/raid1/www/Hosts/bankrupt/TCRAP_Public/170315.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, March 15, 2017, Vol. 20, No. 53
Headlines
A U S T R A L I A
ASMARK2 PTY: First Creditors' Meeting Set for March 22
G. G. ENGINEERING: First Creditors' Meeting Set for March 24
LA TROBE 2017-1: S&P Assigns Prelim. B Rating to Cl. F Security
MACRO REALTY: Court Appoints KPMG as Provisional Liquidator
ROLLCANO PTY: First Creditors' Meeting Set for March 23
C H I N A
CHINA LESSO: Net Leverage to Stay Low in 2017, Fitch Says
CHINACAST EDUCATION: Recovery for Unsecureds Unknown Under Plan
SHANDONG YUHUANG: Fitch Assigns 'B' LT Issuer Default Rating
* Chinese Leaders Back Bankruptcies for Unwanted Zombie Firms
H O N G K O N G
NOBLE GROUP: Fitch Assigns BB+ Rating to US$750MM Notes Due 2022
I N D I A
ALAM TANNERY: CRISIL Hikes Rating on INR16MM Loan to B-
AMARPARKASH RICE: CRISIL Reaffirms D Rating on INR9.5MM Loan
BLUEBERRY AGRO: CRISIL Raises Rating on INR6MM LT Loan to 'B'
CRAFTS INDIA: CRISIL Assigns 'B' Rating to INR4.21MM LT Loan
FORTPOINT AUTOMOTIVE: CRISIL Reaffirms B- on INR49.25M Loan
H.P. INTERNATIONAL: CRISIL Assigns B+ Rating to INR11.75MM Loan
IMPERIAL GRANITES: CRISIL Ups Rating on INR9MM Cash Loan to B+
JAISHREE KRISHNA: CRISIL Assigns 'B' Rating to INR10MM Cash Loan
JMT AUTO: CRISIL Lowers Rating on INR67MM Cash Loan to B+
KANS WEDDING: CRISIL Hikes Rating on INR6.78MM Loan to B+
KAVIT INDUSTRIES: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
KUTTANADU VIKASANA: CRISIL Lowers Rating on INR1.15MM Loan to D
M. E. ENERGY: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan
M.M.G. HOLDINGS: CRISIL Reaffirms 'B' Rating on INR14.28MM Loan
MAA BHAGWATI: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan
MARUTI OIL: CRISIL Assigns B+ Rating to INR9.65MM Cash Loan
METRO PLYWOODS: CRISIL Assigns B+ Rating to INR5MM Cash Loan
MULA SAHAKARI: CRISIL Reaffirms 'B' Rating on INR18.25MM Loan
PARAMOUNT CONDUCTORS: CRISIL Reaffirms 'B' Rating on INR11MM Loan
R.G. TIMBERS: CRISIL Reaffirms B- Rating on INR2MM Cash Loan
RANA DENIM: CRISIL Ups Rating on INR6.61MM LT Loan to BB-
RM DAIRY: CRISIL Assigns B+ Rating to INR14.9MM Term Loan
SARDA PLYWOOD: CRISIL Lowers Rating on INR35.96MM Cash Loan to B-
SWASTIK DENIM: CRISIL Reaffirms B+ Rating on INR7.3MM Term Loan
UNITED INDIA: CRISIL Reaffirms 'B' Rating on INR28.7MM Pack Loan
VEL CASTINGS: CRISIL Assigns 'B' Rating to INR11MM Term Loan
I N D O N E S I A
SRI REJEKI: Moody's Affirms B1 CFR, Outlook Positive
J A P A N
TOSHIBA CORP: Mulls Sale of Controlling Stake in US Nuclear Unit
S I N G A P O R E
HEALTHWAY MEDICAL: Unable to Pay Salaries to Doctors
IREIT GLOBAL: S&P Affirms Then Withdraws 'BB' CCR
S O U T H K O R E A
DAEWOO SHIPBUILDING: May Face Crisis in April Due to Debts
STX CORP: SM Group Picked as Preferred Bidder
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A U S T R A L I A
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ASMARK2 PTY: First Creditors' Meeting Set for March 22
------------------------------------------------------
A first meeting of the creditors in the proceedings of Asmark2
Pty Ltd, formerly "Ausurv Surveyors Pty Ltd", will be held at
Vibe Hotel Darwin Waterfront, Mauna Loa Room, Level 1, 7
Kitchener Drive, in Darwin, NT, on March 22, 2017, at
10:30 a.m.
Hamish MacKinnon and Michael Quin of Bent & Cougle were appointed
as administrators of Asmark2 Pty on March 10, 2017.
G. G. ENGINEERING: First Creditors' Meeting Set for March 24
------------------------------------------------------------
A first meeting of the creditors in the proceedings of G. G.
Engineering (Aust) Pty Ltd will be held at Grant Thornton
Australia Limited, The Rialto, Level 30, 525 Collins Street, in
Melbourne, Victoria, on March 24, 2017, at 11:00 a.m.
Stephen Robert Dixon & Ahmed Bise of Grant Thornton Australia
were appointed as administrators of G. G. Engineering on March
14, 2017.
LA TROBE 2017-1: S&P Assigns Prelim. B Rating to Cl. F Security
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to the eight
classes of nonconforming residential mortgage-backed securities
(RMBS) to be issued by Perpetual Corporate Trust Ltd. as trustee
for La Trobe Financial Capital Markets Trust 2017-1. La Trobe
Financial Capital Markets Trust 2017-1 is a securitization of
nonconforming residential mortgages originated by La Trobe
Financial Services Pty Ltd.
The preliminary ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including S&P's view that the credit support is
sufficient to withstand the stresses it applies. The
credit support for the rated notes comprises note
subordination.
-- The availability of a retention amount, amortization
amount, and yield reserve, which will all be funded by
excess spread, but at various stages of the transaction's
term. They will have separate functions and timeframes,
including reducing the balance of senior notes, reducing
the balance of the most subordinated notes, and subject to
conditions pay senior expenses and interest shortfalls on
the class A1, class A2, and class A3 notes.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity
facility equal to 3.0% of the outstanding balance of the
notes, and principal draws, are sufficient under S&P's
stress assumptions to ensure timely payment of interest.
-- There is a condition that a minimum margin will be
maintained on the assets.
The issuer has not informed Standard & Poor's (Australia) Pty
Limited whether the issuer is publically disclosing all relevant
information about the structured finance instruments that are
subject to this rating report or whether relevant information
remains non-public.
PRELIMINARY RATINGS ASSIGNED
Class Rating Amount (mil. A$)
A1 AAA (sf) 165.0
A2 AAA (sf) 45.0
A3 AAA (sf) 45.3
B AA (sf) 13.2
C A (sf) 11.7
D BBB (sf) 8.1
E BB (sf) 5.1
F B (sf) 3.3
Equity NR 3.3
NR--Not rated.
MACRO REALTY: Court Appoints KPMG as Provisional Liquidator
-----------------------------------------------------------
The Federal Court of Australia, following an application by the
Australian Securities and Investment Commission (ASIC), has
ordered the appointment of Hayden White and Matthew Woods of KPMG
as joint and several provisional liquidators of Macro Realty
Developments Pty Ltd, Macro Realty Developments AFSL Pty Ltd,
Macro All State Investments and Securities Ltd, Pilbara Property
Developments Pty Ltd, Macro Realty Pty Ltd, and 511 GTN Pty Ltd.
Ms. Desiree Veronica Macpherson is a Director of all of these
companies.
ASIC's application for the appointment of provisional liquidators
was based on a number of concerns, including that the companies
had been involved in multiple contraventions of the corporations
legislation and are not complying with their obligations under
that legislation, were not being properly managed, and are
suspected to be insolvent.
Justice Barker, having regard to ASIC's concerns, ordered the
appointment of provisional liquidators to the companies. Under
the orders made, the provisional liquidators are to provide to
the court within 45 days a report, which includes:
* the identification of the assets and liabilities of each of
the companies;
* an opinion as to the solvency of each of the companies;
* the likely return to creditors and any other information
necessary to enable the financial position of the companies
to be assessed; and
* any suspected contravention of the Corporations Act 2001
by any of the companies or their directors/officers.
The Court has listed the matter for a case management conference
on May 30, 2017.
ASIC previously obtained a range of interim orders in the Perth
Federal Court on July 21, 2016, restraining Ms Macpherson and the
Macro Group Companies (except 511 GTN Pty Ltd) from providing
financial services advice, dealing in financial products,
promoting financial products and otherwise carrying on a
financial services business. ASIC also obtained various travel
restraint and asset preservation orders at this time.
The provisional liquidator appointment is part of ASIC's ongoing
investigation into a number of land developments in the Pilbara
region of WA, one in particular known as "The Newman Estate",
which was subject to ASIC action and Federal Court permanent
restraint orders in May last year.
ASIC's investigation is ongoing.
ROLLCANO PTY: First Creditors' Meeting Set for March 23
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Rollcano
Pty Ltd will be held at Level 3, 15 Ogilvie Road, in Mount
Pleasant, on March 23, 2017, at 3:00 p.m.
Mervyn Kitay of Worrells was appointed as administrator of
Rollcano Pty on March 13, 2017.
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C H I N A
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CHINA LESSO: Net Leverage to Stay Low in 2017, Fitch Says
---------------------------------------------------------
Fitch Ratings expects China Lesso Group Holdings Limited's
(BB+/Stable) net leverage to remain low in 2017, despite the
company reporting higher-than-expected capex in 2016.
Capex surged to CNY3.6 billion in 2016, from CNY1.2 billion in
2015, an amount much higher than Fitch previous expectation of
CNY1.5 billion. The capital expenditure was mainly used to expand
Lesso's production bases and its Lesso Mall e-commerce platform.
Despite the higher capex, net leverage remained low, with net
debt/operating EBITDA of less than 1x, following a net cash
position of CNY15 million in 2015. Fitch expects Lesso's net
leverage will stay low in 2017 due to its strong top-line growth,
stable operating EBITDA margin and lower 2017 capex.
The company recorded strong 2016 performance, driven by 12.8% yoy
revenue growth to CNY17.2 billion, which was boosted by strong
volume growth from better construction demand, and EBITDA margin
expansion to 17.3%, from 16.6%, thanks to economies of scale and
an effective procurement strategy.
Lesso's rating remains constrained by its region concentration,
as its revenue from southern China accounted for 59.8% of total
revenue in 2016.
CHINACAST EDUCATION: Recovery for Unsecureds Unknown Under Plan
---------------------------------------------------------------
ChinaCast Education Corporation filed with the U.S. Bankruptcy
Court for the Southern District of New York a disclosure
statement dated March 1, 2017, referring to the Debtor's plan of
reorganization.
Class 6 General Unsecured Claims -- estimated at $12,367,282 --
is impaired by the Plan. Estimated recovery for this class is
unknown. Shares in assets remaining after unclassified claims
and Classes 1-3 are paid in full pari passu with Classes 4 and 5.
Unless otherwise provided in the Plan, the Debtor and the
Litigation Trust, as applicable, will use the proceeds of the DIP
Financing and other funds held by the Debtor on the Effective
Date, (i) to make cash distributions required by the Plan on the
Effective Date, (ii) to fund the Administrative Reserve to the
extent necessary to satisfy Section 1129(a)(11) of the Bankruptcy
Code, (iii) to pay other expenses of the Chapter 11 Case, to the
extent so ordered by the Court, and (iv) for general purposes to
fund the Litigation Trust.
A copy of the Disclosure Statement is available at:
http://bankrupt.com/misc/nysb16-13121-41.pdf
About Chinacast Education
ChinaCast Education Corp. owned and operated three universities
in China: the Foreign Trade and Business College of Chongqing
Normal University, the Lijiang College of Guangxi Normal
University and the Hubei Industrial University Business College,
in addition to internet-based interactive distance learning
applications, multimedia education content delivery, and
vocational training courses.
Chinacast sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 16-13121) on Nov. 9, 2016. The
petition was signed by Douglas Woodrum, chief financial officer.
The case is assigned to Judge Mary Kay Vyskocil. Klestadt
Winters Jureller Southard & Stevens, LLP represents the debtor as
its bankruptcy counsel.
At the time of the filing, the Debtor estimated its assets at
$500 million to $1 billion and debts at $10 million to $50
million.
The Office of the U.S. Trustee has not yet appointed an official
committee of unsecured creditors.
SHANDONG YUHUANG: Fitch Assigns 'B' LT Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has assigned China-based chemical and refinery
producer Shandong Yuhuang Chemical Co., Ltd. (Yuhuang) a Long-
Term Issuer Default Rating (IDR) of 'B', with a Positive Outlook.
Fitch has also assigned Yuhuang's proposed senior unsecured US
dollar notes an expected 'B(EXP)' rating. The notes will be
issued by its offshore SPV Rock International Investment Inc.,
and guaranteed by Yuhuang.
The rating reflects Yuhuang's track record of stable margins for
its China operations, as a result of diversification, vertical
integration and strategic cooperation with national oil companies
(NOCs). The rating has also incorporates the financing and
execution risks for its US methanol project, which is a large
investment for Yuhuang, and the resultant pressure on its credit
profile during construction.
The rating also takes into account vulnerability to future price
volatility of raw materials and end-products in China, and
methanol once the US project starts commercial operations. The
Positive Outlook reflects the potential for positive rating
action should Yuhuang continue to demonstrate robust cash
generation from its China operations, together with strong capex
discipline and sound execution of the US methanol project.
The final rating on the proposed notes is contingent upon the
receipt of documents conforming to information already received.
KEY RATING DRIVERS
Diversified Product Offering: Yuhuang's product range includes
refined oil products, styrene, methyl tertiary-butyl ether
(MTBE), C5 products, dimethyl ether (DME), liquefied gas,
polybutadiene rubber and expanded polystyrene (EPS). It extended
the product-value chain further to include ethanolamine,
butadiene, and styrene-butadiene-styrene (SBS) in 2016. Its
products are mostly commodity chemicals; however, the products
generally have wide end-applications. So, unlike Yuhang's
specialty chemical peers in China, Yuhuang's sales volume and
profitability are not tied to one particular industry, and its
margin has been very stable in the last five years.
Vertical Integration, Cooperation with NOCs: Vertical integration
applies along the production-value chain for many of its
products, which brings greater flexibility in sales, fewer
constraints from raw material supply, and a relatively stable
margin. The company enjoys a very high capacity utilisation rate
for most of its products, which also benefits from this vertical
integration. Its cooperation with NOCs for the procurement of raw
materials and sales of final products also secures both raw
material and distribution channels for its production.
Risks with US Project: Yuhuang plans to spend approximately
US$1.2 billion to build a methanol plant in the US. The company
expects capex to be funded by an US$800 million syndicated bank
facility, the proposed US dollar bond, and Yuhuang's initial
equity contribution of around US$160 million. This project has a
planned capacity of 1.7 million tons. Land construction has
already started, and the company expects the plant to commence
operations in early 2019.
This investment entails some execution risks. However, the
company has tried to address some of the risks through usage of
proven technology; employing experienced engineering, procurement
and construction (EPC) contractors on a lump-sum cost basis; and
recruiting senior personnel from the US chemical industry. The
company is yet to finalise the US project loan, which Fitch
believes is in the advanced stages. Yuhuang intends to involve a
strategic partner to contribute equity and potentially off-take
all of the methanol plant's output, although it is possible that
Yuhuang may fully own the project.
Robust Methanol Market: Fitch expects that long-term demand for
methanol can be supported with more demand from non-traditional
users. China's new methanol-to-olefins (MTO) capacities will be
the key to drive global demand. Fitch does not expect much new
supply in North America, due to relatively long permitting and
construction periods. This could help to support the methanol
price in the medium term. However, methanol prices have been
volatile and highly correlated with oil prices. The rebound in
methanol prices might spur fresh interest in capacity addition.
Higher-than-expected capacity expansion could significantly
pressure methanol prices in a lower-oil-price scenario over the
long term.
Commodity-Price Volatility: Most of Yuhuang's products are
commodity chemicals that are subject to the price volatility of
both raw material and end-products. Yuhuang's market share is
relatively small, and it is a price-taker. Product
diversification and vertical integration help reduce margin
volatility, although its cash generation is still affected by
commodity price movements and any change in the supply/demand
dynamics of its end-products. The addition of methanol in the US
will add to Yuhuang's diversification. However, methanol has also
exhibited price and margin volatility.
High Capex, Discipline Key: Yuhuang has generated negative FCF in
the previous four years due to high capex to expand its product
offering and capacity in China. With most of the domestic
projects completed in 2016, Fitch expects its annual capex for
the China operations to decline from CNY2 billion-3 billion to
CNY0.4 billion-1 billion in the next four years, which could lead
to positive FCF generation and reduce the financial leverage at
its China operations. Fitch's Positive Outlook on Yuhuang factors
in Fitch views that the company's expansionary capex in China
will not be heavy before the US plant is fully operational. A
significant increase in domestic capex will reduce financial
flexibility - which is negative for its credit profile.
High Leverage: Yuhuang's leverage (as measured by FFO-adjusted
net leverage) was high at 5.1x in 2015 (this also includes off-
balance sheet debt arising from financial guarantees provided to
obligations of third parties; excluding these liabilities,
leverage is around 4.2x). Fitch expects its leverage to increase
further to around 6.5x (5.4x if excluding third-party guarantees)
by 2018 due to the debt associated with the US project, which is
guaranteed by Yuhuang and its subsidiaries. However, some
improvement is likely once the US project starts to generate
operating cash flows. Cooperation with a potential strategic
investor for the US project could help to reduce leverage, but
not to a great degree.
Guarantee Structure, Recovery Ratings: The Recovery Rating of
'RR4' assigned to the proposed notes reflects average recovery
prospects. The notes are to be guaranteed by Yuhuang. The up-to-
USD800 million US project loan will be guaranteed by Yuhuang and
several of its key onshore subsidiaries (each accounting for 20%-
30% of group EBITDA) on a joint basis totalling 100%. In Fitch
recovery analysis Fitch has treated the portion of the US project
debt that is guaranteed by the subsidiaries as prior ranking to
the proposed US dollar notes.
DERIVATION SUMMARY
Yuhuang's final rating of 'B' incorporates its track record of
stable margins for its China operations, which is coming off a
period of high capex and likely to generate positive FCF, as the
company completed most of the expansion projects in 2016. Yuhuang
benefits from diversified end-applications compared with other
'B' category-rated chemical peers like China XD Plastics Co Ltd
(B+/Stable), which is exposed to the cyclicality of the auto
industry. These benefits are reflected in its stable margin trend
and stable working-capital movements. However, Yuhuang's leverage
level is higher, and the margin is thinner than at China XD
Plastics. Shanghai Huayi (Group) Company (BBB-/Stable, standalone
rating at BB/Stable) also enjoys diversification, and has similar
leverage at Fitch forecasts leverage level for Yuhuang's China
operations. Shanghai Huayi's margin is weighed down by its
trading operation, but its profitability should be more defensive
than that of Yuhuang due to Shanghai Huayi's much stronger
position in the Shanghai market, and a higher contribution from
advanced chemicals - that is less intensely competitive than
commodity chemicals.
The rating has also incorporated the financing and execution
risks for the US methanol project, which has just started
construction, and the resultant pressure on its credit profile
during construction. The rating also reflects vulnerability (as a
commodity chemical producer) to the future price volatility of
raw material and end-products, including methanol in the future,
as the company has committed to a large methanol project in the
US.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Utilisation rate for the China operations remains above 90%;
US project to start operations in 2019 with 50% utilization
- EBITDA margin remains stable at 8%-10%
- Product-price change with Fitch price deck's assumption of oil
price change
- Total capex at about CNY1 billion in 2016, rise to CNY4.0
billion-4.5 billion in 2017, gradually trending down to around
CNY1.5 billion in 2019
- The company successfully closes the USD800 million syndicate
loan and issues a USD300 million bond in early 2017.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Securing the financing for US methanol project
- Completion of the US project in a timely fashion, and within
the current budget, provided also that there is no significant
deterioration in the US methanol market
- The company demonstrates investment discipline in its China
operations during the heavy investments in relation to the US
project, and generates positive FCF at its China operations
- Operating EBITDA margin sustained above 8%
- FFO fixed-charge coverage ratio above 3.5x, and FFO-adjusted
net leverage below 5.0x on a projected basis after the
completion of the US methanol project
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Failure to secure the financing, or significant delay of the
closing of the project loan for the US methanol project
- Fitch may revise the Positive Outlook back to Stable if the
company does not meet the other positive guidelines set above.
LIQUIDITY
Improving Debt Structure: As with other private companies in
China, most of Yuhuang's debt is short-term, which accounted for
62% of total debt at end-9M16. However, the company is optimizing
its debt structure by refinancing its maturing short-term debt
with long-term debt, including domestic bond issuance. The
company used to rely heavily on bank loans, while increasingly
more debt has been issued out of the domestic bond market in
recent years. Most of the debt is at the holding company level.
Most of the bank loans are not secured by assets, but rather
guaranteed by third parties. The percentage of secured loans has
also declined in recent years. Secured bank loans only accounted
for 5% of total bank loans (4% of total debt) as of end-9M16.
Adequate Liquidity: The company has CNY1.0 billion in
unrestricted cash as of end-9M16. It has short-term debt of
CNY5.9 billion. Fitch estimates its China operations could
generate positive FCF of around CNY730 million in the next 12
months (4Q16-3Q17). The company has unutilised bank credit
facilities of CNY3.2 billion (excluding the debt facilities to be
secured to finance the US project), and an available bond
issuance quota of around CNY4.0 billion, which will be enough to
refinance its maturing short-term debt. Future equity injection
into the US project will be satisfied by the proposed US dollar
notes, and should therefore have no impact on the liquidity of
its China operations.
* Chinese Leaders Back Bankruptcies for Unwanted Zombie Firms
-------------------------------------------------------------
Bloomberg News reports that China is getting serious about
dealing with so-called zombie companies through court-led
bankruptcies as it seeks to cut overcapacity in industries and
boost economic growth.
According to Bloomberg, the country's Chief Justice Zhou Qiang
said at the National People's Congress on March 12 that
authorities will improve the country's judicial system for
dealing with bankruptcies in 2017 to support those goals.
Bloomberg says Chinese authorities are devoting more resources to
tackle corporate restructurings and bankruptcies as bad debts at
banks soared to an 11-year high in 2016 and bond defaults more
than quadrupled in the period.
China is targeting growth of about 6.5 percent this year, and
dealing with zombie companies is pivotal to the nation's efforts
to reduce excess capacity, President Xi Jinping told party
leaders in February, Bloomberg relates citing a Xinhua report.
Courts will tend to liquidate firms that clearly have no future,
though restructurings will remain the preferred outcome for
stressed companies in China, Gong Jiali, president of Guangdong
Higher People's Court, said in an interview last week, Bloomberg
relays.
"There is greater professionalism of the judiciary, greater
specialism of judges in China's bankruptcy courts," Edward
Middleton, head of restructuring for Asia Pacific at KPMG who has
about 30 years of experience in the restructuring field,
Bloomberg relays. Still, neither company owners nor creditors are
used to the idea of taking advantage of bankruptcy processes,
according to Mr. Middleton.
Chinese courts accepted a record of 5,665 bankruptcy filings in
2016, up 54 percent from 2015, according to official data
obtained by Bloomberg. The potential size of China's distressed
debt and non-performing loan market may be worth as much as $3
trillion, distressed fund operator ShoreVest Partners in a note
this month, relays Bloomberg.
Bloomberg notes that China has set up bankruptcy and liquidation
divisions at 73 courts so far to help work on insolvencies.
Commercial bankruptcies in China are still small compared with
the U.S., where there was a 26 percent increase in filings to
37,771 last year, Bloomberg discloses citing the American
Bankruptcy Institute.
China's Supreme People's Court set up a website in August for
courts to release information on bankruptcy cases they are
working on and for creditors to register bankruptcy applications,
Bloomberg recalls. In the province of Jiangsu, north of Shanghai,
the judiciary is changing its appraisal system to encourage
judges to take up bankruptcy cases, according to Xu Qianfei,
president of Jiangsu Higher People's Court, in a written reply to
questions, adds Bloomberg.
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H O N G K O N G
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NOBLE GROUP: Fitch Assigns BB+ Rating to US$750MM Notes Due 2022
----------------------------------------------------------------
Fitch Ratings has assigned Noble Group Limited's (Noble,
BB+/Stable) US$750 million 8.75% notes due 2022 a final rating of
'BB+'.
This final rating follows the receipt of documents conforming to
information already received, and is in line with the expected
rating assigned on March 5, 2017.
KEY RATING DRIVERS
Significant Balance Sheet Improvements: Noble's ratio of working
capital/total debt, including 50% of its perpetual securities,
had improved significantly to a healthy 1.36x by end-2016, from
0.96x at end-2015. This was consistent with Fitch expectations,
as the company implemented a number of liquidity-strengthening
measures, including the sale of Noble America Energy Solutions
(NES) and completion of a rights issue. This ratio is similar to
those of investment-grade rated peers.
Business Profile Remains Strong: Fitch believes Noble's business
profile remains strong - given its global footprint and leading
position in a number of key products in core regions. Returns
have declined, but annual tonnage volume shipped has remained
stable over the last two years at over 220 million tonnes,
supporting its underlying business over the long term.
Return Improvement Uncertain: Noble's quarterly working-capital
return has been below Fitch 3% negative rating trigger since
3Q15, and deteriorated further to an average of 0.7% in 2016.
However, the weak EBITDA generation does not reflect Noble's true
2016 return, as it is largely attributed to the sale of NES, a
temporary increase in selling, administrative and operating (SAO)
expenses due to headcount reduction and rationalisation and
capital constraints on business expansion given the company's
focus on improving its balance sheet and liquidity. Adjusting for
more typical SAO expenses and 11 months of NES's performance
prior to disposal, return on working capital is a higher 2%.
Fitch believes Noble may be able to deploy more capital to
generate returns in 2017 due to its improved liquidity at end-
2016. However, it remains uncertain whether the company will be
able to sustain high returns in the difficult operating
environment.
Negative Operating Cash Flow: Noble's cash flow from operations
(CFO) has been negative since 2014, which breaches one of Fitch's
negative rating triggers. The main reason for negative CFO in
2015-2016 was lower accounts payable, which Fitch believes was
due to credit-related events in 2015 and 1Q16 that reduced vendor
and bank credit lines. This effect was diminished in 2H16, which
was evident in improved CFO to USD56 million in 4Q16n from
negative USD486 million in 1Q16, helped by a USD226 million
accounts payable increase, compared with falls in previous
quarters.
Fitch does not expect a further decline in Noble's accounts
payable in 2017, but it remains uncertain as to whether the
improved CFO on a quarterly basis in 2016 can be sustained into
2017 and beyond, as it can be affected by the company's decision
to increase working capital to drive profitability.
Limited Secured Debt: Noble's secured debt as a percentage of
total debt is low, at around 13% at end-2016. Noble's management
indicated that the company intends to use more borrowing-based
facilities to finance working capital, in particular by issuing
letters of credit, rather than using secured debt drawdowns. A
significant increase in secured debt could lower the company's
unencumbered assets relative to unsecured debt, which may result
in its senior unsecured rating being notched down from its IDR.
DERIVATION SUMMARY
Noble's operational scope is in line with large international
traders with global reach, but its scale is smaller than that of
its investment-grade rated peers, such as Cargill Incorporated
(A/Stable), Archer Daniels Midland Company (A/Stable) and Bunge
Limited (BBB/Stable). Its debt structure is heavier on short-term
debt compared with that of investment-grade rated peers given its
asset-light strategy. Noble's balance sheet is strong and in line
with investment-grade rated peers, but it has weaker profit-
generation ability.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Sales volume to remain similar to 2016 levels.
- Capex and business acquisitions of USD100 million a year.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action:
- The company reverting to more longer-term and competitively
priced funding on a sustained basis
Developments that May, Individually or Collectively, Lead to
Negative Rating Action:
- Sustained weakening of EBITDA/working capital below 12%
(or quarterly EBITDA/working capital below 3%).
- Sustained negative cash flow from operations.
- Working capital/total debt sustained below 1.0x.
- Liquidity position, as defined by unrestricted cash and cash
equivalent plus undrawn committed facilities, to total
inventory sustained below 1.0x (2016: 1.3x).
- Weakened business strength evident from lower funding
capacity
to support working-capital expansion over the cycle;
sustained
decline in tonnage volume that is more severe than industry
performance; and evidence of a weaker risk management
process.
- Senior unsecured ratings might be notched down if there is
insufficient coverage of unsecured debt by unencumbered
assets.
LIQUIDITY
Noble's liquidity at end-2016 stood at US$2.0 billion and
consisted of US$1.1 billion of unrestricted cash and equivalents
and US$943 million of undrawn committed facilities. This compared
with liquidity of only USD868 million at end-June 2016. Current
liquidity is equivalent to close to 1.3x inventory, which Fitch
believes is sufficient to cover requirements arising from
reasonable commodity price increases.
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I N D I A
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ALAM TANNERY: CRISIL Hikes Rating on INR16MM Loan to B-
-------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Alam
Tannery Private Limited to 'CRISIL B-/Stable/CRISIL A4' from
'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Export Packing 16 CRISIL B-/Stable (Upgraded
Credit from 'CRISIL D')
Foreign Bill 13 CRISIL B-/Stable (Upgraded
Purchase from 'CRISIL D')
Inland/Import Letter 2.5 CRISIL A4 (Upgraded from
of Credit 'CRISIL D')
Proposed Long Term 8.5 CRISIL B-/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
The upgrade reflects timely servicing of debt in the nine months
ended February 2017.
The ratings reflect ATPL's working capital-intensive operations
and exposure to fluctuations in foreign exchange (forex) rates.
These weaknesses are partially offset by the extensive experience
of its promoters in the leather industry and their financial
support.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Long processing cycle
(60-75 days) and lengthy repayment schedule owing to high transit
period have resulted in substantial inventory and receivables in
the past three years. Gross current assets have been in the 571-
613 days range in the past.
* Exposure to fluctuations in forex rates: Since majority of
revenue comes from exports, the company remains exposed to
economic and regulatory changes in the global markets. This could
lead to lower pricing power and hence modest profitability.
Strength
* Extensive experience of promoters in the leather industry: The
company is managed by the third generation of promoters - Mr.
Mahmud Alam, Mr. Afroz Alam, Mr. Aftab Alam, and Mr. Shadab Alam.
In the past three decades, the promoters have acquired extensive
market knowledge and established strong relationship with clients
and suppliers. The company has carved a niche for itself in the
buffalo hide-based leather market.
Outlook: Stable
CRISIL believes ATPL will continue to benefit over the medium
term from the extensive experience of its promoters. However,
liquidity will remain constrained by long working capital cycle
despite funding from promoters. The outlook may be revised to
'Positive' in case of substantial growth in turnover with stable
profitability and controlled working capital cycle. The outlook
may be revised to 'Negative' if liquidity deteriorates because of
large working capital requirement and significantly low accrual.
Incorporated in the 1920s and promoted by Mr. Maqbul Alam, ATPL
manufactures leather furniture and also exports hides and
stitched leather to the UK, Germany, Poland, Hungary, China,
South Africa, and Australia. It has two tanneries.
Profit after tax (PAT) was INR35 lakh on net sales of INR37.98
crore for fiscal 2016, against a PAT of INR54 lakh on net sales
of INR37.02 crore for fiscal 2015.
AMARPARKASH RICE: CRISIL Reaffirms D Rating on INR9.5MM Loan
------------------------------------------------------------
CRISIL has been consistently following up with Amarparkash Rice
Exports (P) Ltd (AREPL) for getting information. CRISIL requested
cooperation and information from the issuer through its letters
and emails dated February 17, 2017, February 7, 2017, and January
19, 2017 among others, apart from telephonic communication.
However, the issuer has continued to be non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.5 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 9.5 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
"The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company."
Detailed Rationale
CRISIL has reaffirmed the long-term bank facilities of AREPL at
'CRISIL D'.
Key Rating Drivers & Detailed Description
* Delays in servicing term debt due to poor liquidity: AREPL has
delayed its repayments towards bank loans, as it booked nil
revenue in fiscal 2017. Further delay in recommencement of
operations will result in continued postponement of its debt
repayment obligation.
Punjab-based AREPL, incorporated in 2013, is promoted by Mr.
Rupinder Pal and Mr. Narinder Kumar.
BLUEBERRY AGRO: CRISIL Raises Rating on INR6MM LT Loan to 'B'
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank loan
facilities of Blueberry Agro Products Private Limited to 'CRISIL
B/Stable' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Long Term Loan 6 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Proposed Long Term 0.5 CRISIL B/Stable (Upgraded
Bank Loan Facility from 'CRISIL B-/Stable')
The upgrade reflects expected improvement in revenue by 60-65% in
fiscal 2017 on account of healthy offtake in the global market.
Profitability too is expected to improve substantially because of
better absorption of fixed cost. This is expected to result in
sufficient cash accrual over the medium term, which will be
sufficient to meet debt obligation of INR1.26 crore over this
period. The rating also factors in unsecured loans of INR3.08
crore as on March 31, 2016, providing adequate liquidity.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Net sales were INR4.3 crore in
fiscal 2016. Though sales are expected to improve by 60-65% in
fiscal 2017, operations remain modest. The market is fragmented
with more than half of it comprising regional brands, and a few
national brands and the unorganised segment. Hence, the modest
scale of operations restricts the ability to negotiate with
customers or suppliers.
* Weak financial risk profile: Both capital structure and debt
protection metrics are expected to remain weak in fiscal 2017.
The networth was modest at INR1.1 crore as on March 31, 2016,
against INR2.4 crore a year earlier. Interest coverage ratio is
likely to remain average at around 2 times in fiscal 2017.
Strength
* Extensive experience the promoters: The promoters, members of
the Daga family, have an experience of over three decades in the
tea trading business. Backed by this, growth is expected in
revenue.
Outlook: Stable
CRISIL believes BAPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of a significant increase in scale of
operations and operating margin, or considerable improvement in
the networth driven by equity infusion, leading to a better
capital structure. The outlook may be revised to 'Negative' if
cash accrual is lower than expected, or if the financial risk
profile weakens further, most likely due to an increase in
working capital requirement or large, debt-funded capital
expenditure.
BAPL was incorporated in November 2011; operations are managed by
Mr. Suraj Kumar Daga and his son, Mr. Gaurav Daga. The company
manufactures tea extracts and tea pre-mixes at its facility in
Wada, Maharashtra.
Net loss was INR1.3 crore on net sales of INR4.3 crore in fiscal
2016, against net loss of INR1.1 crore on net sales of INR1.5
crore, in fiscal 2015.
CRAFTS INDIA: CRISIL Assigns 'B' Rating to INR4.21MM LT Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Crafts India Industries.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.25 CRISIL B/Stable
Long Term Loan 4.21 CRISIL B/Stable
The rating reflects the firm's modest scale of operations
expected, and exposure to demand risk and intense competition.
These weaknesses are partially offset by the project's-the firm
is setting up a corrugated boxes facility in Jammu-low funding
and implementation risks, and the promoters' extensive
experience.
Key Rating Drivers & Detailed Description
Weaknesses
*Expected small scale of operations: With commercial production
set to begin only in April 2017, the scale of operations should
remain small over the medium term. Revenue will likely be modest
around INR17 crore in fiscal 2018.
*Exposure to demand risk and intense competition: Exposure to
intense competition and, therefore, to demand risk when
production begins, is likely to persist over the medium term,
keeping business risk profile under pressure.
Strengths
*Longstanding experience of promoters in the packaging industry:
Benefits from the 15 years' experience of the promoters, Mr.
Nitin Jain and Mr. Anuj Jain, and their healthy relations with
customers and suppliers are likely to continue.
*Moderate funding and implementation risks: Funding risk is low
on the ongoing project of INR6.44 crore, funded at a debt-to-
equity ratio of 8:3. The promoters have already brought in around
72% of their contribution in the form of share capital, while the
term loan is to be fully disbursed by March 2017. Implementation
risk is also low, given the promoters' experience in the
packaging industry.
Outlook: Stable
CRISIL believes CII will continue to benefit from its promoters'
extensive experience in the packaging industry. The outlook may
be revised to 'Positive' if timely commercialisation of
production, significant ramp-up in revenue and profitability, and
prudent working capital management strengthen credit metrics.
Conversely, the outlook may be revised to 'Negative' if delay in
stabilisation of operations constrains profitability and
liquidity.
CII is a partnership firm set up in 2016 by Mr. Nitin Jain and
his brother, Mr. Anuj Jain. The firm is setting up a corrugated
box facility at SIDCO Complex, Bari Brahmana, Jammu. Commercial
operations are expected to start from April 2017.
FORTPOINT AUTOMOTIVE: CRISIL Reaffirms B- on INR49.25M Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B-/Stable' rating on the long-
term bank loan facility of Fortpoint Automotive (Cars) Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 13 CRISIL B-/Stable (Reaffirmed)
Cash Credit/
Overdraft facility 5 CRISIL B-/Stable (Reaffirmed)
Inventory Funding
Facility 49.25 CRISIL B-/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 16.68 CRISIL B-/Stable (Reaffirmed)
Term Loan 16.07 CRISIL B-/Stable (Reaffirmed)
The rating reflects the company's weak financial risk profile,
primarily marked by a leveraged capital structure, subdued
interest coverage, and stretched liquidity on account of tightly
matched cash accrual against debt repayments and exposure to
risks related to competition in the automobile dealership
business. These rating weaknesses are mitigated by the promoters'
extensive industry experience and established association with
Maruti Suzuki India Ltd (MSIL; rated, 'CRISIL AAA/Stable/CRISIL
A1+'), a market leader in passenger car industry.
Analytical Approach
CRISIL has treated unsecured loans of INR6.8 crore as neither
debt nor equity as the same are from promoters, have no interest
obligations and are expected to remain in the business over the
long term.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Financial risk profile remains
constrained by modest networth of INR15.12 crore, and high total
outside liabilities to adjusted net worth (TOLANW) ratio of over
8.01 times as on March 31, 2016. Interest coverage is subdued at
1.7 times, but should improve with improvement in profitability.
The liquidity is also stretched with expected cash accruals of
INR12-16 crore against repayment obligations of around INR13.8
crore over medium term. The promoters are expected to support the
liquidity in the form of fund infusion.
* Exposure to risks related to competition in the automobile
dealership business: Scale of operations is modest because of
limited area of operations and competition from dealers of other
principals. Also, given the nature of business, operations and
profitability depend on the principal.
Strength
* Promoter's extensive experience and established relationship
with principal: FACPL is part of the Fortpoint group. The
promoters have been in the auto dealership business for the past
25 years. Their extensive experience has helped FACPL withstand
economic cycles.
Outlook: Stable
CRISIL believes that FACPL will continue to benefit from its
promoters extensive industry experience and established
association with MSIL. The outlook may be revised to 'Positive'
if the financial risk profile and liquidity improves due to
higher-than-expected cash accrual, fresh sizable fund infusion by
promoters along with efficient working capital management.
Conversely, the outlook may be revised to 'Negative' if the
financial risk profile, particularly its liquidity is constrained
due to lower-than-expected cash accrual or large working capital
requirements or any large, debt-funded capital expenditure
programme.
Incorporated in 2001, FACPL is an authorised dealer for MSIL for
sale of its passenger cars in Mumbai. FCAPL operates through two
showrooms and three service centres across Mumbai. The company is
promoted and managed by Mr. Sundeep Bafna and family.
For fiscal 2016, FACPL's profit after tax (PAT) was INR2.67 crore
on net sales of INR286.9 crore, against a PAT of INR1.25 crore on
net sales of INR222.6 crore for fiscal 2015.
H.P. INTERNATIONAL: CRISIL Assigns B+ Rating to INR11.75MM Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of H.P. International - Chandigarh (HPI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11.75 CRISIL B+/Stable
The rating reflects the firm's small scale of, and working
capital-intensive, operations, and below-average financial risk
profile because of weak debt protection metrics. These weaknesses
are partially offset by extensive experience of proprietor and
his funding support.
Analytical Approach
Unsecured loans of INR6.81 crore from proprietor's family members
have been treated as neither debt nor equity as these are
interest-free and will remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Interest coverage and net
cash accrual to total debt ratios were 1.01 times and 0.003 time,
respectively, due to low profitability of 2.7% for fiscal 2016 on
account of trading nature of business. Networth was also modest
at INR7.7 crore on March 31, 2016.
* Small scale of, and working capital-intensive, operations:
Sales were around INR23.8 crore in fiscal 2016. Moreover, gross
current assets were high at over 394 days as on March 31, 2016,
driven by substantial inventory of 177 days and receivables of
212 days.
Strength
* Extensive experience of proprietor in the polymers trading
industry: Presence of more than a decade in the trading business
has enabled the proprietor to develop healthy relationship with
customers and suppliers.
Outlook: Stable
CRISIL believes HPI will continue to benefit over the medium term
from the extensive experience of its proprietor in the polymer
trading industry. The outlook may be revised to 'Positive' in
case of a significant and sustained improvement in revenue and
operating margins, while improving capital structure and working
capital management. The outlook may be revised to 'Negative' if
sharp decline in revenue or margins, further stretch in working
capital cycle, or large, debt-funded capital expenditure results
in deterioration in financial risk profile.
Set up in 2015 as a proprietorship concern by Mr. Nishant Kumar,
HPI trades in PET granules and bottles, master batches,
chemicals, mono cartons, and corrugated boxes that are majorly
used in the pharmaceutical industry. Commercial operations began
in April 2015.
Book profit was INR0.28 crore on sales of INR23.8 crore in fiscal
2016.
IMPERIAL GRANITES: CRISIL Ups Rating on INR9MM Cash Loan to B+
--------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of Imperial Granites Private Limited to 'CRISIL B+/Stable' from
'CRISIL B/Stable', while reaffirming the short-term facilities at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.5 CRISIL A4 (Reaffirmed)
Cash Credit 9.0 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Export Packing Credit 5.5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Letter of Credit 1.0 CRISIL A4 (Reaffirmed)
Proposed Long Term 2.85 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
The upgrade reflects an improvement in the business risk profile
marked by increase in scale of operations. Operating income grew
by 14.3% to INR40.7 crore in fiscal 2016 vis-a-vis INR34.9 crore
in the previous fiscal year and is expected to grow steadily over
the medium term supported by healthy demand in the domestic
market. Improved operating performance has resulted in healthy
cash accrual of INR2.45 crores in fiscal 2016 from INR1.45 crores
in fiscal 2015; cash accrual is expected to be sustained at
INR2.5-3.5 cores over the medium term. The rating upgrade also
factors in the improvement in financial risk profile marked by
comfortable debt protection metrics; interest coverage and net
cash accrual to total debt (NCATD) ratios improved to 2.13 times
and 0.18 times respectively during fiscal 2016 compared to 1.81
times and 0.10 times respectively in the previous fiscal year.
However, exposure to its group companies continues to remain high
thereby constraining its financial risk profile. Any incremental
fund support to, or investments in, group entities will remain a
key monitorable over this period.
The ratings continue to reflect working capital-intensive nature
of operations and susceptibility of the operating margin to
volatility in foreign exchange rates. These rating weaknesses are
partially offset by a moderate financial risk profile because of
a comfortable gearing and adequate debt protection metrics,
extensive experience of the promoters in the granite industry,
and an established market position.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations: Gross current assets were
592 days as on March 31, 2016, driven by a high inventory and
loans and advances extended to group companies. The bank line was
utilised at an average of 98% during the 12 months through
December 2016.
Strengths
* Above-average financial risk profile: The financial risk
profile is comfortable marked by comfortable capital structure
and debt protection metrics. The net worth and gearing was
healthy at INR 56.5 crores and 0.25 times respectively for fiscal
2016. Moderate operating margin has resulted in above-average
debt protection metrics: interest coverage and net cash accrual
to total debt ratios were 2.4 times and 18 times, respectively,
for fiscal 2016.
* Promoters' experience in granite industry, and established
market position: The promoters of the IGPL have close to four
decades of experience in the granite industry. IGPL has well-
established relationships with customers in over 60 export
countries.
Outlook: Stable
CRISIL believes IGPL will continue to benefit from the
established track record of its promoters in the quarry industry
and its diversified end-user profile. The outlook may be revised
to 'Positive' in case of improvement in the working capital cycle
along with a sustained increase in profitability margins and
scale of operations. The outlook may be revised to 'Negative' in
case of lower-than-anticipated cash accrual, larger-than-expected
debt-funded capex, or a stretched working capital cycle, leading
to deterioration in the financial risk profile, particularly
liquidity.
IGPL was incorporated in Chennai in 1986, promoted by Mr. R
Veeramani. The company undertakes quarrying and processing of
granites and monuments.3
Profit after tax (PAT) was INR0.69 crore on total revenue of
INR41.01 crore in fiscal 2016, vis-a-vis PAT of INR0.56 crore on
total revenue of INR35.0 crore, respectively, in fiscal 2015.
JAISHREE KRISHNA: CRISIL Assigns 'B' Rating to INR10MM Cash Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Jaishree Krishna and Company.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B/Stable
The rating reflects initial stage and modest scale of operations
in highly fragmented agro industry. The rating also factors in
below-average financial risk profile marked by weak capital
structure and debt protection metrics. These weaknesses are
partially offset by the extensive experience of partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Initial stage and modest scale of operations: Scale has been
modest, reflected in revenue of INR20 crore projected in fiscal
2017, as the firm started operations only in 2016.
* Below-average financial risk profile: High estimated total
outside liabilities to tangible net worth ratio of around 5 times
as on March, 2017, small estimated interest coverage ratio of 1.1
times and net cash accruals to total debt (NCATD) of 0.01 times
in fiscal 2017, reflect below-average financial risk profile.
Strength
* Experience of partners: JSKC benefits from the partners'
decade-long experience and healthy relationships with customers
and suppliers in Agro business.
Outlook: Stable
CRISIL believes JSKC will maintain the business risk profile over
the medium term backed by partner's experience. The outlook may
be revised to 'Positive' if substantial increase in revenue,
profitability and equity infusion strengthens financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
lower-than-expected revenue and profitability, or stretched
working capital cycle weakens financial risk profile.
Established in 2015 as a partnership firm, JSKC trades in pulses.
The firm, based in Raipur, Chhattisgarh, is managed by Mr.
Priyanshu Agrawal and Mr. Satyad Agrawal.
JMT AUTO: CRISIL Lowers Rating on INR67MM Cash Loan to B+
---------------------------------------------------------
CRISIL has been seeking information and a discussion with the
management of JMT Auto Ltd since January 2016. Despite several
emails and calls, the company has not submitted any information.
CRISIL had, through a letter dated February 24, 2017, informed
the company of the extant guidelines and requested for
cooperation. The issuer, however, remains non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Issuer not
Cooperating and Downgraded
from 'CRISIL A4+'; Removed
from 'Rating Watch with
Negative Implications')
Bill Discounting 1 CRISIL A4 (Issuer not
Cooperating and Downgraded
from 'CRISIL A4+'; Removed
from 'Rating Watch with
Negative Implications')
Cash Credit 67 CRISIL B+/Negative (Issuer
not Cooperating and
Downgraded from 'CRISIL BB';
Removed from 'Rating Watch
with Negative Implications')
Letter of Credit 44 CRISIL A4 (Issuer not
Cooperating and Downgraded
from 'CRISIL A4+'; Removed
from 'Rating Watch with
Negative Implications')
Rupee Term Loan 24 CRISIL B+/Negative (Issuer
not Cooperating and
Downgraded from 'CRISIL BB';
Removed from 'Rating Watch
with Negative Implications')
Term Loan 55 CRISIL B+/Negative (Issuer
not Cooperating and
Downgraded from 'CRISIL BB';
Removed from 'Rating Watch
with Negative Implications')
Working Capital 8 CRISIL B+/Negative (Issuer
Term Loan not Cooperating and
Downgraded from 'CRISIL BB';
Removed from 'Rating Watch
with Negative Implications')
The investors, lenders, and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'Issuer Not Cooperating'. These ratings lack a
forward-looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
CRISIL has downgraded its ratings on the bank facilities of JMTL
to 'CRISIL B+/Negative/CRISIL A4' from 'CRISIL BB/CRISIL A4+' and
has removed it from 'Rating watch with negative implications'.
The downgrade reflects CRISIL's inability in maintaining the
ratings of JMTL at 'CRISIL BB/CRISIL A4+' due to inadequate
information and lack of management cooperation, thereby
restricting CRISIL from taking a forward looking view on the
credit quality of the entity. JMTL scores low ('L') on
availability of past information. Though the company is listed on
the stock exchanges, CRISIL does not have access to
quarterly/half-yearly information of its key subsidiaries, which
have large debt exposure. It scores low ('L') on future
information due to unavailability of management's public stated
stance on future expectations, strategic decisions, and capital
expenditure (capex). It also scores low ('L') on the stability
attributes listed in CRISIL's criteria for surveillance of
ratings of non-cooperative issuers. On the basis of the
aforementioned, CRISIL believes the available information is
inconsistent with a CRISIL BB category rating, leading CRISIL to
downgrade the rating to 'CRISIL B+' and has removed it from
ratings watch and assigned a 'Negative' outlook.
The ratings reflect JMTL's weak financial risk profile because of
high gearing, muted debt protection metrics, and constrained
liquidity, working capital-intensive operations, exposure to
segmental and customer concentrations in revenue profile, and
significant debt obligation over the medium term amid subdued
cash generating ability. These weaknesses are partially offset by
the extensive experience of its promoters.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of JMTL, Amtek Machining Systems Pte Ltd,
and Amtek Riken Castings Pvt Ltd.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile:
Financial risk profile has deteriorated significantly post
acquisition of REGE Holding GmbH (REGE) and Amtek Components
Sweden. Consolidated gearing was high at 7 times as on March 31,
2016, and net cash accrual to total debt ratio weak at 0.07 time
for fiscal 2016.
* Constrained liquidity: Liquidity remains constrained due to
sizeable maturing debt obligation of Rs184.7 crore, while
internal cash accrual is expected to remain subdued on account of
declining operating income and profitability. Generating
sufficient cash accrual to repay debt will continue to be a key
rating driver.
* Segmental and customer concentrations in revenue profile:
Around 85% of revenue comes from the automobile sector, where the
primary customers are commercial vehicle (CV) and heavy earth-
moving machinery (HEMM) manufacturers. The CV industry is
cyclical as demand is driven by growth in industrial production,
increase in freight movement, change in freight rates, and fuel
prices.
* Working capital-intensive operations: Gross current assets were
229 days as of March 2016 due to sizeable inventory of 102 days
given large product range, lead time required for manufacturing,
and slowing down of demand from original equipment manufacturers.
Strengths
* Extensive experience of promoters in the automotive components
industry
* Presence of around three decades in the automotive components
industry has enabled the promoters to establish strong
relationships with various OEMs in different segments, such as
CV, HEMM, and railways, both in India and overseas.
Outlook: Negative
CRISIL believes JMTL's financial risk profile, particularly
liquidity, is likely to deteriorate over the medium term due to
significant maturing debt obligation while cash accrual remains
subdued. The ratings may be downgraded if further weakening of
financial risk profile due to decline in operating income or
profitability leads to lower cash accrual, or if working capital
cycle is stretched or there is sizeable debt-funded capex. The
outlook may be revised to 'Stable' if liquidity improves
significantly due to sufficient cash accrual against debt
obligation.
JMTL (formerly, Jamshedpur Metal Treat) was incorporated as a
private limited company in April 1987 to take over the business
of Metal Treat Company, an ancillary of Tata Motors Ltd ('CRISIL
AA/Positive/CRISIL A1+') that manufactures auto components. It
was reconstituted as a public limited company in April 1992 and
was acquired by AAL in June 29, 2013, which now holds 70.74%
stake in it. The company acquired REGE and Amtek Components
Sweden through Amtek Machining systems Pte Ltd in fiscal 2016. It
has also formed a joint venture, Amtek Riken Castings Pvt Ltd.
For fiscal 2016, JMTL's profit after tax (PAT) was INR4.86 crore
on operating income of INR336 crore, against INR11.28 crore and
INR430.25 crore in the previous fiscal. In the nine months ended
December 31, 2016, total income and PAT were INR228.06 crore and
INR4.24 crore, respectively, against INR248.74 crore and INR1.65
crore, respectively, in the corresponding period of the previous
fiscal.
AAL manufactures iron cast automotive components (connecting rod
assemblies, cylinder blocks, flywheel assemblies, and turbo
charger housing) for two- and three-wheelers, cars, tractors,
light CVs, heavy CVs, and stationary engines.
AAL had a net loss of INR660.84 crore and operating income of
INR1498.54 crore in fiscal 2016, against a net loss of INR119.88
crore and operating income of INR3740.81 crore in fiscal 2015. In
the nine months ended December 31, 2016, total income and net
loss were at INR1507.53 crore and INR1316.42 crore, respectively.
KANS WEDDING: CRISIL Hikes Rating on INR6.78MM Loan to B+
---------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of Kans Wedding Centre to 'CRISIL B+/Stable' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.78 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Long Term Loan 1.22 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects CRISIL's belief that KWC's business risk
profile will continue to improve over the medium term, supported
by healthy growth in revenues and improvement in operating
margins. KWC's revenues grew to INR30.77 crore in fiscal 2016
from INR17.19 crore in the previous fiscal, supported by
incremental revenues from a new showroom opened at Angamaly,
Kerala, in July 2015. Revenue is expected to grow at a healthy
rate over the medium term supported by incremental revenues from
two new showrooms, expected to be opened by August 2017, at
Vadanappally and Thrissur, Kerala, while operating margins are
expected to improve supported by higher proportion of sales from
the kids wear and women's wear segment.
The rating continues to reflect an average financial risk profile
because of a modest net worth, moderate gearing, and weak debt
protection metrics. The rating also factors in exposure to
intense competition and geographic concentration in revenue.
These weaknesses are partially offset by the extensive experience
of the promoters in the apparel retail industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations, exposure to intense competition in
the retail industry, and geographic concentration in revenue: The
firm's revenue has grown substantially, from INR 17.19 crores in
fiscal 2015 to INR 30.77 crores in fiscal 2016. The increase was
supported by incremental revenues from the new showroom at
Angamaly, opened in July 2016. Though revenues are expected to
grow at a healthy rate over the medium term, supported by
incremental revenues from two new showrooms, expected to be
opened by August 2017 at Vadanappally and Thrissur, scale of
operations is expected to remain small.
Also, the firm is exposed to intense competition as the retail
business is highly fragmented with numerous small and midsized
firms. This is likely to constrain pricing flexibility and
operating profitability of the firm.
* Average financial risk profile: Networth increased to INR5.92
crore as on March 31, 2016, up from INR3.77 crore a year earlier.
The networth is expected to improve to INR6.5-7 crore over the
medium term. Gearing was moderate at 1.47 times as on this date,
and is expected to improve to around 1.2 times over the medium
term. Debt protection metrics are weak; interest coverage ratio
was 1.63 times and net cash accrual to total debt ratio 0.07
time, in fiscal 2016. The debt protection metrics are expected to
improve over the medium term.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of over two decades in the apparel retail
industry, and are successfully running apparel retail stores in
Dubai. This experience has enabled them to develop a strong
relationship with suppliers, thus helping in the procurement of
good quality raw material at lower prices. The promoters
extensive experience will continue to help the firm in the
future.
Outlook: Stable
CRISIL believes KWC will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if a significant increase in scale of operations
and efficient working capital management lead to substantially
higher cash accrual. The outlook may be revised to 'Negative' if
a stretched working capital cycle, or any large, debt-funded
capital expenditure weakens the financial risk profile,
particularly liquidity.
KWC, incorporated in 2009, is promoted Mr. K A Niyas and his
family, who have been in this line of business for over two
decades. It is Kerala's largest wedding apparel retail firm,
offering over 10,000 branded products. The firm has three
operational retail stores in Kerala.
KWC's profit before tax (PBT) was INR0.12 crore on sales of
INR29.28 crore in fiscal 2016, vis-a-vis PBT of INR0.03 crore on
sales of INR17.29 crore, for fiscal 2015.
KAVIT INDUSTRIES: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
----------------------------------------------------------------
CRISIL has reaffirmed its rating on the bank facilities of
Kavit Industries at 'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B-/Stable (Reaffirmed)
Letter of Credit 2.34 CRISIL A4 (Reaffirmed)
Term Loan 0.66 CRISIL B-/Stable (Reaffirmed)
The rating continues to reflect the firm's working capital-
intensive operations, weak financial risk profile because of high
gearing and small net worth, and modest scale of operations.
These weaknesses are partially offset by the extensive experience
of KI's promoters in foam trading and manufacturing industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Operations are working
capital-intensive, reflected in gross current assets of 251 days
as on March 31, 2016, due to large receivables (121 days) and
inventory (112 days). High credit of 60-90 days to customers and
year-end sales (peak season is during January-May) have kept
receivables level high. Though payables of 109 days help bridge
funding gap, operations will remain working capital-intensive
over the medium term.
* High gearing because of small networth: Gearing was 2.22 times
as on March 31, 2016, because of high reliance on debt to fund
working capital requirement and capex. Gearing is likely to
remain at a similar level over the medium term.
* Modest scale of operations and low profitability: KI's scale of
operations is modest, as reflected in its sales of around INR21.5
crore in 2015-16. The same has increased at a CAGR of 18 per cent
over the past 3 years ending March, 2016. In spite of a
consistent increase over the years, its scale of operations
remains modest compared to other players in the industry. This is
largely on account of high competition and relatively small
capacity. As a result, KI's small scale of operations limits its
bargaining power with suppliers as well as customers.
Strength
* Proprietor's extensive experience in the foam industry:
Proprietor has been in this business for over 15 years now, which
has helped the firm in terms of supply chain management. The Firm
is engaged into manufacturing of PU Foams and its manufacturing
facility is located at Noida, Uttar Pradesh, along with trading
of chemicals and fabrics. Established position of proprietor in
the industry has helped the firm in terms of its assured demand-
supply chain. Over the years, proprietor has successfully
established a procurement and distribution network that has led
to ready set of distributors and suppliers for the firm.
Outlook: Stable
CRISIL believes KI will continue to benefit over the medium term
from promoters' extensive industry experience. However, financial
risk profile will remain constrained due to planned debt-funded
capital expenditure. The outlook may be revised to 'Positive' if
scale of operations and profitability improve substantially and
fund infusion to meet debt obligation is timely, leading to a
better financial risk profile, particularly liquidity.
Conversely, the outlook may be revised to 'Negative' if lower-
than-expected revenue growth or profitability, or lack of timely
funding support leads to pressure on liquidity.
Based in Noida, Uttar Pradesh, KI was established as a
proprietorship firm in 2000 by Mr. Vijay Manchanda. The firm
manufactures PU foams and matrices and also trades in industrial
chemicals and fabrics.
KI's profit after tax (PAT) was INR11 lakhs on net sales of
INR21.5 crore for 2015-16 (refers to financial year, April 1 to
March 31), vis-a-vis PAT of INR10 lakhs on net sales of INR20.6
crore for 2014-15.
KUTTANADU VIKASANA: CRISIL Lowers Rating on INR1.15MM Loan to D
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Kuttanadu Vikasana Samithy to 'CRISIL D' from 'CRISIL B/
Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 1.15 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B/Stable')
The downgrade reflects delays in servicing instalments on term
loan on account of weak liquidity. Also, collection efficiency
has been significantly affected by demonetisation.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak liquidity
Delays in collection of receivables from microfinance borrowers
post demonetisation led to stretched liquidity and hence delays
in servicing debt.
* Modest scale of operations and geographical concentration
The society had a portfolio of INR2.5 crore as on March 31, 2016,
which is small compared to CRISIL-rated microfinance institutions
(MFIs). Also, operations are confined only to 30 village units in
Alappuzha, Kerala, which exposes it to local, social, and
political issues.
*Modest capital position
Networth was small at INR0.2 crore and gearing high at 10.3 times
as on March 31, 2016. The society largely depends on internal
accrual and grants to implement microfinance and other
developmental activities. Furthermore, surplus is low, resulting
in minimal accretion to corpus. Capital position will remain
subdued over the medium term.
*Exposure to risks inherent in the microfinance segment
The microfinance sector is susceptible to regulatory and
legislative risks. Promulgation of the ordinance on MFIs by the
Government of Andhra Pradesh demonstrated the vulnerability of
MFIs to regulatory and legislative risks, and triggered a chain
of events that adversely impacted the MFI business model by
impairing growth, asset quality, operating surplus, and solvency.
Such institutions lend to the poor and downtrodden sections of
society, and will therefore remain exposed to socially sensitive
factors such as high interest rates, and, consequently, to
tighter regulations and legislation.
Strength
*Strong track record in area of operations
KVS has been operating for more than two decades and has
undertaken various developmental activities for the betterment of
farmers, agricultural labourers, women and children, fishermen,
and disabled villagers in Kuttanadu, Alappuzha. So far, it has
formed about 840 women self-help groups, of which 665 were linked
to 8 banks for various activities. It provides services to
commercial banks for their microfinance operations by assisting
them in group formation, disbursement, and collection of loans.
KVS is a non-profitmaking organisation in Alappuzha and is
managed by Fr. Thomas Peelianickal. The organisation was
registered in 1979 and was taken over by the current management
in 1993. The society is engaged in the microfinance business on
the self-help model and also helps National Bank For Agriculture
& Rural Development (NABARD) form joint liability groups to which
it lends. KVS earns a fee for the service from NABARD.
For fiscal 2016, surplus was INR3 lakh on a total income of INR38
lakh, against a surplus of INR0.9 lakh on a total income of INR30
lakh for the previous year.
M. E. ENERGY: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan
------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of M. E. Energy Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
Foreign Letter
of Credit 1.5 CRISIL B+/Stable (Reaffirmed)
The ratings reflect a modest scale, and working capital intensive
nature, of operations in the thermal engineering segment, subdued
operating profitability, and below-average debt protection
metrics. These rating weaknesses are mitigated by the extensive
industry experience of the promoter and a moderate capital
structure.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and subdued operating profitability:
Revenue was around INR26.9 crore in fiscal 2016, declining from
INR41.6 crore in the previous fiscal. Decline in revenue amid
high fixed costs led to a significant reduction in operating
profitability. Although profitability is expected to improve in
fiscal 2017 on the back of modest revenue growth and controlled
fixed costs, the scale will remain modest.
* Working capital-intensive operations: Gross current assets were
high, at 287 days as on March 31, 2016, driven by a moderate
work-in-progress inventory, large receivables, and sizeable
margin money deposits.
* Below-average debt protection metrics: The interest coverage
ratio was below 1 time in fiscal 2016, and is expected to improve
to just over 1.5 times in fiscal 2017.
Strengths
* Extensive industry experience of the promoter: The key
promoter, Mr. K V Kartha, has over 25 years of experience in the
engineering industry and has developed a strong relationship with
customers and suppliers.
* Moderate capital structure: The gearing was low, at 0.93 time
as on March 31, 2016, because of a moderate networth of INR11.6
crore and the absence of any major debt-funded capital
expenditure (capex).
Outlook: Stable
CRISIL believes MEPL will continue to benefit from the extensive
industry experience of its promoter. The outlook may be revised
to 'Positive' in case of significant and sustained improvement in
revenue and profitability, leading sizeable cash accrual. The
outlook may be revised 'Negative' if the financial risk profile,
particularly liquidity, weakens because of low cash accrual, a
stretched working capital cycle, or any debt-funded capex.
MEPL had a net loss of INR77 lakh on revenue of INR26.97 crore in
fiscal 2016, against a net profit of INR4.41 lakh on revenue of
INR41.67 crore in fiscal 2015.MEPL, established in 1998 and
promoted by Mr. K V Kartha, designs, manufactures and installs
energy-saving projects, heating and cooling systems, and
equipment. Its manufacturing facility is in Pune, Maharashtra.
Helix Investment Company, a private equity firm, acquired a
36.36% stake in the company in 2012.
MEPL had a net loss of INR77 lakh on revenue of INR26.97 crore in
fiscal 2016, against a net profit of INR4.41 lakh on revenue of
INR41.67 crore in fiscal 2015.
M.M.G. HOLDINGS: CRISIL Reaffirms 'B' Rating on INR14.28MM Loan
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of M.M.G. Holdings Private Limited at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 14.28 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3.54 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect a modest scale of operations in
the real estate industry, customer concentration in revenue, and
weak debt protection metrics. These weaknesses are partially
offset by the extensive entrepreneurial experience of the
promoters and the favourable location of the warehouse.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and customer concentration in
revenue: Revenue was around INR2.63 crore in fiscal 2016, against
INR2.31 crore in the previous fiscal. The company derives lease
rental income from two properties in Chennai, leading to customer
and geographic concentration in revenue.
* Weak debt protection metrics: MMG's debt protection metrics are
weak marked by subdued interest coverage ratio at 1.4 times on
account of the high interest outgo and low revenue generation
from the properties. The company receives need-based fund support
from promoters which supports scheduled debt repayments. CRISIL
believes that timely infusion of funds over the medium term will
be a key rating sensitivity factor.
Strength
* Extensive entrepreneurial experience of the promoters and
favourable location of the properties: MMG is part of the
Chennai-based Gupta group of companies, primarily involved in
export of human hair and sandalwood. Mr. M M Gupta, the promoter,
has over four decades of entrepreneurial experience. Also, the
company has properties at favourable locations in Chennai with
reputed tenants and stable cash flows.
Outlook: Stable
CRISIL believes MMG will continue to benefit from the extensive
experience of its promoters and need-based funding support from
them. The outlook may be revised to 'Positive' if an increase in
cash accrual because of healthy occupancy rate improves the
financial risk profile. The outlook may be revised to 'Negative'
if any large, debt-funded capital expenditure further weakens the
financial risk profile.
MMG, incorporated in 2004, is part of the Chennai-based Gupta
group, promoted by Mr. M M Gupta. The company leases warehouse
and commercial spaces in Chennai.
Profit after tax was INR0.29 core on net sales of INR2.63 crore
for fiscal 2016, against INR0.02 crore and INR2.34 crore,
respectively, in fiscal 2015.
MAA BHAGWATI: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Maa Bhagwati Rice Mill at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.9 CRISIL B+/Stable (Reaffirmed)
Operating income is likely to grow significantly in fiscal 2017
to around INR43 crore (INR35 crore for the 10 months through
January 2017) from INR22.61 crore in the previous fiscal because
of better realisations following the revival in the rice
industry. Operating margin is expected at 2.5-3.0% over the
medium term and will remain susceptible to volatility in raw
material prices.
With a stretched working capital cycle because of high stocking
requirement, debt remained large, leading to a high total outside
liabilities to tangible networth (TOLTNW) ratio and below-average
debt protection metrics. However, absence of significant capital
expenditure (capex) and rising net cash accrual should lead to
improvement in the financial risk profile over the medium term.
Sufficient funds ensured moderate reliance on bank borrowings
(averaged 64% for the 12 months through January 2016), despite
working capital intensive operations. Liquidity is supported by
unsecured loans (INR3.64 crore as on March 31, 2016) from the
partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile:
The net worth was small at INR2.4 crore and the TOLTNW ratio high
at 5.16 times as on March 31, 2016. Debt protection metrics were
below-average: the interest coverage ratio was 1.57 times, and
the net cash accrual to adjusted debt ratio 0.05 time, in fiscal
2016. The small net worth significantly weakens the financial
flexibility to raise additional debt. While the financial metrics
will improve in the absence of debt-funded capex, they will
remain weak because of large working capital requirement.
* Small scale of operations
The company is a small player in the fragmented domestic rice
industry with total milling and sorting capacity of 7 tonne per
hour. The small scale exposes it to competitive pressures,
leading to limited bargaining power with customers. This, along
with constrained economies of scale, has resulted in low
profitability.
* Working capital-intensive operations
Gross current assets were 177 days as on March 31, 2016. The
incremental working capital requirement is high in this business
as operations involve large inventory, resulting in substantial
short-term debt. With the expected ramp-up in scale of
operations, improvement in working capital cycle will be a rating
sensitivity factor.
Strength
* Extensive industry experience of the partners
The partners have an experience of more than a decade in the rice
industry. This has enabled them to establish a sound relationship
with customers, resulting in repeated orders from various clients
and the addition of customers.
Outlook: Stable
CRISIL believes MBRM will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' in case of a substantial increase in revenue and
profitability, leading to a rise in net cash accrual, while the
working capital cycle improves, or if the capital structure and
debt protection metrics are significantly better, strengthening
the financial risk profile. The outlook may be revised to
'Negative' if low profitability leads to muted cash accrual, if
working capital management is weak, or the financial risk profile
deteriorates due to large, debt-funded capex.
MBRM was set up as a partnership firm by Mr. Pawan Kumar Goyal
and Mr. Joginder Pal in 2006. The firm mills and processes
basmati rice at its facility in Cheeka, Haryana.
Profit after tax (PAT) and net sales stood at INR14.49 lakhs and
INR22.56 crore, respectively, for fiscal 2016, as against
INR16.37 lakhs and INR35.77 crore, respectively, for the previous
fiscal.
MARUTI OIL: CRISIL Assigns B+ Rating to INR9.65MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Maruti Oil Mills.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.65 CRISIL B+/Stable
Proposed Cash
Credit Limit .35 CRISIL B+/Stable
The rating reflects a modest scale of operations, susceptibility
of profitability to volatility in cotton prices, and a weak
financial risk because of high gearing and low debt protection
metrics. These rating weaknesses are partially offset by the
extensive experience of promoters in the cotton industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the highly competitive cotton
industry
The firm started operations in 2007 and is growing at moderate
rate. The scale of operations is expected to increase over the
medium term. The entry barriers are low on account of limited
capital and technology intensity and little differentiation in
the end product, leading to intense competition.
* Susceptibility of profitability to volatility in cotton prices
The Government of India fixes the MSP (minimum support price) for
each crop every year. When the price of any variety of cotton is
lower than the MSP, the Cotton Corporation of India and National
Agricultural Co-operative Marketing Federation resort to
immediate market intervention and purchase cotton at the MSP
without any quantitative limits.
* Weak financial risk profile
The gearing is expected to be high 2.60 times as on March 31,
2016 primarily due to a small net worth of INR2.6 crore. There is
no long-term loan. The debt protection metrics are weak with
interest coverage and net cash accrual to total debt ratios at
1.4 times and 0.04 time, respectively, in fiscal 2016.
Strength
* Extensive industry experience of the promoters
The promoters have around a decade of experience in the cotton
ginning industry. This has given them an understanding of the
dynamics of the local market, and enabled them to establish
relationships with customers and suppliers.
Outlook: Stable
CRISIL believes MOM will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of substantial revenue growth while
profitability and the capital structure improve. The outlook may
be revised to 'Negative' in case of a considerable decline in
revenue and profitability, deterioration in working capital
management, or large, debt-funded capital expenditure, weakening
the financial risk profile, particularly liquidity.
MOM was established as a partnership firm in 2007 by members of
the Agarwal family, who also manage operations. The promoters
have an experience more than two decades in cotton ginning and
also have a farming business in Warangal, Telangana. MOM carries
out cotton ginning and oil extraction work at its facility in
Warangal.
In fiscal 2016, net profit was INR0.25 crore on total income of
INR142 crore, against net pofit of INR0.23 crore on total income
of INR99.7 crore in the previous fiscal.
METRO PLYWOODS: CRISIL Assigns B+ Rating to INR5MM Cash Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Metro Plywoods.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable
The rating reflects the firm's modest scale of operations in the
intensely competitive plywood trading industry, large working
capital requirement, and below-average financial risk profile.
These weaknesses are partially offset by the extensive experience
of its promoters and established supplier relationship.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in competitive segment: With an
estimated revenue of INR12.5 crore in fiscal 2017, scale remains
small in the competitive plywood trading industry that has low
entry barrier due to minimal capital requirement.
* Large working capital requirement: Gross current assets are
estimated around 165 days as on March 31, 2017, due to high
receivables (approx. 80 days) and sizeable inventory (approx. 3
months).
* Below-average financial risk profile: Networth is estimated to
be modest at INR1.18 crore and gearing moderate at 1.20 times as
on March 31, 2017. However, gearing is likely to deteriorate to
over 2.0 times because of incremental working capital debt to
fund ramp-up in operations. Debt protection metrics are likely to
be muted, with net cash accrual to total debt and interest
coverage ratios of 0.08 time and 2.45 times, respectively, for
fiscal 2017.
Strengths
* Extensive experience of promoters and established supplier
relationship: Presence of over four decades in the plywood
trading segment has enabled the promoters to establish strong
relationship with suppliers.
Outlook: Stable
CRISIL believes MP will continue to benefit over the medium term
from the extensive experience of its promoters and established
relationship with key customers and suppliers. The outlook may be
revised to 'Positive' if significant ramp-up in operations and
better profitability lead to higher-than-expected cash accrual.
The outlook may be revised to 'Negative' in case of a decline in
revenue or profitability, or if large, debt-funded capital
expenditure or deterioration in working capital management
affects financial risk profile.
Set up in 1978 in Chennai as a partnership firm by Mr. Ashraf, MP
trades in plywood and timber. Operations are managed by Mr.
Ashraf and his son Mr.Mishad Ashraf.
For fiscal 2016, profit after tax (PAT) was INR11.8 lakh on a
total income of INR5.99 crore, against a PAT of INR15.17 lakh on
a total income of INR5.30 crore for the previous fiscal.
MULA SAHAKARI: CRISIL Reaffirms 'B' Rating on INR18.25MM Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long-
term bank facility of Mula Sahakari Sakhar Karkhana Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 18.25 CRISIL B/Stable (Reaffirmed)
The rating reflects MSSKL's weak financial risk profile, with
high total outside liabilities to adjusted networth ratio and
subdued debt protection metrics on account of its large working
capital requirement. The rating also factors in low profitability
and susceptibility to cyclicality and regulatory risks in the
sugar industry. These weaknesses are partially offset by MSSKL's
established regional presence in the sugar industry, longstanding
association with farmers, and benefits from the upcoming
cogeneration power plant.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: The financial risk profile is weak
because of a high total outside liabilities to adjusted networth
ratio of 9.4 times as on March 31, 2016, and subdued debt
protection metrics, with interest coverage ratio of 1.9 times and
net cash accrual to total debt ratio of 0.04 time in fiscal 2016.
* Large working capital requirement: Operations are working
capital intensive as reflected in gross current assets of 591
days as on March 31, 2016. Since the sugarcane crushing season is
only between November and March, the society holds high inventory
of finished products post the crushing season, resulting in high
year-end inventory.
* Low profitability and susceptibility to cyclicality and
regulatory risks in the sugar industry: Sugar is the largest
agriculture-based industry in India and substantial government
intervention in the industry reflects the large share of sugar in
the common consumption basket, and its importance to sugarcane
growers. Sugarcane and sugar production in India tend to follow a
cyclical trend, wherein the production increases for two years
and then declines for the next two years and recovers thereafter.
Strengths
* Established regional presence in the sugar industry and
longstanding association with farmers: Extensive experience of
Mr. Shankar Rao Patil in the sugar industry has resulted in
longstanding association with farmers.
* Benefits from the increased cogeneration power capacity: The
society has increasedits cogeneration capacity to 30 megawatt
(MW) from 16 MW in fiscal 2017. This may lead to improvement in
revenue and higher profitability.
Outlook: Stable
CRISIL believes MSSKL will continue to benefit over the medium
term from its longstanding presence in the industry and the semi-
integrated nature of operations. The outlook may be revised to
'Positive' if higher-than-expected revenue and margins lead to
higher cash accrual. Conversely, the outlook may be revised to
'Negative' if weaker sugar prices put pressure on the financial
risk profile and liquidity.
MSSKL was incorporated in fiscal 1980 as a co-operative society
by Mr. Yashwanth Rao Patil. Currently, the operations are managed
by his son, Mr. Shankar Rao Patil. MSSKL's plant in Sonai
(Maharashtra) has sugarcane crushing capacity of 5000 tonne per
day, co-gen capacity of 30 MW, and a distillery with capacity of
30 kilolitre per day.
Profit after tax was INR0.05 crore on an operating income of
INR197.04 crore in fiscal 2016, against a profit after tax of
INR7.55 crore on an operating income of INR326.29 crore in fiscal
2015.
PARAMOUNT CONDUCTORS: CRISIL Reaffirms 'B' Rating on INR11MM Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Paramount Conductors Limited at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B/Stable (Reaffirmed)
Letter of Credit 6 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.25 CRISIL B/Stable (Reaffirmed)
Term Loan .75 CRISIL B/Stable (Reaffirmed)
The ratings reflect the company's small scale of, and working
capital-intensive, operations in a highly fragmented electrical
equipment industry and below-average debt protection metrics.
These weaknesses are partially offset by the extensive experience
of its promoters, moderate operating profitability, and moderate
capital structure.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations in competitive segment
Revenue declined to INR17.5 crore in fiscal 2016 from INR22.5
crore in fiscal 2015 on account of high fragmentation in the
electrical equipment industry.
* Working capital-intensive operations
Gross current assets were high at 584 days as on March 31, 2016,
because of large inventory of 449 days and debtors 260 days.
Inventory was large on account of substantial stock of spares and
other raw materials maintained along with high lead time required
for manufacturing machinery. Further it receives payment from
customers in around 5-6 months. Against these requirements the
firm receives moderate credit from suppliers; hence the company
relies highly on bank lines to fund the gap.
* Below-average debt protection metrics
Interest coverage and net cash accrual to total debt ratios were
1.4 times and 0.05 time, respectively, in fiscal 2016 and will
remain muted over the medium term because of continued high
reliance on working capital debt, despite moderate profitability.
Strengths
* Extensive experience of promoters
Longstanding presence in the electrical equipment industry has
enabled the promoters to develop healthy relationship with
customers and suppliers.
* Moderate operating profitability
Operating margin improved to 23% in fiscal 2016 from 18% in the
previous fiscal. Profitability will remain comfortable because of
high value addition in motor rewinding and machinery
manufacturing.
* Moderate capital structure:
Networth and gearing were INR17.3 crore and 1.19 times,
respectively, as on March 31, 2016. Capital structure will remain
steady over the medium term in the absence of any debt-funded
capital expenditure (capex).
Outlook: Stable
CRISIL believes PCL will continue to benefit over the medium term
from the extensive experience of its promoters. The outlook may
be revised to 'Positive' if higher cash accrual due to
significant increase in revenue and sustained profitability, or
substantial improvement in working capital management leads to
better liquidity. The outlook may be revised to 'Negative' if
financial risk profile, particularly liquidity, weakens on
account of further stretch in working capital cycle, low cash
accrual, or any major debt-funded capex.
Incorporated in 1971 and promoted by Mr. G K Tapadia and his
family, PCL manufactures winding wires (aluminium and copper),
coils (high tension and low tension), and machines for
manufacturing coils (testing machines and motor rewinding). Units
are in Nagpur and Goa.
PCL's net profit was INR0.17 crore on total operating income of
INR17.54 crore in fiscal 2016, as against a net profit of INR0.42
crore on operating income of INR22.58 crore in the previous
fiscal.
R.G. TIMBERS: CRISIL Reaffirms B- Rating on INR2MM Cash Loan
------------------------------------------------------------
CRISIL's ratings on the bank facilities of R.G. Timbers and Saw
Mills continues to reflect RG's modest scale of operations in the
highly fragmented timber trading industry, the working capital
intensive nature of operations and the below-average financial
risk profile marked by highly leveraged capital structure and
weak debt protection metrics. These rating weaknesses are
partially offset by the extensive industry experience of the
promoters.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B-/Stable (Reaffirmed)
Letter of Credit 8 CRISIL A4 (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest Scale of operations in the highly fragmented timber
trading industry: RG's revenue was INR10.7 crores in fiscal 2016.
The modest scale is on account of intense competition in the
highly fragmented timber trading industry. Furthermore, the
timber trading industry has low entry barriers because of minimal
capital requirement.
* Working capital intensive nature of operations: RG's has
working capital intensive operations as reflected by the high
Gross current asset (GCA) days of around 369 days as on March 31,
2016. The firm has high inventory and receivables leading to high
GCA.
* Below-average financial risk profile: Financial risk profile is
below average due to high gearing of 2.7 times as on March 31,
2016 and weak debt protection metrics as reflected by low
interest coverage of 1.08 times for fiscal 2016.
Strength
* Extensive experience of promoters in the industry: The
promoters have more than two decades of experience in the
industry. The extensive experience of promoters has helped RG in
establishing healthy relationship with suppliers in Africa,
Malaysia and other countries, which helps the firm in receiving
quality supplies.
Outlook: Stable
CRISIL believes RG will continue to benefit over the medium term
from its partners' extensive industry experience. The outlook may
be revised to 'Positive' if there is an improvement in scale of
operations and profitability, leading to higher-than-expected
cash accruals, thereby leading to an improvement in the financial
risk profile. Conversely, the outlook may be revised to
'Negative', if the firm reports significant decline in revenues
or profits or undertakes large debt-funded capital expenditure
programme, or any stretch in working capital cycle leads to
further weakening of the financial risk profile.
Established in 1999 as a partnership firm by Mr. K.Ramasamy and
his wife Mrs. R.Ganapathiammal, RG trades in timber mainly in
Tamil Nadu and Kerala.
RG reported Profit after tax (PAT) of INR 0.03 crore on revenue
of INR 10.7 crores in fiscal 2016 as against INR 0.06 crore and
INR 9.9 crores, respectively in fiscal 2015.
RANA DENIM: CRISIL Ups Rating on INR6.61MM LT Loan to BB-
---------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Rana
Denim Private Limited at 'CRISIL BB-/Stable/CRISIL A4+' from
'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.88 CRISIL A4+ (Upgraded from
'CRISIL A4')
Cash Credit 8 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
Long Term Loan 6.61 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
Proposed Long Term 6.51 CRISIL BB-/Stable (Upgraded
Bank Loan Facility from 'CRISIL B+/Stable')
Working Capital 7 CRISIL BB-/Stable (Upgraded
Demand Loan from 'CRISIL B+/Stable')
The rating upgrade is driven by CRISIL's belief that RDPL will
maintain its profitability and liquidity, which improved
moderately, over the medium term. RDPL's financial risk profile
has improved driven by steady cash accruals and negligible term-
debt repayment obligations. With expected revenues of around INR
40-45 crores and operating profitability of 9 per cent during
fiscal 2017, RDPL's interest coverage ratio is expected to remain
at over two times. However, management of working capital
requirements, which are large for the company, will continue to
remain a rating sensitivity factor.
The ratings continue to reflect the extensive experience of
RDPL's promoters in the cotton industry and the benefits arising
from its synergies with group concerns. The ratings also reflect
an average financial risk profile marked by moderate net worth
and improving debt protection metrics. These rating strengths are
partially offset by the RDPL's susceptibility to volatility in
raw material prices, given its large inventory holding; changes
in government policies, and customer concentration in revenue
profile.
Analytical Approach
For arriving at its ratings, CRISIL has treated unsecured loans
extended by the promoters of about INR 4.8 crores as on March 31,
2016, as neither debt nor equity as these are expected to remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Strengths
* Promoters extensive experience in the cotton industry and
benefits arising from synergies with group concerns
RDPL procures cotton partially from its group entities. These
firms are structured as partnerships and obtain raw cotton
directly from farmers in the Yewatmal region in Vidarbha. The
cotton is then ginned and packed into bales.
The arrangement ensures that the company benefits from a stable
supply of cotton inputs at reasonable rates. It also allows RDPL
to procure cotton in small quantities according to its
requirements and maintain lower inventory levels as compared to
other spinning mills.
CRISIL expects the synergies with group concerns to ensure
adequate availability and reasonable pricing of cotton for RDPL
and support its business risk profile.
* Average financial risk profile marked by moderate net worth and
improving debt protection metrics
RDPL has an average financial risk profile, marked by moderate
dependence on bank debt and improving debt protection metrics.
RDPL's net worth stood at about INR 20.6 crores as on March 31,
2016. With stable accretion to reserves, the net worth is
expected to improve over the medium term. The gearing continues
to remain moderate at about 0.77 times as on March 31, 2016.
RDPL's operating margin is expected to remain stable at around 9
per cent over the medium term. Hence, with scheduled repayment of
term debt obligations and stable operating profitability, its
debt protection metrics are improving with expected interest
coverage ratio of over 2 times for fiscal 2017 and net cash
accruals to total debt ratio at about 20 per cent.
Weakness
* Exposure to risks relating to concentration of revenues from a
few customers
RDPL's client portfolio is skewed with sales to the top-three
customers forming over 60 per cent of total sales. Sales to KG
Denim Limited accounted for over 50 per cent of total sales
during fiscal 2016. The company is, therefore, vulnerable to
unexpected slowdown in demand from its customers with whom RDPL
has no long-term formal agreements. The company is also exposed
to any change in business plans of its large customers. Further,
the company's limited bargaining power with customers is
constrained by its small scale of operations in comparison to its
clients.
CRISIL believes that RDPL will remain exposed to risks relating
to concentration of revenue from a few customers.
Outlook: Stable
CRISIL believes RDPL will continue to benefit over the medium
term from the extensive industry experience of its promoters, and
synergies from group concerns. The outlook may be revised to
'Positive' if the working capital cycle or scale of operations
improves, leading to higher cash accrual and strong liquidity.
Conversely, the outlook may be revised to 'Negative' if RDPL's
revenue and profitability decreases significantly, leading to low
cash accrual, or its liquidity weakens because of a large debt-
funded capital expenditure (capex).
RDPL was set up by Mr. Hasamali Rana Karani and his family in
2000. The company manufactures open-ended cotton yarn in counts
of 6s to 20s, used in manufacturing denim garments. It operates a
unit in Yavatmal (Maharashtra).
RDPL reported a profit after tax (PAT) of about INR0.41 crore on
an operating income of INR45.5 crores for fiscal 2016 against a
PAT of about INR0.63 crores on an operating income of INR43.6
crores for fiscal 2015.
RM DAIRY: CRISIL Assigns B+ Rating to INR14.9MM Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of RM Dairy Products LLP.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
Term Loan 14.9 CRISIL B+/Stable
The rating reflects firm's initial phase of, and expected modest
scale of operations in dairy products industry with average
financial risk profile. These rating weaknesses are partially
offset by the extensive entrepreneurial experience of partners
and their funding support.
Analytical Approach
Unsecured loans (outstanding at INR7.70 crore as on January 31,
2017) extended to RMDP by partners have been treated as neither
debt nor equity as these are subordinated with bank lines and are
fully interest free.
Key Rating Drivers & Detailed Description
Weaknesses
* Initial phase of, and expected modest scale of operations: As
commercial operations started in November 2016, scale of
operations is expected to remain modest over the medium term in
the highly fragmented dairy products industry.
* Average finical risk profile: The financial risk profile is
expected to remain average due to start-up nature of operations
and sizeable debt contracted for project set up.
Strength
* Entrepreneurial experience of partners: With over a decade of
experience in diversified industries, the partners experience is
expected to help in scaling up operations.
Outlook: Stable
CRISIL believes RMDP will maintain a stable credit risk profile
over the medium term owing to experience of partners. The outlook
may be revised to 'Positive' if scale of operations, revenue and
profitability increase substantially. Conversely, the outlook may
be revised to 'Negative' if lower-than-expected revenue or
profitability weakens financial risk profile and debt servicing
metrics with liquidity.
RMDP was incorporated in April 2015 as a limited liability
partnership firm by eight partners -- Mr. Ram Vinod Singh, Ms
Radha Singh, Mr. Shishir Singh, Mr. Girish Goyal, Ms Suman Goyal,
Mr. Ravi Singhal, Ms Archana Singhal and Ms Shally Singh. The
firm is setting-up an integrated manufacturing plant in Aligarh,
Uttar Pradesh, with installed capacity of around 4 lakh litre per
day, to produce skimmed milk powder, desi ghee and poly pack
milk.
SARDA PLYWOOD: CRISIL Lowers Rating on INR35.96MM Cash Loan to B-
-----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sarda Plywood Industries Limited to 'CRISIL B-/Stable' from
'CRISIL B+/Stable', and reaffirmed the short-term rating at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 35.96 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
Letter of Credit 34.61 CRISIL A4 (Reaffirmed)
Term Loan 1 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects CRISIL's belief that business and
financial risk profiles will remain constrained by low
profitability and consequent high reliance on external funding,
over the medium term. The company has consistently incurred net
losses in the four years through March 2017 (INR5.73 crore in
fiscal 2016) because of a dip in revenue and muted profitability
margins. Despite cash profit till December 2017 on account of
sales of asset, improvement in operations will remain a key
sensitivity factor. Deterioration in liquidity further weakened
financial risk profile, with interest coverage ratio declining to
0.03 time for fiscal 2016. Gearing weakened to 4.02 times as on
March 31, 2016, due to erosion of networth following net losses
and high reliance on working capital debt. Despite expected
improvement in scale of operations, business and financial risk
profiles will remain muted over the medium term.
The ratings reflect susceptibility of SPIL's operating margin to
intense competition in the plywood industry, and weak financial
risk profile because of high gearing and muted debt protection
metrics. These weaknesses are partially offset by established
market position and extensive experience in the timber industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility of operating margin to intense competition in
the plywood industry
The plywood industry has many unorganised players catering to
regional demand to reduce high transportation costs, as price is
the main differentiating factor in this segment. This affects
operating margins of established players such as SPIL. Plywood
demand and prices are also adversely affected by availability of
cheap substitutes such as particle and medium-density fibre
boards.
* Weak financial risk profile
Losses and erosion in networth in the last few years and
dependence on ICDs (at an interest rate of 15%) led to a high
gearing of 4.02 times as on March 31, 2016. Debt protection
metrics also remained muted, with an interest coverage ratio of
0.03 time for fiscal 2016.
Strength
* Established market position and promoters' extensive
experience: The company is a leading player in the branded
plywood segment with a strong brand prefix, Duro. Also, product
profile is diverse with facilities for manufacturing plywood,
veneer, and decorative plywood.
Outlook: Stable
CRISIL believes SPIL will continue to benefit over the medium
term from the extensive experience of its promoters. The outlook
may be revised to 'Positive' if a considerable increase in
revenue or profitability leads to substantial cash accrual, or if
working capital management improves significantly. The outlook
may be revised to 'Negative' if financial risk profile weakens
further because of decline in operating profitability.
Incorporated in 1957 as a private limited company, SPIL
manufactures plywood and allied products. It became a deemed
public limited company in 1974 and is listed on the Bombay Stock
Exchange. Units are in Jeypore, Assam, and Rajkot, Gujarat. It
also owns a bought-leaf tea processing factory in Jeypore.
Net loss was INR5.73 crore on an operating income of INR182.31
crore in fiscal 2016, against a net loss of INR75 lakh on an
operating income of INR203.36 crore in the previous fiscal.
SWASTIK DENIM: CRISIL Reaffirms B+ Rating on INR7.3MM Term Loan
---------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Swastik Denim
Private Limited continues to reflect the modest scale of
operations in the highly fragmented textile industry and modest
financial risk profile marked by small networth and high gearing.
These strengths are partially offset by the extensive industry
experience of promoters.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.5 CRISIL B+/Stable (Reaffirmed)
Term Loan 7.3 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition: Revenue,
at INR 9.37 crore in fiscal 2016, is expected touch INR 13.0
crore in the current fiscal. Operations should remain exposed to
intense competition.
* Below-average financial risk profile: Financial risk profile is
below-average, marked by small networth of INR 3.02 crore and
high gearing of 3.0 times.
Strength
* Extensive experience of promoters: Benefits from the two-decade
long industry experience of promoters should support business
risk profile.
Outlook: Stable
CRISIL believes SDPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if increase in revenue and cash accrual strengthens
financial risk profile. The outlook may be revised to 'Negative'
if low revenue or profitability, or stretch in working capital
cycle weakens debt-servicing ability.
SDPL, incorporated in 2012, is promoted by Mr. Sandeep Patani,
Mr. Sanjay Patani, Mr. Chhogalal Vadera, Mr. Kishor Mundra and
Mr. Sachin Zanwar. The company is engaged sizing of raw cotton on
a job work basis and started commercial production in April 2015.
Its manufacturing unit is in Kolhapur (Maharashtra).
SDPL has reported loss of INR0.48 crore on net sales of INR9.37
crore for fiscal 2016.
UNITED INDIA: CRISIL Reaffirms 'B' Rating on INR28.7MM Pack Loan
----------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
United India Shoe Corporation Private Limited (UNISCO; part of
the UNISCO group) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.5 CRISIL A4 (Reaffirmed)
Export Packing
Credit 28.7 CRISIL B/Stable (Reaffirmed)
Letter of Credit 8.5 CRISIL A4 (Reaffirmed)
Long Term Loan 20 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect a modest financial risk profile,
particularly liquidity, and susceptibility to intense
competition. These rating weaknesses are partially offset by the
experience of the promoters in the leather footwear industry.
Analytical Approach
For arriving at the ratings, CRISIL had earlier combined the
business and financial risk profiles of UNISCO and UNICO Leather
Product Pvt Ltd. This is because the two companies, together
referred to as the UNISCO group, were under a common management
and had fungible cash flows
However, CRISIL has now changed its analytical approach and has
combined the business and financial risk profiles of UNISCO and
UNICO Leather Product & Co (UCCO), as the two entities together
referred to as the UNISCO group, are under a common management
with significant financial and operational linkages. ULPP is now
handled separately with no linkages with UNISCO as per
management's stance.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest financial risk profile
Gearing was 1.7 times as on March 31, 2016. Furthermore, exposure
to associate companies has been high at INR54 crore as against a
networth of INR28.7 crore as on this date, constraining the
overall financial risk profile
* Susceptibility to intense competition
UNISCO group continues to remain exposed to intense competition
in the export market as reflected in revenue decline of 16%
fiscal-on-fiscal in 2016. The operating profitability also
reduced to 3% from 6.1% due to pricing pressure.
Strength
* Extensive experience of the promoters
The promoters worked extensively with other leather companies
prior to starting UNISCO; this has resulted in establishing a
strong clientele base in the US market.
Outlook: Stable
CRISIL believes the UNISCO group will continue to benefit from
the extensive industry experience of its promoters. The outlook
may be revised to 'Positive' in case of significant improvement
in revenue and profitability, leading to better cash accrual and
liquidity. The outlook may be revised to 'Negative' if there is a
decline in profitability margins, large, debt-funded capital
expenditure, or an increase in investments in associate entities,
adversely impacting the financial risk profile.
Established in 2001, UNISCO manufactures leather shoes. UCCO,
established in 2015, manufactures shoe uppers and supplies them
to UNISCO. The day to day operations are handled by Mr. Mohamed
Akmal.
In fiscal 2016, the group had a net profit of INR3.2 crore on net
revenue of INR194.0 crore, against a net profit of INR2.6 crore
on net revenue of INR231.4 crore in fiscal 2015.
VEL CASTINGS: CRISIL Assigns 'B' Rating to INR11MM Term Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Vel Castings Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B/Stable
Term Loan 11 CRISIL B/Stable
The rating reflects exposure to risks related to the company's
nascent stage and small scale of operations, and below-average
financial risk profile. These weaknesses are partially offset by
the extensive experience of the promoter in the automotive
component industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks related to the nascent stage and small scale
of operations: Commercial operations commenced only in April
2016. Though the promoter has extensive experience in the
automotive industry, the company is exposed to risks related to
ramp up in operations.
* Below-average financial risk profile: This is because of a
highly leveraged capital structure and weak debt protection
metrics. The gearing, which was at 1.74 times as on March 31,
2016, is expected to deteriorate over the medium term on account
of high reliance on debt to fund additional capital expenditure
and working capital requirement. Debt protection metrics are
expected to remain weak over this period due to modest
profitability and weak cash accrual.
Strength
* Extensive industry experience of the promoters
Mr. E. Madhavan is a first generation entrepreneur and a well-
qualified technocrat with experience of close to two decades in
selling wet brake assemblies to tractor manufacturers in India.
Outlook: Stable
CRISIL believes VCPL will continue to benefit from the extensive
industry experience of its promoter. The outlook may be revised
to 'Positive' in case of successful stabilisation of operations
and increase in revenue and profitability. The outlook may be
revised to 'Negative' in case of a decline in revenue or
profitability, or larger-than-expected debt-funded capital
expenditure, resulting in deterioration in the financial risk
profile.
VCPL, incorporated in 2014 and based in Vellore, Tamil Nadu, is
promoted by Mr. E.Madhavan and his wife Mrs Shanthi Madhavan. The
company manufactures castings for automotive components.
Commercial operations commenced from April 2016.
=================
I N D O N E S I A
=================
SRI REJEKI: Moody's Affirms B1 CFR, Outlook Positive
----------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating (CFR) of P.T. Sri Rejeki Isman Tbk and the B1 rating on
the senior unsecured notes due 2019 and 2021, and issued by
Golden Legacy Pte. Ltd. and guaranteed by Sritex.
The outlook on all the ratings is positive.
RATINGS RATIONALE
"The affirmation of Sritex's B1 CFR reflects the company's robust
revenue and EBITDA growth in 2016, and Moody's views that the
recent completion of its capacity expansion project positions it
for solid earnings and cash flow growth in 2017," says Brian
Grieser, a Moody's Vice President and Senior Analyst.
Despite the strong earnings growth, debt is expected to increase
in 2016, as the company finished its three-year expansion project
and invested in raw materials to support the ramp up of its new
capacity in the garment business. As a result, leverage - as
measured by debt-to-EBITDA - likely rose to over 4.0x at 31
December 2016 from 3.8x at December 31, 2015; tempering upward
ratings momentum.
Sritex's B1 CFR continues to reflect its: (1) solid EBITDA
margins, approaching 20%; (2) track record of revenue and
earnings growth; (3) completion of its large, debt-funded capital
spending program on time and on budget in 2016; (4) customer and
geographic sales diversification; and (5) solid liquidity
profile.
"The positive outlook on Sritex's CFR continues to reflect
Moody's expectations that the company's earnings will benefit
from strong demand for its textile and garment products in 2017,
and that garment sales will represent a greater proportion of
Sritex sales; thereby supporting margin expansion," adds Grieser
who is also the Lead Analyst on Sritex.
Moody's expects Sritex's free cash flow to turn positive in 2017,
due to a combination of higher EBITDA generation and materially
lower capital expenditures. Moody's expects this to reduce Sritex
reliance on incremental debt in 2017, for the first time since
the start of the three-year expansion project.
The ratings could be upgraded within the next 12 months if Sritex
maintains its stable operating and financial profile, with cash
flows exceeding capital spending.
In particular, debt-to-EBITDA levels approaching 3.5x and EBITA-
to-interest expense above 3.5x would be supportive of an upgrade.
The company would also need to maintain its good liquidity
profile, supported by high cash balances and committed bank
facilities.
A near-term downgrade of the ratings is unlikely, given the
positive outlook. However, the outlook could return to stable if
any of the following occur:
(1) Rising wages and other input costs reduce Sritex's cost
competitiveness, such that its EBITDA margins fall below 15% on a
sustained basis; (2) Sritex expands its business through debt-
funded acquisitions or capital expenditures, such that debt-to-
EBITDA exceeds 4.0x on a sustained basis; (3) Related-party
transactions weigh on margins or weaken cash flow prospects; or
(4) Liquidity deteriorates due to either falling cash balances or
a loss of access to its credit facilities.
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
P.T. Sri Rejeki Isman Tbk, located in central Java, Indonesia, is
a vertically integrated manufacturer of textiles and textile
products. Its operations are spread across 25 factories,
consisting of nine spinning plants, three weaving plants, five
finishing plants and eight garment plants. Net revenues generated
by its four divisions totaled approximately S499 million for nine
months ending Sept. 30, 2016.
=========
J A P A N
=========
TOSHIBA CORP: Mulls Sale of Controlling Stake in US Nuclear Unit
----------------------------------------------------------------
Bloomberg News reports that Toshiba Corp. is considering the sale
of a majority stake in its Westinghouse nuclear unit as the
company grapples with construction delays and a multibillion
dollar writedown in the business. Shares reversed an earlier
decline.
According to the report, the Tokyo-based company is reevaluating
Westinghouse's position within the group and it may deconsolidate
the nuclear unit by selling a controlling equity stake. Bloomberg
says Toshiba made the announcement as it gained approval to delay
the release of third-quarter earnings until April 11. Shares
reversed losses of as much as 8.8 percent and gained 0.5 percent
at the close in Tokyo, the report says.
Westinghouse has been at the center of Toshiba's most recent
problems amid cost overruns on nuclear projects and related
litigation, Bloomberg notes. While the company was due to report
final figures on March 14, it said it needed more time to examine
reports of "inappropriate pressure" internally to push through
the acquisition of a U.S. construction firm specializing in
building atomic plants, according to Bloomberg. Toshiba has
estimated it will need to take a writedown of JPY712.5 billion
($6.2 billion) but it hasn't been able to get its auditors to
sign off on the earnings results, Bloomberg relates.
"The shares are up because the company has come out and shown its
willingness to make strategic decisions about Westinghouse,"
Bloomberg quotes Hideki Yasuda, an analyst at Ace Research
Institute, as saying. "The uncertainty over the extent of losses
in the nuclear business has been the number one source of worry.
Sloughing it off would bring stability and a higher valuation for
Toshiba."
According to Bloomberg, Toshiba said on March 14 it is planning
to sell about JPY160 billion of assets in the 2016 fiscal year.
It also plans to cut the number of board members and have a
majority of directors from outside the company, the report
relays.
Bloomberg says Westinghouse appears to be already assembling a
team of lawyers and advisers to help with the restructuring. The
company has hired PJT Partners Inc., people with knowledge of the
matter have said, Bloomberg relays. Lisa Donahue of AP Services,
LLC, an affiliate of AlixPartners, will lead the Pittsburgh-based
company's operational restructuring efforts, Bloomberg reports
citing a spokeswoman at Westinghouse. It also brought in
bankruptcy attorneys from Weil Gotshal & Manges LLP, Reuters
reported earlier, Bloomberg relays.
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, large-
scale 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.
=================
S I N G A P O R E
=================
HEALTHWAY MEDICAL: Unable to Pay Salaries to Doctors
----------------------------------------------------
The Straits Times reports that the turmoil at private clinic
operator Healthway Medical Corp (HMC) is coming to a head.
Not only has the Singapore Exchange (SGX) directed HMC to go back
to shareholders to get their approval before drawing down on a
controversial loan, but the firm's clinics also appear to be
falling into disarray, the report says.
Checks by The Straits Times showed that no doctors turned up for
work at seven of its family clinics on March 13. According to the
clinics' receptionists, this was because certain anchor doctors
fell ill and no locum doctors could be found to take their place,
the report relates.
At Healthway's Holland Drive clinic, a receptionist said over the
phone that no doctor would be on duty this week, until the anchor
doctor comes back next Tuesday (March 21), according to the
report.
In a weekend announcement, HMC disclosed that it had not paid the
salaries of its doctors and senior management, amounting to
SGD3.9 million, for last month, The Straits Times relates.
The report says the company had started to fall behind on
payments even earlier, claimed a doctor who works for the group.
The doctor, who declined to be named, said: "Doctors don't live
hand to mouth. If they fold, they fold. I can work somewhere
else."
Asked how it was handling the situation, HMC said: "We have, and
manage, over 120 full-time doctors . . . Locums are in short
supply due to the school holidays. On the other hand, our
specialist and dentist clinics were relatively crowded today,"
the report relays.
The Straits Times notes that HMC is in a liquidity crunch after
losing millions of dollars in questionable loans to two entities.
The SGX has called for an independent review of these loans.
HMC had a cash balance of just $527,000 at the end of last year
against trade and other payables of $27.7 million. It needs $10.7
million to settle overdue payroll and debt obligations by March
31, The Straits Times discloses.
HMC also has some egg on its face now after an onerous $70
million convertible bond deal it inked in January with a fund
called Gateway raised SGX's eyebrows and an outcry from minority
shareholders, according to The Straits Times.
The bonds would be secured on the shares of all HMC group
companies, meaning a default would result in a loss of HMC's
entire core business, the report notes. Gateway would also be
transferred a controlling interest in HMC as part of the bond
issuance. One day before the notes were set to be issued, SGX
made a rare move to step in. It told HMC the issuance must be put
to a shareholder vote in compliance with Catalist listing rules,
the report says.
HMC added in the weekend update that it has re-entered
discussions with Gateway to consider alternative proposals, The
Straits Times adds.
Gateway told The Straits Times: "Any new proposal will take into
account the issues raised by SGX.
"Given the very weak financial health of the company, no
responsible lender would give money without tight controls on the
company and on how the money was used."
If a shareholder meeting is held to vote on the Gateway deal, it
is not certain how the votes will swing, the report adds.
Healthway Medical Corp is one of Singapore's largest private
clinic operators with close to 50 family clinics.
IREIT GLOBAL: S&P Affirms Then Withdraws 'BB' CCR
-------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term corporate credit
rating on Singapore-based IREIT Global with a stable outlook.
S&P also affirmed the 'axBBB-' long-term ASEAN regional scale
rating on the REIT. S&P subsequently withdrew all the ratings at
IREIT's request.
The affirmed ratings at the time of the withdrawal reflected
IREIT's relatively small scale and concentrated lease expiry
profile compared with rated peers. These risks are balanced by a
stable portfolio of quality assets with high occupancy rates and
strong tenants. The company's business and financial performance
was in line with S&P's expectations as of Dec. 31, 2016. S&P
expects leverage, as measured by a ratio of debt to assets, to
remain at about 40%, even while the company is growing through
acquisitions. This ratio allows for limited financial
flexibility, given the 45% limit for REITs set by the Monetary
Authority of Singapore (MAS). S&P expects the ratio of funds
from operations (FFO) to debt to be stable at 10%-11% over the
next few years.
Tikehau Investment Management Asia Pacific recently purchased 80%
of the shares of the manager of IREIT. S&P do not view the
recent change in ownership and control as having a significant
effect on the business or financial prospects. Tikehau will
broaden the mandate from office properties to include industrial
and retail properties in Europe. S&P expects the leverage to be
maintained despite the acquisition strategy, due to the MAS
regulation. In addition, any risks due to property type or
geographical location are likely to be offset by increases in
scale and diversity. S&P understands that Tikehau has a broad
network in Europe and should be able to source potential deals
for the company.
At the time of the withdrawal, the stable outlook reflected the
view that IREIT will gradually improve its portfolio scale and
diversity through acquisitions. S&P believes the company would
also continue adhering to its financial policy of keeping
leverage below 45%. S&P also expects IREIT to maintain its
stable income and financial strength.
====================
S O U T H K O R E A
====================
DAEWOO SHIPBUILDING: May Face Crisis in April Due to Debts
----------------------------------------------------------
Park Hyong-ki at The Korea Times reports that Daewoo Shipbuilding
& Marine Engineering (DSME), once one of Korea's biggest
shipbuilders, faces a potential crisis, despite claims to the
contrary.
The Korea Times relates that the financial authority in South
Korea has assured the market that the company faces no such
scenario where it could default on its debt. But the question
remains as to whether Daewoo can refinance and repay
KRW440 billion owed to investors next month.
With the company running out of money without any new projects
that can improve cash flow, the market remains concerned over the
lack of liquidity, the report says.
According to the report, the state-run Korea Development Bank
(KDB) and Export-Import Bank of Korea injected more than
KRW4 trillion into DSME in 2015. KDB is DSME's main creditor bank
and largest shareholder with a 79% stake, the report notes. But
the company has used most of that capital, and barely has enough
money to repay its April debt, the Korea Times notes.
Even after it pays debt due in April, it still needs to refinance
debt worth KRW500 billion due in the second half of this year. In
total, the company needs about KRW1 trillion to repay its debt
this year, the Korea Times discloses.
The company raised about KRW1.8 trillion via new shares from KDB
last December, the Korea Times relays citing a regulatory filing.
DSME said the purpose of the fundraising was to improve its
finances, the report relates.
"Daewoo Shipbuilding will exert efforts to resolve its liquidity
problem this year by securing funds from new project orders and
implementing self-rehabilitation," the report quotes a KDB
official as saying. "KDB and other creditor banks will closely
monitor the company, and manage both its long and short-term
liquidity."
According to the report, KDB CEO Lee Dong-geol said last month at
a National Assembly meeting, "KDB is looking into ways to secure
liquidity for DSME. It will come out with a plan in late March."
DSME's only hope at this point is to receive payment for two
drill ships the company built for Sonangol, Angola's state-run
oil company, the report notes. DSME secured the $1.2 billion
order in 2013. But delivery of those ships has been delayed
because Angola is in a financial crisis because of low oil
prices, the report states.
Headquartered in Seoul, South Korea, Daewoo Shipbuilding &
Marine Engineering Co. -- http://www.dsme.co.kr/-- is engaged in
building ships and offshore structures. Its product portfolio
includes commercial ships, such as liquefied natural gas (LNG)
carriers, oil tankers, containerships, liquefied petroleum gas
(LPG) carriers, pure car carriers; offshore structures, such as
FPSO vessels, drilling rigs, drillships and fixed platforms, and
naval vessels, including submarines, destroyers, rescue ships and
patrol boats.
The shipyard, along with two other major South Korean
shipbuilders, are currently undergoing self-created debt-
restructuring plans in the face of a decrease in new orders
caused by the protracted global economic slump, according to
Yonhap News.
STX CORP: SM Group Picked as Preferred Bidder
---------------------------------------------
Yonhap News Agency reports that a SM Group-led consortium was
picked as the preferred bidder for STX Corp.
SM Group and three others made offers earlier last week to buy
the cash-strapped STX, an affiliate of the now-defunct shipping
conglomerate STX, Yonhap discloses.
Since mid-February, trading of STX, a trading firm, has been
suspended on the Seoul bourse due to the erosion of its capital
base, according to Yonhap. The company faces the risk of being
delisted if it fails to come up with measures to bolster its
capital base, Yonhap notes.
SM Group, a mid-sized shipping firm, reportedly plans to pour
KRW130 billion into STX, according to the report.
The state-run Korea Development Bank owns 39.59 percent of STX,
with Nonghyup holding 10.07 percent, Yonhap discloses.
Late last year, SM Group, which owns South Korea's No. 2 bulk
carrier Korea Line Corp., acquired the now-defunct Hanjin
Shipping Co.'s U.S.-Asia route and other assets for KRW37 billion
(US$32 million), adds Yonhap.
*********
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, Ivy B. Magdadaro, 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 ***