORK: No More Layoffs for Now, Chairman Says S I N G A P O R E EZRA HOLDINGS: Creditor May Drop Winding-Up Action vs. Emas AMC S R I L A N K A CEYLON DOLLAR: Fitch Affirms 'B+f' Credit Quality Rating - - - - - ================= A U S T R A L I A ================= A & J GREEN: First Creditors' Meeting Set for March 9 ----------------------------------------------------- A first meeting of the creditors in the proceedings of A & J Green Haulage Pty Limited will be held at the offices of TPH Insolvency, 133 Macquarie Street, in Sydney, NSW, on March 9, 2017, on March 9, 2017, at 11:00 a.m. Timothy Heesh and Amanda Lott of TPH Insolvency were appointed as administrators of A & J Green on Feb. 27, 2017. BADGE SEAGLE: First Creditors' Meeting Set for March 10 ------------------------------------------------------- A first meeting of the creditors in the proceedings of Badge Seagle Pty Ltd, trading as Mister Minit Carlingford, Mister Minit Stanhope, Mister Minit Top Ryde, Mister Minit Macquarie, Mister Minit Hornsby, will be held at the offices of Deloitte Financial Advisory Pty Ltd, Eclipse Tower, Level 19, 60 Station Street, in Parramatta, NSW, on March 10, 2017, at 11:00 a.m. Neil Cussen and David Mansfield of Deloitte Financial were appointed as administrators of Badge Seagle on Feb. 28, 2017. DAVIS GROUP: First Creditors' Meeting Slated for March 8 -------------------------------------------------------- A first meeting of the creditors in the proceedings of Davis Group Pacific Pty Limited will be held at the Boardroom of Chifley Advisory, Suite 3.04, Level 3, 39 Martin Place, in Sydney, NSW, on March 8, 2017, at 11:00 a.m. Gavin Moss and Trent McMillen of Chifley Advisory were appointed as administrators of Davis Group on Feb. 25, 2017. ENERGY DRINKS: First Creditors' Meeting Set for March 8 ------------------------------------------------------- A first meeting of the creditors in the proceedings of Energy Drinks Distributing Pty Ltd will be held at the offices of Veritas Advisory, Level 5, 123 Pitt Street, in Sydney, NSW, on March 8, 2017, at 11:00 a.m. David Iannuzzi and Steve Naidenov of Veritas Advisory were appointed as administrators of Energy Drinks on Feb. 24, 2017. POLLENIZER: Startup Incubator to Close down in June --------------------------------------------------- Paul Smith at The Australian Financial Review reports that pioneering Australian start-up incubator and consultancy Pollenizer will shut down after conceding that it had failed to find a sustainable business model for its operations. The company, which has nurtured hundreds of local start-ups since being founded in 2007 by Phil Morle and Mick Liubinskas, officially told staff and investors on Feb. 28 that it had reached the end of the road, the report relates. According to the report, Mr. Morle had been running Pollenizer as sole chief executive since Mr. Liubinskas left to join Telstra- backed incubator Muru-D. The report says Mr. Liubinskas has been based in San Francisco since last year as Muru-D's venture portfolio manager, but remained a director at Pollenizer. Mr. Morle told The Australian Financial Review the company's move away from its roots as the country's first incubator, to become a consultant to larger organisations on the start-up arts, had not been enough to satisfy the entrepreneurial aspirations Pollenizer was founded on, or make enough money. "We are entrepreneurs and we get out of bed in the morning to do something massive, and while it is certainly possible that Pollenizer could have continued indefinitely as a boutique consulting business, everyone on the team is motivated to do something huge and change the world somehow," the report quotes Mr. Morle as saying. "In the end we just couldn't see the path to that, and now the important thing for me is that the amazing team around me get to move on and do amazing things." The company was employing 22 people until it recently began to wind things back, and Mr. Morle said it would move down to zero by the end of June, the report relays. The Australian Financial Review adds that Pollenizer still has a portfolio of start-ups under its wing and said it was cutting out its other operations in order to retain enough capital to be able to assist them to their next stages as previously planned. These start-ups are Lawpath, HiveXchange, Mezo, CohortIQ and Spot. ========= C H I N A ========= COUNTRY GARDEN: Fitch Affirms 'BB+' LT Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has affirmed China-based Country Garden Holdings Co. Ltd.'s Long-Term Issuer Default Rating (IDR) at 'BB+'. The Outlook is Stable. Fitch has also affirmed Country Garden's senior unsecured rating and the ratings on its outstanding notes at 'BB+'. Country Garden's ratings are supported by strong contracted sales growth, high financial flexibility with low interest cost and a record of strong execution. The ratings are constrained by its opportunistic growth strategy, which increases financial performance volatility, and a negative trend in its cash flow from operation (CFO). Moving into higher-tier cities is a positive development in Country Garden's progression to becoming a nationwide homebuilder. However, it may take another 12-18 months before the process reaches fruition. KEY RATING DRIVERS Expansion Increases Volatility: Fitch has observed that Country Garden's growth and expansion follows a three-to-four year cycle. It achieved significant contracted sales growth of 89% in 2016 and 116% in 2013, which considerably raised its leverage and churn ratio. Leverage peaked at 42% in 1H16 and 36% in 2013, compared with a recent low of 32%-33% in 2011-2012. Its asset turnover ratios peaked at 1.7x-1.8x in 1H16, compared with its lowest level of 1.1x-1.2x in 2015. Fitch has tightened its negative rating sensitivities and uses three-year average ratios to reflect this volatility. Fitch expects Country Garden to maintain its three-year average leverage through the cycle at 30%-32% and its three-year average asset turnover ratio at 1.5x- 1.6x. Positive CFO Unsustainable: Fitch estimates that Country Garden's CFO was close to neutral in 2016; the closest that CFO has been to positive since 2012. However, it is likely to turn negative again in 2017 due to landbank acquisitions and construction expenditure for the large surge in projects it sold in 2016. Positive rating action depends on whether Country Garden can balance its expansion pace while maintaining neutral CFO in the next one to two years. Robust Contracted Sales: Country Garden achieved an 89% increase in attributable contracted sales to CNY235bn during 2016; one of the highest growth rates achieved by Chinese homebuilders during the year. This was supported by its landbank repositioning since late 2015, with nearly 60% of its 2016 contracted sales from products targeted at tier 1 and 2 cities, compared with 52% in 2015; 65% of its newly acquired CNY128bn attributable landbank in 2016 also targets tier 1 and 2 cities. Guangdong Leadership Supports Growth: Fitch believes Country Garden's strong home-base position in Guangdong province enables its rapid landbank repositioning to support sales growth. Around 67% of the value of saleable resources targeting tier 1 and 2 cities in 1H16 also targeted customers in Shenzhen and Guangzhou, compared with only 8% for Beijing and Shanghai. Given Country Garden's land bank repositioning was mainly in Guangdong, Fitch expects the contracted sales contribution from Guangdong to remain at around 30%. Gradual Margin Recovery: Fitch estimates that the 2016 EBITDA margin remained stable at around 17%-18%, due to the recognition of wider-margin contracted sales. The 2015 EBITDA margin was at its historical low, as the company recognised lower-margin products, such as high-rise residential apartments. Fitch believes its margins could gradually improve to around 20%-21% by 2018-2019 as the company recognises more higher-margin contracted sales and continues de-stocking low-margin products. Successful product repositioning to target tier 1 and 2 cities will help EBITDA due to better margins, churn and liquidity. Corporate Action Potential: Country Garden has continued its share buyback plans, having purchased over 1.2 billion shares for HKD4.7bn (equivalent to around CNY 4.4bn) on the open market between the start of 2016 to 15 February 2017. The company also made two acquisitions of auxiliary homebuilding businesses in 2015-2016. Fitch expects Country Garden to continue making bolt- on acquisitions to strengthen these auxiliary businesses. DERIVATION SUMMARY Country Garden is well positioned between its relative peers with 'BBB-' and 'BB' ratings. Country Garden's CFO trend remains negative, while CFO of Longfor Properties Co. Ltd. (BBB-/Stable) and Shimao Property Holdings Limited (BBB-/Stable) has a neutral to positive trend. Country Garden has the largest contracted sales, EBITDA and churn in the peer group. This is offset by its EBITDA margin, which is similar to that of Greenland Holding Group Company Limited (BB+/Negative, standalone assessment: BB/Negative). In addition, Country Garden's leverage is weaker compared with pure homebuilders, such as Shimao, and similar to 'BBB-' rated homebuilders with large investment properties, such as Longfor and China Jinmao Holdings Group Limited (BBB-/ Stable); but with greater volatility. No Country Ceiling or parent/subsidiary linkage aspects affect Country Garden's rating. Companies in this sector are unlikely to be rated above 'BBB+' due to operating environment risks. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: - contracted sales by gross floor area to increase by 10%-20% over 2017-2018; - average selling prices for contracted sales to increase by 0%-5% over 2017-2018; - EBITDA margin to improve to 17%-18% in 2017-2018; and - net debt, including perpetuals, to be around CNY70bn-95bn in 2016-2017. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Achieving sustainable neutral or positive cash flow from operation. This may be achievable if Country Garden maintains a stable growth pace. Developments that May, Individually or Collectively, Lead to Negative Rating Action - A three-year average EBITDA margin below 20% on a sustained basis (average 2013-2015: 22%). - A three-year average net debt/adjusted inventory ratio above 40% on a sustained basis (average 2013-2015: 36%). - A three-year average contracted sales/gross debt ratio below 1.3x on a sustained basis (average 2013-2015: 1.6x). LIQUIDITY Sufficient Liquidity: Country Garden had CNY49bn of cash on hand, including CNY19bn in restricted cash, with undrawn bank facilities of approximately CNY145.8bn, as at end-June 2016. This was more than sufficient to cover its short-term debt of CNY18bn. Diversified Funding Channels: Country Garden has many financing options, including equity issuance, perpetual capital securities, offshore notes, onshore debentures and bank borrowings. Its weighted-average borrowing cost was 5.76% in 1H16. FULL LIST OF RATING ACTIONS Country Garden Holdings Co. Ltd.'s - Long-Term IDR affirmed at 'BB+'; Outlook Stable - Foreign-currency senior unsecured rating affirmed at 'BB+' - USD900m 7.500% senior unsecured notes due 2020 affirmed at 'BB+' - USD550m 7.875% senior unsecured notes due 2019 affirmed at 'BB+' - USD650m 4.750% senior unsecured notes due 2023 affirmed at 'BB+' - USD350m 5.625% senior unsecured notes due 2026 affirmed at 'BB+' ================ H O N G K O N G ================ CHINA FISHERY: Fitch Affirms 'D' Issuer Default Rating ------------------------------------------------------ Fitch Ratings has revised the Recovery Rating on China Fishery Group Limited's senior unsecured rating and the rating on the USD300m senior notes issued by its financing vehicle CFG Investment S.A.C. to 'RR5' from 'RR4'. The senior unsecured rating and rating on the notes are affirmed at 'C' and China Fishery's Issuer Default Rating (IDR) has been affirmed at 'D'. The revision of the Recovery Rating reflects a lower valuation assumption for the Peruvian fishmeal operations, as well as Fitch's expectation that China Fishery may not be able to fully recover the prepayments made to its Russian suppliers. In addition, the provision of a debt guarantee by a Peruvian subsidiary to club loan lenders may allow club loan lenders to access funds ahead of senior noteholders. KEY RATING DRIVERS Asset Sale on Hold: China Fishery previously said that the company was considering a sale of its Peruvian fishing operations at an indicative enterprise value of USD1.7bn. Following the company's bankruptcy filing, Fitch believes a sale is no longer likely in the near term. Instead, a key focus of the restructuring plan will be on stabilising the Peruvian operations to maximise value. Fitch views China Fishery's Peruvian anchovy fishing and processing operations as the most important driver of earnings and value among China Fishery's subsidiaries. Peruvian Business Operational: China Fishery's Peruvian fishing business saw its access to funding curtailed after the appointment of China Fishery's provisional liquidators in late- 2015, but it has since resumed normal operations. China Fishery caught 100% of its fishing quota in the season ended 27 January 2017 in the important North/Centre region. Fishing is currently under way in the South zone of Peru and China Fishery has caught 14% of its quota to date. LSA Prepayment Recovery Unlikely: Prior to 2014, China Fishery made large prepayments to finance the operations of Russian suppliers under long-term supply agreements (LSA). After the agreements were terminated in early 2014, the company expected to recover the prepayments either in cash or fish stock over the next several years. The company in 3Q15 reported the prepayment balance was USD62m, and it claims to have recovered another USD30m subsequently. Based on recent discussions with the issuer, Fitch does not expect any further amounts to be recovered. DERIVATION SUMMARY China Fishery's IDR is rated at 'D' as the company filed for US bankruptcy protection under Chapter 15 and Chapter 11 of the US bankruptcy code in June 2016. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for China Fishery include: - Peruvian fishing business operates as a going concern. RATING SENSITIVITIES Fitch will re-examine China Fishery's credit profile if it successfully restructures its debt. LIQUIDITY China Fishery has not published financial statements since June 2015. As of June 2015, China Fishery's outstanding debt consisted of a USD129m inventory loan secured by fishmeal inventory, the 9.75% USD300m senior notes issued by CFG Investment S.A.C. due 2019, as well as the USD600m club loan facility, of which USD455m was outstanding. FULL LIST OF RATING ACTIONS China Fishery Group Limited - IDR affirmed at 'D' - Senior unsecured rating affirmed at 'C', Recovery Rating revised to 'RR5' from 'RR4' CFG Investment S.A.C. - USD300m senior notes guaranteed by China Fishery affirmed at 'C', Recovery Rating revised to 'RR5' from 'RR4'. NOBLE GROUP: 2016 Results No Impact B2 CFR, Moody's Says -------------------------------------------------------- Moody's Investors Service says that Noble Group Limited's 2016 results have no immediate impact on its B2 corporate family rating or the negative rating outlook. "Noble Group's capital raising initiatives allowed the company to reduce debt and alleviate immediate pressure on liquidity, but the company remains challenged by volatile operating cash flow and significant debt maturities in 2018," says Joe Morrison, a Moody's Vice President and Senior Credit Officer. On Feb. 27, 2017, Noble Group announced FY2016 results that indicated continued pressure on the company's operations. Reported revenue and operating income from supply chains -- excluding exceptional non-cash items and losses from discontinuing or to be discontinued businesses -- were $45.5 billion and $808 million, respectively, down 25% and 30% year-on- year. Its reported operating margin for 2016 at 1.79% was down 12 basis points. In addition, reported cash flow from operating activities was negative $592 million, a deterioration from the negative $236 million in the prior year. However, reported debt decreased to $4.0 billion at end-2016 from $5.9 billion at end-2015, following the company's successful $500 million equity rights offering and receipt of $1.156 billion in proceeds from the sale of its Noble Americas Energy Solutions (NES) business. "Noble Group's operating results and cash flow in 4Q 2016 improved quarter-on-quarter, supported by cost-cutting measures and a working capital surplus," says Morrison. The company's operating income from supply chains grew to $211 million in 4Q 2016 from $170 million in 3Q 2016, and cash flow from operating activities turned to positive $275 million from negative $79 million. At end-2016, Noble Group had cash on hand -- excluding restricted cash with brokers -- of $1.1 billion and availability under committed credit facilities of $943 million, amounts sufficient to cover the $1.2 billion in short-term debt, comprised of $817 million in unsecured bank loans and $476 million in secured bank loans due in 2017. The company has further debt maturities, however, of $378 million in unsecured notes due in March 2018 and $1.1 billion in senior unsecured bank loans due in May 2018. Noble Group's profitability and cash flow in 2017 should benefit from its cost reduction efforts, as well as the new $1.0 billion borrowing base facility at its UK unit, Noble Clean Fuels Limited (unrated), that will support working capital and trade facilities and which should help the company to better utilize its operational assets. However, whether the company can improve profitability and cash flow on a sustained basis remains uncertain, given the unfavorable operating environment and the loss of profits and cash flow contribution from the NES business. In addition, the company announced on 13 February that it is in discussions regarding a strategic investment in Noble Group. Although no binding arrangements are in place, Moody's expects that if successful, a strategic investment would bring operational benefits and help alleviate pressure on Noble Group's liquidity profile. Noble Group's adjusted net debt/EBITDA for FY2016 rose to about 7.6x from 4.1x in 2015, mainly because of a weakening in earnings. Moody's expects net debt/EBITDA to trend down in 2017 toward 7.0x as earnings should improve moderately. The senior unsecured ratings are not notched down for legal subordination. At end-2016, secured debt of about $533 million amounted to 13% of total debt, and Moody's views that additional borrowings under the $3 billion borrowing base facilities are likely to be limited, because a large portion of those facilities are, or will be, used to issue trade finance instruments such as letters of credit. The principal methodology used in these ratings was Trading Companies published in June 2016. Noble Group Limited is the largest global physical commodities supply chain manager in Asia by revenue. Its diversified activities across the supply chain include the sourcing, storage, processing, transportation, and distribution of over 20 commodity products. Founder and Chairman, Mr. Richard Elman, holds an approximate 18% stake in the company. China Investment Corporation - the Chinese sovereign wealth fund - owns about 10%. ========= I N D I A ========= AKS ALLOYS: ICRA Reaffirms C+ Rating on INR14cr LT Loan ------------------------------------------------------- ICRA has reaffirmed its long term rating assigned to the INR14.00 crore Fund based facilities of AKS Alloys Private Limited at [ICRA]C+. The short term rating for INR10.00 crore non fund based facilities has also been reaffirmed at [ICRA]A4. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term Fund Based 14.00 Reaffirmed at [ICRA]C+ Short Term Non Fund Based 10.00 Reaffirmed at [ICRA]A4 The rating action is based on the best available information. As part of its process and in accordance with its rating agreement with AAPL, ICRA had sent repeated reminders to the company for payment of surveillance fee that became overdue and had been trying to seek information from the company so as to undertake a surveillance of the rating; however despite multiple requests; the company's management has remained non-cooperative. ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, the company's rating is now denoted as: "[ICRA] C+/A4 ISSUER NOT COOPERATING ON INFORMATION AND FEE". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Incorporated in 2000, AAPL is engaged in manufacturing steel ingots and trading steel scrap / ingots. The Company operates a steel ingot manufacturing facility with a capacity of 18,000 tonnes per annum (TPA), at Pondicherry. The Company is closely held and managed by the promoter group, mainly comprising Mr. Sanjay Kumar Sharma and Mr. Nemi Chand Kothari. The Company holds 80% equity stake in SAR Ispat Private Limited, which is engaged in manufacturing steel billets at Pondicherry with a capacity of 36,000 TPA. BUILDQUICK INFRA: CRISIL Assigns B+ Rating to INR4.5MM Loan ----------------------------------------------------------- CRISIL has revoked the suspension of its ratings on the bank facilities of Buildquick Infrastructure Private Limited and has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the facilities. CRISIL had suspended the ratings on Dec. 5, 2016, as BIPL had not provided information required for a rating review. The company has now shared the requisite information, enabling CRISIL to assign ratings to the bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2.5 CRISIL A4 (Assigned; Suspension Revoked) Cash Credit 4.5 CRISIL B+/Stable (Assigned; Suspension Revoked) The ratings reflects modest scale of operations and operating profitability, exposure to demand-related risk on the ongoing bungalow project, and weak financial risk profile. These rating weaknesses are partially offset by the promoters' extensive experience and the company's moderate medium-term revenue visibility. Analytical Approach For arriving at the rating, CRISIL has treated as neither debt nor equity, unsecured loans of INR6 crore that BIPL has received from the directors and family members as on March 31, 2016. This is because the loans bear a nominal interest rate and are expected to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and operating profitability: Dependence on orders received from government departments and other customers for revenue constrains scalability in operations'revenue reduced to INR5.15 crore in fiscal 2016, from INR15.39 crore the previous fiscal'and operating profitability, which reduced to 3.79% from 8.65% during the period. * Demand-related risk on real estate project: Construction on the bungalow project, Abhinandan, is almost complete, though only 80 of its 138 bungalows have been booked so far. * Weak financial risk profile: Debt protection metrics are weak due to losses incurred in fiscal 2016. The metrics have been below average in the past too, due to low cash accrual. Modest networth also constrains financial risk profile Strengths * Extensive experience of the promoters: Benefits from the promoters' extensive experience of more than three decades in civil and commercial construction, and in execution of real estate development will continue to support business risk profile. * Moderate revenue visibility: Moderate outstanding orders of about INR33.37 crore as on January 31, 2017, support revenue visibility for the medium term. Outlook: Stable CRISIL believes BIPL will continue to benefit over the medium term from the extensive experience of its promoters and moderate order book. The outlook may be revised to 'Positive' if revenue and operating margin exceeds expectations, or substantial sales of real estate units leads to increased cash inflows. Conversely, the outlook may be revised to 'Negative' if low cash accrual, stretch in working capital cycle, or any large capital expenditure weakens financial risk profile, particularly liquidity. Set up as a partnership firm in 1984, and incorporated as a private limited company in 2008, BIPL is engaged in construction of industrial and commercial projects and in real estate development. Mr. Sunil Patel and Mr. Paresh Thaker are the promoters. The company's registered office is at Anand, Gujarat. Revenue was INR5.15 crore and net loss was INR0.95 crore in fiscal 2016, against revenue of INR15.40 crore and net profit of INR0.23 crore in fiscal 2015 CHABBRA'S ASSOCIATES: Ind-Ra Affirms 'BB' Long-Term Issuer Rating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Chabbra's Associates' (CA) Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR135 mil. Fund-based limits affirmed with IND BB/Stable Rating; and -- INR200 mil. Non-fund-based limits affirmed with IND A4+ Rating KEY RATING DRIVERS The affirmation reflect CA's continued moderate scale of operations with net revenue of INR845 million in FY16 (FY15: INR930 million). The ratings are constrained by the firm's partnership nature of business. The ratings are further constrained by the firm's geographical concentration risk emanating from its contract execution activities mostly based in and around Andhra Pradesh and Telengana. The ratings, however, continue to be supported by CA's improved credit metrics with interest coverage (operating EBITDAR/gross interest expense) of 4.6x in FY16 (FY15: 4.5x) and net financial leverage (total adjusted net debt/operating EBITDAR) of negative 0.01x (0.9x). Improvement in the credit metrics was on account of low working capital requirement. The ratings are further supported by CA's strong liquidity profile as reflected in its 45% use of working capital limits on average during the 12 months ended January 2017. The ratings are also supported by over two decades of experience of the promoters in construction of buildings, roads, etc. RATING SENSITIVITIES Positive: A substantial improvement in the scale of operations along with an improvement in net financial leverage could be positive for the ratings. Negative: A further decline in the operating EBITDA margins leading to deterioration in net financial leverage could be negative for the ratings. COMPANY PROFILE CA is a partnership firm incorporated on Dec. 1, 1996. The firm's registered office is in Secunderabad, Telangana. The firm is engaged mainly in the civil construction works. CA is promoted by Suresh Kumar Chabbra, Ramesh Kumar Chabbra and Vidya devi Chabbra. DWARKA GEMS: CARE Reaffirms 'B-' Rating on INR10.38cr Loan ---------------------------------------------------------- The ratings of Dwarka Gems Limited (DGL) continue to remain constrained on account of continuous cash losses registered in last three financial years ended FY16 (FY refers to the period from April 1 to March 31), weak debt coverage indicators and stressed liquidity position. The ratings, further, continue to remain constrained on account of the company's exposure to the volatility in gold and diamond prices and foreign exchange rates. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term/Short 10.38 CARE B-; Stable/CARE A4 term Bank Reaffirmed Facilities The ratings, however, continue to factor in the vast experience of promoters in gems & jewellery industry and its moderate capital structure. The ability of DGL to enhance its scale of operations and improve its profitability in the light of price fluctuation risk associated with the precious metals is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weakness Continuous cash losses, weak debt coverage indicators and stressed liquidity position The profitability of the company is exposed to volatile raw material prices and foreign exchange rate that led to fluctuating profitability margins. The company has registered continuous cash losses in last three financial years ended FY16. Due to continuous cash losses and elongated operating led to its stress liquidity position. Further, due to cash losses, debt coverage indicators stood weak. Key Rating Strengths Growth in Total Operating Income (TOI) During FY16, TOI of the company has improved by 26.43% over FY15 mainly on account of increase in export sales by 90.37% over FY15 which offset to an extent with decline in domestic sales by 22.32% over FY15. Moderate capital structure The capital structure of the company stood moderate owing to high net-worth base. DGL is the flagship company of Dwarka Group which was promoted by Mr. Krishna Behari Goyal and Mr. Ashok Goyal as a private limited company in 1992 and was converted into public limited company in 1996. However, later on, Mr. Ashok Goyal left the company. DGL has a track record of more than two decades and is engaged in the manufacturing, whole selling and retailing of plain gold & diamond studded jewellery and gold coins. DGL has two retail showrooms located in Chandigarh and Jaipur. The company majorly export its product in USA and U.K. Further, DGL is also involved in the export of jewellery mainly through its two subsidiaries companies namely Dwarka Gems Inc (New York) and Dwarka Gems (Europe) Ltd. (London). During FY16 (FY refers to the period April 1 to March 31), DGL has reported a total operating income of INR11.54 crore and net loss of INR0.26 crore. EROS INTERNATIONAL: S&P Assigns 'B+' CCR; Outlook Stable -------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term corporate credit rating to Eros International Plc. The outlook is stable. At the same time, S&P assigned its 'B+' rating to the proposed U.S. dollar-denominated senior unsecured notes, maturing 2022, that Eros Films Ltd. will issue. Eros will guarantee the proposed notes. Eros is a New York Stock Exchange-listed Indian film production and distribution company. Eros also runs the digital entertainment streaming service Eros Now. "Our rating reflects Eros' good market presence in the fragmented Bollywood (Hindi) film production industry, which is smaller than Hollywood's," said S&P Global Ratings credit analyst Ashutosh Sharma. "The rating also reflects Eros' higher leverage from a volatile financial performance and our belief that the company would successfully refinance its upcoming maturities and other high-cost borrowings through the proposed senior unsecured notes." Eros' business risk profile reflects the company's relatively larger footprint in the fragmented Bollywood and Indian movie business compared with its much larger and concentrated Hollywood peers such as Metro-Goldwyn Mayer, Lionsgate, and Dreamworks Animation. S&P expects Eros' revenue and cash flow to remain volatile due to its dependence on new movie releases, significant upfront investments with a relatively shorter shelf life, and the rapidly changing tastes of the Indian audience. However, with more than 50 movies every year, Eros has a much larger movie slate than its international peers, which means a more distributed risk pattern compared with international peers, who run higher risks with big- budget films. "Unpredictable cash flows because of variations in audience tastes and attendance at theatres, and risks related to high upfront investments are key considerations in our ratings on film production and distribution companies. India's sizable population, rising income levels, increasing multiplex penetration, and rising television and Internet reach make the country's movie market lucrative," Mr. Sharma said. Eros commands roughly 30% of the Bollywood box-office collections and about 40% of all Indian language films released in theatres in the U.K. and the U.S. However, S&P believes Eros' slate has high content and geographical concentration because it mainly caters to the Indian diaspora. More than 50% of its box office revenue is from the top five or six Bollywood movies it produces. Eros is also expanding in regional Indian languages, further diversifying its overall revenue. Catalog sales contribute more than a fourth of Eros' revenue. However, the company's own library size (3,000+ films) is small when compared with that of its western peers. The stable rating outlook reflects S&P's expectation that Eros will successfully refinance its upcoming maturities and maintain its business position over the next 12 months while improving its operating cash flow through prudent content acquisition and working capital management. S&P may lower the rating if Eros is unable to refinance its debt maturities. S&P may also lower the rating if the company's ratio of funds from operations (FFO) to debt moves sustainably below 12%. Poor box-office performance or higher-than-expected content and working capital investments could indicate such a situation. S&P may raise the rating if Eros' operating cash flow improves such that the FFO-to-debt ratio moves sustainably above 20% with adequate liquidity. Higher growth with prudent content acquisition and a faster receivables collection would reflect such a scenario. ESSEM ENTERPRISE: CARE Assigns 'B' Rating to INR8.86cr LT Loan -------------------------------------------------------------- The ratings assigned to the bank facilities of Essem Enterprise are constrained by its small scale of operations with moderate profit margins, proprietorship nature of constitution, client concentration risk albeit satisfactory clientele, volatility in input prices, working capital intensive nature of operations, leveraged capital structure with moderate debt coverage indicators, its presence in an intensely competitive industry and sluggish economic scenario. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 8.86 CARE B; Stable Assigned Short-term Bank Facilities 1.43 CARE A4 Assigned The ratings, however, derive strength from the experience of the management, its long track record of operations and healthy order book position. Going forward, the ability of Essem to increase its scale of operations by executing orders in hand within stipulated time period, timely receipts of contract proceeds and effective management of working capital will be the key rating sensitivities. Detailed description of the key rating drivers: Key Rating Weaknesses Small scale of operations with moderate profit margins: The size of the operations of the entity remained small with total operating income of INR15.14 crore in FY16 and total capital employed of INR16.83 crore as on March 31, 2016. The profit margins of the entity remained moderate with operating margin at 16.34% and PAT margin of 7.58% in FY16. Proprietorship nature of constitution: Essem Enterprise, being a proprietorship entity, is exposed to inherent risk of the capital being withdrawn at time of personal contingency of the proprietor and the entity being dissolved upon the death/insolvency of the proprietor. Moreover, the proprietorship entity has restricted access to external borrowing as credit worthiness of the proprietor would be the key factors affecting credit decision for the lenders. Client concentration risk albeit satisfactory clientele: Essem executes orders mainly for various public sector units like Kolkata Municipal Corporation, Indian Railway, Hindustan Aeronautics Ltd and earns revenue of about 90% of its total operating income from the above clients which exposes it to client concentration risk. Volatility in input prices: The major inputs for any civil contractors are bitumen, asphalt, murram, stone chips and metals, the prices of which are volatile. Furthermore, all the contracts executed by the entity do not contain any price escalation clause and the entity is exposed to volatility in prices of input materials. This apart, it does not enter into any agreement with contractees to safeguard its margins against any increase in labour prices and being present in a highly labour intensive industry, it remains susceptible to the same. Working capital intensive nature of operations: The operations of the firm are highly working capital intensive mainly due to high inventory and debtor collection period. The average inventory period was on the high side mainly due to work uncertified as on account closing dates. Most of the customers of Essem are public sector units like Indian Railway, Kolkata Municipal Corporation. Due to its low bargaining power coupled with high competition in the industry Essem has to allow high credit period to its customer. This apart, stretched payment mechanism adopted by the government authorities has also lead to high collection period for the firm which ultimately resulted in high average working capital utilization restricting the overall financial flexibility. Moreover, it receives credit of about three months from its creditors which mitigates its working capital intensity to a certain extent. Leveraged capital structure with moderate debt coverage indicators: The capital structure of Essem has remained leveraged as on March 31, 2016 marked by overall gearing of 2.65x. The debt protection indicators remained moderate marked by satisfactory interest coverage of 2.27x and moderate total debt to GCA of 8.26 years in FY16. Intense competition and sluggish economic scenario: The entity has to bid for the contracts based on tenders opened by the various public sector units like Kolkata Municipal Corporation, Indian Railway. Upon successful technical evaluation of various bidders, the lowest bid is awarded the contract. Since the type of work done by the entity is mostly commoditised, the entity faces intense competition from other players. The firm receives projects which majorly are of a short to medium tenure (i.e. to be completed within maximum period of one to two years). Apart from this, present economic slowdown is also having a negative bearing on the construction sector which may also hinder the growth of the entity. Key Rating Strengths Long track record of operations and experienced management: The entity is into civil construction activities since 1985 and thus has more than three decades of track record of operations. Furthermore, the proprietor, Mr. Santanu Mukherjee has around 31 years of experience in the civil construction industry, looks after the day to day operations of the entity. Healthy book position: The order book position has been healthy and as on January 06, 2017 the value of orders in hand was INR50.77 crore (3.35 times of FY16 total income) which needs to be completed by October 2018. Kolkata-based (West Bengal) Essem was established as proprietorship entity in the year 1985 by Mr. Santanu Mukherjee. Since its inception, the entity has been engaged in civil construction activities in the segment like construction of road, bridges, water drain, box culvert and buildings. Along with civil construction activities, the entity has also been engaged in allied electrical, underground pipeline and mechanical jobs. During FY16 (Audited; refers to the period April 1 to March 31), Essem reported PAT of INR1.15 crore (INR0.83 crore in FY15) on total operating income of INR15.14 crore (INR12.28 crore in FY15). Furthermore during 9MFY17, the entity has achieved revenue of INR15.50 crore. GARG RICE: CARE Assigns 'B' Rating to INR13.75cr LT Loan -------------------------------------------------------- The ratings assigned to the bank facilities of Garg Rice Mills are constrained by its small scale of operations with low profitability margins, highly leveraged capital structure, weak total debt to GCA and foreign exchange fluctuation risk. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 13.75 CARE B; Stable Assigned Short-term Bank Facilities 0.25 CARE A4 Assigned The ratings are further constrained by elongated operating cycle, susceptibility of margins to fluctuation in raw material prices, fragmented nature of industry coupled with high level of government regulation and partnership nature of its constitution. The ratings, however, derive strength from experienced partners, established track record of the entity and locational advantages. Going forward, the ability of the firm to increase its scale of operations while improving its profitability margins and solvency position and managing its working capital requirements efficiently would remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced partners and established track record: Mr. Radhe Shyam and Mr. Ramesh Garg have total work experience of three decades, Mr. Nilesh Garg and Mr. Nitin Garg have total work experience of around one decade and Mr. Sachin Garg has industry experience of 2 years. The firm has been in operations for more than two and a half decades. This has aided in having established relationship with customers and suppliers. Location advantages: The firm's processing facility is situated at Taraori, Haryana which is one of the largest producers of paddy in India. Its presence in the region gives additional advantage over the competitors in terms of easy availability of the raw material as well as favorable pricing terms. Key Rating Weaknesses Small scale of operations with low profitability margins: Despite being in operations for more than two and a half decades, the firm's scale of operations has remained small marked by TOI of INR89.93 crore for FY16 (refers to the period April 1 to March 31). The PBILDT margin and PAT margin of the firm stood at 1.56% and 0.33% respectively in FY16. Highly leveraged capital structure: GRM has highly leveraged capital structure with overall gearing ratio of 6.25x as on March 31, 2016 as compared to 11.76x as on March 31, 2015 Weak total debt to GCA: The total debt to GCA stood weak at 38.28x for FY16 as compared to 50.35x for FY15. Foreign exchange fluctuation risk: The firm is dependent upon exports and its exports contribution to total sales stood at 89% in FY16. With significant chunk of sales realization in foreign currency, the firm is exposed to the fluctuation in exchange rates as around 50% of its exports remain unhedged exposing it to sharp appreciation in the value of rupee against foreign currency which may impact its cash accruals. Elongated operating cycle: The average operating cycle of the firm stood elongated at 94 days for FY16 (113 days for FY15). Susceptibility of margins to fluctuation in raw material prices: The firm is susceptible towards fluctuation in raw material prices and monsoon dependent operations Fragmented nature of industry: The commodity nature of the product makes the industry highly fragmented. Partnership nature of constitution: GRM's constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency and the firm being dissolved upon the death/retirement/insolvency of partners. Garg Rice Mills (GRM) was established in 1980 as a partnership firm and is currently being managed by Mr. Radhe Shyam, Mr. Nilesh Garg, Mr. Ramesh Garg, Mr. Nitin Garg and Mr. Sachin Garg as its partners sharing profit and loss equally. The firm is engaged in processing of paddy and milling of rice at its manufacturing facility located at Taraori (Haryana) having an installed capacity of 11500 tonnes per annum as on March 31, 2016. The firm is also engaged in trading of rice [income from trading constituted around 60% of the total revenue in FY16 (refers to the period April 1 to March 31)]. The firm is majorly engaged in export of basmati and non-basmati rice to countries such as Saudi Arabia, Israel and other Middle East countries. The export constituted approximately 89% of total income in FY16. The firm procures rice from wholesalers based in Rajasthan, Jharkhand, Uttar Pradesh, Punjab, West Bengal, Haryana, etc and procures paddy directly from local grain markets located in Haryana. Furthermore, the firm also sells rice domestically in the states of Delhi, Punjab and Haryana directly as well as through brokers. Besides GRM, the one of the partners is also engaged in another group concern namely RT Overseas, a partnership firm engaged in trading and milling of rice since 2011. In FY16, GRM has achieved a total operating income of INR89.93 crore with PAT of INR0.30 crore, as against the total operating income of INR78.45 crore with PAT of INR0.28 crore in FY15. In 8MFY17 (Provisional), the firm has achieved total operating income of INR35 crore. GOLDEN APPLE: CRISIL Assigns 'B+' Rating to INR18MM LT Loan ----------------------------------------------------------- CRISIL has revoked the suspension of its rating on the long-term bank facilities of Golden Apple and has assigned its 'CRISIL B+/Stable' rating to the facilities. CRISIL had suspended the rating on Dec. 27, 2016, as GA had not provided the information required for a rating review. GA has now shared the requisite information, enabling CRISIL to assign a rating to its bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9 CRISIL B+/Stable (Assigned; Suspension Revoked) Long Term Loan 18 CRISIL B+/Stable (Assigned; Suspension Revoked) The firm's business risk profile is stable with revenue expected to double in fiscal 2017 and grow 15-20% over the medium term, supported by the capacity enhancement from 1500 tonne per annum (tpa) to 5250 tpa, and healthy demand for apples in the off season. Liquidity is constrained by high bank limit utilisation of 90% over the 12 months through December 2016, but supported by need- based fund support from promoters, and sufficient cash accrual to meet debt obligation, given 30 months of moratorium. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations: The firm commenced commercial operations in fiscal 2012, and had modest revenue of INR80.8 million in fiscal 2016. Small scale of operations in a competitive industry limits ability to bargain with suppliers and customers, leading to pressure on working capital. Following capacity expansion, revenue should grow at a healthy pace over the medium term. However, scale of operations will remain modest. * Working capital-intensive operations: GA had gross current assets of 353 days as on March 31, 2016, mainly because of large inventory of 5-6 months to meet demand in the off season. Operations will remain working capital intensive and effective management will remain a rating sensitivity factor. * Susceptibility to climatic conditions: GA's revenue depends on apple yield in a particular year, which may be affected by adverse climatic conditions such as ground frost or hailstorm, and by proliferation of pests, disease outbreak, loss of soil fertility, water availability, and natural calamities. Strengths * Extensive experience of promoters: The firm is managed by Mr. Ehsan Jawed and two other partners, who have been trading apples since 1960 and own 10 hectares of apple orchards with annual capacity of 5250 tpa. Mr. Javed has also entered the cold storage business to tap his established customer base. * Average Financial risk profile: Financial risk profile should remain average, backed by healthy debt protection metrics. Total outside liabilities to adjusted net worth (TOLANW) will weaken on account of large, debt-funded capital expenditure (capex) undertaken in fiscal 2015, but will remain comfortable. Healthy profitability, stable working capital cycle, and absence of additional debt-funded capex will keep the financial risk profile average over the medium term. * Financial support from promoters in the form of unsecured loans: The promoters have extended unsecured loans in fiscal 2017 which will support the firm's growing scale of operations. Outlook: Stable CRISIL believes GA will continue to benefit from its promoters' industry experience. The outlook may be revised to 'Positive' if there is a substantial increase in revenue or improvement in operating profitability, while working capital management is efficient. The outlook may be revised to 'Negative' if there is a considerable increase in working capital requirement, or if profitability is low, weakening the financial risk profile. Any delay in commissioning of the storage facility, leading to lower- than-expected revenue, may result in a 'Negative' outlook. GA trades in, and provides controlled-atmosphere storage for, apples. It commenced commercial operations in fiscal 2012. The firm is based in Pulwama, Jammu & Kashmir. GA's profit after tax (PAT) was INR27.6 lakh on net sales of INR6.05 crore in fiscal 2016, vis-a-vis INR15.01 lakh and INR5.89 crore, respectively in fiscal 2015. INDCON PROJECTS: CRISIL Reaffirms B+ Rating on INR13.5MM Loan ------------------------------------------------------------- CRISIL has reaffirmed the ratings on Indcon Projects and Equipment Limited ratings at 'CRISIL B+/Stable/ CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 13.5 CRISIL A4 (Reaffirmed) Cash Credit 13.5 CRISIL B+/Stable (Reaffirmed) Letter of Credit 1.5 CRISIL A4 (Reaffirmed) The ratings reflect the weakened liquidity profile marked by insufficient net cash accrual to meet term debt obligations; tender-based business operations leading to volatility in sales; large working capital requirement and average financial risk profile. These weaknesses are partially offset by the extensive experience of IPEL's promoters in the engineering equipment industry, the company's diversified revenue profile, and strong and long-term relationships with customers and suppliers. Key Rating Drivers & Detailed Description Weaknesses * Weakened liquidity profile: Liquidity profile is marked by insufficient net cash accrual to meet term debt obligations of INR2.37 crores and INR2.5 crores in fiscal 2017 and 2018 and high bank limit utilisation driven by lower than expected turnover. Further, the company has large debt contracted from banks and non-banking financial institutions (NBFCs), resulting in a weakened liquidity profile. * Tender-based business operations leading to volatility in sales: IPEL derives significant portion of its revenue from tender-based orders. This exposes the company to volatile revenue profile as inability to bag a tender may lead to revenue losses. * Large working capital requirement: IPEL's working capital requirements were high as indicated by gross current assets (GCAs) estimated at 250 days as on March 31, 2016. This is on account of higher debtor and inventory days. * Average financial risk profile: IPEL has average financial risk profile marked by gearing levels increased to to 1.75 times due to increase in dependency over working capital funding to meet the increased working capital requirements and increase in term loans from the NBFCs. Strengths * Extensive experience of IPEL's promoters: IPEL was set up in 1986. The promoters have experience of nearly three decades in the industrial manufacturing for engineering equipment skid mounted compressed air, gas and liquid driers, pressure vessels. * Diversified revenue profile and strong and long-term relationships with customers and suppliers: The established industry position of the promoters established strong relations with suppliers and customers such as Reliance Industries Ltd (CRISIL AAA/Stable/CRISIL A1+), Indian Oil Corporation Ltd (CRISIL AAA/Stable/CRISIL A1+),Hindustan Petroleum Corporation Ltd (CRISIL AAA/Stable/CRISIL A1+), and helped IPEL in terms of pricing and assured demand supply. IPEL derives roughly 40% of its revenue from manufacturing segment and 60% from the EPC segment. Outlook: Stable CRISIL believes IPEL will continue to benefit from the extensive industry experience of its promoters and their established relationships with customers. The outlook may be revised to 'Positive' if increase in scale of operations and profitability and efficient working capital management, lead to better cash accrual and financial risk profile. The outlook may be revised to 'Negative' if reduced cash accrual or large working capital requirement or debt-funded capital expenditure weakens financial risk profile. Incorporated in 1986 by Mr. Prakash Narain Misra, IPEL designs and manufactures engineering equipment such as skid-mounted compressed air, gas, and liquid driers; pressure vessels; columns; and heat exchangers. It is also engaged in engineering, procurement, and construction of pipeline infrastructure for the oil and gas sector. The company is based in Delhi, and has manufacturing facilities in Faridabad (Haryana), Gujarat, and Delhi. In fiscal 2016, IPEL earned profits of INR1.19 crores on net sales of INR56.93 crores, against INR0.87 crores and INR62.77 crores for fiscal 2015. INDUSTRIAL FORGING: ICRA Assigns B+ Rating to INR11.95cr Loan ------------------------------------------------------------- ICRA has assigned the long-term rating of [ICRA]B+ to the INR11.95-crore fund based bank limits of Industrial Forging Industries. ICRA has also assigned the short-term rating of [ICRA]A4 to the INR1.50-crore non-fund based limits of the entity. The outlook on the long-term rating is Stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Rated on Long-term scale Fund Based Limits 11.95 [ICRA]B+ (Stable) assigned Rated on Short-term scale Non-Fund Based Limit 1.50 [ICRA]A4 assigned Detailed rationale The assigned ratings take into account IFI's moderate scale of current operations and its weak financial profile characterised by low operating profitability, high gearing and weak debt coverage indicators. The entity's liquidity position also remains stretched owing to high working capital intensity of operations due to high debtor days and inventory days, reflected by high utilisation of its fund-based working capital limits. ICRA also notes that IFI's profitability remains susceptible to the fluctuation in raw material prices. Moreover, the assigned ratings take into account the company's exposure to foreign currency fluctuation risks in the absence of a formal hedging mechanism. The ratings, however, favourably factor in long experience of the promoters in the forging of steel and alloys. Repeat orders from the existing clientele highlight acceptable product quality. ICRA notes that effective management of the entity's working capital requirement would remain a key rating sensitivity. Key rating drivers Credit strengths * Long experience of the promoters in the forging of steel and alloys * Repeat orders from existing clients indicates acceptable product quality Credit challenges * Weak financial profile characterised by low operating profitability, adverse capital structure and weak coverage indicators * High working capital intensity of the entity's operations adversely impacts its liquidity position, notwithstanding the improvement in FY 2016 * Moderate Scale of Current Operations * Vulnerability of profitability to fluctuation in raw material Prices * Exposure to foreign currency fluctuation risks in the absence of a formal hedging mechanism Detailed description of key rating drivers highlighted: The promoters are involved in forging of steel products since 1989. The products manufactured by the entity include cross arm, clamps, eye hook, ball hook etc., which find application in the overhead lines for transmission of power. The entity has an installed forging capacity of 12,000 MT per annum at its facilities located in Howrah and Jungalpur. The facilities are operating at an optimum capacity at present. While forging of the company's products is carried out at its own facilities, galvanising of the same is carried out at the facility of a group entity, IFI Industries which is involved in galvanising of the products. The entity sells its products in the international markets like South Africa, Kenya, Uganda, Jordan, the UAE and Mozambi as well as in the domestic market in the states of West Bengal, Chhattisgarh, Odisha and Jharkhand. The entity has registered an operating income of INR65.71 crore in FY2016 of which around 29% is on account of sales in the export market and the balance is from domestic sales. Although the revenue of the entity improved over the last three years, the current scale of the entity's operations continued to remain moderate. Moreover, the low-value additive nature of operations put pressure on its profitability as reflected by a low operating profitability of 2.98% in FY2016. Although foreign currency fluctuation gain in FY2016 supported the net profitability of the company to some extent, the net profit margins continued to remain on the lower side. The capital structure of the company remained aggressive and debt coverage indicators remained weak. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt-servicing track record of IFI, its business risk profile, financial risk drivers and the management profile. Industrial Forging Industries (IFI) is involved in forging of steel products such as MS round, MS flat, MS angle and MS channel for manufacturing of structural items such as cross arm, clamps, eye hook etc, which find application in overhead lines for transmission of power. The entity's manufacturing facilities are located at Howrah and Jangalpur in West Bengal and have an installed capacity of 12,000 MT per annum. JEYA SATHYA: CRISIL Upgrades Rating on INR14MM Cash Loan to B ------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facility of Jeya Sathya Agro Food Products Private Limited to 'CRISIL B/Stable' from 'CRISIL B-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 14 CRISIL B/Stable (Upgraded from 'CRISIL B-/Stable') The rating upgrade reflects improvement in the business risk profile following successful stabilisation of operations in January 2016. Revenue is expected at around INR60 crore in fiscal 2017, higher than CRISIL's earlier expectation .The better-than- expected operating performance is expected to result in cash accrual of INR1.1-1.2 crore, against maturing obligations of around INR0.84 crore, per fiscal over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest financial risk profile: The capital structure is highly leveraged and debt protection metrics are modest. The total outside liabilities to tangible networth ratio is expected to be over 2.5 times as on March 31, 2017. The interest coverage ratio is likely to be modest at less than 1.5 times for fiscal 2017. * Susceptibility to changes in government regulations and volatility in raw material price: The domestic rice industry is highly regulated in terms of paddy prices, export/import policy, and rice release mechanism, which affects the credit quality of players in the industry. The minimum support price of paddy and prevailing rice prices are two important factors that determine a rice mill's profitability. CRISIL believes that the profitability of millers, such as JSA, will remain susceptible to volatility in raw material prices and to any changes in government regulations. Strength * Extensive experience of the promoters in the agricultural commodities industry: The promoters, Mr. Kasinathan Manickavasagan and his family members, Mr. Chidambaram Raju, Mrs Ramaiah Sathya, and Mrs Muthukannan Jaya, have an experience of 10-15 years in the industry. Mr. Manickavasagan has an interest in this industry through his food agency. The experience helps procure paddy from local farmers and traders at competitive prices, and is expected to ensure regular supply of paddy. Outlook: Stable CRISIL believes JSA will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' in case of an improvement in the financial risk profile, particularly capital structure , driven by higher-than- expected revenue or operating profitability. The outlook may be revised to 'Negative' in case of a decline in revenue or operating profitability, or higher-than-expected debt-funded capital expenditure, resulting in weakening of the financial risk profile. JSA was incorporated in 2013. The company operates a rice mill with a capacity of 8 tonne per hour in Kallur, Tamil Nadu. It commenced commercial operations in January 2016. LAXMI SOPAN: CARE Reaffirms 'B' Rating on INR5.22cr LT Loan ----------------------------------------------------------- The rating assigned to the bank facilities of Laxmi Sopan Agriculture Produce Marketing Company Limited (LAPL) continues to remain constrained on account of small scale of operations with low capitalization, leveraged capital structure, weak debt coverage indicators and weak profitability margins owing to limited value addition nature of business. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 5.22 CARE B; Stable Reaffirmed The rating is further constrained by agreement roll back and vacancy risk and non existence of rent escalation clause. However, the rating derives strength from experienced and resourceful promoters along with 100% occupancy rates of leased assets and comfortable operating cycle. The ability of the entity to increase its scale of operations, improve its solvency position and profit margins amidst competitive scenario along with efficient management of working capital requirements is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Strengths Experienced and resourceful promoters and comfortable occupancy status: LAPL's promoters have experience of over 15 years in industry and are ably supported by experience personnel in second- tier management. Furthermore, the promoters have been supporting the business by continuous infusion of funds. Further with the experience the promoters have been able to maintain healthy occupancy level of 100% for the total developed area of 7.40 lakh square feet for the marketing of agriculture produce for the farmers. Key Rating Weaknesses Modest scale with low profitability and leveraged capital structure: Despite being in existence for around three years, the scale of operations of the company remained small with low networth base thus depriving it of scale benefits. Furthermore, owing to limited value addition nature of business and high degree of competition the profit margins remained low. Dependence on external borrowings remained high resulting in leveraged capital structure owing to low networth base. Vacancy and rollback risk: Although the occupancy remained healthy but the same is susceptible to agreement roll out and vacancy risk and risk arising out of non existence of rent escalation clause and lock in period of five years. Laxmi Sopan Agricultural Produce Marketing Company Limited (LAPM) was incorporated on February 08, 2014. The company has developed an area of around 18 acres of land located at Solapur for providing a market for the selling of agriculture produce by the farmers. The overall operations of LAPL are spearheaded by Mr. Rajendra Vitthal Raut, Mr. Sanjay Vitthal Raut, Mr. Vijay Vitthal Raut and Mr. Abhijeet Ashok Raut with two and half decades, two decades, around one and half decade and half a decade, respectively, through association with group entities engaged in similar segment. The entity reported TOI of INR0.97 crores with net losses of INR0.49 crore against TOI of INR0.31 crore with a net loss of INR0.20 crore in FY15 (refers to the period April 1 to March 31). LUNI POWER: CRISIL Lowers Rating on INR15MM Term Loan to 'D' ------------------------------------------------------------ CRISIL has revised its rating on the long-term bank facilities of Luni Power Company Private Limited to 'CRISIL D' from 'CRISIL BB- /Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 15 CRISIL D (Downgraded from 'CRISIL BB-/Stable') The downgrade reflects irregularity in payment of interest on term loan. Continuous time and cost overrun in the project has resulted in stretched liquidity and irregularity in servicing the interest on term loan. CRISIL's rating on the long-term bank facility of LPCL continues to reflect LPCL's exposure to risks related to project implementation. The company is also susceptible to hydrological risks and to single site concentration in its revenue profile. These rating weaknesses are partially offset by the extensive experience of LPCL's promoters in the hydroelectric power generation and infrastructure sectors. Key Rating Drivers & Detailed Description Weakness * Stretched liquidity resulting from time and cost overruns LPCL is implementing a 4.5 MW hydro-based power plant under a 40- year concession contract entered in to with Himachal Pradesh state government on build, own, operate and transfer (BOOT) basis for generation of electricity by utilising the water resource of the Luni Khad, a tributary of river Beas. At a total cost of INR37.5 crore, the project was expected to become operational in October 2014, however delay in acquisition of land, led the date of commencement to be pushed to March 2016, with project cost increasing to INR48.5.0 crore. The repayment period has also been moved in line with the shift in beginning of operations. However, on account of climatic factors, the project was delayed further and is yet to become operational. The total cost incurred till date is INR55.5 crore. The repayment is scheduled from June 2017. The excess cost has been entirely funded through unsecured loans. The time and cost overrun has resulted in stretched liquidity and irregularity in servicing the interest on term loan. Strength * Extensive experience of promoters SPML Infra Ltd, a majority shareholder of LPCL, is an infrastructure development company based out of New Delhi and is the flagship company of SPML group. SPML has 32 years of experience in water infrastructure, 16 years in power infrastructure and 10 years in civil infrastructure development. LPCL, incorporated in 2001, is setting up a small hydro-power plant under a 40-year concession contract with the Government of Himachal Pradesh on a build-own-operate-and-transfer basis. MAHAVIR POLYPLAST: CARE Reaffirms B+ Rating on INR8.75cr Loan ------------------------------------------------------------- The ratings assigned to the bank facilities of Mahavir Polyplast Private Limited continue to remain constrained by its small scale of operations coupled with low net worth base, thin profitability margin, leveraged capital structure and weak debt coverage indicators. The ratings are further constrained by working capital intensive nature of operations, raw material price fluctuation risk and intense competition in the industry due to low entry barriers. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 8.75 CARE B+;Stable Reaffirmed Short-term Bank Facilities 4.25 CARE A4 Reaffirmed The rating constraints are partially offset by experienced promoters and growing scale of operations. Going forward, the ability of the company to increase the scale of operations while improving the profitability margins and capital structure along with effective working capital management shall be the key rating sensitivities. Key rating weakness Growing though small scale of operations with low net worth base: The total operating income of the company increased in FY16 on account of increase in the sales of UPVC pipes, screen pipes, etc, to its new and existing customers. Despite growth registered, the same continued to remain small; the small scale limits the company's financial flexibility in times of stress and deprives it from scale benefits. Working capital intensive nature of operations: Operations of the company continues to remain working capital intensive marked by an average operating for FY16. The operating cycle of the company continue to remain high on account of elongated inventory holding. Weak financial risk profile: The profitability margins as marked by the PBILDT and PAT margins of the company continued to remain thin for FY16. The PBILDT and PAT margins stood at 8.23% and 0.62%, respectively, during FY16. The capital structure of the company as marked by overall gearing continues to remain leveraged at 8.37x as on March 31, 2016, on account of high dependence of working capital borrowing against low net worth base. Coverage indicators continue to remain weak owing to high debt levels. Interest coverage and total debt to GCA of the company stood at 1.47x and 16.99x, respectively, as on March 31, 2016, as against 1.51x and 19.25x as on March 31, 2015. Raw material price fluctuation: The prices of raw materials of the company required for the manufacturing of PVC pipes and fittings are volatile in nature and since the cost of raw materials accounting for significant portion of the total production cost, an upward movement in the raw material prices adversely affects the profitability of the industry players. Intense competition in the industry due to low entry barriers: The company operates in a highly fragmented industry marked by the presence of a large number of players in the organized as well as unorganized sector. The industry is characterized by low entry barriers due to low technological inputs and easy availability of standardized machinery for the production. Key rating strengths Experienced management: The company is currently managed by Mr. Ram Niwas Gupta and Mr. Rishi Gupta, and have an experience of around two and a half decades in trading and manufacturing of plastic products. MPP was incorporated in 2007 and commenced its commercial operations in 2008. The company is currently being managed by Mr. Ram Niwas Gupta and Mr. Rishi Gupta. The company is engaged in the manufacturing of pipes such as unplasticized polyvinyl chloride (UPVC) pipe, casing pipe, ribbed screen pipe, plumbing pipe and column pipe, etc, with installed capacity of 11,500 M.T. per annum as on March 31, 2016, at its manufacturing facility located at Agra, Uttar Pradesh. MPP mainly procures its key raw material, ie, polyvinyl chloride (PVC) resin, calcium carbonate and chemical from manufacturing companies located in Uttar Pradesh. The company mainly supplies to traders located in Agra and nearby regions. Mahavir Pipe Store (MPS), an associate concern, is engaged in trading of pipes. In FY16 (refers to the period April 1 to March 31), MPPL achieved a total operating income (TOI) of INR28.91 crore with PAT of INR0.64 crore, as against total operating income of INR26.27 crore with PAT of INR0.01 crore in FY15. Furthermore, the company has achieved total operating income of INR31.50 crore in 9MFY17 (refers to the period April 1 to December 31; based on provisional results). MANJEERA CONSTRUCTIONS: ICRA Cuts Rating on INR30cr Loan to C ------------------------------------------------------------- ICRA has downgraded the long term rating assigned to the INR15.00 crore fund based limits, INR30.00 crore non fund based limits and INR15.00 crore unallocated limits of Manjeera Constructions Limited to [ICRA]C from [ICRA]B-. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based limits 15.00 [ICRA]C /downgraded from [ICRA]B- Long term Non Fund 30.00 [ICRA]C /downgraded from based [ICRA]B- Long term: Unallocated 15.00 [ICRA]C /downgraded from [ICRA]B- As part of its process and in accordance with its rating agreement with MCL, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings; however despite multiple requests; the company's management has remained non-cooperative. ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, the company's rating is now denoted as: "[ICRA]C ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Manjeera Constructions Limited was incorporated in the year 1987 as Manjeera Constructions Private Limited by Mr. G. Yoganand. The company was later converted into a public listed company, with the shares being listed on BSE as well as NSE. From FY 2007-08, the company started executing civil work contracts involving construction of apartments, hostels etc. MANJEERA RETAIL: ICRA Reaffirms 'D' Rating on INR300cr Loan ----------------------------------------------------------- ICRA has reaffirmed the long term rating assigned to the INR300.00 crore fund based limits and INR14.00 crore unallocated limits of Manjeera Retail Holdings Private Limited at [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based limits 300.00 Reaffirmed at [ICRA]D Long term: Unallocated 14.00 Reaffirmed at [ICRA]D The rating action is based on the ongoing delay in debt servicing by the company. As part of its process and in accordance with its rating agreement with Manjeera Retail Holdings Private Limited, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings; but despite repeated requests by ICRA; the company's management has remained non- cooperative. ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, the company's rating is now denoted as: "[ICRA]D ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Manjeera Retail Holdings Private Limited is a Special Purpose Vehicle (SPV) created in 2007 for the development of a 2.08 million sft mixed use real estate development at Kukatpally, Hyderabad comprising of Manjeera Majestic Homes (residential)- 0.35 million sft; Manjeera Majestic Commercial (retail cum office) - 0.33 million sft; Manjeera Trinity Mall (cum multiplex) - 0.45 million sft and Manjeera Trinity Corporate (office) - 0.95 million sft under JDA with Andhra Pradesh Housing Board (APHB) with a revenue sharing agreement (5%). The entire development is spread across 8.295 acres. MATHIYAN CONSTRUCTION: ICRA Cuts Rating on INR10cr Loan to C+ ------------------------------------------------------------- ICRA has revised its long-term rating on the INR10.0-crore fund- based facilities of Mathiyan Construction Pvt Ltd to [ICRA]C+ from [ICRA]B-. ICRA has reaffirmed its short-term rating of [ICRA] A4 on the INR24.0 crore non-fund based facilities of MCPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Limits 10.0 [ICRA]C+; revised from [ICRA]B- Non-fund Based Limits 24.0 [ICRA]A4; reaffirmed Rationale The ratings revision takes into account the continuously stretched liquidity position of the company as evident from the over utilisation of working capital limits because of high receivable and inventory days. The ratings are also constrained by the decline in the company's revenue in FY2016 due to delayed execution, which along with high repayment obligation resulted in weak debt service indicators. The ratings, however, draw comfort from MCPL's healthy pending order book, the promoter's extensive experience in road construction and the company's status as a 'Class A' contractor under the Public Works Departments (PWD) of Uttar Pradesh (U.P.) and Uttarakhand state governments. The ability of the company to improve its liquidity position, ramp up its operating scale and improve its coverage metrics will be the key rating sensitivity. Key rating drivers Credit strengths * Experience of the promoters in the construction business * Healthy pending order book Credit weaknesses * Stretched liquidity position resulting in over utilisation of Limits * High working capital intensity * Continuous delays in project execution * High geographical and client concentration risk Description of key rating drivers highlighted: The revenue declined by 30% in FY2016 due to continuous delay in project execution. However, the presence of the price escalation clause in majority of projects has limited the price risk, as evident from the increase in operating profitability from 10.43% in FY2015 to 11.75% in FY2016. MCPL's working capital intensity was high (44.96%) in FY2016 due to high debtor (96 days in FY2016) and inventory (107 days in FY2016) days. The liquidity position of the company remains stretched as evident from the over utilisation of working capital limits. The company faces high geographical and client concentration risk as its order book is confined to road construction orders from PWD and Pradhan Mantra Gram Sadak Yojan (PMGSY) in U.P., Uttarakhand and Goa. The company has a long experience in the construction business and is registered class A contractor under the state PWD departments. The company has a healthy pending order book worth ~Rs 129.0 crore as of Jan 31, 2017, which provides revenue visibility over the medium term, with an order backlog/OI ratio of 3.15x. Based at Muzaffarnagar in U.P., MCPL was incorporated in 2007 by Mr. Rajeev Kumar and his brother, Mr. Subhash Chand. The promoters have a decade-long experience in the construction business. The company undertakes work related to road construction and maintenance mainly for PWD and PMGSY. The company reported an OI of INR40.81 crore and a profit after tax (PAT) of INR1.41 crore in FY2016, as compared to an OI of INR58.17 crore and a PAT of INR1.78 crore in the previous year. MID INDIA: ICRA Upgrades Rating on INR105cr LT Loan to BB- ---------------------------------------------------------- ICRA has upgraded the long-term rating to [ICRA]BB- from its earlier ratings of [ICRA]B+ on the INR105.00-crore fund-based (term loan) bank facility of Mid India Creations LLP. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term fund- 105.00 Upgraded to [ICRA]BB- with based term loan "Stable" outlook from earlier rating of [ICRA]B+ Detailed Rationale ICRA's rating revision favorably factors in the change in the terms of MIC's agreement with the property's operator (TGB Banquets and Hotels) as well as the improvement in the former's operational metrics. The change in the management agreement places MIC in a better position as it ensures minimum monthly guarantee (operating profit before interest, depreciation and taxes), which would reduce its degree of dependence on the promoter's support. The commencement of hotel's operations in November 2016 would complement the adjacent banquet property, resulting in higher occupancies. The rating also takes into account the low credit risk since the revenue would be first received by MIC and then shared with the operator after taking the minimum guarantee on a monthly basis. Nevertheless, MIC is likely to continue to be dependent on its promoters for meeting its debt obligations. Going forward, the timely infusion of promoter funds to support repayments and ability to achieve targeted realisations and occupancies to ensure timely debt servicing would remain the key rating sensitivities. Key Rating Drivers Credit Strengths * Revision in the management agreement with "The Grand Bhagwati" ensures minimum operating profit * Low credit risk in the dealings with the operator as the gross revenue is received by MIC first, before the payment of management fee is made to TGB. * Negligible working capital funding requirement in MIC as the operating expenses are incurred by TGB (MIC shares the revenue in the subsequent month) * Popularity of hotels-cum-marriage destination in Indore and nearby cities augurs well in terms of demand potential; development of residential projects around the proposed hotel add to the demand potential Credit Weaknesses * Dependence on promoters for funding support to meet debt obligations on time * Ability to achieve targeted room revenues and occupancies for the ongoing and future developments * Cyclical industry, vulnerable to general economic slowdown and exogenous shocks (geo-political crisis, disease outbreak etc.) * Risks such as limited ability to raise equity capital and risk of dissolution due to death/retirement/insolvency of partners inherent in a partnership firm Description of Key Rating Drivers Highlighted: The service agreement with the property's operator (TGB banquets and Hotels Limited) has been revised to ensure a minimum net revenue guarantee of INR1.00 crore on a monthly basis to MIC irrespective of the level of occupancy in the hotel or bookings in the banquets. This would ensure a minimum operating profit of ~Rs. 12.00 crore on a yearly basis, which can be revised upward with the increase in banquet bookings and hotel occupancy. Furthermore, the credit risk of the firm would remain low as the operating expenses are borne by TGB in the first instance and then the revenue sharing takes place in the subsequent month subject to the minimum guarantee of net income (OPBITA) to MIC. This would also result in low working capital intensity in MIC's operations and enhance the predictability of operating profits in the near-medium term. However, the rating remained constrained by the nascent stage of operations, which would restrict the occupancy and booking in the near term. Therefore, the firm is still dependent on the support from promoters for meeting the debt obligations. The firm has a single property in Indore, Madhya Pradesh, exposing it to the risks pertaining to cyclical industry and making it vulnerable to general economic slowdown and exogenous shocks (geo-political crisis, disease outbreak etc.) MIC is a partnership firm incorporated in October, 2011, under the Limited Liability Partnership Act 2008. It is constructing a 120-room hotel in Indore, Madhya Pradesh. MIC has three partners belonging to the BCM Group of Indore, the Naidunia Group of Madhya Pradesh, and the Surana Group of Jaipur. The BCM Group has undertaken many real estate projects in Madhya Pradesh, while the Naidunia Group is engaged in the print media business in Madhya Pradesh and is also present in the information technology services. The Surana Group has presence in the jewellery and construction business and also operates a multiplex, a hotel and a convention centre. The banquet property commenced operations in June, 2015, while the hotel property was soft launched in July, 2016. MIC has registered an operating income (OI) of INR8.08 crore with a profit after tax (PAT) of INR0.02 crore in FY2016. NUWAY ORGANIC: ICRA Assigns 'D' Rating to INR18cr Term Loan ----------------------------------------------------------- ICRA has assigned the rating of [ICRA]D to the INR32-crore bank lines of Nuway Organic Natural (India) Limited. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits- Cash Credit 8.00 [ICRA]D; assigned Fund Based Limits- Term Loan 18.00 [ICRA]D; assigned Unallocated Amount 6.00 [ICRA]D; assigned Rationale The assigned rating takes into account the stretched liquidity position as reflected by the delays in the term loan repayments and near full utilization of working capital limits along with weak financial risk profile with net losses in the last 5 years, high gearing levels, weak coverage indicators and inadequate free cash outflows. Additionally due to the company's limited track record of operations in the liquor industry and high competitive intensity in the industry owing to the presence of other distilleries in the region, the company has not been able to scale up the sales of PML whats this in the open quota due to which it sells ENA which has contributed to the weak profitability and cash flows. The aforementioned factors would continue to weigh on the business of the company and accordingly ICRA expects that the company's profitability and cash flows will remain weak in the medium term. The rating also factors in the vulnerability of profitability of the liquor industry to the regulatory scenario, given that prices are fixed by the excise policy of the state governments with the implication that any significant increase in grain prices may impact the profitability of the liquor manufacturers. Further, profitability is also vulnerable to fluctuations in RM (nakku) prices and fall in molasses prices, in which case price competition from molasses- based liquor will increase. The rating, however, factor in the favorable demand prospects for alcohol consumption and favourable location of the manufacturing plant which aids in procurement of raw material from the surrounding agricultural belt. Key rating drivers Credit Strengths * Ease of procurement due to raw material availability from surrounding agrarian belt Credit Weakness * Significant delays in the debt servicing of the company. * High competitive intensity owing to the presence of other distilleries in the region; weak competitive position of the company in the Punjab market as on date as reflected by low sales volumes of PML in excess of quota quantity * Profitability vulnerable to regulatory scenario, since prices are fixed by the state government excise policy; any significant increase in grain prices subsequently may impact profitability * Weak financial risk profile with net losses in the last 5 years and to the tune of INR3.53 crore in FY2016, high gearing levels, weak coverage indicators and free cash outflows; cash generation of the company is insufficient to service upcoming term loan repayments Description of key rating drivers highlighted: The company has stretched liquidity position as reflected by the delays in the debt servicing and near full utilization of working capital limits. The operating income of the company stood at INR39.19 crore in FY2016 as against INR50.56 cr in FY2015 with net losses to the tune of INR3.53 crore in FY2016. Nuway Organic Naturals India Limited (NONIL) is primarily engaged in the production and sale of alcoholic products. The company was incorporated as Mahindra Papers Limited in July 1995. The management of the company was taken over by the Ayur Group in 2003 and was renamed as Nuway Organic Naturals India Ltd. in July 2003. Ayur Group is in the business of herbal cosmetic products since 1984 and sells its products under the brand name "Ayur". NONIL's distillery is located in Rajpura (Punjab) with a capacity of 45 kilolitres per day (KLPD) of potable alcohol and uses grain (primarily nakku or broken rice) to manufacture liquor. The distillery began operations in June 2011. It manufactures Extra- Neutral Alcohol (ENA), which is used for internal consumption, i.e. for production of country liquor (Punjab-made Liquor or PML), and for external sales. The company also markets Indian- made Foreign Liquor (IMFL) under the brand name of "Chairman". Besides the liquor business, the company has also been engaged in trading of cosmetics, mineral water and cold-drinks manufactured by group companies and has a manufacturing unit for soaps, hand wash, and other personal care products in Baddi (Himachal Pradesh). NONIL recorded a net loss of INR3.53 crore on an operating income of INR39.19 crore for the year ending March 31, 2016. PALLAVI MOTORS: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has affirmed Pallavi Motors Private Limited's (PMPL) Long-Term Issuer Rating at 'IND BB+'. The Outlook is Stable. Instrument-wise rating actions are: -- INR103 mil. Fund-based limits affirmed with IND BB+/Stable rating; -- INR25 mil. Non-fund-based limits affirmed with IND A4+ rating; and -- INR30 mil. Long term loans assigned with IND BB+/Stable Rating KEY RATING DRIVERS The affirmation reflects PMPL's continued moderate scale of operations and credit metrics. In FY16, revenue was INR1,123 million (FY15: INR961 million), interest coverage (operating EBITDAR/gross interest expense) was 2.4x (2.0x) and net financial leverage (total adjusted net debt/operating EBITDA) was 1.5x (2.7x). The ratings factor in PMPL's continued low operating EBITDA margin of 2.3% in FY16 (FY15: 2.6%) due to the distributorship nature of the business. The ratings, however, reflect PMPL's comfortable liquidity profile as indicated by its 70% average working capital utilization during the 12 months ended January 2017. The ratings benefit from PMPL's dealership with Maruti Suzuki India Limited whose current domestic market share is 46.8% in the Indian passenger vehicle market. The ratings draw comfort from over 15 years of experience the promoters in the automobile dealership business. RATING SENSITIVITIES Positive: A substantial increase in the scale of operations along with sustained improvement in the EBITDA interest coverage could lead to a positive rating action. Negative: A sustained decline in the EBITDA interest coverage could lead to a negative rating action. COMPANY PROFILE Assam-based PMPL was incorporated in 1999 as an authorized dealer of Maruti Suzuki India for the passenger cars. It has one showroom, four outlets and one service centre. PMPL is a family run business and promoted by Mr. Om Prakash Lahoty, Mr. Avadesh Lahoty and Mrs. Sita Devi Lahoty. PKM PROJECTS: ICRA Reaffirms 'D' Rating on INR40cr LT Loan ---------------------------------------------------------- ICRA had suspended the long-term rating of [ICRA]D in August 2016 for the INR40-crore bank lines of PKM Projects Private Limited. ICRA has reaffirmed the long-term rating of [ICRA] D on the Rs.40 crore long-term bank lines of PKM. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Fund Based-TL 40.00 [ICRA]D reaffirmed; Suspension revoked Rationale The rating reaffirmation factors in the continued delays in debt servicing by PKM on the loans availed for acquisition of a hotel property in Goa. The company has invested almost the entire estimated funds; however, the hotel is yet to commence operations. Further, PKM is yet to tie up with an operations and management (O&M) partner, resulting in delay in the commencement of its operations. The company will remain dependent on promoter support for servicing its debt obligations. Going forward, the timely debt servicing will be the key monitorable. Key rating drivers Credit Strengths * Favourable location of the project at Candolim Beach in Goa Credit Weaknesses * Delay in debt servicing * Delay in the proposed sale of the hotel property * Delay in commencement of operations * Operations and management (O&M) tie up with any franchisee not yet finalized PKM Projects Private limited (PKM) was incorporated in December 2006 and is a part of the Mahesh Mehta Group of companies, which has interests in hotel business, real estate business and in also into manufacturing of Kattha Products. The company had acquired one hotel property in Goa, which is expected to start its operations from April 2017. The company continues to delay its debt servicing as the commercial operations of the hotel are yet to start. The company is yet to tie up with an O&M partner, resulting in delay in commencement of operations. The hotel property is located at a favourable location, which is 200 meters from the beachfront, in the prime entertainment hub of North Goa's Candolim beach. PKM Projects Private limited (PKM) was incorporated in December 2006 and is a part of the Mahesh Mehta Group of companies, which has interests in hotel business, real estate business and is also into manufacturing of Kattha Products. The company had acquired one hotel property in Goa, which is expected to start its operations from April 2017. The hotel property is located 200 meters from the beachfront, in the prime entertainment hub of North Goa's Candolim beach and is located near to some other prime properties such as Taj Holiday Village, Kingfisher Villa, Taj Fort Aguada Heritage etc. PLUTO PLAZA: ICRA Assigns B+ Rating to INR35cr Term Loan -------------------------------------------------------- ICRA has assigned the long-term rating for the INR35.00-crore bank facilities of Pluto Plaza Private Limited at [ICRA]B+. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits/ Term Loan 35.00 [ICRA]B+ (Stable) Assigned Rationale The assigned rating takes into account the project execution risk with 83% of construction cost yet to be incurred of the total project cost of INR79.04 crore and exposure to significant market risk with the entire project yet to be sold/ leased. The rating also takes into account high liquidity risk with a significant portion of the project envisaged to be leased, resulting in smaller and spread out cash flows. Further, any delay in leasing/sale can lead to funding gaps given the limited moratorium available. The rating, however, positively factors in the attractive location of the project 'Plutone', in close proximity to the central business area of Chhend, Rourkela, which strengthens the project attractiveness. The achievement of financial closure for the project and the escrow mechanism followed by PPPL towards the rated term loan provide a higher priority to debt-servicing obligations. Key rating drivers Credit strengths * Favourable location of the project and its proximity to the central commercial area of Chhend, Rourkela, strengthens project attractiveness * Achievement of financial closure for the project along with significant contribution by the promoters * Provision of escrow mechanism, stipulating priority towards repayment of debt obligations (from the lease rentals) Credit weaknesses * Exposed to project execution risk, as it is at a very nascent stage * Exposure to market risk with the entire portion of the project to be leased/sold * Liquidity risk given that large part of the project is envisaged to be leased, resulting in smaller and spread out cash flows. Further, delay in leasing/sale can lead to funding gaps given the limited moratorium available. Description of key rating drivers highlighted: PPPL is developing a shopping mall in the Chhend area of Rourkela on a plot of land measuring around 3.88 acres taken on a 99-year lease from the Rourkela Development Authority. Chhend is one of the most populous colonies of the Rourkela city and strengthens project attractiveness. Of the total carpet area of 1,70,583 sq. ft., the company plans to sell 29.5% to various parties and rent out the balance 70.5%. The capital outlay of the project is estimated at around INR79.04 crore. Till January 2017, around INR13.50 crore has been incurred towards development of the project. The construction work on the project started in the third quarter of FY2016 and is scheduled to be completed by March 2019. During the interim period, the company would face significant project related risks, including the risk associated with the execution of the project as per scheduled timeframe and within budgeted cost. However, with majority of the statutory approvals in place, project execution risk is mitigated to some extent. The company has already achieved the financial closure for the project while it is yet to start any bookings for the property, resulting in high off-take risk for the area to be sold and leased out. Going forward, funding and execution progress would be the key rating sensitivities. Analytical approach: For arriving at the rating, ICRA has taken into account the business risk profile of PPPL, financial risk drivers and the management profile. Incorporated in August 2005 as a private limited company, Pluto Plaza Private Limited (PPPL) is developing a shopping mall 'Plutone' over 3.88 acres of land at Chhend, which is adjacent to the Ring Road in Rourkela, Odisha. The proposed shopping mall is likely to host a multiplex, restaurants, food court, shops and an anchor store. The mall will be partially sold out and the balance part will be put on rent. The proposed shopping mall-cum- multiplex is scheduled to start operations from April 2019. PROTAC FOODS: ICRA Assigns 'B' Rating to INR18cr Term Loan ---------------------------------------------------------- ICRA has assigned the long term rating of [ICRA]B to INR18.00 crore term loan and INR4.00 crore cash credit facilities of Protac Foods International Private Limited. The outlook on the long term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term-Fund Based-Term Loan 18.00 [ICRA]B (Stable); assigned Long term-Fund Based-Cash Credit 4.00 [ICRA]B (Stable); assigned Rationale The assigned rating is constrained by PFIPL's limited track record and small scale of operations, resulting in limited operational and financial flexibilities. The rating is also constrained by sizeable debt repayment obligations on account of high dependency on external funding for construction of the processing plant; combined with modest net worth levels, resulting in high gearing level of 3.70 times as on 30th November, 2016. With low capacity utilization during the initial months of operations, the cash accruals remained negative, straining the liquidity position of the company. Going forward, the ability of the company to ramp up its volumes and achieve the desired operational efficiency within a short span of time remains critical to ensure timely servicing of debt obligations. ICRA further notes vulnerability of the company to inherent risks in poultry industry like disease out breaks, seasonal nature of business, volatility in broiler prices and processed chicken prices, and competition from large number of organised and unorganized players exerting pressure on the margins. The rating, however, favorably factors in the experience of the promoters in the food processing and poultry industry, proximity of the plant to poultry farms and its diversified customer base of reputed clients. ICRA notes receiving of exports approvals and other certificates such as Agricultural and Processed Food Products Export Development Authority (APEDA) and Food Safety and Standards Authority of India (FSSAI) enhances the business growth prospects. ICRA also takes note of healthy long term demand prospects for the domestic poultry industry on back of favourable socio-economic factors. Key rating drivers Credit Strengths * Experience of the promoters in the food processing and poultry Industry * Favourable location of the plant with close proximity to poultry farms * Diversified customer base with customers from institutional as well as retail markets * Favorable demand prospects for the domestic poultry industry, given the limited per capita animal protein consumption in India, and favorable socio-economic factors * APEDA and FSSAI certification enhances business prospects Credit Weakness * Nascent stage of operations with company reporting losses at operational level as of November, 2016 * Limited track record and small scale of operations * Weak capital structure with low net-worth and significant term loan debt * Strained liquidity profile due to sizeable scheduled repayments on the term loans; request for enhancement in the working capital loans is yet to be sanctioned * Vulnerability of operations to inherent risks of poultry industry like disease out breaks, seasonal nature of business, volatility in broiler prices and processed chicken prices, high competitive pressure, etc. Description of key rating drivers highlighted: The company processes live birds for the production of fresh and frozen chicken. The promoters of PFIPL were in the related line of activities prior to the establishment of the company, due to which they have gained significant industry experience. The plant location is in a region where there are many poultry farms, which ensures adequate and continuous availability of live birds and the company benefits from easy procurement. The company's products cater to institutional as well as retail markets. PFIPL currently supplies products at restaurants, fresh provisions shops, wet markets and supermarkets in the domestic market and proposes to sell at international markets as well. The company has received supply orders of its products from multinationals like Vista Processed Foods Pvt. Ltd. (Subsidiary of McDonald), KFC, METRO, Licious and Big Basket. Also, the poultry meat demand in India has witnessed growth on account of favorable socio economic factors such as changing eating habits, higher purchasing power, urbanization, growing numbers of fast food chains, increasing health consciousness, thus giving ample opportunity for growth. The company started its operations in July 2016 and has been reporting losses at operating level as of November, 2016. Due to limited track record of operations, the ability of the company to ramp up its production levels, increase the capacity utilization and break even, is yet to be demonstrated. There has been high dependency on external funding for the capital expenditure incurred towards construction of the processing plant, resulting in a weak capital structure with a gearing of 3.70 times as on November 30, 2016. Also, with additional debt funding planned for the incremental capital expenditure and working capital requirements, the capital structure is likely to weaken further. PFIPL has sizeable debt repayment obligations in the near term. With negative accruals as on date and repayment of term loans already having begun, timely servicing of debt is dependent on the ability of promoters to bring in additional funds. While, the company has requested for enhancement in the working capital limits to ease the liquidity constraint and meet the increasing working requirements of the growing business, the same is yet to be sanctioned, posing significant funding risk. Incorporated in February 2014, Protac Foods International Private Limited (PFIPL) started its commercial operations from July 2016. The company is engaged in processing of poultry birds for production of dressed and frozen chicken. The product portfolio of the company consists of fresh chilled chicken, frozen chicken, chicken cut parts (whole, boneless and portions) and ready to eat product (marinated chicken pieces). The company's processing plant is located in Kolar district of Karnataka and has an installed capacity of processing 6000 birds per hour. However, with certain capital expenditure yet to undertaken, the current operational capacity stands at 2500 birds per hour. As per provisional results for FY2017, the company reported a net loss of INR5.64 crore on an operating income of INR10.96 crore for the period from July 2017 to November 2017. RAJARAMSEVAK MULTIPURPOSE: CARE Puts B Rating on INR12.94cr Loan ---------------------------------------------------------------- The ratings assigned to the bank facilities of Rajaramsevak Multipurpose Cold Storage Private Limited are constrained by its short track record with small scale of operations, presence in a regulated industry, seasonality of business with susceptibility to the vagaries of nature, risk of delinquency in loans extended to farmers, working capital intensive nature of operations, high leverage ratios and competition from other players. The ratings, however, derive strength from the experience of the promoters and its close proximity to potatoe-growing area. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12.94 CARE B; Stable Assigned Short-term Bank Facilities 0.20 CARE A4 Assigned Going forward, the ability of RMCPL to increase its scale of operations with improvement in profit margins and effective management of working capital will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record with small scale of operations: RMCPL has commenced commercial operations from February 2014 onwards and thus has very short track record of operations. The size of the operations of the company remained small with total operating income of INR5.55 crore in FY16 (refers to the period April 01 to March 31) and total capital employed of INR15.16 crore as on March 31, 2016. Regulated nature of business: In West Bengal, the basic rental rate for cold storage operations is regulated by the state government through West Bengal State Marketing Board. The rent of these cold storages is decided by taking into account political considerations, not economic viability. Due to severe government intervention, the cold storage facility providers cannot enhance rental charge commensurate with increased power tariff and labour charge. Seasonality of business with susceptibility to vagaries of nature: RMCPL's operation is seasonal in nature as potato is a winter season crop with its harvesting period commencing in March. The loading of potatoes in cold storages begins by the end of February and lasts till March. Additionally, with potatoes having a preservable life of around eight months in the cold storage, farmers liquidate their stock from the cold storage by end of season, ie, generally in the month of November. The unit remains non-operational during the period from December to February. Furthermore, lower agricultural output may have an adverse impact on the rental collections as the cold storage units collect rent on the basis of quantity stored and the production of potato is highly dependent on vagaries of nature. Risk of delinquency in loans extended to farmers: Against the pledge of cold storage receipts, RMCPL provides interest bearing advances to the farmers & traders. Before the closure of the season in November, the farmers & traders are required to clear their outstanding dues with the interest. In view of this, there exists a risk of delinquency in loans extended, in case of downward correction in potato or other stored goods prices, as all such goods are agro commodities. Working capital intensive nature of business: RMCPL is engaged in the cold storage and trading of potatoes business, accordingly its operation is working capital intensive. The company procures traded goods in harvesting seasons and sells it all over the year which has resulted into high inventory period. Accordingly the requirement of working capital remains high and therefore the average utilization of fund based limit remained at about 95% during the last 12 months ended January 31, 2017. High leverage ratios: The capital structure of the company remained leveraged marked by debt equity of 2.92x and overall gearing of 8.56x as on March 31, 2016. Competition from other local players: Despite being capital intensive, the entry barrier for new cold storage is low, backed by capital subsidy schemes of the government. As a result, the potato storage business in the region has become competitive, forcing cold storage owners to lure farmers by providing them interest bearing advances against stored potatoes which augments the business risk profile of the companies involved in the trade. Key Rating Strengths Experienced promoters: The key promoter, Mr. Raja Chakraborty (Managing Director) has over two decades of experience in the trading of potatoes and cold storage services through his family business. He looks after the day-to-day operations of the company. He is supported by other directors who are also having long experience in this line of business. Close proximity to potato-growing area: RMCPL's storing facility is situated in Kamarhati, Barasat in West Bengal which is one of the major potato-growing regions of the state. The favourable location of the storage unit, in close proximity to the leading potato-growing areas provides it with a wide catchment and making it suitable for the farmers in terms of transportation and connectivity. RMCPL was incorporated in February 2012 and presently managed by Mr. Raja Chakraborty, Mr. Shyamal Kumar Dutta, Mrs Koyanta Chakraborty and Mrs Rita Chakraborty. After remaining dormant for around two years, it has commenced operations of cold storage services and trading of potatoes from February 2014. The cold storage facility of RMCPL is located at Kamarhati, Barasat (West Bengal) with aggregate storage capacity of 18300 metric ton. RMCPL earned revenue of around 50% (75% in FY15) from trading activities and rest from rental business in FY16. During FY16 (Audited), RMCPL reported net loss of INR0.15 (PAT of INR0.58 crore in FY15) crore on total operating income of INR5.55 crore (Rs.9.41 crore in FY15). Furthermore, during 9MFY17, the company has reported a total operating income of INR7.69 crore. RAMA PAPER: ICRA Reaffirms 'D' Rating on INR53.81cr Term Loan ------------------------------------------------------------- ICRA has reaffirmed the long term rating assigned to the INR71.81 crore fund based limits of Rama Paper Mills Limited at [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 18.00 Reaffirmed at [ICRA] D Term Loan 53.81 Reaffirmed at [ICRA] D The rating action is based on the best available information. As part of its process and in accordance with its rating agreement with RPML, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings, but despite repeated requests by ICRA, the company's management has remained non-cooperative. In the absence of requisite information, ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, the company's rating is now denoted as: "[ICRA] D ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Rama Paper Mills Limited, which is in the business of manufacturing and selling of paper and board related products was established in December 1985 at Kiratpur, (District Bijnor, Uttar Pradesh). The company has been promoted by Mr. Pramod Agarwal and his brother Mr. Arun Goel, who are professionally qualified. While RPML started off with an initial installed capacity of 61000 Metric Ton (MT). With four production lines, RPML has a presence in product segments such as Newsprint, cream woven paper, duplex board and poster paper. SCAN ENERGY: CRISIL Reaffirms 'D' Rating on INR80.83MM LT Loan -------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Scan Energy and Power Limited at 'CRISIL D/CRISIL D'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 59 CRISIL D (Reaffirmed) Letter of Credit 7 CRISIL D (Reaffirmed) Long Term Loan 80.83 CRISIL D (Reaffirmed) The ratings reflect delays in servicing term debt and the cash credit facility. The delays were due to weak liquidity. The company has working capital-intensive and a modest scale of operations in the cyclical steel industry. These rating weaknesses are mitigated by the extensive industry experience of the promoters. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations, resulting in stretched liquidity Operations are highly working capital intensive owing to large inventory (3-4 months on an average). Furthermore, moderate credit of 30-45 days is offered by its vendors, while debtors remain around 35-55 days; these are expected to remain stable over the medium term. The large working capital requirement is primarily funded through a cash credit facility from the bank. Working capital requirement is likely to remain sizeable over the medium term resulting in high bank limit utilisation. * Vulnerability to cyclical downturns due to a modest scale of operations The steel industry is cyclical and sensitive to changes in general economic conditions. The demand for steel products thus generally correlates with fluctuations in the domestic and global economies. The prices of steel products are influenced by many factors, including demand, worldwide production capacity, capacity utilisation rates, raw material costs, exchange rates, trade barriers, and improvement in steel-making processes. The overall economy has been facing a downturn in the past 2-3 years owing to which sales and profitability of various steel players faced tremendous pressure. Strength * Extensive industry experience of the promoters While SEPL is a new entity and is yet to stabilise operations, its promoters, the Agarwal family, have extensive experience of over two decades in trading and manufacturing of iron and steel products. The promoters operate other companies such as Scan Steels Ltd and Nav Durga Fuels Pvt Ltd, which are in the same business and have fully integrated manufacturing facilities. They are also experienced in setting up steel plants and currently have manufacturing facilities in Odisha, Jharkhand, Karnataka, and Andhra Pradesh. Furthermore, they have an established relationship with customers, which the company will be able to leverage once it is fully operational. The extensive experience is expected to help in completion of the ongoing project on time and stabilise operations at the earliest. SEPL, part of the Scan group promoted by Mr. G S Agarwal and his family, was incorporated in 2007. The company has set up a steel billet and thermo-mechanically treated bar manufacturing unit with capacities of 450 tonne per day (tpd) and 500 tpd, respectively in the Mahboobnagar district of Telangana, around 60 kilometre from Hyderabad. SEPL has incurred net loss of INR12.04 crore on net sales of INR199 crore in 2014-15. SENTHUR TEXTILES: CARE Reaffirms 'B' Rating on INR8.04cr Loan ------------------------------------------------------------- The rating assigned to the bank facilities of Senthur Textiles Private Limited continues to be constrained by small scale of operations, financial risk profile marked by low profitability, leveraged capital structure, weak debt coverage indicators and working capital intensive nature of operations. The rating is further constrained by susceptibility of profit margins due to fluctuating raw material prices and presence in highly fragmented and competitive industry. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 8.04 CARE B; Stable Reaffirmed The rating, however, derives comfort from experience of promoter in cotton yarn manufacturing, marginal growth in total operating income in FY16 (refers to period April 01 to March 31) and increasing demand for yarn in local market. Going forward, the ability of the company to increase its scale of operations and profitability, improve capital structure and debt coverage indicators and efficiently manage its working capital requirements will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations: The company has small scale of operations marked by total operating income (TOI) of INR24.67 crore in FY16 and low networth of INR2.22 crore as on March 31, 2016. Weak financial risk profile marked by low profitability and high leverage: Overall gearing ratio continues to remain leveraged although improved marginally from 4.52x as on March 31, 2015 to 4.18x as on March 31, 2016 on back of reduction in the total debt. Working capital intensive nature of operations: Inventory period has improved from 120 days in FY15 to 96 days in FY16 on back of increased orders resulting in fast moving inventories. With moderately high average inventory period, the operating cycle also stood elongated at 101 days in FY16 (as against 114 days in FY15). Key Rating Strengths Experience of promoter in cotton yarn manufacturing: Senthur Textiles Private Limited is managed by Mr. P.J. Ramkumar Rajha who is the Managing Director of the company. The Managing Director of STPL has a rich experience of around three decades in the textile industry and is with the company since its inception. Growth in total operating income: The total operating income of the company grew by 10% in FY16 over FY15 and stood at INR24.67 crore with PAT of INR0.04 crore due to increased orders and favorable market conditions for the textile industry in FY16. Senthur Textiles Private Limited was incorporated in the year 1994, promoted by Mr. P. J. Ramkumar Rajha. STPL is completely owned and managed by the family members and is engaged in the cotton yarn manufacturing. The firm procures raw cotton from traders in Andhra Pradesh, Telangana, Karnataka, Maharashtra and Gujarat and sells cotton yarn through agents in the form of cones to textile companies in Erode, which is a cluster of textile business with huge demand for cotton yarn. The manufacturing unit is located at Rajapalyam, Tamil Nadu with an installed capacity of 9,240 spindles. The capacity utilization ranged between 90%- 95% as of January 24, 2017. Mr. P.R. Jagadeesh Chandar (S/o Mr. Ramkumar Rajha) has joined the business in FY15 after completing his MBA in Human Resource and industry experience of 1 ´ years in a Human Resource Management company in Bangalore. The day to day operations are managed by Mr. P. J. Ramkumar Rajha, Managing Director (who has got wide experience of more than three decades in the business of yarn production) along with Mr. P.R. Jagadeesh Chandar. In FY16 STPL reported a PAT of INR0.04 crore on a total operating income of INR24.43 crore, as against a net loss and TOI of INR0.04 crore and INR22.24 crore respectively in FY15. SHETRON LIMITED: Ind-Ra Lowers Long-Term Issuer Rating to 'D' ------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Shetron Limited's Long-Term Issuer Rating to 'IND D' from 'IND BB+'. The Outlook was Stable. The instrument-wise rating actions are: -- INR438.31 mil. (reduced from INR550) Long term loans rating lowered to 'IND D'; -- INR287.5 Fund-based facilities rating lowered to 'IND D/ IND D'; -- INR370 mil. (reduced from INR372.5) Non-fund-based facilities rating lowered to 'IND D/IND D' KEY RATING DRIVERS The downgrade reflects the instances of delays of up to 15 days in servicing of term loans by Shetron during the three months ended January 2017, due to its tight liquidity position. RATING SENSITIVITIES Positive: The ratings could be upgraded if the loan's interest and principal obligations are serviced in a timely manner for at least one quarter. COMPANY PROFILE Shetron is a Bangalore-based company, listed on the Bombay Stock Exchange. It was established in 1980 by Diwakar S. Shetty and his associates jointly with the Karnataka State Industrial & Investment Development Corporation. The company produces and sells dry cell metal battery jackets & components, metal food cans, printed metal sheets, etc. SHIV SUNDER: CARE Reaffirms 'B' Rating on INR9cr LT Loan -------------------------------------------------------- The rating assigned to the bank facilities of Shiv Sunder and Company is primarily constrained on account of stabilization risk associated with its recently completed greenfield project for the hotel. The rating, further, continues to remain constrained due to competitive nature of the industry with dependence on tourist arrivals and its constitution as a partnership concern which led to risk of withdrawal of capital. The rating, however, continues to derive strength from the experienced management and location advantage of the hotel. The rating, further, derives strength from tie up with Royal Orchid Hotels Limited (ROHL) for management and marketing of the hotel. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 9 CARE B; Stable Reaffirmed The ability of the firm to stabilize the operation with achieving envisaged levels of sales and profitability will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness Stabilization risk associated with its recently completed hotel It has completed the work on hotel by January 2017 end with minor finishing work remaining. With this hotel, stabilization risk is associated owing to its presence in the cyclical and competitive nature of the hotel industry with dependence on tourist arrivals. The Indian hotel industry is highly fragmented in nature with the presence of large number of organized and unorganized players spread across all regions. The hospitality industry is highly cyclical in nature and sensitive to any untoward events such as slowdown in the economy. Tourism in India has witnessed significant growth in the recent years. Key Rating Strengths Agreement with Royal Orchid Hotels Limited (ROHL) for management and marketing of the hotel For its hotel, SSC has entered into an agreement with ROHL for its brand Regent Central. As per agreement, ROHL will looks after management and marketing of the hotel. Renowned for attention to detail and design, Royal Orchid hotels offers myriad options of business hotels ranging from luxurious 5-star hotels to economy business hotels. Owing to agreement with ROHL, the hotel of SSC will be benefited due to experienced management and marketing. Indore-based (Madhya Pradesh) SSC was formed in December, 2011 as a partnership concern by Mr. Dinesh Verma along with his family members. SSC was established with an objective to set up a two star hotel in Indore (Madhya Pradesh). The hotel will have facility of total 42 room includes; 4 suits, 18 Deluxe rooms, 20 Super Deluxe rooms which is now revised to 52 room includes; 4 suits, 12 Deluxe/Super Deluxe rooms and 36 Simple rooms along with separate Vegetarian and Non-Vegetarian restaurant and bar, Gym, Spa as well as two banquet halls and marriage garden of 26000 Sq. Ft. It has started commercial operation from March 2017. SKILLED CONSTRUCTION: CARE Ups Rating on INR2.90cr Loan to BB- -------------------------------------------------------------- The revision in long-term rating assigned to the bank facilities of Skilled Construction Company Limited takes into account marginal growth in total operating income and increase in profitability margins in FY16 (refers to the period April 1 to March 31). The ratings also take comfort from the long experience of the promoters and operational track record of the business and comfortable capital structure and satisfactory debt coverage indicators. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 2.90 CARE BB-; Stable Outlook: Facilities Stable Revised from CARE B+ Short-term Bank Facilities 4.85 CARE A4 Reaffirmed The ratings, however, continue to be constrained by small scale of operation, working capital intensive nature of operations and short-term revenue visibility in order book position along with low diversification of customer base and geographical concentration risk. Going forward, the ability of SCC to improve the scale of operations by diversifying geographical and diversifying customer base is the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operation: The operations of the entity is small as measured by Total operating income of INR16.07 crore in FY16 (INR15.40 crore in FY15) and also marked by networth of INR4.43 crore as on March 31,2016 (INR3.67 crore as on March 31,2015). Working capital intensive nature of operations: The operations are working capital intensive with funds being blocked in inventory. On procurement of raw materials from its suppliers, SCC enjoys a credit period of around 2 months and also provides credit period of around 20 days. However ,the average collection days stood satisfactory though increased from 17 days in FY15 to 33 days in FY16 due to majority of works being executed during Q4FY16 resulting in delay in billing and collection of payments. All these factors led to operating cycle at 73 days in FY16 compared to 70 days in FY15. The company relies on overdraft facilities to manage working capital requirements and overdraft limit was utilized around 95% during the 12 months ended December 31, 2016. Short-term revenue visibility in order book position along with low diversification of customer base and geographical concentration risk: The Company since inception has been engaged primarily in building of road over bridges (ROB) and has completed around 27projects. SCC's major clients include Roads & Bridges Development Corporation (RBDC) of Kerala and Southern Railways; it also receives contracts from M/s KITCO Ltd, National Highway Authority of India and others. The entity has an order book to the tune of INR13.50 crore (translates to 0.84x of FY16 total operating income) which is expected to be completed by September 2017. The entity has a concentrated and less diversified customer base, which has however remained with the entity over years. Key Rating Strengths Long experience of the promoters and operational track record: The management team of SCC includes MrBenny Thomas, Mr. Sobha Sunil, Mr. Jose Philip, Mr. R Prasad and Mr. Roney Siby Jacob who have more than a decade experience in the construction industry. SCC was incorporated in 1991 as a private limited company. SCC was later reconstituted into a public limited company in the year 1997. The entity since inception has been engaged primarily in building of road over bridges. Marginal growth in total income and profitability margins: The total operating income (TOI) stood stable with a marginal growth of 5% to INR16.07 crore in FY16 over FY15 as SCC has received a government project from the Konkan railways due to which the TOI improved in FY16. The Konkan Railway project is currently work in progress and is expected to be completed by December 2017. The PBILDT margin increased by 49 bps from 9.42% in FY15 to 9.91% in FY16 on the back of decrease in material cost. PAT margin improved by 43 bps to 4.13% in FY16 over FY15due to increase in PBILDT. For H1FY17 (provisional), ETPL reported total revenue of INR9.50 crore with a PBT of INR0.95 crore. Comfortable capital structure and satisfactory debt coverage indicators: The Company has a comfortable capital structure as on March 31, 2016. The Debt equity ratio, though declined marginally to 0.32x as on March 31, 2016 against 0.30x on March 31, 2015 on the back of increase in term loans, stood comfortable at below unity. SCC availed additional bank facilities to execute an over bridge project at Etumannur(Kerala) which is expected to be completed by September 2017. Overall gearing stood at 0.98x as on March 31, 2016 against 0.93x as on March 31, 2015 due to higher utilisation of working capital facilities as at financial year end. TD/GCA stood stable and satisfactory at 5.10x in FY16 due to moderate debt levels along with increase in gross cash accruals. The interest coverage ratio improved marginally to 2.66x in FY16 compared to 2.54x in FY15 due to the increase in PBILDT. SCC is engaged in the civil construction business.Incorporated in 1991 as a private limited company, SCC was later reconstituted into a public limited company in the year 1997. The entity is a Class A contractor registered with Kerala State Public Works Department and is engaged in the construction of bridges, flyovers, railway over bridge and others miscellaneous work. SCC is managed by Mr. Benny Thomas, Mr. Sobha Sunil, Mr. Jose Philip, Mr. R Prasad and Mr. Roney Siby Jacob. In H1FY17 (provisional) SCC has achieved revenue of INR9.50 crore with PBT of Rs0.95 crore. SCC has orders in hand of INR13.50 crore which is expected to be completed by September 2017. In FY16 (refers to the period of April 01 to March 31), the company has reported a total operating income of INR16.07 crore with net profit of INR0.66 crore (as against a total operating income of INR15.40 crore on a net profit of INR0.57 crore in FY15). SPARSH FAB: CRISIL Raises Rating on INR6MM Term Loan to BB ---------------------------------------------------------- CRISIL has upgraded its ratings on the bank facilities of Sparsh Fab Textiles Private Limited to 'CRISIL BB/Stable' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL BB/Stable (Upgraded from 'CRISIL B+/Stable') Rupee Term Loan 6 CRISIL BB/Stable (Upgraded from 'CRISIL B+/Stable') The rating upgrade reflects improvement in the company's financial risk profile particularly its liquidity, backed by its increasing cash accruals and cushion in the short term bank lines. Steady growth in the business in Fiscal 2017 and sustenance of its improved margins of just above 3.5 per cent will translate into cash accruals of around INR2 cr, which will be sufficient to repay fixed debt obligation of INR1.3 cr in the same period. Moreover cushion in the working capital bank lines and enhancement of INR1 cr in the same is expected to provide further support the company's liquidity going ahead. Additionally, with reduction in the interest rate to 9.35 per cent currently from levels of 12 per cent earlier is expected to strengthen the debt protection metrics of SFTPL over the medium term. Analytical Approach For arriving at the ratings, CRISIL has treated unsecured loans of INR 4.28 crore (as on March 31, 2016) extended to Sparsh Fab Textiles Pvt Ltd (SFTPL) by its promoters as neither debt nor equity as the loans are expected to be retained in the business over the medium term. Key Rating Drivers & Detailed Description Strength * Extensive industry experience of the company's promoters: SFTPL's promoters have an experience of over 20 years in the textiles industry. Their extensive experience and understanding of the textile trading and manufacturing business has enabled the company to record sales of around INR101 crore in 2015-16, as against INR66.2 crore in 2012-13. The company also benefits from its established brand, 'Sparsh Fab' through strong customer relationships. Weaknesses * Though improving yet moderate financial risk profile marked by high gearing and modest net worth but supported by healthy debt protection metrics While SFTPL's financial risk profile has been improving it continues to remain moderate due to high gearing of 1.84 times and moderate net worth of INR 6.8 cr expected as on March 31, 2017. However, owing to steady operating profitability and reduction in the interest rates, the debt protection metrics of the company are expected to further strengthen in Fiscal 2018 * Low operating profitability in the fragmented textile industry: SFTPL's operating margins have remained in the range of 2-3.7 per cent over past 4 years ending through 2015-16. The operating margins remain exposed to intense competition from other players in the fragmented textile trading and manufacturing industry. Outlook: Stable CRISIL believes Sparsh Fab Textiles Pvt Ltd (SFTPL) will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case of higher-than-expected cash accrual, resulting in an improvement in the financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of a decline cash accrual, stretched working capital cycle, or large, debt-funded capital expenditure, leading to deterioration in the financial risk profile, especially liquidity. SFTPL was incorporated in 2009, promoted by the Bhiwandi, Maharashtra-based Todi family. The company trades in fabric for uniforms, shirting, and others. It undertakes designing work and outsources the manufacturing and processing of the fabric, which it sells under the Sparsh Fab brand. Operations are managed by Mr. Girish Todi, the managing director. For fiscal 2016, profit after tax (PAT) was INR91 lakhs on net sales of INR101.18 crore, against a PAT of INR62 lakhs on net sales of INR85.48 crore for fiscal 2015. SRI CHAITANYA: CRISIL Assigns B+ Rating to INR16MM Cash Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B+/Stable' rating to the long- term bank facility of Sri Chaitanya Rice Mill - East Godavari. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 16 CRISIL B+/Stable The rating reflects the company's moderate scale and working capital intensive operations in the intensely competitive rice mill industry and below-average financial risk profile, marked by high gearing and weak debt protection metrics. These weaknesses are partially offset by the extensive industry experience of partners and funding support provided by them. Key Rating Drivers & Detailed Description Weaknesses * Moderate scale of operations in the intensely competitive rice milling industry: Intense competition in the rice milling business restricts the scale of operations (revenue of INR34.6 crore in fiscal 2016) and constrains bargaining power with suppliers and customers (operating margin of 9.5% in fiscal 2016). * Working capital-intensive operations: Operations are working capital intensive as reflected in gross current assets of 294 days as on March 31, 2016, mainly due to the considerable inventory. * Below-average financial risk profile: Moderate profitability and scale of operations, and sizeable working capital debt continue to constrain the financial risk profile. Resultantly, gearing was high at 5 times as on March 31, 2016, and debt protection metrics were weak with interest coverage of around 1.3 times. Strength * Partners' extensive industry experience: Benefits from the three decade-long experience of the partners, their established relationships with customers and local suppliers, and keen grasp over market dynamics, will continue. Outlook: Stable CRISIL believes that SCRM will continue to benefit over the medium term from its partners' industry experience. The outlook may be revised to 'Positive' if there is substantial and sustained improvement in the firm's revenue and profitability margins, leading to healthy accruals and improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if SCRM's working capital cycle lengthens or its accruals decline, thereby weakening its financial risk profile. Set up in 2004 as a partnership firm by Mr. Ramesh Reddy and his family members, SCRM and processes paddy into rice, and generates by-products such as broken rice, bran, and husk. Its milling unit is in East Godavari District (Andhra Pradesh). SCRM had a book profit of INR0.18 crore on sales of INR34.6 crore in fiscal 2016, against INR0.47 crore and INR34.6 crore, respectively, in fiscal 2015. SRI SOMESHWARA: ICRA Reaffirms B+ Rating on INR12cr LT Loan ----------------------------------------------------------- ICRA has reaffirmed the long term rating of [ICRA]B+ to INR12.00 crore fund based bank facilities and short term rating of [ICRA]A4 for the INR10.07 crore non fund based facilities of Sri Someshwara fertilizers and Chemicals (SFC). The outlook on the long term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term-Fund Based-Cash Credit 12.00 [ICRA]B+ (Stable); reaffirmed Short term-Non Fund based-Bank Guarantee 10.07 [ICRA]A4; reaffirmed Rationale The reaffirmation of ratings take into account the moderate scale of operations with further decline in revenues in FY2016 and 9M FY2017, on account of lower sales volumes of fertilizers due to weak monsoons. The ratings also take into account the vulnerability of business to agro climatic conditions given that demand for fertilizers in India is linked to monsoon conditions to a large extent. The ratings are constrained by the moderate financial profile of the firm marked by a gearing of 2.28 times as on March 31, 2016 and weak coverage indicators; and the high geographical concentration risk with the operations restricted to Karnataka. The ratings are also constrained by the moderate profitability of the firm given the trading nature of operations, and the sizeable repayment obligations towards housing loans. However, the ratings continue to draw comfort from the experience of the promoters in the fertilizer industry, and their long term associations with reputed suppliers of fertilizers such as Indian Potash Limited, Krishak Bharati Cooperative Limited, Gujarat State Fertilizers & Chemicals Limited, Green Star Fertilizers, Rashtriya Chemicals & Fertilizers Limited and National Fertilizers Limited etc. The ratings also favorably factors in the low customer concentration risk, coupled with the repeat orders from reputed entities such as Mysore Agro Supplies, Bhavani Agro Agencies etc. In ICRA's opinion, the ability of the firm to achieve revenue growth, and improving profitability amidst intense competition to generate adequate cash accruals for debt servicing, would remain key rating sensitivities, going forward. Key rating drivers Credit Strengths * Long standing experience of promoters in fertilizers trading Business * Long term associations with reputed suppliers of fertilizers * Low customer concentration risk, coupled with reputed client profile and repeat orders Credit Weakness * Moderate scale of operations which limits bargaining power * Moderate financial profile of the firm marked by high gearing and weak debt coverage * High geographic concentration in the state of Karnataka * Demand outlook for fertilizers heavily tied to regulatory risks in terms of pricing from the government as well as agro- climactic conditions and regulatory policies; sensitivity of revenue and profitability of the company to agro-climatic conditions witnessed in FY2015 and FY2016. Description of key rating drivers highlighted: The firm has an established track record of more than 16 years in the fertilizer trading business, especially in Karnataka market with network of over 160 retailers. However, this also exposes the firm to high geographical concentration risk with complete dependence on single market. The firm has established relations with major suppliers of fertilizers and has diversified product portfolio. The customer concentration risk is also low for the firm with the top 10 customers contributing to 10% of total sales for FY2016, coupled with reputed client profile and repeat orders. The revenues of the firm have, however, posted a de- growth of 25% to INR58.84 crore from INR78.18 crore, on account of lower sales volumes of fertilizers as well as drop in average realisation for both urea and NPK complexes. Additionally, the volumes were impacted due to the discontinuation of supply to Department of Agriculture. The firm reported an operating income of INR30.08 crore for the period April 2017 to December 2017, reflecting a further decline in revenues in the current year. The firm has a moderate capital structure with a gearing of 2.28 times as on March 31, 2016. The moderate profitability and high debt levels result in weak coverage indicators with interest coverage at 1.92 times, NCA/TD of 5.38% and Total debt/OBIDTA at 6.27 times during FY2016. Additionally, with sizable debt repayment towards housing and vehicle loans, the coverage indicators are likely to weaken further. Sri Someshwara Fertilizers & Chemicals was incorporated as a sole proprietorship in 1990 and commenced commercial operation in 1991. The firm is engaged in the wholesale and retail trading of chemicals and chemical fertilizers such as Nitrogen Phosphorous- Potassium (NPK), Single Super Phosphate (SSP), Urea, Monoammonium Phosphate (MAP), Borax, Zinc Sulphate and Gypsum. The firm is based in Mandya district of Karnataka. The proprietor of the firm is also associated with the entities namely Sri Someshwara Transport, Sri Someshwara Projects Pvt. Ltd and Someshwara Fertilizers Private Limited. Sri Someshwara Transport is a wholly owned by SFC and provides facilities for the transport of fertilizers, food and civil supplies. For FY2016, the firm reported a net profit of INR2.27 crore on an operating income of INR58.84 crore. TEAM INTERVENTURE: CRISIL Lowers Rating on INR127MM Loan to 'D' --------------------------------------------------------------- CRISIL has downgraded its rating on the short-term bank facilities of Team Interventure Exports India Private Limited to 'CRISIL D' from 'CRISIL A3'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Foreign Bill Purchase 127 CRISIL D (Downgraded from 'CRISIL A3') Proposed Short Term 13 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL A3') The downgrade reflects deterioration in liquidity resulting in foreign bills remaining overdue for more than 90 days as confirmed by the banker. Liquidity was stretched due to delays in realisation of receivables. CRISIL notes the company's management had concealed the information about the delays and overdue in bank facilities. On the contrary, TIEIPL's management has misrepresented by providing undertakings confirming timely repayments of banking facilities, which is crucial for forming a credit opinion. Analytical Approach For arriving at its rating, unsecured loans of INR39.0 crore from promoters have been treated as neither debt nor equity as these are interest-free and are expected to be retained in business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Weak liquidity leading to irregularities in bank facilities TIEIPL's liquidity has deteriorated due to delays in recovery of receivables from overseas clients leading to its bank facilities remaining overdue for more than 90 days. * Low profitability and working capital-intensive operations: Operating margin has remained modest due to negligible value addition in trading business. Also, gross current assets were high at 150 days as on March 31, 2016. The operations of the company are working capital intensive in nature. * Susceptibility of business to changes in regulations: Business depends on policies and regulations in force in the export market. This is reflected in subdued demand following revision in China's import policy. * Small scale of operations in competitive segment: With an estimated turnover of INR600 crore in fiscal 2016, the company is a modest player in the cotton yarn and fabric export segment. Hence, it remains a price taker, thereby exposing itself to volatility in input prices. Strength * Extensive experience of promoters: The promoters have over three decades of experience in the export market. They began operations by exporting rubber products and subsequently ventured into cotton yarn and fabrics, which account for over 95% of total revenue. Incorporated in 1990 in Mumbai and promoted by Mr. Suresh Agarwal, Mr. Mahendra Agarwal, and Mr. Vinod Agarwal, TIEIPL exports cotton yarn and fabric. TEAM UNIVERSAL: CARE Lowers Rating on INR18cr LT Loan to 'D' ------------------------------------------------------------ The revision in the rating assigned to the long-term bank facilities of Team Universal Infratech Private Limited takes into account the delays in servicing of debt obligations. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 18 CARE D Revised from CARE BBB- Detailed description of the key rating drivers Key Rating Weaknesses Recent irregularities in debt servicing: There have been irregularities in the Cash Credit account during Q3FY17 (refers to the period April 01 to March 31) primarily on account of stretched collection period. However, as on February 7, 2017, the delays have been regularized. Deterioration in financial performance during FY16; however the capital structure continued to remain comfortable: The gross billing has witnessed a sharp decline of about 50.17% in FY16 from FY15 on account of slow movement in orders. The profitability margins of the company also declined during FY16 vis-a-vis FY15. The capital structure of the company however continued to remain comfortable at below unity as on March 31, 2016 despite increased debt levels. The operating cycle of the company also witnessed significant deteriorations and was elongated at 213 days for FY16 as against 103 days for FY15. Key Rating Strengths Experienced promoters: The promoters have over two decades of experience in the construction industry. Two of the promoters, Mr. Sanjay Agarwal and Mr. Narendra Agarwal have been involved in the execution of various construction projects for companies in the past in India and overseas. Stable industry outlook: Construction & Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India's overall development and enjoys intense focus from Government for initiating policies that would ensure timebound creation of world class infrastructure in the country. The Indian construction equipment industry is reviving after a gap of four years and is expected to grow to US$ 5 billion by FY19-FY20 from current size of US$ 2.8 billion. India needs INR31 trillion (US$ 465 billion) to be spent on infrastructure development over the next five years, with 70% of funds needed for power, roads and urban infrastructure segments. Incorporated in July 2008, Team Universal Infratech Pvt. Ltd. (TUIPL) has been promoted by Mr. Sanjay Agarwal, Mr. Narendra Agarwal and Mr. Sunny Sahni of Hyderabad. The company is engaged in the execution of civil construction contracts on EPC basis. The construction activity is undertaken for mainly building, roads, bridges, townships, etc, on subcontract basis. As per the audited results for FY16, TUIPL reported a PAT of INR1.56 crore on a total operating income of INR64.76 crore as against a PAT of INR5.75 crore on a total operating income of INR129.97 crore in FY15. VEDBHUMI BUILDERS: CARE Assigns 'D' Rating to INR32cr LT Loan ------------------------------------------------------------- The ratings assigned to the bank facilities of Vedbhumi Builders and Developers Private Limited factors in the delay in debt service obligations of the term loan facility availed by the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 32 CARE D Assigned Establishing a clear track record of timely debt servicing with improvement in liquidity position is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Delay in debt servicing obligations and weak liquidity position: Due to delay in receipt of payments from customer due to low demand in the retail real estate market liquidity position of the entity remained weak. The same resulted in various instances of delays in repayment of principal and interest obligation of term facility availed from Dena Bank. Vedbhumi Builders & Developers Private Limited (VBDPL) was incorporated in 2005 by Mr. Yogesh Chawda & Mr. Vijay Pawar. The promoters have been involved in the development of residential and commercial projects in the city of Nagpur and its catchment areas since over a decade. VBDPL, in the past, has developed one residential/commercial project 'Bhumi Arcade' which was completed in June, 2012. The project was residential cum commercial project comprising of 21 apartments and 25 commercial units with a total salable area of 69,379 sq.ft and the same has been completely sold off. The promoters in their individual capacities have executed 11 projects with total saleable area of 18,58,175 sq.ft. VBDPL is currently executing one residential project named 'Vatsalya Bhumi (VB)' in Nagpur with a total saleable are of 3.71 Lakh Sq.ft. at the cost of INR97.74 crore. The project was started in June 2012 and was envisaged to be completed by September 2015. However, given the weak demand situation in the real estate segment the scheduled completion date of the project got delayed. The project comprises of 24 row houses and 224 apartments spread across five buildings. VICTORIAN MARKETING: CRISIL Reaffirms 'B' Rating on INR8.5MM Loan ----------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank loan facility of Victorian Marketing Private Limited at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8.5 CRISIL B/Stable (Reaffirmed) The rating continues to reflect a weak financial risk profile, modest scale of operations and increased working capital requirement due to higher debtors. These rating weaknesses are partially offset by the extensive experience of the promoters in the coal industry, and an improvement in profitability. Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: The networth was modest at INR4 crore and the gearing high at 3.37 times, as on March 31, 2016. Debt protection metrics is modest marked by NCATD of 5% and interest coverage of 1.3 times as on March 31, 2016. * Modest scale of operations: Company has reported operating income of INR37.05 crores in fiscal 2016 against INR42.12 Crores in fiscal 2015. * Working capital-intensive operations: Debtors were substantial at 104 days as on March 31, 2016 on account of change in nature of business and delay in realization of payments form 2 principals. Strengths * Extensive experience of the promoters: The promoters have an experience of around 4 decades in the coal industry. * Improved operating profitability: Profitability improved to 9.9% in fiscal 2016 from 7.4% in fiscal 2015 due to value addition in operations. Outlook: Stable CRISIL believes VMPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' in case of more-than-expected growth in revenue and profitability or large equity infusion, leading to an improved capital structure. The outlook may be revised to 'Negative' in case of a decline in revenue, deterioration in the capital structure, or stretched liquidity due to increase in working capital requirement. VMPL, based in Nagpur, Maharashtra, was established in 1976 by the Agrawal family. The company was engaged in domestic coal trading, but currently also undertakes coal beneficiation along with coal trading. Profit after tax was INR0.29 crore on net sales of INR37.05 crores in fiscal 2016, against INR0.35 crore and INR42.12 crore, respectively, in fiscal 2015. VIJAYA RAJA: ICRA Assigns B+ Rating to INR10cr Unallocated Loans ---------------------------------------------------------------- ICRA has assigned the long-term rating of [ICRA]B+ to the INR10.00 crore unallocated limits of Vijaya Raja Rajeswari Constructions Private Limited. The outlook on the long term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Unallocated Limits 10.00 [ICRA]B+(Stable) assigned Rationale The assigned rating is constrained by the high market risk with ~75% of the total 114 flats yet to be sold as on November 15, 2016; high funding risk with ~53% of the project cost of INR58.22 crore to be funded by customer advances; and moderate execution risk with about 40% of the construction still left. The rating further factors in the company's sole presence in the Vijayawada residential market and its exposure to cyclicality inherent to the real estate sector. The assigned rating however positively factors in the attractive location of the ongoing project, 'VRR Vaibhavam' owing to the proximity of the project to capital region of new Andhra Pradesh capital and long standing experience of more than 20 years of VRRCPL's promoters in the real estate industry. The rating also draws comfort from the low equity mobilization risk as most of the equity has already been infused into the project; and Description of key rating drivers highlighted: Vijaya Raja Rajeswari Constructions Private Limited was incorporated in 2007 and is engaged in the business of construction of residential apartments in Andhra Pradesh and Telangana. The company is currently developing VRR Vaibhavam in Vijayawada on a land area of 11527 sq yards; while ~50% of the project work has been completed as on 30th November, 2016, the construction of the project is expected to be completed by March, 2018. The promoters have been in the construction industry for last 20 years. The promoters have carried out 8 real estate projects till date covering more than 3.3 lakhs sq. ft of flats in and around Vijayawada. The promoters have already infused INR7.89 crore of equity and unsecured loans towards the project completion. Hence, the equity mobilization risk is low as about 83% of the projected promoters amount has already been brought in. The project is exposed to high market risk with about ~79% of the total available flats yet to be sold. Also, the project is exposed to high dependence on customer advances. Going forward, timely execution of the project without time and cost overruns and the ability of the firm to achieve sufficient sales for the term loan repayments and maintain healthy collection efficiency will remain the key rating sensitivities from credit perspective. Vijaya Raja Rajeswari Constructions Private Limited was incorporated in 2007 and is engaged in the business of construction of residential apartments in the states of Andhra Pradesh and Telangana. The company is currently developing VRR Vaibhavam at an estimated project cost of INR58.22 crore in Vijayawada on a land area of 11527 sq yards; while ~50% of the project work has been completed as on 30th November, 2016, the construction of the project is expected to be completed by March, 2018. VINAYAK INTERNATIONAL: CARE Reaffirms B+ Rating on INR1.5cr Loan ---------------------------------------------------------------- The ratings assigned to the bank facilities of Vinayak International Housewares Private Limited continue to remain constrained by small scale of operations with low net worth base, declining operating margins, leveraged capital structure and weak coverage indicators. The ratings are further constrained by working capital intensive nature of operations and intense competition in the industry due to low entry barriers. The ratings, however, continue to draw comfort from the experienced promoters and growing scale of operations. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 1.50 CARE B+; Stable Reaffirmed Short-term Bank Facilities 17.00 CARE A4 Reaffirmed Going forward, the ability of the company to increase its scale of operations while stabilizing its profitability margins and improving its capital structure shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness Decline in profitability margins Despite growth registered in the scale of operation PBILDT and PAT margins declined to 4.79% and 0.70%, respectively, in FY16 (refers to the period April 1 to March 31) as against 5.17% and 0.75% in FY15 due to increase in proportion of trading which inherently have lower profitability margins. In FY16, the company generated 75% (57% of sales in FY15) of its revenue from trading and balances from manufacturing activities. Leveraged capital structure along with weak coverage indicators The capital structure of the company continues to remain leveraged on account high dependence on bank borrowing to fund the working capital requirements coupled with low net worth base. Though debt equity and overall gearing has improved from 2.30x and 5.99x, respectively, in FY15 to 1.95x and 5.19x, respectively, in FY16 owing to increase in net worth base due to accretion of profit to reserves. However, the same stood leveraged. Owing to high financial expenses against low profitability, the debt service coverage indicators continues to remain weak marked by interest coverage and total debt to gross cash accrual of 1.39x and 29.75x for FY16. Working capital intensive nature of operations. The business model of VIH continues to entail involvement of high working capital requirement. VIH has an operating cycle marked by operating cycle of 85 days in FY16. The average utilization of working capital borrowings of the firm remained fully utilized for 12 months ended December 2016. Intense competition in the industry due to low entry barriers VIH operates in a highly fragmented industry marked by the presence of a large number of players in the unorganized sector. The industry is characterized by low entry barriers due to low technological inputs and easy availability of standardized machinery for the production. This further leads to high competition among the various players and low bargaining power with suppliers. Key Rating Strengths Experienced promoters The promoters of VIH, Mr. Rajendra Prasad Gupta and Mr. Deepak Gupta are having an experience of more than two decades in manufacturing and trading of stainless steel utensils. They look after the day-to-day affairs of the company. Growth in the scale of operations though remained small The total operating income of the company grew from INR53.00 crore in FY15 to INR66.77 crore at a growth rate of 25.98%. The growth in TOI was on account of higher quantity sold to existing customers and addition of new customers into the business. Despite growth registered the same continued to remain small which inherently limits company's financial flexibility in times of stress and deprives it from scale benefits. Vinayak International Housewares Private Limited (VIH) was incorporated in March 2012 and was promoted by Mr. Rajindra Prasad Gupta. The company took over the business of proprietorship concern "Vinayak International" (established in 1996 by Mr. Rajindra Prasad Gupta). It is engaged in manufacturing and trading of stainless steel utensils. The main raw material for the company is stainless steel sheets which the company procures from domestically and also imports the same mainly from China (around 40% of the total raw material cost). The company has manufacturing facility located in Wazirpur industrial area, Delhi. The installed capacity of the company is 5 lakhs pieces per month. In FY16, the company generated 75% (57% of the sales in FY15) of its revenue from trading and balance from manufacturing. The company has manufacturing facility located in Wazirpur industrial area, Delhi. The installed capacity of the company is 5 lakhs pieces per month. For FY16, VIH achieved a total operating income (TOI) of INR66.77 crore with profit after tax (PAT) of and INR0.47 crore, respectively, as against TOI of INR53.00 crore with PAT of INR0.40 crore, in FY15. Furthermore, the company has achieved total TOI of INR46.00 crore till 9MFY17 (refers to the period April 1 to December 31, based on provisional results). WINSOME INTERNATIONAL: Ind-Ra Lowers Issuer Rating to 'D' --------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Winsome International Limited's Long-Term Issuer Rating to 'IND D' from 'IND BB+'. The Outlook was Stable. The instrument-wise rating action is: -- INR160 mil. Fund-based limit rating lowered to 'IND D/IND D' KEY RATING DRIVERS The downgrade reflects Winsome's continuous overutilization of the cash credit account during the six months ended January 2017, due to tight liquidity. RATING SENSITIVITIES Positive: Timely debt servicing for three consecutive months could result in a positive rating action. COMPANY PROFILE Winsome is a public limited company. It has a manufacturing unit in the name of Rameshwara Jute Mills in Muktapur, District Samastipur, in north Bihar and has 400 narrow looms with 5,420 spindles. Winsome is listed on the Calcutta Stock Exchange. ========= J A P A N ========= TAKATA CORP: Four Automakers Knew of Airbag Hazard, Suit Says ------------------------------------------------------------- Hiroko Tabuchi and Neal E. Boudettefe at The New York Times report that at least four automakers knew for years that Takata Corp.'s airbags were dangerous and could rupture violently but continued to use those airbags in their vehicles to save on costs, lawyers representing victims of the defect asserted in a court document filed on Feb. 27. The New York Times says the Justice Department's criminal investigation into Takata's rupture-prone airbags has so far painted automakers as unwitting victims duped by a rogue supplier that manipulated safety data to hide a deadly defect, linked to at least 11 deaths and over 100 injuries in the United States. But the fresh allegations against Ford, Honda, Nissan and Toyota, made as part of a class-action lawsuit in Florida and based on company documents, point to a far deeper involvement by automakers that used Takata's defective airbags for years, the report notes. The New York Times relates that Honda vehemently denied the new allegations on Feb. 27. The three other automakers either declined to comment or said a response would come through legal channels, the report notes. Last summer, The New York Times reported indications that automakers, rather than being the victims of Takata's missteps, had pressed their suppliers to put cost before all else. That report focused on General Motors, which is not named in the Florida case, though plaintiff lawyers said they were preparing to take action against the company. The defect has prompted the nation's largest automotive recall ever, affecting nearly 70 million airbags in 42 million vehicles. According to the report, the plaintiffs' filing came hours before Takata pleaded guilty, under a deal announced last month, to charges of wire fraud for providing the false data, a rare outcome for businesses accused of wrongdoing. Federal prosecutors also said last month that they had charged three Takata executives with fabricating test data and fined the Tokyo company $1 billion. "I deeply regret the circumstances that resulted in the agreement today," the report quotes Yoichiro Nomura, Takata's chief executive, as saying at the federal court hearing in Detroit. The company's actions were "completely unacceptable," he said. "Takata is fully committed to ensuring such conduct never happens again," he added, notes the report. The New York Times says the allegations in the Florida case came in response to a court document filed by the automakers last week that pointed to Takata's plea deal to argue that the supplier alone was culpable. But the plaintiffs, who could gain from suing the deep-pocketed automakers alongside Takata, argue that the automakers were more deeply involved in the handling of the defect, according to The New York Times. The report says the fines and costs associated with the scandal have also taken a heavy financial toll on Takata, and it has been searching for a financial lifeline - possibly in the form of a white knight that would effectively take it over. The New York Times reports that one of the plaintiffs' lawyers, Kevin R. Dean, filed an objection to Takata's plea deal on Feb. 27 in Detroit, arguing that the automakers were accomplices in the cover-up. He urged the judge to reject the agreement and for the Justice Department to further investigate the automakers' role, the report relays. The New York Times relates that the plaintiffs have taken particular issue with the amount set aside for victims in Takata's plea - a total of $125 million. In contrast, the automakers will have recourse to draw on an $850 million fund to offset continuing recall costs. Judge George Caram Steeh dismissed Mr. Dean's objections, saying that Takata's plea deal was in the best interest of the victims, reports The New York Times. He said any further action against the automakers should be pursued in civil court, and approved the plea deal as is, the report adds. 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. TOSHIBA CORP: Not Aware of Westinghouse Considering Chapter 11 -------------------------------------------------------------- The American Bankruptcy Institute, citing Makiko Yamazaki of Reuters, reported that Toshiba Corp (6502.T) said it was not aware that its U.S. nuclear unit Westinghouse was considering filing for Chapter 11 protection from creditors -- an option analysts say could jeopardize the entire group. According to Reuters, citing the Nikkei business daily, Toshiba was now looking at a potential Chapter 11 filing as one of several options for Pittsburgh-based Westinghouse, as it grapples with cost overruns at two U.S. projects that are set to result in a $6.3 billion writedown. In theory, such a drastic step could help draw a line under problems in its nuclear business, Reuters said. But analysts and sources with knowledge of the matter say that even under a Chapter 11 filing, Toshiba could still be on the hook for up to $7 billion in potential liabilities as it has guaranteed Westinghouse's contractual commitments -- an arrangement typical for the nuclear industry, the report related. One source familiar with the matter told Reuters there had been discussions within Toshiba on the issue, but there was also a lot of resistance, the report further related. A spokesman for the TVs-to-construction conglomerate said he was unsure how any U.S. bankruptcy filing would affect its Westinghouse contractual commitments, Reuters said. Reuters pointed out that the ill-fated purchase of nuclear construction plant firm CB&I Stone & Webster in late 2015 has plunged Toshiba into crisis, forcing it offer up a majority stake in its prized memory chips business for sale. It has been forced to recognize huge cost overruns at two projects to build the first nuclear reactors in the United States in 30 years, stemming from design changes such as reinforcing the plants to withstand aircraft crashes, the report added. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, largescale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba Corporation's corporate family rating (CFR) and senior unsecured rating to Caa1 from B3. Moody's has also downgraded Toshiba's subordinated debt rating to Ca from Caa3, and affirmed its commercial paper rating of Not Prime. At the same time, Moody's has placed Toshiba's Caa1 CFR and long-term senior unsecured bond rating, as well as its Ca subordinated debt rating under review for further downgrade. The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings said it has lowered its long-term corporate credit rating on Toshiba Corp. to 'CCC+' and its short-term corporate credit and commercial paper program ratings on the company to 'C', all by one notch. All of these ratings remain on CreditWatch with negative implications. S&P also lowered its senior unsecured debt rating on Toshiba two notches to 'B-' from 'B+' and kept the rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the long- and short-term ratings on Toshiba on CreditWatch with negative implications at the same time as lowering the long-term ratings, in response to Toshiba's announcement that it might recognize several JPY100 billion in impairment losses related to goodwill arising from its acquisition of a nuclear power business through U.S.-based Westinghouse Electric Co. LLC, because the goodwill far exceeded the company's initial estimates. ==================== N E W Z E A L A N D ==================== BOUTIQUE HAIR: Placed in Receivership; Owner Seeks Buyer -------------------------------------------------------- Stuff.co.nz reports that a hair and beauty products company owned by a man who ran what is thought to be a significant ponzi scheme is looking for a new owner. Christchurch-based Boutique Hair & Beauty was last week tipped into receivership. Its majority owner, Paul Clifford Hibbs, was last year named as being under investigation by the Serious Fraud Office (SFO) and Financial Markets Authority (FMA), relating to another of his companies, Hansa, Stuff.co.nz relates. According to the report, the SFO and FMA have not provided further details, but last September investor John Docherty and his wife claimed they had been left stranded after allegedly being swindled out of NZ$650,00. Multiple sources have since said Hansa investors have been told at least NZ$20 million was missing, Stuff.co.nz says. Stuff.co.nz relates that the receiver for Boutique Hair & Beauty, PWC partner Malcolm Hollis, said the receivership was on Mr. Hibbs' request following discussions he had had with one of the main banks. Financing statements showed ANZ had held a security agreement with Mr. Hibbs relating to the business since 2007, Stuff.co.nz says. According to Stuff.co.nz, Mr. Hollis said the receivership was not because of a business failure but because of an issue with its ownership. "It's pretty self-evident in terms of Mr. Hibbs' current situation," Stuff.co.nz quotes Mr. Hollis as saying. "He's got wider issues to deal with." Stuff.co.nz relates the business, which had 16 staff, would continue to run and Mr. Hollis said was fairly confident he would find a buyer. If not, it would have to be closed down, he said. Three staff had already lost their jobs, and Mr. Hibb and his wife were no longer on the payroll, Mr. Hollis said, notes the report. "This is to put it in the hands of someone else." Stuff.co.nz notes that the company under investigation, Hansa, was last month put in liquidation on application by the investor who claimed to have lost NZ$650,000. Waterstone Insolvency liquidator Damien Grant said in December they had so far identified payments of at least $9m into the company, adds Stuff.co.nz. HERBERT CONSTRUCTION: Liquidators Seeks to Bankrupt Owner --------------------------------------------------------- Stuff.co.nz reports that liquidators are attempting to bankrupt Napier developer Malcolm Herbert after he failed to make payments under an agreed settlement involving his failed company Herbert Construction. Rhys Cain and Rees Logan of Ernst & Young obtained a default judgment against Mr. Herbert after he took no steps to defend proceedings taken after he stopped making payments as agreed under a settlement deed, according to Stuff.co.nz. Stuff.co.nz says a subsequent application mas made to the High Court to bankrupt Mr. Herbert. He applied to have it set aside and his application is expected to be heard in coming weeks. Mr. Cain would not disclose how much money Mr. Herbert owed, but said he defaulted on payments after a written agreement was signed, Stuff.co.nz says. Secured creditors claim they were owed NZ$453,800 and unsecured creditors NZ$427,400, but these figures may increase, the report adds. Herbert Construction is a construction company based in Napier. Herbert Construction was put in court-ordered liquidation in July, 2013, owing more than NZ$3.6 million, Stuff.co.nz discloses. The company built several prominent buildings in Hawke's Bay, including the NZ$10 million Hawke's Bay Regional Council headquarters in 2005, which was later found to be a leaky-building and cost more than NZ$2 million to repair. ===================== P H I L I P P I N E S ===================== TV5 NETWORK: No More Layoffs for Now, Chairman Says --------------------------------------------------- Alena Mae S. Flores at Manila Standard reports that PLDT Inc. chairman Manuel Pangilinan said on Feb. 27 the dismissal of 100 employees at TV 5 Networks Inc. last week will be the last round of cost-cutting measures designed to bring back the broadcast company to profitability by 2019. According to the report, Mr. Pangilinan, whose group controls TV 5, confirmed that "pink slips" were given on Feb. 24 to about 100 people working for TV 5. "We're closely monitoring the situation but that's the last, that's the last of the cost-cutting for TV 5," the report quotes Mr. Pangilinan as saying. "It had to be done. The choice is shut down the station or keep it alive. We want to save the many [employees] and I know that few had got to be sacrificed." The Standard relates that Mr. Pangilinan said the employee layoffs, which started in 2015, was "always a painful experience." The company reported having around 1,000 employees last year. "So there will always be comments on how it was executed, the terms under which the separation are being offered. So you know, we can only do the best we can under the circumstances because TV 5 continues to show losses, albeit the losses are starting to decline starting 2016," he said. Mr. Pangilinan said TV 5 would be left with around 600 employees, because any additional layoffs would mean "cutting it to the bone and that's not good," the report relays. The Standard adds that Mr. Pangilinan said he was hoping that TV 5, the country's third biggest broadcast network, would return to profitability by 2019. "I think those losses will decline starting 2017. I would say 2019 [is the target]. We reduce debts starting this year 2017, so by 2019 we will be [debt free]," Mr. Pangilinan, as cited by the Standard, said. Mr. Pangilinan said TV 5 was now revamping its content strategy to compete with other stations. "I think the news will stay, substantially as it is. The sports content will still be there and we're expanding the sports content. Then there will be some entertainment shows that we will be putting in," the report quotes Mr. Pangilinan as saying. "It's not a shutdown situation for TV 5. I think it's a selective kind of programming. I think it's the only way for TV 5 to compete. The viewing habits for video are slowly changing, so we want to move in the direction rather than stay with the legacy where we are not competitive." He also shot down revival of talks to acquire GMA-7. "There's been no discussions," he said, the report relays. MediaQuest Holdings Inc., a unit of PLDT Group, bought TV 5 in 2009 from the Cojuangco family for PHP4 billion, and acquired MPB Primedia of Malaysia, a TV5 major block-timer, for $16 million. Media Quest is owned by the Beneficial Trust Fund of PLDT where Mr. Pangilinan sits as chairman and chief executive, according to the Standard. ================= S I N G A P O R E ================= EZRA HOLDINGS: Creditor May Drop Winding-Up Action vs. Emas AMC --------------------------------------------------------------- Business Times reports that EMAS Chiyoda Subsea (ECS) - a joint venture in which Singapore-listed Ezra Holdings has a 40 per cent stake - stands to stave off a winding-up petition by a trade creditor against wholly owned Emas AMC Pte Ltd. But the woes for ECS and the subsidiary are far from over as other creditors can also step in to exercise their legal rights to follow through with the liquidation bid. BT understands that Emas AMC has paid off the claims made by Necotrans Singapore Pte Ltd in support of its winding-up application. The report relates that the court hearing for application was scheduled to take place Feb. 24. But with the claims said to have been settled, Necotrans was expected to withdraw its winding-up application, in line Singapore's Company's Act rules. But the rules also provide for other trade creditors, if they so desire, to step forward to be the substitute plaintiff in the winding-up application, BT states. According to BT, several trade creditors are said to have expressed interest to attend the hearing. While they have not been identified as at press time, at least two named trade creditors have pursued legal recourse against Emas AMC or Ezra Holdings for claims allegedly owed. BT says Houston-based Helix Energy Solutions, in its annual report released on Feb. 24, said that a foreclosure had been filed to secure the remaining principal owed on a US$30 million promissory note received for the sale of a spoolbase in Ingleside, Texas, for US$45 million in January 2014. BT relates that Helix said that it was still owed US$10 million principal balance due on Dec. 31, 2016, from the unnamed counterparty that is understood to be Emas AMC. According to BT, Norwegian vessel owner Forland Subsea had said that if a settlement could not be reached with Ezra, which acted as the parent corporate guarantor for Emas AMC towards about 25.5 million Norwegian krone (SGD4.29 million) allegedly owed on a charterparty, a winding-up application would be filed against the holding company. A second Norwegian vessel owner, Ocean Yield, had unilaterally terminated a bareboat charter with Emas AMC after the latter allegedly defaulted on payment towards the charter. Both parties subsequently agreed on a short-term charter at reduced vessel day rate, the report says. Against the stark reality of trade claims piling up against the group and its associates, observers argued that the settlement of Necotrans claims, though generally considered positive, may just be the tip of the iceberg of Ezra group's mounting debt problems, according to BT. A factor that will weigh in on stakeholder's confidence is the quantum paid out to Necotrans: it will be meaningful only if it amounts to at least millions of dollars, one industry veteran said, BT relays. Singapore-based Ezra Holdings Limited, an investment holding company, provides integrated offshore solutions for the oil and gas industry. The company operates in three divisions: Subsea Services, Offshore Support and Production Services, and Marine Services. ================ S R I L A N K A ================ CEYLON DOLLAR: Fitch Affirms 'B+f' Credit Quality Rating -------------------------------------------------------- Fitch Ratings has affirmed Ceylon Dollar Bond Fund's International Fund Credit Quality Rating at 'B+f' and Fund Market Risk Sensitivity Rating at 'S5'. The fund is managed by Ceylon Asset Management (CAM). KEY RATING DRIVERS The affirmation of the 'B+f' International Fund Credit Quality Rating is driven by the weighted-average rating factor (WARF), the fund's rating distribution and its investment guidelines. The fund has a limited investment space, as it only invests in US dollar bonds issued by the government of Sri Lanka (B+/Stable), licensed banks in Sri Lanka and Sri Lankan corporates that are rated by an international rating agency. This restricts potential investments to 15 listed issuances totalling around USD10bn as well as Sri Lanka Development Bonds (SLDBs) of around USD4bn. SLDBs are unlisted, unrated US dollar bonds issued by the government domestically. The affirmation of the Fund Market Risk Sensitivity Rating is driven by the market risk factor as well as Fitch's consideration of qualitative factors, such as the fund manager's ability to extend duration above current levels if it sees fit. The rating also reflects Fitch's conservative assumptions about potential volatility in emerging market debt. ASSET CREDIT QUALITY The fund's portfolio comprises of four bonds - all rated 'B+' - that have been issued by the entities detailed above and is mainly exposed directly to government and to government- guaranteed debt. The fund currently has a large cash balance (19% of portfolio), which the manager expects to invest in the near- term and maintain around 5%-6% of the portfolio in short term US- dollar fixed deposits in a licensed commercial bank in Sri Lanka. CONCENTRATION The portfolio is concentrated and has a large exposure to Sri Lankan sovereign risk. The concentration risk is a structural feature given the limited opportunities in the fund's investment universe. Fitch has conducted stress tests on the target portfolio. Based on its analysis, Fitch believes the fund has considerable capacity to withstand negative rating migration in its investments before it would be downgraded to the 'CCC' category. PORTFOLIO SENSITIVITY TO MARKET RISK The Fund Market Risk Sensitivity Rating is based on an analysis of the fund portfolio's interest-rate and spread duration. Based on the fund's market risk factor alone, it could achieve a 'S4' Fund Market Risk Sensitivity Rating. However, in affirming the rating at 'S5', Fitch has also taken into consideration wider market conditions - such as potential volatility in emerging market debt - in its rating decision as well as recognising that the fund manager does have discretion to extend duration above current levels if it sees fit. According to Fitch's criteria, funds rated 'S5' are considered to have high sensitivity to market risk. On a relative basis, total returns or changes in net asset value are expected to experience extreme variability across a range of market scenarios due to substantial exposure to interest-rate, credit spread and other risk factors. The fund currently has a weighted-average life of 1.3 years due to the large cash balance it maintains in short-term deposits. The fund will rely on secondary market liquidity to meet large redemption requests. However, it has access to an overdraft facility of up to 10% of assets under management and requires 14 days' notice on redemptions above 3% of the fund. On the asset side, it holds only a limited proportion of outstanding debt issues, all of which are listed on the Singapore Exchange. FUND PROFILE The fund is regulated by the Securities and Exchange Commission of Sri Lanka under the Unit Trust Code, 2011. Deutsche Bank Sri Lanka, a branch of Deutsche Bank AG (A-/RWN/F1), is the trustee. THE ADVISOR Fitch considers CAM suitably qualified, competent and capable of managing the fund. The investment committee has relevant experience and the company has sufficient sources of information on which to base its decision-making process. Fitch considers the systems supporting the fund's investment activities to be satisfactory. CAM is 21%-owned by Sri Lanka Insurance Corporation Limited (SLIC, B+/Stable), 69% by Ceylon Capital Trust (Pvt) Ltd and 10% by Commercial Credit and Finance PLC (CCF). Fitch believes CAM has shareholder support, but a key challenge will be demonstrating sustained growth in assets under management. The Ceylon Dollar Bond Fund is a key component of its growth strategy. CAM has been managing funds since 1999. The current management team has been in place since 2005 and SLIC and CCF invested in the business in 2010 and 2013, respectively. RATING SENSITIVITIES The ratings may be sensitive to changes in the fund's credit quality or market risk profile. The International Fund Credit Quality Rating may be downgraded if Fitch downgrades the rating of the Sri Lankan sovereign or the ratings of the banks in which the fund has invested assets, especially the banks whose issues are not government guaranteed. An upgrade of the assets in the fund's portfolio could lead to an upgrade of the fund. Changes in exchange-control regulations that could increase the fund's transfer and convertibility risks or a weakening in the liquidity inherent in the fund or changes to liquidity provisions - such as the manager's ability to borrow against the fund's net assets or its ability to delay redemptions - would be viewed as negative. To maintain the bond fund ratings, CAM will provide Fitch with portfolio information, including details of the portfolio's holdings and credit quality. Fitch closely monitors the credit composition of the portfolio, the credit counterparties used by the manager and the overall market risk profile of the investments. ********* 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 ***