/raid1/www/Hosts/bankrupt/TCRAP_Public/170324.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Friday, March 24, 2017, Vol. 20, No. 60
Headlines
A U S T R A L I A
ADANI ABBOT: Moody's Affirms Ba2 Senior Secured Rating
COPAL ENGINEERING: First Creditors' Meeting Set for April 3
COPAL FABRICATION: First Creditors' Meeting Set for April 3
DBCT FINANCE: Moody's Changes Outlook Stable & Affirms Ba2 Rating
ELITE LOGISTICS: First Creditors' Meeting Set for March 30
EMAUX WATER: Swimming Pool Equipment Supplier in Liquidation
HMA ARCHITECTS: First Creditors' Meeting Set for March 30
LA TROBE 2017-1: S&P Assigns B Rating on Class F Notes
TS MORGAN: First Creditors' Meeting Set for March 30
C H I N A
WEST CHINA CEMENT: S&P Raises CCR to 'B+' on Improved Liquidity
XINJIANG GUANGHUI: Moody's Gives (P)B3 Rating to New Senior Notes
XINJIANG GUANGHUI: S&P Rates New US Dollar-Denominated Notes B-
I N D I A
A.S. MOTORS: CARE Reaffirms B+ Rating on INR17.15cr LT Loan
AIFAZ COTTON: CARE Assigns B+ Rating to INR12cr LT Loan
AJAY LANDMARK: CARE Assigns 'B' Rating to INR12.25cr LT Loan
ALLIED ENERGY: ICRA Reaffirms B+ Rating on INR6cr Loan
ARYA EDUCATIONAL: CARE Assigns 'B+' Rating to INR9.0cr LT Loan
ASCOTT ELECTRICALS: ICRA Reaffirms B+ Rating on INR4cr LT Loan
CAPITAL CLOTHING: ICRA Reaffirms B+ Rating on INR0.27cr Loan
CHEMIETRON CLEAN: CARE Assigns B+ Rating to INR5.46cr Loan
COMMERCIAL CARRIERS: CARE Assigns 'D' Rating to INR5.99cr Loan
CLUB29 PRIVATE: CARE Lowers Rating on INR12.13cr Loan to 'D'
CYBERWALK TECH: ICRA Reaffirms 'D' Rating on INR68.84cr Loan
DOSHI CERAMIC: ICRA Hikes Rating on INR3.42cr LT Loan to B+
ETHAMES GRADUATE: ICRA Reaffirms B+ Rating on INR16cr Loan
INNOTECH EDUCATIONAL: CARE Assigns 'D' Rating to INR19cr Loan
JAGDAMBAA AGRO: CARE Assigns 'B' Rating to INR21.92cr LT Loan
KAADAMBARY RICETECH: CARE Lowers Rating on INR14.50cr Loan to D
KARTYA CONSTRUCTIONS: ICRA Reaffirms B+ Rating on INR7.85cr Loan
LAVANYA PURE: CARE Assigns 'B' Rating to INR13.32cr LT Loan
MA MONI: CARE Assigns B+ Rating to INR6.40cr LT Loan
MAHABIR INDUSTRIES: CARE Raises Rating on INR9cr LT Loan to BB-
MOTI RAM: CARE Assigns 'B' Rating to INR6.67cr Long Term Loan
NIGAM INDUSTRIES: CARE Assigns B+ Rating to INR6.40cr Loan
NIKI AGRO: CARE Lowers Rating on INR12.24cr LT Loan to 'D'
NORTH EAST FERRP: CARE Assigns B+ Rating to INR5.95cr LT Loan
PALAK FERRO: CARE Lowers Rating on INR6.10cr LT Loan to 'D'
PIONEER GLOBEX: ICRA Lowers Rating on INR15cr Cash Loan to 'D'
R.B. RICE: ICRA Reaffirms 'B' Rating on INR13.50cr Loan
RATAN ENGINEERING: CARE Reaffirms B+ Rating on INR12.75cr Loan
SABARI KRISHNA: ICRA Reaffirms 'B' Rating on INR13.50cr Loan
SAISONS TECHNOCOM: ICRA Assigns B+ Rating to INR20cr Loan
SHREE GANESH: CARE Lowers Rating on INR28.75cr LT Loan to B+
SHREE GANESH: CARE Assigns B+ Rating to INR13.30cr LT Loan
SHRIKALYANI AGRITECH: CARE Assigns 'B+' Rating to INR11.67cr Loan
SIDDHI FERROUS: ICRA Hikes Rating on INR9.5cr Cash Loan to B+
SPEEDAGE TRADE: ICRA Assigns 'B' Rating to INR60cr Loan
SRI LAKSHMI: ICRA Lowers Rating on INR5.50cr Cash Loan to D
SRI SRINIVASA: ICRA Reaffirms B+ Rating on INR6.0cr Loan
STANLUBES & SPECIALITIES: CARE Rates INR4.42cr Loan at B-
STATUS CLOTHING: ICRA Lowers Rating on INR9cr Cash Loan to D
TERRA INFRA: CARE Revises Rating on INR9.28cr Loan to B-
UTTAM GALVA: CARE Reaffirms 'D' Rating on INR3933.94cr Loan
VAMSI PHARMA: ICRA Assigns 'B+' Rating to INR14.05cr LT Loan
VINSHIL POLYCHEM: CARE Reaffirms B+ Rating on INR0.50cr Loan
J A P A N
TOSHIBA CORP: Memory Unit Suitors Seek Partners for Joint Offers
M A L A Y S I A
PRIME GLOBAL: Expects to Report First Quarter Revenue of $327K
N E W Z E A L A N D
MAINZEAL PROPERTY: Court Action Still at Pre-hearing Stage
PUMPKIN PATCH: Catch Group Buys brand and intellectual property
P H I L I P P I N E S
ATLAS CONSOLIDATED: Reports PHP879 Million Net Loss in 2016
S I N G A P O R E
HEALTHWAY MEDICAL: Agree on Amended Terms for SGD70MM Bonds Deal
S O U T H K O R E A
DAEWOO SHIPBUILDING: State-Run Creditors to Provide KRW6.7TT
- - - - -
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A U S T R A L I A
=================
ADANI ABBOT: Moody's Affirms Ba2 Senior Secured Rating
------------------------------------------------------
Moody's Investors Service has affirmed Adani Abbot Point Terminal
Pty Ltd's (AAPT) Ba2 senior secured and senior secured bank
credit facility ratings. The outlook remains negative.
AAPT is part of an obligor group that has economic ownership of
the Abbot Point Coal Terminal in North Queensland under a 99-year
lease with state-owned lessor, the North Queensland Bulk Port
Authority.
Adani Ports and Special Economic Zone Limited (Baa3 negative) is
the ultimate holding company of the AAPT obligor group.
RATINGS RATIONALE
"The Ba2 ratings are supported by the take-or-pay contractual
arrangements with AAPT's coal mining counterparties, with the
contracts providing for the socialization of lost revenue in the
event of counterparty default or contract termination", says
Arnon Musiker, a Moody's Senior Vice President.
Such a provision represents an important source of financial
flexibility, given AAPT's high financial leverage.
The Ba2 ratings also reflect AAPT's indirect exposure to coal
commodity risk, although such risk has reduced over the past
several months, with mining counterparties experiencing better
cash margins, owing mainly to more favourable coal prices
compared to a year ago.
"The negative outlook primarily reflects the challenging nature
of the debt refinancing task facing the company over the next 12
to 18 months, with around AUD977 million of debt - representing
around 70% of total debt - maturing in November 2018", adds
Musiker.
The negative outlook also considers a degree of uncertainty
associated with the outcome of tariff renegotiations with its
customer counterparties, a process that is ongoing and that could
take several months to conclude.
Furthermore, the negative outlook reflects some recontracting
risk associated with contracts with subsidiaries of Glencore
International AG (Baa3 stable) and which mature in 2020. Moody's
understands that Glencore is required to give notice of 36 months
of its intention to renew the contract, which falls due later
this year.
Moody's understands that AAPT has plans to reduce the refinancing
task, including applying the proceeds -- from a partial novation
and termination of its user agreement with a subsidiary of Rio
Tinto -- towards debt reduction. That being said, the amount of
debt to be refinanced will remain challenging, and further
progress in establishing and executing a reliable refinancing
plan will provide support for the ratings.
Moody's expects AAPT's financial leverage - as measured by funds
from operations (FFO)/debt - to provide support for the ratings,
although challenges related to refinancing, the uncertainty
surrounding tariff renegotiations, and the recontracting of the
volumes of Glencore's subsidiaries remain key issues over the
near term.
A positive ratings trend is likely to develop, assuming that the
outcome of the tariff renegotiations results in FFO/debt above 7%
and FFO/interest cover in the low-to-mid 2x range, and that there
is considerable progress in executing a debt refinancing plan.
On the other hand, the ratings could be downgraded if Moody's
expects that AAPT's FFO/debt will fall below 7% on a consistent
basis. A downgrade is also likely if Moody's believes (i) that
the company is experiencing difficulty in arranging refinancing,
(ii) there is an increased risk of a covenant breach under the
senior secured documents, and/or (iii) the company is not
continuing its track record of compliance with environmental
regulations.
The non-renewal of the contracts with Glencore's subsidiaries
could, in the absence of replacement contracts, also pressure the
ratings.
The principal methodology used in these ratings was Generic
Project Finance Methodology published in December 2010.
Abbot Point Coal Terminal is situated 25km north of Bowen in
Queensland and is the northern most coal terminal in Australia.
Adani Abbot Point Terminal Pty Ltd (AAPT) subleases the land and
fixtures for the terminal from Mundra Port Holdings Trust (MPHT),
which has economic ownership of the terminal under a 99-year
lease with state-owned lessor, the North Queensland Bulk Port
Authority (unrated). AAPT and MPHT together constitute an obligor
group under the senior secured finance documents.
The terminal is operated by Abbot Point Operations Pty Ltd (APO),
which has subcontracted the services to Abbot Point Bulkcoal Pty
Ltd (APB, unrated). APB has operated the terminal since 2000 and
was acquired by APO in October 2016 from Glencore International
AG.
Adani Ports and Special Economic Zone Limited (Baa3 negative) is
the ultimate holding company of the obligors, and has entered
into an agreement to sell its equity stake in MPHT and AAPT to a
related party.
COPAL ENGINEERING: First Creditors' Meeting Set for April 3
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Copal
Engineering Pty Limited will be held at Lawson, Wentworth and
Blaxland rooms at the Chartered Accountants Australia and New
Zealand, Level 9, 33 Erskine Street, in Sydney, New South Wales,
on April 3, 2017, at 10:00 a.m.
Anthony Wayne Elkerton -- anthony@dwadvisory.com.au -- and
Cameron Hamish Gray -- cameron@dwadvisory.com.au -- of Dean-
Willcocks Advisory were appointed as administrators of Copal
Engineering on March 22, 2017.
COPAL FABRICATION: First Creditors' Meeting Set for April 3
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Copal
Fabrication Pty Ltd will be held at Hannell Room at Crowne Plaza
Newcastle, Corner Merewether Street & Wharf Road, in Newcastle,
New South Wales, on April 3, 2017, at 12:00 p.m.
Anthony Elkerton and Cameron Gray of Dean-Willcocks Advisory were
appointed as administrators of Copal Fabrication on March 22,
2017.
DBCT FINANCE: Moody's Changes Outlook Stable & Affirms Ba2 Rating
-----------------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
ratings outlook on DBCT Finance Pty Ltd. and, at the same time,
has affirmed DBCT's Ba2 senior secured ratings.
DBCT is the financing affiliate of DBCT Management Pty Limited
and DBCT Trust, which collectively have economic ownership of the
Dalrymple Bay Coal Terminal through a long-term lease, comprising
a 50-year initial and 49-year option period.
RATINGS RATIONALE
"The change in DBCT's outlook to stable primarily reflects the
stabilizing nature of the environment for the coal market and
Moody's expectations that most of the terminal's coal mining
counterparties will continue to ship volumes at a level
sufficient to maintain the terminal's high utilization rate over
the next 1 to 2 years," says Arnon Musiker, a Moody's Senior Vice
President.
The high ongoing utilization rate of around 80-90%, coupled with
the improved coal market environment, underpins the company's
cash flow-generating capacity, and increases the likelihood that
DBCT will be able to recover (or "socialize") lost revenue,
should any counterparties elect not to renew their contracts on
maturity.
DBCT now has the right, under its regulatory framework, to reset
tariffs for remaining users in order to socialize lost revenue
following default and immediately on contract termination.
The company has limited financial flexibility to absorb cash flow
volatility due to its high leverage. Moody's expects funds from
operations (FFO)/debt to range between 6% and 7%, which is close
to the rating tolerance level of 6%.
As such, DBCT's ability to recover revenue losses through
socialization on a timely basis is a key source of financial
flexibility, particularly if its counterparties either do not
renew, or reduce their take-or-pay commitments on contract
renewal dates.
DBCT's ratings are further supported by the take-or-pay
provisions in its contracts with users, which allow DBCT to
recover operating costs on a timely basis and earn a rate of
return on its asset base. The ratings also reflect the terminal's
operating track record, and the current absence of a requirement
for a material expansion program with associated execution risk.
The Queensland Competition Authority's (QCA) approval of DBCT's
2017 Access Undertaking in February 2017, which contains its
standard terms and conditions for access seekers, provides
further visibility for the regulatory period to 2021.
The ratings incorporate Moody's expectation of continued support
by DBCT's ultimate shareholder, Brookfield Infrastructure
Partners LP ("BIP", unrated).
The ratings could be subject to upward momentum if coal market
conditions remain supportive and there is increased certainty of
DBCT's contracts rolling over on maturity.
The ratings could be downgraded if DBCT's financial profile
materially weakens, and/or Moody's believes that (1) DBCT is
experiencing difficulties in achieving socialization of lost
revenue following a material contract termination,(2) DBCT's
strategic importance to users is declining, and/or (3) DBCT is
failing to maintain its operating track record, particularly if
such failure has environmental implications.
The principal methodology used in this rating was Generic Project
Finance Methodology published in December 2010.
Dalrymple Bay Coal Terminal, which has a coal handling capacity
of 85 million tonnes per annum, is situated at the Port of Hay
Point, 38 kms south of Mackay in Queensland, adjacent to the Hay
Point Coal Terminal. This latter terminal is owned by the BHP
Billiton Limited (A3/P-2 stable) Mitsubishi Corporation (A2/P-1
stable) alliance.
The DBCT Group is owned by BIP, which is in turn 30% owned by
Brookfield Asset Management Inc. ("BAM", Baa2 stable) and 70% by
the public. BIP owns and operates long-life assets in the
utilities, transport, energy and communications sectors across
North and South America, Australasia and Europe. It is a
publicly-traded partnership which is also managed by BAM.
ELITE LOGISTICS: First Creditors' Meeting Set for March 30
----------------------------------------------------------
A first meeting of the creditors in the proceedings of:
-- Elite Logistics Holdings Pty Ltd;
-- Elite Logistics (Victoria) Pty Ltd;
-- Elite Logistics (Queensland) Pty Ltd;
-- Elite Logistics Pty Ltd; and
-- Australian Liquor Network Pty Ltd
will be held at the offices of Jones Partners Insolvency &
Business Recovery, Level 13, 189 Kent Street, in Sydney, on
March 30, 2017, at 9:30 a.m.
Bruce Gleeson and Daniel Robert Soire of Jones Partners
Insolvency were appointed as administrators of Elite Logistics on
March 20, 2017.
EMAUX WATER: Swimming Pool Equipment Supplier in Liquidation
------------------------------------------------------------
Chris Maher at Splash Magazine reports that following financial
difficulties, swimming pool equipment supplier Emaux Water
Technology (Australia) has gone into liquidation.
According to Splash Magazine, the liquidation only applies to the
Perth-based supplier Emaux Water Technology (Australia) and does
not affect the Emaux China manufacturing operation in Hong Kong,
which is itself owed monies by the Australian operation.
At the time of writing, Emaux China had not registered as a
creditor although it had been given notice by the liquidators,
Splash Magazine notes.
While Emaux Water Technology (Australia) has a supplier contract
with Emaux China, there are no common ownerships, Splash Magazine
says.
The report says registered creditors so far include 23 companies
totalling AUD279,099 in debt, and any further creditors are
advised to contact the liquidators.
Chris William of WA Insolvency Solutions has been appointed
liquidator jointly with David Hurt, Splash Magazine notes.
A very orderly creditors' meeting was held in Perth on March 16,
ratifying the liquidator's appointment and approving the
remuneration, according to Splash Magazine. Further meetings will
only be held if there is the need to gain creditors' approval for
an action by the liquidator.
Assets include stock and some vehicles. There is no intellectual
property and there are no primary secured creditors, the report
says.
According to the report, two salespeople have been engaged by the
liquidators to sell stock and they have received a couple of
offers to bulk-buy stock and are considering them based on what
would provide the best return for creditors.
Anyone interested in purchasing stock, currently selling at cost
or near cost price, should contact Monty Purich of WA Insolvency
Solutions on (08) 9463-3048 or by email mpurich@wais.com.au.
HMA ARCHITECTS: First Creditors' Meeting Set for March 30
---------------------------------------------------------
A first meeting of the creditors in the proceedings of HMA
Architects Pty Ltd will be held at the offices of Pitcher
Partners, Level 1, 914 Hay Street, in Perth, on March 30, 2017,
at 11:00 a.m.
Bryan Kevin Hughes, Daniel Bredenkamp and Renee O'Driscoll of
Pitcher Partners were appointed as administrators of HMA
Architects on March 20, 2017.
LA TROBE 2017-1: S&P Assigns B Rating on Class F Notes
------------------------------------------------------
S&P Global Ratings assigned its ratings to the eight classes of
nonconforming residential mortgage-backed securities (RMBS)
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 non-
conforming residential mortgages originated by La Trobe Financial
Services Pty Ltd.
The 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.
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.
TS MORGAN: First Creditors' Meeting Set for March 30
----------------------------------------------------
A first meeting of the creditors in the proceedings of
TS Morgan Developments Pty Ltd, trading as Evoque Developments &
Somersetmorgan, will be held at The Australian Institute of
Company Directors, Level 23, Westpac House, 91 king William
Street, in Adelaide, South Australia, on March 30, 2017, at
11:00 a.m.
Domenic Calabretta and Grahame Ward of Mackay Goodwin were
appointed as administrators of TS Morgan on March 21, 2017.
=========
C H I N A
=========
WEST CHINA CEMENT: S&P Raises CCR to 'B+' on Improved Liquidity
---------------------------------------------------------------
S&P Global Ratings said that it had raised its long-term
corporate credit rating on West China Cement Ltd. (WCC) to 'B+'
from 'B'. The outlook is stable. S&P also raised the long-term
issue rating on the company's outstanding senior unsecured notes
to 'B+' from 'B'. At the same time, S&P raised its long-term
Greater China regional scale ratings on WCC and the notes to
'cnBB' from 'cnB+'. WCC is a China-based cement producer.
"We upgraded WCC because we expect the company to maintain its
improved liquidity and profitability over the next 12 months,"
said S&P Global Ratings credit analyst Claire Yuan.
WCC's liquidity position improved because of much stronger
operating cash flows than S&P had originally anticipated due to
the company's ongoing efforts to reduce costs and higher cement
prices in Southern Shaanxi. Moreover, WCC recently repaid its
Chinese renminbi (RMB) 800 million short-term commercial paper
due March 2017, by issuing RMB400 million of new short-term
commercial paper, a RMB200 million two-year bank loan, and cash
on hand. S&P therefore revised its assessment of the company's
liquidity position to adequate, from less than adequate.
"We see no impact on WCC's operations of the termination of Anhui
Conch Cement Co.'s acquisition offer. Instead, WCC is
collaborating with Anhui Conch, its second-largest shareholder,
and implementing various cost control measures to improve
operating efficiency. The results of these measures include 4.5%
savings in electricity costs due to waste heat recycling systems.
Operating efficiency also benefitted from 11.6% savings in
material costs in 2016, including lower limestone prices and per
ton consumption, which moderated the 4.8% increase in unit costs
of coal. On the other hand, price improvement in Southern
Shaanxi, backed by WCC's good market share and pricing power,
moderate high pricing competition in other regions. As a result,
WCC's EBITDA margin increased to 31.4% in 2016, from 24.7% in
2015. We expect the company's adjusted EBITDA margin will
normalize to about 25%-30%, slightly lower from 31.4% in 2016,
reflecting our overall higher coal price expectation for 2017,"
S&P said.
"In our base case, we expect WCC to continue to generate healthy
operating cash flows in 2017, with the debt-to-EBITDA ratio
improving to 3.0x-3.5x, from 3.5x in 2016. That's because we
expect cement prices to remain stable in 2017. While high
infrastructure spending supports demand growth, the government's
continuous cooling measures for the property sector could temper
the growth prospects. We believe WCC's more stringent control on
costs could stabilize its operating margins. Moreover, the
company's debt maturity profile has improved, given the limited
amount of debt maturing in 2018, following its two-year bank loan
of RMB200 million," S&P noted.
WCC's liquidity position has improved after it repaid its RMB800
million short-term commercial paper due in March 2017. S&P
expects the company to maintain adequate liquidity, with its
liquidity sources sufficiently covering its liquidity uses by
more than 1.2x over the next 12 months.
"The stable outlook reflects our expectation that WCC's ongoing
efforts to control costs could help the company maintain its
EBITDA margins over the next 12 months," said Ms. Yuan.
S&P expects cement prices to stabilize because market conditions
for cement producers will improve during this time, in S&P's
view, mainly backed by recovery in infrastructure investment.
S&P may raise the rating if WCC's financial leverage improves
while it manages its refinancing more proactively. This could
happen if the company's operating performance improves such that
its debt-to-EBITDA ratio falls below 3x on a sustained basis
while liquidity remains at least adequate.
S&P may lower the rating if WCC's operating performance
deteriorates or market conditions weaken, such that the debt-to-
EBITDA ratio exceeds 4x on a sustainable basis. This also could
happen if average selling prices for cement continue to decline
or WCC's sales volume is significantly lower than S&P's
expectation.
XINJIANG GUANGHUI: Moody's Gives (P)B3 Rating to New Senior Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)B3 rating
to the proposed senior notes to be issued by Xinjiang Guanghui
Industry Investment (Group) Co., Ltd. (B2 stable) (Guanghui
Group).
The proceeds from the proposed note issuance will be used for
overseas investment projects and other general working capital
purposes.
The provisional status of the note rating will be removed once
Guanghui Group has completed the notes issuance upon satisfactory
terms and conditions, including proper registrations with the
National Development and Reform Commission and the State
Administration of Foreign Exchange in China (Aa3 negative).
RATINGS RATIONALE
"The proposed notes will provide funding to support Guanghui
Group's investment overseas in the energy sector. Although there
is execution risk related to its investment, the company has
experience in the oil and gas sector and the amount is not large
relative to the group's total assets," says Gerwin Ho, a Moody's
Vice President and Senior Analyst.
Furthermore, the proposed notes are within Moody's forecast of
the new debt to be raised by the company in 2017.
Moody's expects that Guanghui Group's consolidated revenue and
EBITDA will grow faster than its gross debt in 2017.
After the notes are issued, Moody's expects adjusted debt/EBITDA
in the next 12 to 18 months will be in the range of 8.5x to 9.0x,
which will match its corporate family rating of B2.
The rating of the proposed notes has been notched down from the
corporate family rating of B2 because investors in the notes will
be exposed to the subordination risk arising from the high level
of priority debt at the operating subsidiaries of Guanghui Group.
Guanghui Group's B2 corporate family rating reflects its (1)
37.26% equity interest in China Grand Automotive Services Co.,
Ltd. (CGA, B1 stable), the leading auto dealer in China, with a
large network, strong geographic coverage, and a diversified
brand offering, and (2) business diversification.
On the other hand, the rating is constrained by the company's (1)
weak debt-servicing ability due to the fact that it does not have
majority ownership in CGA and the absence of significant cash
inflows from dividends from CGA; (2) high leverage due to the
sizeable funding needs for the group's high level of capital
expenditure and weakening profitability; and (3) Guanghui Group's
private company status.
The stable outlook reflects Moody's expectation that (1) Guanghui
Group will not reduce its ownership and control in CGA; (2) CGA
will maintain its leadership position in the auto dealership
business and will not aggressively take on material debt-funded
acquisitions; and (3) the Guanghui Group companies will be able
to refinance their short-term debt.
The rating could come under upgrade pressure if Guanghui Group:
(1) remains the largest shareholder in CGA, which in turn shows
good growth in revenues and profits, while containing growth in
debt leverage; (2) improves liquidity, such that short-term
debt/total debt falls and cash/short-term debt is close to 1x;
and/or (3) improves its credit metrics, such that adjusted
debt/EBITDA falls to 5.5x-6.0x and EBITDA/interest exceeds 2.5x
on a sustained basis.
On the other hand, the rating would be under pressure for
downgrade if (1) Guanghui Group reduces its ownership or control
in CGA; (2) CGA's position in the auto dealership market weakens
materially, or debt leverage rises as a result of debt-funded
acquisitions, or aggressive expansion; and/or (3) the Guanghui
Group's liquidity or credit metrics further deteriorate, such
that adjusted debt/EBITDA exceeds 9.0x and EBITDA/interest falls
below 1.0-1.5x on a sustained basis.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
Xinjiang Guanghui Industry Investment (Group) Co., Ltd. is a
private company that operates in three key segments, namely auto
dealership, energy and real estate. At end-2016, the company held
a 37.26% stake in China's largest auto dealer by revenue, China
Grand Automotive Services Co., Ltd.
Founded in 1989, the unlisted Xinjiang Guanghui was 63.6% owned
by the Mr. SUN Guangxin at end-2016. Mr. Sun is the chairman,
founder and controlling shareholder.
XINJIANG GUANGHUI: S&P Rates New US Dollar-Denominated Notes B-
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating and
'cnB+' long-term Greater China regional scale rating to a
proposed issue of U.S. dollar-denominated senior unsecured notes
by Xinjiang Guanghui Industry Investment (Group) Co. Ltd.
(Guanghui: B/Stable/--; cnBB-/--). The rating on the notes is
one notch below the corporate credit rating on Guanghui,
reflecting S&P's opinion that the proposed notes are structurally
subordinated to priority obligations at the operating entities.
The ratings on the notes are subject to our review of the final
issuance documentation.
S&P expects Guanghui to use the issuance proceeds for overseas
investment and general corporate purposes.
The rating on Guanghui reflects the company's operations in
China's highly competitive and fragmented auto retail industry,
and its exposure to the volatile energy and cyclical property
segments. S&P also expects Guanghui's financial leverage to
remain high due to the company's aggressive debt-funded expansion
appetite and high capital investment required in the energy and
property businesses. Guanghui's satisfactory market position as
the largest auto retailer in China and its extensive nationwide
network and diversified product offering temper these weaknesses.
The stable outlook on Guanghui reflects S&P's expectation that
the company will continue to shift its focus to higher-margin
after-sales services and maintain its satisfactory market
position in China's auto retailing market over the next 12
months. These factors would support Guanghui's cash flow
generation. However, S&P expects the company's leverage to
remain high due to its aggressive debt-funded expansion appetite.
=========
I N D I A
=========
A.S. MOTORS: CARE Reaffirms B+ Rating on INR17.15cr LT Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
A.S. Motors Private Limited (ASMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 17.15 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ASMPL continues to
remain constrained on account of its financial profile marked by
thin profitability, highly leveraged capital structure, weak debt
coverage indicators and moderate liquidity profile. The rating,
further, remains constrained on account of its presence in the
highly competitive dealership industry coupled with limited
bargaining power against principal automobile manufacturer. The
ratings, however, continue to draw strength from the long
standing experience of the promoters with its established track
record of operations in the industry, continuous growth in its
scale of operations marked by increasing Total Operating Income
(TOI) during the last two financial years ended FY16 (refers to
the period April 1 to March 31), its diversified revenue mix due
to its presence in passenger car, two-wheelers and tractors
segments along with its association with established Original
Equipment Manufacturers (OEMs).
ASMPL's ability to increase its scale of operations while
improving profitability along with improvement in the solvency
position as well as efficient management of working capital shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Thin profitability
The profitability of the company continued to remain thin owing
to trading nature of the business and its presence in the highly
competitive automobile dealership business. During FY16, the
PBILDT margin of the company remained stable, although PAT margin
witnessed decline over FY15 owing to higher interest expenses led
by higher avail of external borrowing.
Weak solvency position
Its capital structure continued to remain highly leveraged
attributed to increase in its total debt level pertaining to
higher reliance on external borrowings by ASMPL to fund its
working capital requirements. Furthermore, the debt service
coverage indicators of the company also stood weak and
deteriorated from FY15 level.
Moderate liquidity position
The operations of the company are working capital intensive in
nature supported largely by the bank borrowings as evinced by
almost full utilization during the past twelve months period
ended January, 2017.
Continuous growth in TOI
During FY16, TOI witnessed significant growth by around 23% y-o-y
on the back of increase in revenue generated from HMIL dealership
driven by increase in sales volume by around 88%. Furthermore,
growth was also driven by higher revenue generated from sale of
spares, service income along with discount received and incentive
income.
ASMPL was incorporated in 1988 by Mr. Sanjay Garg, Managing
Director at Gwalior, Madhya Pradesh (MP). Till June, 2014,
ASMPL was having a dealership of Tata Motors Limited's (TML)
passenger cars. However, ASMPL discontinued the dealership of TML
and established the dealership of Hyundai Motor India Limited
(HMIL) for passenger cars from July, 2014 onwards.
The company also has authorized dealership of Honda Motorcycles
and Scooters India Private Limited (HMSI). ASMPL also has
dealership of TAFE (Tractors and Farm Equipment Limited) since
2010. ASMPL has three showrooms located at Gwalior, M.P and also
provides after sales services and spare parts for HMIL, HMSI and
TAFE at its outlet.
AIFAZ COTTON: CARE Assigns B+ Rating to INR12cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Aifaz
Cotton Processors (ACP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ACP is constrained
on account of modest scale of operations with low capitalization,
low and fluctuating profitability margins owing to limited value
addition nature of business, leveraged capital structure and
moderate debt coverage indicators and working capital intensive
operations. The rating is further constrained on account of
susceptibility of margins to fluctuation in raw material prices,
presence in fragmented and competitive industry, susceptibility
to government policies related to price and export of cotton and
proprietorship nature of constitution.
The rating, however, derives benefit from experience of the
promoter in the industry and location advantage.
The ability of the entity to increase its scale of operations and
improve profitability and capital structure while managing
volatility associated with cotton prices along with efficient
working capital management is a key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced proprietor: The promoter of the entity has an
experience of about a decade in cotton ginning & pressing
business. Furthermore, ACP has a track record of around 9 years
and has reinforced its footings in the cotton business with a
sound base. Over the years, it has developed a market for its
products and established good relations with its customers and
suppliers.
Location advantage: The presence of ACP in cotton producing
region will fetch a location advantage of lower logistics
expenditure. Hence, raw material will be available in adequate
quantity. Moreover, there is robust demand of cotton bales and
cotton seeds in the region due to presence of spinning mills in
the region.
Key Rating Weaknesses
Modest scale and low and fluctuating profitability margins: The
total operating income (TOI) of ACP has been increasing during
last three years ending FY16 (refers to the period April 1 to
March 31). Furthermore, the networth base remained low limiting
financial flexibility and depriving it of benefits of economies
of scale. However, profit margins have been low and fluctuating
during the period owing to fluctuation in input prices and
limited value addition nature of business. However, the same
remained at low level.
Leveraged capital structure and moderate debt Indicators: The
capital structure of the entity remained leveraged owing to high
dependence on external borrowings. Furthermore, the same resulted
in high fixed cost and with net profitability debt coverage
indicators remained moderately weak.
Working capital intensive operations: The operations of the
entity remained working capital intensive with higher utilization
of bank borrowings. The same was due to high inventory holding
due to seasonality associated with availability of raw cotton.
Aifaz Cotton Processors (ACP) was incorporated as a
proprietorship firm in the year 2008. The firm is engaged in the
business of cotton ginning & pressing and trading of cotton,
seeds, oil process at Wane, Yavatmal District. The entity
purchase raw cotton from local market and brokers.
In Ginning Division, ACP grades raw cotton and produces cotton
seeds and then sells it to the oil mills for the further process
of crushing and extracting oil. In Pressing Division, ACP grades
raw cotton into pure cotton and then after pressing it, ACP
produces Cotton Bales and then sells it to Spinning Mills.
The facility of the firm is located at Wani, Yavatmal District
with an installed capacity to gin and press 1500 quintal/ton of
cotton per day. Moreover, by being in the seasonal nature of
industry, the firm operates for 210 days (from October to April)
in a year.
During FY16, the entity reported PAT of INR0.69 crore on a TOI of
INR99.02 crore as against TOI and PAT of INR0.21 crore and
INR68.79 crore, respectively, in FY15.
AJAY LANDMARK: CARE Assigns 'B' Rating to INR12.25cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Ajay Landmark Private Limited (ALPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.25 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating of ALPL is primarily constrained on account of its
presence in the highly competitive and fragmented food processing
industry and seasonality associated with agro industry leads to
fluctuations in the raw material prices and vulnerability to
margins. The rating is, further, constrained on account of
project implementation risk associated with its debt funded
greenfield project for setting up a plant for flour mill division
and its weak financial risk profile marked by weak profitability
margins, leveraged capital structure and stressed liquidity
position.
The rating, however, derives strength from the long standing
experience of the directors along with its established marketing
network with continuous increase in TOI.
The ability of the company to successfully implementing its
project within envisaged time and cost parameters and stabilize
its operations and achieve envisaged level of TOI with efficient
management of working capital would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Project implementation risk
ALPL undertook a project to set up plant for the flour mill
division. The company had envisaged total cost of INR9.50 crore
towards the project and envisaged to be completed in FY16.
However, there is delay in project implementation which led
to cost overrun. The company will incur additional cost to
complete the project and is expected to commence its operations
from March 2017.
Weak Financial risk profile marked by continuous net loss, weak
solvency position and stressed liquidity position PBILDT margin
of the company has witnessed fluctuating trend in last three
financial years ended FY16. During FY15, it registered operating
profit as against operating loss in FY14 whereas in FY16, PBILDT
margin has decreased due to higher manufacturing expenses.
Furthermore, it has registered continuous net loss in last three
financial years ended FY16. Further, in FY16, it has registered
cash loss of INR0.27 crore in FY16.
The capital structure of the company stood highly leveraged as on
March 31, 2016 mainly on account of low net-worth base.
Furthermore, Total debt to GCA stood weak due to negative GCA in
FY16. Interest coverage ratio stood low owing to higher interest
expenses.
The liquidity position of the company stood stressed with 100 %
utilization of working capital bank borrowings for the last
12 months ended December, 2016. Furthermore, operating cycle of
the company stood elongated at 95 days in FY16.
Operating margins are susceptible to the fluctuation in the
prices of agro-based raw materials, which are seasonal in nature.
The primary raw materials of APLP are agro-based commodities like
chilli, turmeric, coriander, cumin etc. as farming of such agro
commodities is done only once in a season. The profitability of
the company is vulnerable to fluctuation in raw material prices
due to commoditized nature of the business and even processes
involved limited value addition. Furthermore, agro-based
commodities being a seasonal crop, it results in higher inventory
holding period.
Presence in highly competitive and fragmented food processing
industry
Indian food processing industry is characterized as fragmented
and competitive due to presence of around 6600 units that
includes organized as well as unorganized players in the
industry. ALPL will be facing stiff competition from organized
players in the market as well as from unorganized players that
are very active at regional level. Furthermore, ALPL also faces
stiff competition from other well known Indian Brands of leading
spices like MDH Masala, Everest Masala, Badshah Masala, Ramdev
etc. which have greater penetration in the market. Due to highly
competitive and fragmented industry, ALPL needs to sustain its
aggressive sales promotional activities to maintain its market
position.
Key Rating Strengths
Experienced management
Mr. Ajay Kumar Singh, Director, is a graduate by qualification
and has around more than three decades of experience in the
industry. Mr. Atul Kumar Singh, Director, is a post graduate by
qualification and has around two decades of experience in the
industry. The long standing experience and in-depth knowledge of
the industry by the promoters has benefited the company and has
able to establish customer and supplier base in the market.
Established marketing network with continuous increasing in TOI
Being present in the food processing industry since long period
of time, the company has well-established network of agents and
dealers. The company has near about 70 dealers. ALPL is benefited
from the established distribution network and existing client
base. The company sells its products to retailers through
dealers. It also sells directly to government departments under
"Mid- day-Meal" scheme as well as hotels and restaurants.
Jaipur-based (Rajasthan) Ajay Landmark Private Limited (ALPL) was
incorporated in 2007 by Mr. Ajay Kumar Singh and Mr. Atul Kumar
Singh. ALPL is engaged in the business of processing of spices
and markets its products under the brand name of 'Saptarshi' in
domestic market mainly in Eastern Rajasthan, Uttar Pradesh,
Madhya Pradesh and Haryana. Further, in FY17, the company
undertook a project for setting up of flour mill having an
installed capacity of 350 tons per day for manufacturing of
flour, maida, Gram flour and porridge.
Furthermore, the promoters of ALPL have promoted Ajay Petro
Junction which is operating a Reliance Petrol Pump and
Jumbo Finvest Private Limited (Rated CARE BBB-) which is
Registered as Non deposit taking NBFC with RBI.
As per the audited result of FY16 (refers to the period April 01
to March 31), ALPL reported a total operating income of INR15.60
crore (FY15: INR13.06 crore) with a net loss of INR0.47 crore
(FY15: INR01.9 crore).
ALLIED ENERGY: ICRA Reaffirms B+ Rating on INR6cr Loan
------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ on the
INR6.00-crore fund-based facility and INR0.50-crore unallocated
limits of Allied Energy Systems Private Limited (AESPL). ICRA has
also assigned the short-term rating of [ICRA]A4 to the INR6.50-
crore bank guarantee limit. The long-term rating has been
assigned a 'Stable' outlook.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 6.00 [ICRA]B+; re-affirmed, Stable
outlook assigned
Long-term 0.50 [ICRA]B+; re-affirmed, Stable
Unallocated Limit outlook assigned
Bank Guarantee 6.50 [ICRA]A4; assigned
Rationale
The rating reaffirmation takes into account the increase in the
operating income in FY2016 as well as the improvement in TOL/TNW
levels and interest coverage ratio. However, these factors have
been accompanied with a decline in the operating margin and a
significant increase in working capital intensity in nine months
ending December 2016. The rating action also factors in the fact
that the operating income as well as the operating margin has
been fluctuating over the past few years as order execution has
been erratic due to tender-based nature of the business.
The rating continues to be constrained by critical dependence of
the company's revenues on the timeliness of project execution by
its large clients; competition from other players in the industry
and the vulnerability of profitability to any unfavorable
fluctuations in prices of key raw materials, given the fixed
price nature of contracts. The rating also continues to factor in
the high gearing and the increasing Total Debt/ OPBDITA2 of the
company, led by funding of working capital requirements, mainly
through bank borrowings. Although ICRA's rating also takes
cognisance the diversification to the solid waste management
division with healthy orders in this segment, the company's
revenue from this segment would be largely dependent on the
timely execution of these projects, given the number of approvals
and clearances involved. ICRA also takes note of the company's
dependence on availability of non-fund based limits to procure
further orders for the new segment, which would be critical for
the increase in the scale of operations going forward.
However, the rating continues to draw comfort from the extensive
experience of the promoters in fabrication business and the
established customer base, comprising reputed companies, which
reduces the counterparty credit risk to some extent.
Going forward, the ability of the company to execute the current
orders in a timely manner thereby increasing the scale of
operation and optimising the working capital cycle will remain
the key rating sensitivity.
Key rating drivers
Credit strengths
* Established and reputed clientele (with companies such as
Steel Authority of India Limited (SAIL) and Lanco) results
in low counterparty credit risk
* No major scheduled long-term debt repayment obligation of
the company
* Strong outstanding order book at present of around ~Rs.56
crore from the solid waste management division provides
positive revenue visibility in FY2018
Credit weaknesses
* Modest scale of operations; growth linked to the timeliness
of project execution by large clients
* Profitability remains vulnerable to fluctuations in the
prices of key raw materials, given the fact that EPC contracts
are of fixed price nature
* High working capital intensity; management of working capital
remains crucial due to long fabrication timelines and high
receivable days
* Highly fragmented and competitive nature of the industry
limits pricing flexibility of industry participants including
AESPL
Description of key rating drivers highlighted:
The promoters and their families have been involved in the steel
fabrication business for more than a decade and have gained a
thorough knowledge of the market. Furthermore, the promoters also
have experience in the solid waste management segment through
sister concerns. Their long presence in these industries has
helped the company to establish strong relationships with its
suppliers and customers. AESPL has gradually diversified into the
solid waste management segment and has received a number of
tenders in this regard which is expected to augur well for the
revenue of the company in the coming year. However, the company's
revenue from this segment would be largely dependent on the
timely execution of these projects, given the long gestation
period, number of approvals and clearances involved. Furthermore,
the availability of non-fund based limits would remain critical
for getting new tenders for the company.
The working capital intensity of the company also remains high
mainly on account of high debtors and inventory days. The funding
of working capital requirements primarily through bank borrowings
has led to a leveraged capital structure and higher Total
Debt/OPBDITA ratio.
Incorporated in 2005, Allied Energy System Private Limited is
primarily engaged in designing fabrication and erection of
Deaerators for boilers, which are used in industries such as
chemicals, power, petrochem, fertilizer, sugar, paper etc. The
company is also engaged in manufacturing steel fabricated
products such as pressure vessels, heat exchangers, and
evaporators. Currently, the company has diversified into solid
waste management projects and has received several orders for
design, construction, and maintenance of waste management plants.
AESPL recorded a net profit of INR0.41 crore on an operating
income of INR28.25 crore in FY2016 as against a net profit of
INR0.22 crore on an operating income of INR25.43 crore in the
previous year.
ARYA EDUCATIONAL: CARE Assigns 'B+' Rating to INR9.0cr LT Loan
--------------------------------------------------------------
CARE Ratings has been seeking information from Arya Educational
and Cultural Society (AECS) to monitor the rating vide e-mail
communications/ letters dated July 15, 2016, February 16, 2017
and February 28, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the society has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines, CARE's rating on Arya Educational and
Cultural Society's bank facilities will now be denoted as CARE
B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.00 CARE B+; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating in October 9, 2015 the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced & Qualified promoters; albeit limited experience of
the members in the education sector: The society is setting up a
school which is a new venture for its members who do not have any
direct prior experience in the business.
The founder and promoter of AECS is Dr. Ravi Shankar Singh,
(President), has an experience of 15 years in the medical
profession and is currently working as Zonal Director at Paras
HMRI Hospital but he lacks experience in education sector.
Mr. Vinay Gupta, Vice President is the CFO at the Paras Group
with a prior experience of 16 years in the finance domain in
reputed companies and Mr. Prakash Kumar, General Secretary having
a business experience of around two decade in the realty space.
The other members are Justice Shyam Kishore Sharma, a Judge at
Patna High Court, Mr. Kaushal Kishor Thakur, Treasurer who is
having an experience of nearly a decade as a finance
professional, Dr. Gopal Saran, a doctor, having nearly 9 years of
experience in administrative role, Justice Shailesh Kumar Sinha,
Judge, Patna High Court and Mr. Arun Kumar, a journalist with
Hindustan Times Patna was also a member of another educational
society in Patna for nearly a decade. The members have ventured
into this business due to the increasing demand for good schools
in the region.
Association with reputed brand: The school will be run under the
aegis of 'Delhi Public School Society, Delhi' (DPS) an
established brand in the education sector. DPS is an established
brand in the education sector and the DPS society has a global
network of over 200 schools from Pre-Nursery/Nursery to XII
standard. The society will operate and manage the school as per
the guidelines issued by DPS. All the policy level decisions with
respect to the curriculum, educational methodology and teacher
selection are taken in agreement with the members from DPS
society, thereby providing assurance with respect to the
education quality standards.
Buoyant prospects of the K-12 segment in India: CARE expects the
total number of schools in the K- 12 education segment to grow
from 13.6 lakh during FY12 (refers to the period April 01 to
March 31) to 15.3 lakh during FY16 at a CAGR of 3%. This implies
an addition of 1.7 lakh schools (inclusive of the government and
private schools) during the period FY12-FY16. The government's
thrust on improving the country's literacy rate through higher
enrolments as well as ensuring lower drop-out rates in the K-12
education space is expected to drive the growth in terms of
opening-up of the new schools in the country. CARE expects the
private schools in the country to grow from 2.7 lakh during FY12
to 3.2 lakh during FY16 at a CAGR of 4%. This implies an addition
of 0.47 lakh schools during the period FY12-FY16.
Key Rating Weaknesses
Project Implementation risk: AECS is setting up a new school in
district Purnea, Bihar, spread over an area of approximately 5
acres. The total cost of the project is estimated to be INR15.24
crore, which is proposed to be funded in debt equity ratio of
around 1.44x. Financial closure for the debt portion has not been
achieved yet. Till Sep. 10, 2015, the society has incurred a cost
of INR4.00 crore towards acquisition of land, site development
and building construction, which was met through promoter's
contribution.
Competition from existing schools: AECS is expected to face
competition from the existing and prospective schools
located/coming in the nearby regions. The fee structure of the
school is moderately high and, thus, the ability of AECS to enrol
the projected number of students at the envisaged fee structure
depends on its capability to distinguish and market itself from
the existing schools and will leverage on "Delhi Public School
Society" brand in the region.
Regulatory risk associated with the education sector: Despite the
increasing trend of privatization of education sector in India,
regulatory challenges continue to pose a significant threat to
the educational institutes. The regulatory authority for the
schools, CBSE, functions under the supervision of the controlling
authority, which is vested with Secretary (Education), Government
of India, and Ministry of Human Resource Development.
Arya Educational and Cultural Society (AECS) was registered in
Apr. 2015 under the Societies Registration Act, 1860 for
establishing and operating educational institute in Purnea, Bihar
with an objective to provide education services. AECS is setting
up a school up to VIth standard and has applied for a franchisee
with 'Delhi Public School Society, Delhi' (DPS) wherein the
society will manage the school in accordance with the guidelines
(relating to fees, infrastructure, teacher student ratio, faculty
etc.) issued by DPS and the day to day management of the school
will be looked after by the society. The school will be
affiliated to Central Board of Secondary Education (CBSE) and
would commence its first academic session (2016-17) up to Class
VI with effect from April 2016 and expansion up to standard XII
will take place in the subsequent years.
ASCOTT ELECTRICALS: ICRA Reaffirms B+ Rating on INR4cr LT Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+
outstanding on the INR4.00 crore long term fund based facilities
of Ascott Electricals Private Limited. The outlook on the long
term rating is stable. ICRA has also reaffirmed the short-term
rating of [ICRA]A4 assigned to the INR0.20 crore (revised from
INR1.00 crore) fund based limits and INR5.00 crore non-fund based
limits of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund
based limits 4.0 [ICRA]B+(Stable)/reaffirmed
Short term: Fund
based limits 0.2 [ICRA]A4/reaffirmed
Short term: Non
Fund based limits 5.0 [ICRA]A4/reaffirmed
Rationale
The reaffirmation of ratings takes into account the long-standing
experience of the promoters spanning over three decades in
transformer manufacturing industry. The ratings are, however,
constrained by significantly high debtor levels on account of
delays in payments from Tamil Nadu Generation and Distribution
Corporation Limited ("TANGEDCO"); and the company's modest scale
of operations in a highly competitive electrical equipment
industry. Further the ratings are constrained by the company's
financial risk profile which is marked by leveraged capital
structure, weak coverage indicators; tight liquidity due to
stretched receivables position; and exposure to customer
concentration risks, since the company derives ~90% of its
revenue from TANGEDCO. However, considering the orders in hand
and expected orders in coming months, revenue stream is expected
to improve for the near term.
Going forward, any un-fulfillment of expected orders leading to
decline of operating income in FY2018 and continuance of
stretched working capital cycle will be key rating sensitivities
for downward movement of rating, while significant scaling up of
operations and improvement in working capital cycle will be key
credit positives.
Key rating drivers
Credit Strengths
* Significant experience of the promoters in the transformer
manufacturing industry for more than three decades
* Caters largely to TANGEDCO orders; Price variation clauses
in the orders supports margins
Credit Weakness
* Sharp decline in revenues in FY2016 due to Chennai floods;
stagnation in revenue in FY2017 due to reduced orders from
TANGEDCO
* High debtor days due to delay in payments from TANGEDCO
leading to high working capital intensity
* High customer concentration risks with ~90% of revenues from
TANGEDCO
* Financial profile characterized by high gearing, moderate
coverage indicators and stretched liquidity
Description of key rating drivers highlighted:
AEPL is engaged in manufacturing transformers, mainly power,
distribution and instrument transformers (also known as metering
sets). The company manufactures oil-cooled transformers with
capacities ranging from 100 KVA to 50 MVA. The company caters
mainly to Tamil Nadu Generation and Distribution Corporation
Limited ("TANGEDCO", erstwhile Tamil Nadu Electricity Board)
Limited with about 90% of the company's revenues being derived
from sales to TANGEDCO, reflecting high single customer
concentration risk. The company however, has significant
experience in the industry and has long established relationships
with TANGEDCO and has been able to generate repeat orders from
them, which mitigates the risk to an extent.
The company's scale of operations remains modest which in turn
restricts operational and financial flexibility to an extent.
AEPL'S operating income had witnessed a 35% decline in FY2016 due
to shutdown of operations on account of Chennai floods when both
the manufacturing units in Saidapet and Thirumudivakkam were
severely affected by floods due to which operations were shut for
three months. Although the operations resumed fully in February
2016, there has not been any improvement in the revenues in the
first 10 months of FY2017 due to reduced orders from TANGEDCO.
The impact of low orders was further exacerbated by the increase
in overhead costs which led to deterioration in the operating and
net margins. However, the presence of price variation clause
links the sales realization to variation in raw materials, thus
protecting the margins of the company to some extent.
The debt profile of the company is largely skewed towards working
capital borrowings. AEPL's capital structure is leveraged as
reflected in gearing level of 1.6x as on January 31, 2017. The
debt levels remain high due to near full utilization of working
capital borrowings. The gearing levels also remained high due to
meager accretion to reserves. Moreover, AEPL's operations are
highly working capital intensive in nature. The company derives
about 90% of its revenue from TANGEDCO and faces huge delay in
collection of payment from it. The company largely manages its
working capital cycle by stretching its creditors and utilizing
the working capital borrowings. Further, the company's key raw
materials are procured against firm orders; hence the company has
minimal inventory holding of 30 days as on January 31, 2017.
Incorporated in 2005, Ascott Electricals Private Limited (AEPL)
is engaged in manufacturing electrical transformers such as
distribution transformers, power transformers and metering sets.
The company has two manufacturing facilities viz., Saidapet and
SIDCO Industrial Estate, Thirumudivakkam (both in Chennai, Tamil
Nadu) in a total area of 20,000 sq ft. The company's operations
are managed by its promoters, Mr. P.C. Alexander and his son, Mr.
Arun Alexander.
For 10M FY2017, the company has reported a profit before tax of
INR0.05 crore on an operating income of INR20.4 crore as against
a net profit of INR0.4 crore on an operating income of INR22.6
crore in FY2016.
CAPITAL CLOTHING: ICRA Reaffirms B+ Rating on INR0.27cr Loan
------------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B+ for
the INR0.27 crore long-term fund based facility. ICRA has also
reaffirmed the short-term rating of [ICRA]A4 for the INR9.00
crore short-term fund based facility and [ICRA]B+ and [ICRA]A4
for the INR0.73 long-term/short-term unallocated facility of
Capital Clothing Company. The outlook on the long term rating is
stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund
based facility 0.27 [ICRA]B+ (Stable)/reaffirmed
Short-term-Fund
based facility 9.00 [ICRA]A4/reaffirmed
Long-term/Short-
Term-Unallocated 0.73 [ICRA]B+ (Stable)/[ICRA]A4
reaffirmed
Rationale
The ratings reaffirmation take into consideration the experience
of the promoters in the business for more than a decade, the
established relationship with its customers, which has supported
the order flows over the years and marginal increase in the
receivables in FY 2017.
The ratings are, however, constrained by the concern's small
scale of operations, which limits the benefits from economies of
scale and financial flexibility. Further, the concern's financial
profile is characterized by stretched capital structure and
coverage indicators. Intense competition arising from a highly
fragmented nature of the industry also limits its pricing
flexibility to an extent. The ratings also factor in the high
geographical concentration of revenues and the exposure of the
earnings to volatility in raw material prices and forex rates,
mitigated to some extent by entering into forward contracts.
Going forward, the management's ability to improve its revenues
and profit margins while efficiently managing its working capital
cycle will be critical to generate strong cash flows and thereby
improve its credit profile.
Key Rating Drivers
Credit Strengths
* Experience of the promoters in the garment industry
* Established relationship with customers ensuring stable
Revenues
Credit Challenges
* Pressure on operating margins due to high input cost and
low pricing power
* Revenues exposed to high geographical concentration risk
* Small scale of operations restricts scale economies and
financial flexibility
* Earnings susceptible to volatility in yarn prices and
fluctuations in exchange rates mitigated to some extent
as by forward contracts
Description of key rating drivers highlighted:
The promoter has a proven track record in out apparel export
industry for more than a decade which helps in establishing
relationship with customers ensuring stable revenues. The
realization has increased in FY2017 owing to increase in flow of
orders from customers for high value added items like men
clothing. However, there is pressure on operating margins due to
high input cost and intense competition arising from a highly
fragmented nature of the industry limiting its pricing power. The
concern's small scale of operations limits the benefits from
economies of scale and financial flexibility. The revenues of the
concern is exposed to high geographical concentration risk as the
revenues are skewed towards Europe; earnings are susceptible to
volatility in yarn prices and fluctuations in exchange rates
mitigated to some extent as by forward contracts. The ratings are
further constrained by risk associated being a proprietorship
concern.
Capital Clothing Company is a proprietorship concern started in
the year 2000. The company is into manufacturing of knit apparel
for High, Medium and Low ranges, specializing in Ladies,
Children's and Men's Nightwear. The concern's focus markets are
mainly Europe (60%) and UK (40%). The concern has its
manufacturing unit in Tirupur with machinery capacity of 150
sewing machines.
In FY2016, the concern reported a net profit of INR0.37 crore on
an operating income of INR34.15 crore as against a net profit of
INR0.91 crore on an operating income of INR48.03 crore in FY2015.
CHEMIETRON CLEAN: CARE Assigns B+ Rating to INR5.46cr Loan
----------------------------------------------------------
CARE Ratings has been seeking information from Chemietron Clean
Tech Private Limited to monitor the rating(s) via e-mail
communications/letters dated February 1, 2017, February 21, 2017,
February 25, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the publicly available information which however, in
CARE's opinion is not sufficient to arrive at a fair rating. The
rating of Whitelotus Industries Limited bank facilities will now
be denoted as CARE B+/CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.46 CARE B+; Issuer not
Facilities cooperating; Based on
best available Information
Long-term Bank 1.00 CARE B+/CARE A4; Issuer not
Facilities/Short- cooperating; Based on best
Term Bank Facilities available Information
The rating takes into account its modest scale of operations and
financial risk profile marked by thin profitability, leveraged
capital structure, weak debt coverage indicators, modest
liquidity and elongated working capital cycle in FY16 (refers to
the period April 1 to March 31). The ratings, however, derives
strength from the experienced promoters along with locational
advantage resulting in easy access to raw material. CCPL's
ability to increase its sales of operations along with
improvement in profitability and operating cycle would be the key
rating sensitivities.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating(s).
Detailed description of the key rating drivers
At the time of last rating in November 23, 2015, the following
were the rating strengths and weaknesses:
Key Rating Strengths
Location advantage resulting in easy access to raw
material:CCPL's manufacturing facilities are located in Ahmedabad
which is one of the prominent and well- established industrial
hubs in Gujarat. This place enjoys good road & rail connectivity
leading to better lead-time and facilitates delivery of finished
products in a timely manner.
Key Rating Weaknesses
Experienced promoters: CCPL is incorporated by three promoters
led by Mr. Ashok Gupta. Mr. Ashok Gupta has total experience of
43 years in the engineering industry through various business
ventures and looks after the overall management of CCPL.
Small scale of operations and thin profitability: Scale of
operations remained at a modest level. During FY16, TOI stood at
Rs.5.43 crore a y-o-y decrease of 34.02%. Profitability of CCPL
improved viz. increase in PBILDT margin and PAT margin by 1181
bps and 12 bps to 21.26% and 1.39% during FY16 as against 9.45%
and 1.27% during FY15.
Leveraged capital structure and Weak coverage indicators:
Solvency position improved but continued to remain leveraged as
indicated by an overall gearing of 3.51 times as on March 31,
2016. The net worth stood at INR1.52 crore as on March 31, 2016.
Modest liquidity and elongated working capital cycle: As on
March 31, 2016, CCPL's current ratio stood improved but modest at
1.16 times (FY15 1.02 times). Also, working capital cycle
remained elongated at 269 days in FY16 which deteriorated from
101 days in FY15 on the back of decrease inventory period
CCPL was incorporated in May, 2008 as a private limited company
by three promoters led by Mr. Ashok Gupta (Age: 73 years). Mr.
Ashok Gupta has a long industry experience of around 43 years.
CCPL is engaged in the business of manufacturing and trading of
air filters and air handling units. CCPL operates from its ISO
9001:2008 certified manufacturing facilities located at Ahmedabad
(Gujarat). CCPL is selling its clean room technology product
under the brand name of "Chemietron" and air filters under the
brand name of "Hygieno".
COMMERCIAL CARRIERS: CARE Assigns 'D' Rating to INR5.99cr Loan
--------------------------------------------------------------
CARE Ratings has been seeking information from Commercial
Carriers Limited (CCL) to monitor the rating vide e-mail
communications/letters dated July 28, 2016, February 16, 2017,
February 18, 2017 and numerous phone calls. However, despite our
repeated requests, the company has not provided the requisite
information for monitoring the rating. In line with the extant
SEBI guidelines CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating on
Commercial Carrier Ltd.'s bank facilities will now be denoted as
CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 5.99 CARE D; Issuer not
cooperating; Revised from
CARE B+ on the basis of best
available information
The rating has been revised on account of ongoing delays in
servicing of term loan.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating in February 16, 2016, the following
were the rating strengths and weaknesses:
Key Rating Strengths:
Experienced promoter with long track record of operation CCL is
into surface transportation and logistics services since 1978 and
accordingly has a track record of around four decades. Mr.
Indrajeet Mallick (Son of Mr. D.N. Mallick), aged about 25 years,
is the Managing Director of CCL, having around six years of
experience in this trade. He monitors the overall functioning of
the company with adequate support from other directors: Mr. D.K.
Roy and Mr. K.K. Sinha who are having more than two decades of
experience in this business.
Diversified sectoral base with strong clientele
CCL's clients are reputed entities in their respective line of
business such as Tata Motors Ltd. [rated CARE AA+], Larsen &
Toubro Ltd., Tata Steel [rated CARE AA+], Usha Martin Ltd. [rated
CARE A3+], BHEL, etc. receiving regular and bulk orders. The well
diversified sector base and reputed client base indicates the
presence of the company in various sectors thereby insulating the
company from recession in any one particular industry to some
extent. Being associated with these agencies ensures CCL steady
flow of income with minimal default risk.
Key Rating Weaknesses:
Small size of operations with thin profit margins
CCL has been in the surface transportation business for more than
three and half decades. Despite such long track record, the scale
of operations of the company remained small with a total
operating income of INR 30.0 crore and PAT of INR0.16 crore in
FY15. However, the total operating income has grown at a CAGR of
4.94% during last three years (FY13-FY15) on account of receipts
of repeated orders from its clients. The small size restricts the
financial flexibility of the company in times of stress and it
suffers on account of lack of economies of scale. Further, the
tangible networth as on Mar.31, 2015 was also low at INR 4.90
crore.
The profit margins remained thin with operating margin of 2.96%
and PAT margin of 0.52% in FY15. The operating margin witnessed
decline during last three years due to increase in cost of
operations and inability of the company to pass on the same to
its clients in an intensely competitive industry scenario.
Further PAT margin witnessed erratic trend during last three
years and the same deteriorated significantly during FY15 due to
high decline in PBILDT level vis-a-vis decline in capital
charges.
Volatility in fuel price:
Fuel and lubricant costs typically constitutes significant
portion of the total operating costs (accounting for around 39%
of total cost of sales in FY15) of the transport operator.
Accordingly, any insignificant increase in fuel prices has to
borne by company itself which will ultimately affect CCL's
operating margins.
High collection period leading to high working capital cycle
CCL's average collection period has increased during last three
years (143 days in FY15 from 112 days in FY13) on account of
better bargaining power of the customers. The major clients of
CCL are reputed private and public sector organisations and
hence, the default risk is less and further, in this sector, the
higher average collection period is an industry phenomenon.
Consequently, the same led to higher working capital cycle for
the company. Accordingly, the company's average utilisation of
its working capital limits during last twelve months ended
January 2016 was about 90%.
Customer concentration risk
CCL customer base is highly concentrated with top four customers
constituting about 90% of total revenue during FY15. However,
majority of CCL's clients are reputed companies like Tata Motors
Ltd., Tata Steels Ltd, Usha Martin Ltd., Utility Transport, etc.
However, concentration risk is mitigated somewhat on account of
its established relationship with these clients as reflected by
the repeat orders and additional work assignments.
Leveraged capital structure with weak debt protection metrics The
capital structure of the company has remained leveraged marked by
debt equity of 1.09x and overall gearing of 2.36x as on March 31,
2015. The debt equity ratio was deteriorated as on March 31, 2015
due to availment of vehicles loans. Further overall gearing ratio
also deteriorated as on March 31, 2015 due to availment of term
loans for financing vehicles and higher utilisation of fund based
limits. The debt protection metrics were weak marked by interest
coverage of below unity. However the company is regular in its
debt repayment obligations partly through operating profits and
balance through infusion of unsecured loans. Further total debt
to CGA also remained high at 12.40x in FY15.
Growing industry yet fragmented and highly competitive
The road freight transport industry has grown leaps and bounds
since independence and especially since liberalisation. It is
estimated that the size of the road freight industry is currently
around INR3,800 bn. However, having achieved a matured stage, the
road freight transport industry is deregulated and highly
fragmented. As per CARE Research, around 80-85 per cent of the
road freight transport industry consists of small transport
operators that own less than 5 trucks, are fragmented and
unorganised. The highly fragmented and unorganized nature of the
industry results in intense price competition and may lead to
pressure on the company's profitability in case of adverse
situations.
Commercial Carriers Ltd. (CCL) was started as a partnership firm
in 1978 by Mr. D.N. Mallick and Mrs. Supti Mallick of Guwahati.
In March 1993, the company was incorporated as a private limited
company and subsequently, in April 2012, it was reconstituted as
public limited company with its name changed to the current one.
The company is engaged in the business of surface transportation
& logistics. It offers services like transportation of various
regular consignments; containerize transportation, transportation
of various types of odd size consignment etc., for different
major industrial houses. Currently, about 80% of business is
generated through own fleet of vehicles and for balance, the
company resorts to hired vehicles. Further, it has developed
strong client relationship with many reputed private and public
sector entities over the years.
Mr. Indrajeet Mallick (Son of Mr. D. N. Mallick), aged about 25
years, is the Managing Director of CCL, having around six years
of experience in this trade. He monitors the overall functioning
of the company with adequate support from other directors: Mr.
D.K. Roy and Mr. K.K. Sinha who are having more than two decades
of experience in this business. In FY15 (refers to the period
April 1 to March 31), the company achieved a PAT of INR0.16 crore
(INR0.42 crore in FY14) on total operating income of INR30.00
crore (INR28.68 crore in FY14).
CLUB29 PRIVATE: CARE Lowers Rating on INR12.13cr Loan to 'D'
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Club29 Private Limited (Club 29), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.13 CARE D Revised from
CARE B+
Short-term Bank
Facilities 0.75 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the long term bank
facilities of Club 29 takes into account the on-going delays in
servicing the interest and principal payments on term loans.
The ratings continue to take into consideration lack of
experience of the promoters in executing and operating a
recreational indoor facility, financial risk emanating from
achievability of projected revenues.
The ratings derive strength from resourceful promoters having
experience in real estate development, locational advantage of
the project rendering visibility on the membership enrolment and
achievement of financial closure for the additional debt in the
project. Further the club's construction is complete and the club
is operational since August, 2016. The ability of Club 29 to
generate the envisaged foot-falls translating into envisaged
revenues and cash flows from increased membership and from usage
of the facility are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
On-going delays in debt servicing: There have been on-going
delays in payment of interest and principal payments on term
loans.
Key Rating Strengths
Favourable project location: Wakad is close to the Infotech and
Biotech Parks at Hinjewadi, Pimpri-Chinchwad Industrial area,
Mumbai-Bangalore Bypass, Express Highway to Mumbai and Balewadi
National Sports complex. Further, due to availability of many
schools and being close to work area in Wakad, it is seen as an
ideal residential destination for many IT professionals.
Resourceful partners, albeit lack of experience in executing and
operating indoor recreational facility:
Club 29 is promoted by Mr. Dhiraj Hansalia, Mr. Jayant Vallabhdas
Kaneria, Mr. Sanjay Pandurang Kalate and Mr. Mohan Pandurang
Kalate who are the promoters of the Mont Vert group and directors
of the company.
Although, the promoters have considerable experience in the real
estate industry, Club 29 is the Mont Vert group first venture
into the hospitality segment exposing them to the risk relating
to foray and operational stabilisation into a new segment.
Financial risk emanating from achievability of projected
revenues:
The club has started operations in August, 2016. The ability of
the club to generate the envisaged foot-falls translating into
envisaged revenues and cash flows from increased membership and
from usage of the facility is a key rating sensitivity.
Club29 Private Ltd incorporated in January 2012, is a Mont Vert
Group venture based out of Wakad, Pune and is focused on
providing a recreational indoor centre. Club29 is a recreational
facility that provides facilities such as restaurant banquets
halls, gymnasium facility, sports lounge consisting of badminton
court, squash court, Table-Tennis tables, swimming pool, bowling
alley, billiards tables and fuzz ball tables etc. The complete
facility is housed in a building on Ground plus 5 floors, with a
Terrace & 2 Basement area for parking. The total built up area of
the property is 3810.34 Square meters. The facility also houses-
guest house/ rooms (which will be on rent and can also be used
for coaches out of Pune who will train in the facility), card
rooms, executive lounge, spa, children's play area etc. The
facility is in a residential area and is also in close vicinity
to the Information technology offices of Hinjewadi, Pune and
close to schools, thereby having occupancy/foot-falls. The club
currently has 500 life time members (i.e for period of 25 years)
which are residents of the group's project 'Montvert Seville', a
Mont-Vert group residential scheme of 450 flats, which is in
immediate vicinity to Club 29.
CYBERWALK TECH: ICRA Reaffirms 'D' Rating on INR68.84cr Loan
------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]D for INR68.84
crore term loans of Cyberwalk Tech Park Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 68.84 [ICRA] D; Reaffirmed
Rationale
The rating continues to factor in the delays in servicing of debt
by CTPPL given the inadequate cash flow generation in its single
ongoing commercial project. Given the oversupply situation in the
vicinity of the project, CTPPL remains exposed to considerable
market risk which has resulted in slower than expected sales and
leasing. Going forward, timely servicing of debt repayment
commitments and CTPPL's ability to lease/sell the remaining area
at desired prices and maintain its collection efficiency will
remain the key rating sensitivities. ICRA does note the
experience of the company's promoters in the real estate sector.
Key Rating Drivers
Strengths
* Long experience of the promoters in the real estate industry
Credit Weakness
* Delays in debt servicing by the company
* Inadequate cash flow generation in the project due to
oversupply situation and slow down in the real estate.
* High market risk
Description of key rating drivers highlighted:
CTPPL developed the first phase of its real estate project named
'Cyber Walk' in FY2013 for which it availed a total debt of
INR113.0 crore. Due to subdued sales, the cash flows generated by
the company were inadequate, leading to delay in debt servicing.
In Aug, 2016, the company received restructured terms of debt
whereby there has been deferment of principal (Rs 68.10 crore)
and its interest liability (Rs. 18.39 crore) from Jan, 2015 till
Dec, 2016. Given the ballooning nature of repayments, the company
had relatively lower repayment liability in the initial years.
However, due to muted sales velocity of 1% in last one year (55%
of total area sold as of Feb, 2017) and inadequate collection,
the liquidity position of CTPPL has remained stretched, hence
resulting in delays in debt servicing by the company. The active
promoters of the company i.e Aarone group who have long standing
experience in the real estate industry continue to support the
cash flows by regular fund infusions.
Cyberwalk Tech Park Private Limited (erstwhile Sofed Retailer
Private Limited) was promoted as a Special Purpose Vehicle to set
up an IT Park at Manesar, Gurgaon. Presently, Aarone Promoters
Private Limited (owned by Aarone Group) is the largest
shareholder with 44.20% stake followed by Mr. Amit Kumar Modi
(Chandigarh Distillers & Bottlers Limited Group) and Parabolic
Real Estate Pvt. Ltd. with 27.9% stake each respectively. The IT
Park is titled 'CyberWalk' and is being developed in two phases,
with a total leasable/saleable area of 11.28 lakh sq.ft; with 8.8
lakh sq.ft to be developed in phase one.
CTPPL reported a net loss of INR2.10 crore on an operating income
of INR5.63 crore in FY2016, as against a net loss of INR5.02
crore on an operating income of INR12.08 crore in the previous
year.
DOSHI CERAMIC: ICRA Hikes Rating on INR3.42cr LT Loan to B+
-----------------------------------------------------------
ICRA Ratings has upgraded the long-term rating assigned to the
INR3.42 crore1 fund based limits of Doshi Ceramic Industries at
[ICRA]B+ from [ICRA]B. ICRA has also re-affirmed the short-term
rating assigned to INR0.20 crore short-term, non-fund based
limits of DCI. The outlook on the long-term rating is stable.
Further, ICRA has also upgraded long term rating to [ICRA]B+ and
reaffirmed short term rating at [ICRA]A4 to unallocated limits of
INR1.96 crore of DCI.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund
based limits 3.42 [ICRA]B+(Stable)/upgraded
from [ICRA]B
Short term: Non
fund based limits 0.20 [ICRA]A4/ re-affirmed
Unallocated 1.96 [ICRA]B+ (Stable) upgraded
from [ICRA]B, [ICRA]A4
re-affirmed
Rationale
The ratings upgrade take into account the improvement in
financial profile of Doshi Ceramic Industries (DCI) in FY2016 as
characterized by healthy profitability, improvement in capital
structure with reduced gearing level and healthy overage
indicators. The ratings also favorably factor in the locational
advantage it enjoys owing to its presence in ceramic hub of
Morbi, Gujarat which facilitates it in raw material procurement
and sourcing of skilled manpower.
The ratings however, are constrained by DCI's modest scale of
operations and the fragmented nature of the sanitary ware
industry with competition from organized players and unorganized
players as well as stiff competition from cheaper imports from
China and Pakistan. The ratings also take into account the
vulnerability of the firm's profitability to availability and
volatility in gas prices and foreign exchange fluctuation risk in
absence of any hedging policy for export sales. Further, ICRA
notes that DCI is a partnership firm and any withdrawals from the
capital account could impact the net worth and thereby the
gearing levels.
Going forward, the ability of the DCI to scale up operation while
maintaining profitability and manage working capital requirements
efficiently would remain important from the credit perspective.
Key rating drivers
Credit Strengths
* Improvement in financial profile characterised by healthy
profitability and reduced gearing level in FY2016 along
with improved coverage indicators;
* Locational advantage on account of being located in the
ceramic hub of Morbi (Gujarat) which facilitates raw material
procurement.
Credit Weakness
* Small scale of operation
* Highly fragmented industry structure with competition from
large organized and unorganized players in the domestic
market and from cheaper Chinese and Pakistani imports in
the export market
* Exposure to exchange rate risk on export sales
* Profitability remains exposed to availability and prices
of gas which is the major fuel for sanitary ware manufacturers
* Partnership firm; any substantial withdrawal from capital
account could impact the net worth and thereby the capital
structure of the firm
Description of key rating drivers highlighted:
DCI is engaged into manufacturing of premium quality "SENI" brand
ceramic sanitary ware in various design and sizes. The firm's
capacity utilization has been moderate at 37.92% in FY2015,
though the same increased from that of 20.62% in FY2014 on
account of increase in demand for Grade II sanitary ware
products. However, with reduced exposure of sanitary products in
overseas market, the capacity utilization of DCI has reduced to
32.06% in FY2016. DCI derives majority of its revenue from
overseas market. The firm's export sales are designated in USD,
and as export orders are not hedged it exposes the profitability
of the firm to exchange rate fluctuations. The manufacturing
facility of DCI is located in Morbi region of Gujarat, which is
the hub of ceramic sanitary ware manufacturing in India and
provides an easy access to quality key raw materials. The Morbi
region in Gujarat, where DCI is located, is home to more than 100
small and medium scale units that are engaged in manufacturing of
sanitary wares which results into competitive market for DCI. The
firm has little control over prices of natural gas which can lead
to volatility in margins.
The scale of operation of DCI has remained small since inception.
DCI reported ~6% growth in operating income (OI) which increased
from INR6.02 crore in FY2015 to INR6.39 crore in FY2016. The
operating margins of the firm remained healthy and stood at
21.06% and 21.25% respectively for FY2015 and FY2016. The total
debt of DCI has declined from INR5.46 crore as on March 2015 end
to INR3.79 crore as on March 2016 end on account of scheduled
repayments of existing term loan and repayment of unsecured
loans.
Consequently the gearing of the firm declined from 1.74 times as
on March 2015 end to 1.16 times as on March 2016 end. The debt
protection metrics remain adequate owing to healthy profitability
of the firm as evident from interest coverage of 2.61 times and
NCA/Debt of 31% for FY 2016. The working capital intensity of the
firm improved to 31% in FY2016 from that of 52% in FY2014 with
decline in inventory as on 31st March 2016. The firm had been
able to generate healthy cash flows owing to healthy operating
margins of the firm.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the debt servicing track record of DCI, its business
risk profile, financial risk drivers and the management profile.
ETHAMES GRADUATE: ICRA Reaffirms B+ Rating on INR16cr Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating at [ICRA]B+ to
the INR16.00 crore(1) fund based limits of Ethames Graduate
School Private Limited. The outlook on the long term rating is
Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 16.00 [ICRA]B+(Stable) Re-affirmed
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with EGSPL, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings, but
despite repeated requests by ICRA, the company's management has
remained non-cooperative. In the absence of requisite
information, ICRA's Rating Committee has taken a rating view
based on best available information. In line with SEBI's Circular
No. SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, the
company's rating is now denoted as: "[ICRA]B+(Stable); ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Ethames Graduate School Private Limited was set up in the year
2010 by Mr. Praveen Pula to provide vetting and evaluation
services to the foreign institutions namely Ethames Graduate
School UK and University of Sunderland. It screens the
applications received for the above mentioned universities and in
turn, receives a commission income from the universities based on
the fees received.
EGSPL also provides infrastructure services to Woxsen School of
Business(WSB) which has been set up recently by the promoters
under Pinakin Educational Trust. WSB has a 200 acre campus which
is fully residential and provides 2-year PGDM(Post-graduate
diploma in Management) in Finance, Operations and HR domain and
also 1-year PGPXP (Post graduate program for experienced
professionals).
INNOTECH EDUCATIONAL: CARE Assigns 'D' Rating to INR19cr Loan
-------------------------------------------------------------
CARE Ratings has been seeking information from Innotech
Educational Society (IES) to monitor the rating vide e-mail
communications/letters dated July 12, 2016, February 16, 2017,
February 18, 2017 and numerous phone calls. However, despite our
repeated requests, the society has not provided the requisite
information for monitoring the rating. In line with the extant
SEBI guidelines CARE has reviewed the rating on the basis of the
publicly available information, which however, in CARE's opinion
is not sufficient to arrive at a fair rating.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 19.00 CARE D; issuer not
Facilities cooperating; Revised from
CARE B+; on the basis of
best available information
The rating on Innotech Educational Society's bank facilities will
now be denoted as CARE D; ISSUER NOT COOPERATING. The rating has
been revised on account of ongoing delays in servicing of term
loan.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating.
Detailed description of the key rating drivers
At the time of last rating in September 7, 2015, the following
were the rating strengths and weaknesses:
Key Rating Strengths:
Experienced members from the industry on the advisory board of
the society: The founder & promoter of IES, Shri Amit Kumar Das
(President of the Society), an NRI (based in Australia), is a
graduate and diploma holder in computer engineering, having more
than a decade experience in Information Technology sector. He is
well supported by an advisory board comprising of experienced
professionals from the industry. Moderate enrolment rate in the
first year of operations: The first year students' enrolment rate
remained moderate at 63% in the academic year (AY) 2014-15.
Further, for academic year 2015-16 the society has achieved an
enrolment of 67%.
Modern infrastructure with latest available technology: The
campus of the institute is spread over an area of 15 acre and
includes facilities such as world class classrooms, health
centre, gymnasium, canteen, ATM, Wi-Fi, mini-sports complex,
fully equipped auditorium, highly equipped libraries with online
access to major journals and publications from across the world,
video-conferencing facility, etc.
Linkage with reputed International Institute and National
University: The institute has signed MoU with TAFE, South
Australia for sharing expertise on curriculum, teaching pedagogy
and the development of education and training at MBIT. TAFE, is
the network of independent institutes, which is the leading and
largest vocational education and training provider in South
Australia. Further, its engineering college has got affiliation
from Aryabhatta Technology University, Bihar and has been
approved by All India Council for Technical Education (AICTE).
Key Rating Weaknesses
Nascent stage of operations: However, the society has completed
two and a half year of operation with the commencement of the
operation from Sep. 2014.
Project implementation risk: The Phase III will start from Feb.
2016 and is likely to be completed by the end of Mar. 2017.
Intense competition from established and upcoming educational
institutes: IES faces high competition from other established and
upcoming educational institutes located in and around Bihar. In
Bihar area itself, there are more than 25 colleges offering
bachelor degree in engineering including colleges like IIT, NIT,
Birla Institute of Technology, Bhagalpur college of Engineering,
etc. to name a few. Further there are numerous engineering
colleges in Bihar and its adjoining areas.
Regulatory challenges: Despite the increasing trend of
privatization of the education sector in India, regulatory
challenges continue to pose a significant threat to the
educational institutes. In addition to AICTE, the educational
institutions are regulated by respective state governments with
respect to number of management seats, amount of tuition fee
charged for government quota and management quota giving limited
flexibility to the institutions. These factors have significant
impact on the revenues and profitability of the institutions.
Innotech Educational Society (IES) was established in March, 2010
under the Societies Registration Act, 1860 for establishing and
operating educational institutes for imparting education in
engineering discipline in Araria, Bihar. With completion of the
Phase I of its three phased project, the society has started an
Engineering college under the name "Moti Babu Institute of
Technology (MBIT)" with 300 seats in 5 streams of engineering
from the academic year 2014- 2015. The institute is approved by
All India Council for Technical Education (AICTE) and affiliated
to Aryabhatta Technology University, Bihar.
The society has been founded & promoted by Shri Amit Kumar Das,
an NRI (based in Australia), who is a graduate and diploma holder
in computer engineering and possesses more than a decade
experience in Information Technology sector. He is also the
founder & chairman of the ISOFT Software Technologies Pvt. Ltd.,
a company engaged in software Development.
JAGDAMBAA AGRO: CARE Assigns 'B' Rating to INR21.92cr LT Loan
-------------------------------------------------------------
CARE Ratings has been seeking information from Jagdambaa Agro
Mill Private Limited (JAMPL) to monitor the rating vide e-mail
communications/letters dated May 17, 2016, February 16, 2017,
February 18, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the rating. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the publicly available information, which however, in CARE's
opinion is not sufficient to arrive at a fair rating. The rating
on JAMPL's bank facilities will now be denoted as CARE B; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 21.92 CARE B; Issuer not
Facilities cooperating; based on
best available information
The rating takes into account volatile agro commodity prices with
linkages to vagaries of monsoon, intensely competitive nature of
the industry with presence of many unorganised players, regulated
nature of the industry and high near term debt repayment
obligations. Moreover, the rating continues to derive strengths
by the satisfactory experience of the promoters although
relatively new in rice milling and its proximity to raw material
sources.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating in June 1, 2015, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced promoters although relatively new in rice milling The
company will be managed by Mr. Raj Kumar Patwari with the help of
other director Mr. Bijay Kumar Kishorepuria. All the directors
are having around four decades of experience in the industries
like iron & steel manufacturing and trading, food processing,
etc. However, the promoters are relatively new in the rice
milling business.
Proximity to the raw material sources
JAMPL's plant is located at Purnea district of Bihar, which is a
paddy growing region in eastern India resulting in lower
logistic expenditure (both on transportation and storage), easy
availability and procurement of raw materials at effective
prices.
Key Rating Weaknesses
Volatile agro-commodity (paddy) prices with linkages to vagaries
of the monsoon
Rice is mainly a 'kharif' crop and is cultivated from June-July
to September-October and the peak arrival of crop at major
trading centers begins in October. The output is highly dependent
on the monsoon. Unpredictable weather conditions could affect the
domestic output and result in volatility in price of rice. In
view of seasonal availability of paddy, working capital
requirements remain high at season time owing to the requirement
for stocking of paddy in large quantity.
Intensely competitive nature of the industry with presence of
many unorganised players
Rice milling industry is highly fragmented and competitive due to
presence of many players operating in this sector owing to its
low entry barriers, due to low capital and technological
requirements. Purnea district in Bihar is a major paddy growing
area with many rice mills operating in the area. High competition
restricts the pricing flexibility of the industry participants
and has a negative bearing on the profitability.
Regulated nature of the industry
The Government of India (GoI), every year decides a minimum
support price (MSP) to be paid to paddy growers which limits the
bargaining power of rice millers over the farmers. The MSP of
paddy is expected to increase during the crop year 2016-17 to
INR1,470/quintal (as suggested by the Commission for Agricultural
Costs and Prices, the apex body to advice on MSP to the
government) from INR1,410/quintal in crop year 2015-16. The sale
of rice in the open market is also regulated by the government
through levy of quota, depending on the target laid by the
central government for the central pool. Given the market
determined prices for finished product vis-a-vis fixed
acquisition cost for raw material, the profit margins are highly
vulnerable.
High near term debt repayment obligation
The overall credit risk profile of the company is restricted due
to its high near term debt repayment obligations. Higher
dependence on external funds for setting up the plant resulted in
high repayment obligation for the company. Absence of adequate
matching cash flow in near term in view of stabilization risk
associated with a green field project may affect the
creditworthiness of the company in near term.
Jagdambaa Agro Mill Pvt. Ltd. (JAMPL), incorporated in March,
2014, was promoted by Mr. Raj Kumar Patwari and Mr. Bijay Kumar
Kishorepuria of Patna, Bihar to set up a non-basmati rice milling
& processing unit and sale of its by-products like husk, bran
etc. in the domestic market. The company has initiated a green-
field project to commission a rice milling unit at Purnea
district of Bihar with a proposed capacity of about 41,000 MTPA.
The day-to-day affairs of the company are looked after by Mr. Raj
Kumar Patwari (Director) with adequate support from other
director and a team of experienced personnel.
KAADAMBARY RICETECH: CARE Lowers Rating on INR14.50cr Loan to D
---------------------------------------------------------------
CARE Ratings has been seeking information from Kaadambary
Ricetech Private Limited to monitor the rating(s) vide e-mail
communications dated June 17, 2016, July 4, 2016, August 22,
2016, September 8, 2016, October 14, 2016, October 25, 2016,
December 30, 2016 and February 20, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the Kaadambary
Ricetech Private Limited has not provided the requiste
information for monitoring the ratings. In line with the extant
SEBI guidelines CARE has reviewed the rating on the basis of the
publicly available information, which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating on
Kaadambary Ricetech Private Limited's bank facilities will now be
denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.50 CARE D; Issuer Not
Cooperating; Revised from
CARE B on the basis of best
information available
The ratings have been revised on account of delay in interest and
principal repayments obligation in term facility. Further, there
have been instances of overdrawals in cash credit facility.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in Debt Obligations: There have been instances of delays in
repayment of principal and interest obligation of term facility.
Further, there have been instances of overdrawals in cash credit
for a period of more than 30 days. The same has been confirmed by
the banker. Moreover, the bank has classified the company under
SMA-2 category as on February 28, 2017.
Kaadambary Ricetech Private limited (KRT) was incorporated as a
private limited company in the year 2013 by Mr. Shiv Shankar
Agarwal, Mr. Shesh Narayan Agarwal Mr. Bhaiyalal Kannaujiya and
Mrs. MaltiKannaujiya. The company is setting up a unit for rice
milling and parboiling unit. The proposed processing facilities
are located at Raipur Chhattisgarh.
Projected capacity of rice mill is 16 metric tonnes per annum
while for parboiling unit it is 34000 metric tonne per annum.
Out of the total production 60% will be for private sales and 40%
will be job work specifically for Government of Chhattisgarh. The
major raw material for the company is paddy, which will be partly
procured from farmers and partly from government. The finished
product of KRT includes rice, broken rice, parboiled rice and by
product i.e. rice bran, raw rice and paddy husk, which it is
going to sell in the market by the name of Kaadambary Rice.
The total cost of the project is estimated at INR15.05 crore
(including margin for working capital) which will be partly
funded by promoter's equity of INR9.55 crore and term loan of
INR5.50 crore at a debt equity ratio of 0.57x. The project is
expected to be commissioned by May 24, 2015.
Further, the rice mill is going to be operational for the period
of 4 months i.e. November to February and the parboiling unit for
the period of 4 months i.e. April to July as per the seasonal
availability of the raw material.
KARTYA CONSTRUCTIONS: ICRA Reaffirms B+ Rating on INR7.85cr Loan
----------------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating assigned to the
INR8.50 crore fund based and non-fund based limits of Kartya
Constructions Pvt Ltd.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 7.85 Reaffirmed at [ICRA]B+(stable)
Bank Guarantee 0.25 Reaffirmed at [ICRA]A4
Unallocated 0.40 Reaffirmed at
Facilities [ICRA]B+(stable)/[ICRA]A4
As part of its process and in accordance with its rating
agreement with Kartya Constructions Pvt Ltd., ICRA has been
trying to seek information from the company so as to undertake a
surveillance of the ratings, but despite repeated requests by
ICRA, the company's management has remained non-cooperative. In
the absence of requisite information, ICRA's Rating Committee has
taken a rating view based on best available information. In line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 01, 2016, the company's rating is now denoted as:
"[ICRA]B+(stable)/A4 ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited or no updated information on the company's performance
since the time it was last rated.
Kartya Constructions Private Limited (Kartya/the company) was
started in 2010 with its registered office in Madurai, Tamil
Nadu. The company is in the field of infrastructure development
and undertakes construction of civil structures such as colleges,
shopping malls, hospitals, schools, etc. The company also
undertakes construction of industrial structures and civil works.
The company has a separate unit that manufactures and sells
ready-mix concrete and blue metal using input from its own
quarries.
LAVANYA PURE: CARE Assigns 'B' Rating to INR13.32cr LT Loan
-----------------------------------------------------------
CARE Ratings has been seeking information from LAVANYA PURE FOOD
PRIVATE LIMITED (LPFPL) to monitor the rating(s) vide email
communications/letters dated May 25, 2016, February 16, 2017,
February 18, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the publicly available information, which however, in
CARE's opinion is not sufficient to arrive at a fair rating. The
rating on LPFPL's bank facilities will now be denoted as CARE B;
ISSUER NOT COOPERATING. The ratings have been revised on account
of financial performance of the company in FY16.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 13.32 CARE B; Issuer not
cooperating; Revised from
CARE B+ on the basis of best
available information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on June 2, 2015, the following were
the rating strengths and weaknesses:
Key Rating Strengths:
Experienced promoters in agro based industry
Mr. Sanjeev Kumar Thakur (Director, BCom, Age 55 years) has rich
working experience of around 10 years in the field of food
processing business through his family business.
Locational Advantage
LPFPL's unit has close proximity to local grain markets, from
where the major raw material, 'wheat' can be easily procurable.
Further, Bihar stands sixth among all other wheat producing
states in India. Furthermore, the plant is having good
transportation facilities and other requirements like good supply
of power, and water etc.
Insulation from economic cycle with stable demand outlook Wheat
based products, viz. 'Maida', 'Suji' and 'Atta' have large
consumption across the country in the form of bakery products,
cakes, biscuits and different types of food dishes in home and
restaurants. Being a part of daily food habit, the demand for
wheat products is sustainable and accordingly, the flour mill
industry is relatively insulated from economic cycle.
Furthermore, flour milling industry in India has witnessed a
satisfactory upward trend over the past few years. The demand has
been driven by the rapidly changing food habits of the average
Indian consumer, dictated by the lifestyle changes in urban and
semi-urban regions of the country. The boom in the hospitality
sector, driven by increasing focus on India by MNC's is expected
to act as a steady and sustained growth driver for the company.
Key Rating Weaknesses:
Nascent stage of operations
LPFPL commenced commercial operation since October 2014. Hence,
it is in its nascent stage.
Raw material price fluctuation and availability risk with
susceptibility to vagaries of nature
The prices of major raw material, wheat, are dependent on its
availability which is further dependant on climatic conditions.
Wheat production's overdependence on monsoons is an inherent risk
which may impact its availability, resulting in volatility in
wheat prices. Since, raw material would be the major cost driver
for LPFPL, any increase in raw material prices without
corresponding increase in finished goods prices will result in
adverse performance of the company.
Highly competitive and fragmented industry
Flour processing industry is highly fragmented and competitive
marked by the presence of numerous unorganized players. Major
flour requirement in the country is met through small 'Chakki'
units, mainly due to low entry barriers on the back of limited
capital and technological requirements and capital subsidy
provided by the state government to promote agro-based
industries, leading to intense competition within the business
scenario. Hence, the players in the industry do not enjoy the
discretion oven fixing of price and are always expose to pressure
on profitability driven by induce completion.
Regulated industry
Wheat being a staple food, its prices is under the tight control
of the Central and respective State Governments. There are
strict regulations in place relating to Minimum Support Price and
Exim policy which hugely affects the wheat prices
domestically.
Lavanya Pure Food Private Limited (LPFPL) was incorporated in
June 2011 by Mr. Dilip Kumar and Mr. Sanjeev Kumar Thakur of
Bihar. Although the company has come into existence in the year
2011, its commercial operation started in October 2014. The
company has set-up a flour mill in Muzaffarpur, Bihar to process
wheat into 'Maida', 'Suzi', and 'Chokar'. LPFPL procures wheat
both from the farmers and commission agents present in local
grain markets and sell its products mainly to local biscuit
manufacturer and wholesale traders in the state of Bihar.
The Board of Directors of the company comprises of two members-
Mr. Dilip Kumar (Managing Director) and Mr. Sanjeev Kumar Thakur
(Director). The day-to-day affairs of the company are looked
after by both the directors.
MA MONI: CARE Assigns B+ Rating to INR6.40cr LT Loan
----------------------------------------------------
CARE Ratings has been seeking information from Ma Moni Cold
Storage Private Limited (MCSPL) to monitor the rating vide email
communications/letters dated July 19, 2016, February 16, 2017,
February 18, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the rating. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the publicly available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. The rating
on Ma Moni Cold Storage Private Limited's bank facilities will
now be denoted as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.40 CARE B+; Issuer not
Facilities cooperating; based on
best availableinformation
The rating take into account regulated nature of the industry,
seasonality of business with susceptibility to the vagaries of
nature, risk of delinquency in loans extended to the farmers and
traders and competition from other local players. Moreover, the
rating continues to derive strengths by the satisfactory
experience of the promoters with long track record of operations
and its proximity to the potato-growing areas. Users of this
rating (including investors, lenders and the public at large) are
hence requested to exercise caution while using the above rating.
Detailed description of the key rating drivers
At the time of last rating in December 11, 2015, the following
were the rating strengths and weaknesses:
Key Rating Strengths
Experienced promoters & long track record of operations: The
promoters of MCSPL are having more than two decades of experience
in this line of business.
Proximity to potato growing area: MCSPL's cold storage unit is
located in the Paschim Mednipur district of West Bengal which is
one of the major potato growing regions of the state. The
favorable location of the storage unit, its close proximity to
the leading potato growing areas will auger well for the company,
as it will provide it with a wide catchment and will make it
suitable for the farmers in terms of transportation and
connectivity.
Key Rating Weaknesses
Regulated nature of business In West Bengal, the basic rental
rate for cold storage operations is regulated by the state
government through West Bengal State Marketing Board. Due to
ceiling on the rentals (Presently INR 120/quintal) to be charged,
it is difficult for cold storage units like MCSPL to pass on
sudden increase in operating costs leading to downward pressure
on profitability.
Seasonality of business with susceptibility to vagaries of
nature: MCSPL's operations are seasonal in nature as potato is a
winter season crop with its harvesting period commencing in
March. The loading of potatoes in cold storages begins by the end
of February and lasts till March. Additionally, with potatoes
having a preservable life of around eight months in the cold
storage, farmers liquidate their stock from the cold storage by
end of season i.e., generally in the month of November. The unit
remains non-operational during the period between December to
February. Furthermore, lower agricultural output may have an
adverse impact on the rental collections as the cold storage
units collect rent on the basis of quantity stored and the
production of potato is highly dependent on vagaries of nature.
Risk of delinquency in loans extended to farmers: The business of
the company remained working capital intensive as the working
capital limits under produce marketing loan scheme from bank are
used to extend advances to farmers & traders, which are routed to
the farmers through MCSPL. Against the pledge of cold storage
receipts, MCSPL provides interest bearing advances to farmers &
traders. Before the closure of the season in November, the
farmers & traders are required to pay their outstanding dues with
the interest. In view of this, there exists a risk of delinquency
in loans extended to farmers & traders, in case of downward
correction in potato or other stored goods prices, as all such
goods are agro commodities.
Competition from other local players: Despite being capital
intensive, entry barrier for setting up of new cold storage unit
is low on account of government support and high demand for cold
storages in Mednipur district. The storage business is highly
competitive in the potato growing regions of the state as West
Bengal is the second largest producer of potato in India.
Ma Moni Cold Storage Private Limited (MCSPL) was incorporated on
May 28, 1987 for setting up a cold storage facility by Samanta
family of Paschim Medinipur, West Bengal. MCSPL is engaged in the
business of providing cold storage services primarily for
potatoes to local farmers and traders on rental basis with an
aggregate storage capacity of 23,310 metric ton per annum (MTPA).
The cold storage is located at Paschim Medinipur district of West
Bengal. Besides providing cold storage facility, the company also
provides interest bearing advances to farmers & traders for
potato farming & storing purposes against potato stored.
The board of MCSPL comprises six directors, belonging to the
promoter's family & relative. The day-to-day operations of
the company are being managed by Mr. Bajradhari Samanta with
adequate support from the other co-directors.
As per audited results for FY15 (refers to the period April 1 to
March 31), MCSPL reported PAT of INR0.02 crore on total
operating income of INR3.12 crore.
MAHABIR INDUSTRIES: CARE Raises Rating on INR9cr LT Loan to BB-
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Mahabir Industries (MHI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9 CARE BB-; Stable Revised
Facilities from CARE B+
Detailed Rationale
The revision in the rating of MHI factors in the growth in the
scale of operations in FY16 (refers to the period April 1 to
March 31) and improvement in coverage indicators. The rating
further continues to draw comfort from experienced promoters and
established of track record of operations and moderate operating
cycle.
The rating, however, continues to remain constrained on account
of small scale of operations, low profitability margins,
leveraged capital structure and vulnerability of profitability
margins due to presence in the highly volatile agrocommodity
business, fragmented & competitive industry with constitution of
the entity as a partnership concern.
Going forward, ability of the firm to profitably increase its
scale of operations while improving its capital structure shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Improvement in financial risk profile during FY16
The financial risk profile of the firm has improved marginally
marked by improvement in TOI owing to increase in quantity sold
and PAT margins owing to decrease in interest and depreciation.
However the PBILDT stood declined due to low value addition and
intense competition. The coverage indicators too stood weak on
account of leveraged capital structure and high dependence on
external borrowings.
Small though growing scale of operations: Total operating income
(TOI) of the company stood small which limits the company's
financial flexibility in times of stress and deprives it from
scale benefits. However, the risk is partially mitigated by the
fact that the scale of operation is growing continuously. For the
period FY14-FY16 (refers to the period April 1 to March 31),
SAP's total operating income grew on a y-o-y basis and compounded
annual growth rate (CAGR) was around 11.83.% for the said period.
Vulnerability of profitability margins due to presence in the
highly volatile agro-commodity business: MHI's profitability
is influenced by movement in prices of rice bran and refined oil.
Furthermore, any increase in the seed prices without a
corresponding increase in DOC and edible crude oil prices will
adversely impact already low profitability margins of the
entities in this business.
Fragmented and competitive industry: The edible oil industry is
highly fragmented with low entry barriers and hence faces intense
competition from established integrated players along with
players from the unorganized segment.
Key Rating Strengths
Experienced partners and established track record of operations:
The firm is being managed by experienced partners having rich
experience varying upto four decades in agro product industry.
Moderate operating cycle: MHI maintains sufficient stock raw
material inventory for uninterrupted production process and
minimal finished goods inventory to meet the immediate demand of
its customers. It gives credit period of around one week to its
customers and receives a credit period of around a month from its
suppliers.
Mahabir Industries (MHI) is a partnership firm established in
1992 and is currently managed by MrDaulat Ram Khurana and his
sons, MrManoj Kumar Khurana and Mr. Naveen Khurana, sharing
profit and losses in the ratio 34%, 33%, and 33% respectively.
The firm is engaged in extraction of rice bran oil at its
processing facility located in Karnal, Haryana with an installed
capacity to extract 150 tons of rice bran oil per day as on March
31, 2016. The key raw material is rice bran which is procured by
MHI from rice mills located in Delhi, Kolkata, etc. The firm
sells rice bran oil to various edible oil refineries in Himachal
Pradesh and Gujarat.
In FY16 (refers to the period April 1 to March 31), MHI has
achieved a total operating income (TOI) of INR53.56 crore with
PBILDT and profit after tax (PAT) of INR1.30 crore and INR0.21
crore, respectively, as against TOI of INR39.80 crore with PBILDT
and PAT of INR1.22 crore and INR0.08 crore, respectively, in
FY15. Furthermore, during FY17 the firm has achieved TOI of
around INR47 crore till September 2016 (based on provisional
results).
MOTI RAM: CARE Assigns 'B' Rating to INR6.67cr Long Term Loan
-------------------------------------------------------------
CARE Ratings has been seeking information from Moti Ram Sunil
Kumar to monitor the rating(s) vide e-mail communications/
letters dated February 22, 2017, and numerous phone calls.
However, despite our repeated requests, the firm has not provided
the requisite information for monitoring the ratings. In the
absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. In line
with the extant SEBI guidelines, CARE's rating on Moti Ram Sunil
Kumar's bank facilities will now be denoted as CARE B; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.67 CARE B; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in March 30, 2016, the following were
the rating strengths and weaknesses.
Key Rating Weakness
Weak financial risk profile: During FY15 (refers to the period of
April 1 to March 31), MRS registered decline of 46.32% in the
total operating income which stood at 1.53 crore in FY15 as
against 2.85 crore in FY14. The operations of the firm continues
to remain small which limits the firm's flexibility in times of
stress and deprives it of scale benefit.
Profitability margins of the firm improved and stood moderate for
FY15. The PAT margin also improved in line with PBILDT margin.
Capital structure of the firm has remained leveraged for FY15 due
to low net worth base. Overall gearing deteriorated significantly
on account of high utilization of working capital borrowings as
on balance sheet date.
The coverage indicators stood weak characterized by interest
coverage ratio and total debt to GCA of 1.58x and 62.28x,
respectively, for FY15.
Working Capital Intensive nature of operations: The working
capital cycle elongated to 333 days in FY15 on account
significant increase in inventory and collection period. The high
working capital requirements were met largely through bank
borrowings which resulted in a high average utilization on of
around 95% of its sanctioned working capital limits for last 12-
month period ended February 2016.
Proprietorship nature of its constitution: MRSs constitution as a
proprietorship firm has the inherent risk of possibility of
withdrawal of the proprietor's capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of proprietor.
Business susceptible to the vagaries of nature: Rice being mainly
a 'kharif' crop is a seasonal crop and is cultivated from June-
July to September-October, and the peak arrival of crop at major
trading centers begins in October. The output is highly dependent
on the monsoon. Unpredictable weather conditions could affect the
domestic output and result in volatility in the price of rice.
Fragmented and competitive nature of industry: The commodity
nature of the product makes the industry highly fragmented, with
numerous players operating in the unorganized sector with very
less product differentiation. Furthermore, the concentration of
rice millers around the paddy growing regions makes the business
intensely competitive.
Regulatory policy risk: The Government of India (GoI), every year
decides a minimum support price (MSP) of paddy which limits the
bargaining power of the rice millers over the farmers. Sale of
rice in the open market is also regulated by the government
through the levy system under which the rice millers have to
first supply to the government through Food Corporation of India
(FCI) at the predetermined prices. The millers can sell rice at
the market rates in the open market only after they fulfill the
levy quota.
Key Rating Strengths
Experienced proprietor coupled with long track record of
operations: Moti Ram Sunil Kumar (MRS) was established as a
proprietorship firm in the year 2006. Mr. Sunil Kumar is a
graduate and has an experience of nearly a decade in processing
and milling of basmati and non-basmati rice through his
association with MRS. He looks after overall operations of the
firm. Favorable manufacturing location: The firm's processing
facility is situated in Karnal, Haryana, which is one of the
highest producers of paddy in India. Its presence in the region
gives additional advantage over the competitors in terms of easy
availability of the raw material as well as favorable pricing
terms.
MRS was established as a proprietorship firm in 2006 by Mr. Sunil
Kumar. He looks after the overall operations of the firm. The
firm is engaged in the processing of paddy at its manufacturing
unit located at Karnal, Haryana, with total installed capacity of
30,000 metric ton per annum (MTPA) as on March 31, 2015. MRS
procures paddy from local grain markets through dealers and
agents mainly from the state of Haryana. The firm sells its
products, ie, basmati and non-basmati rice in the states of
Delhi, Haryana and Punjab through a network of commission agents
and traders. In FY15, MRS achieved total operating income (TOI)
of INR1.53 crore with PAT of INR0.05 crore.
NIGAM INDUSTRIES: CARE Assigns B+ Rating to INR6.40cr Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Nigam
Industries (NIS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.40 CARE B+; Stable Assigned
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of NIS is constrained
on account of its small scale of operations, moderate
profitability along with its on-going debt funded capex. The
rating is further constrained on account of partnership nature of
its constitution and its presence in competitive chemical as well
as textile industry. The rating, however, derives comfort from
the experienced partners, moderate capital structure and debt
coverage indicators and NIS's eligibility for various fiscal
benefits from government.
Improvement in the scale of operations, profit margins, debt
coverage indicators as well as better working capital management
would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations
During FY16 (refers to the period April 1 to March 31), NIS
reported TOI of INR4.76 crore with PAT of INR0.15 crore. Till
November 30, 2016, NIS has achieved turnover of INR7.59 crore out
of which INR6.10 crore is from fabric processing and balance from
processing and trading of chemicals.
On-going debt-funded capex
NIS is implementing a project for dyeing of fabrics on job work
basis at a total cost of INR7.35 crore which will be funded
through term loan of INR5.50 crore and balance by way of mix of
partners' capital as well as unsecured loans from relatives. Till
December 2016, NIS has incurred 80% of the total cost, however,
with remaining cost yet to incur and customer base yet to be
established; NIS is exposed to project implementation and
stabilization risk.
Presence in highly fragmented and competitive chemical as well as
textile industry along with partnership constitution NIS is
currently into processing as well as trading of chemicals and
from July 2016 it has also commenced operations of dyeing of
fabrics. The chemical industry is highly fragmented in nature
with presence of huge number of organized as well as unorganized
players in it. Furthermore, due to the fragmented nature of the
industry, bargaining power of NIS with customers is also
restricted as reflected in small scale of operations as well as
moderate profitability. Furthermore, NIS being a partnership firm
is exposed to inherent risk of partners' capital being withdrawn
at time of personal contingency.
Key Rating Strengths
Experienced partners albeit no relevant experience in fabric
processing industry
Key partner Mr. Rameshwar Yadav has more than two decades of
experience in the chemical industry. He also promotes other
entities of Nigam Group such as Nigam Pharmachem Industries,
Shiva Dyestuff Pvt. Ltd. and Shree Shraddha Chemicals Pvt Ltd.
Fiscal benefits from government
For dyeing unit, as per Amended-TUFS (Technology Up-gradation
Fund Scheme, NIS is eligible for 10% capital subsidy on eligible
plant and machineries purchased. NIS will also get 7% interest
subsidy and 15% capital subsidy (maximum up to 25 lakh) from
state government.
Comfortable capital structure and debt coverage indicators albeit
expected to deteriorate due to ongoing capex The capital
structure of NIS stood comfortable marked by overall gearing
ratio of 0.92 times as on March 31, 2016 which improved from 1.03
times as on March 31, 2015. Debt coverage indicators also
remained at comfortable level. However, as NIS is undertaking a
project of establishing another unit for dyeing of fabrics, both
overall gearing and debt protection metrics are envisaged to
deteriorate going forward.
Moderate liquidity position
The operating cycle of NIS stood comfortable at 34 days during
FY16. CC utilization remained around 60% during past 12
months ended on November 2016.
NIS based in Ankleshwar (Gujarat), was established in 1989 by
three partners Mr. Ramehwar Yadav, Mr. Kameshwar Yadav and Mr.
Ravindra Yadav. NIS is engaged into processing and trading of
chemicals which find application in various industries such as
pharmaceutical, agriculture, fertilizer etc. on job work basis.
It has an installed capacity of 4100 MTPA for chemical processing
as on March 31, 2016. Currently, NIS is undertaking a project of
INR7.35 crore to establish another unit for dyeing of fabrics on
job work basis which will be funded through project debt to
equity mix of 2.97 times.
During FY16 (A), NIS reported PAT of INR0.15 crore on a TOI of
INR4.76 crore as against PAT of INR0.19 crore on a TOI of
INR6.17 crore during FY15. During 8MFY17 (Provisional), NIS has
achieved a turnover of INR7.59 crore.
NIKI AGRO: CARE Lowers Rating on INR12.24cr LT Loan to 'D'
----------------------------------------------------------
CARE has been seeking information from Niki Agro Products Private
Limited to monitor the rating(s) vide e-mail communications dated
August 22, 2016, September 8, 2016, September 19, 2016, October
14, 2016, November 16, 2016, December 30, 2016 and February 20,
2017 and numerous phone calls. However, despite CARE's repeated
requests, the Niki Agro Products Private Limited has not provided
the requisite information for monitoring the ratings. In line
with the extant SEBI guidelines CARE has reviewed the rating on
the basis of the publicly available information, which however,
in CARE's opinion is not sufficient to arrive at a fair rating.
The rating on Niki Agro Products Private Limited's bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 12.24 CARE D; Issuer Not
Facilities Cooperating; Revised
from CARE BB on the basis
of best information available
The ratings have been revised on account of delay in interest and
principal repayments obligation in respect of term facility.
Furthermore, there have been instances of overdrawals in cash
credit.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in servicing of debt obligations: There have been instances
of delays in repayment of principal and interest obligation of
term facility. Furthermore, there has been instances of
overdrawals in cash credit for a period of more than 90 days. The
same has been confirmed by the banker. Moreover, the bank has
classified the account as NPA.
Incorporated in 2001, Niki Agro Products Private Limited (NAPPL)
is a Jalgaon based company promoted by Mr. Kantilal Jain and Mr.
Deepak Jain. The company is engaged in the processing and trading
of pulses comprising of Toor dal, Moong dal, Urad dal, Masoor
dal, Lobia, Chana, Rajma, dried peas etc. NAPPL generates 99%
(98% in FY13) of revenues from processing of pulses. NAPPL has
four processing units located at Jalgaon, Maharashtra with total
processing capacity of 24,000 tonnes of pulses per annum (TPA)
and the same was utilised at around 80% in FY15. NAPPL imports
80% from local suppliers located in Maharashtra, Delhi, Rajasthan
and Madhya Pradesh and 20% of its raw material requirement from
Myanmar, Burma, China, Canada and Africa. NAPPL markets its
products under the brand names of 'Deep', 'Peacock' and 'Manik
Panna'. The company mainly supplies its products in the state of
Maharashtra, Gujarat, Delhi and Madhya Pradesh directly as well
as through agents and brokers under its brand names. NAPPL has a
wide network consisting of over 200 brokers spread across various
regions from Maharashtra, Gujarat, Delhi and Madhya Pradesh.
NORTH EAST FERRP: CARE Assigns B+ Rating to INR5.95cr LT Loan
-------------------------------------------------------------
CARE Ratings has been seeking information from North East Ferro
Alloys Company Private Limited (NEFA) to monitor the ratings vide
e-mail communications/letters dated July 21, 2016, February 16,
2017, February 18, 2017 and numerous phone calls. However,
despite CARE's repeated requests, the firm has not provided the
requisite information for monitoring the ratings. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the publicly available information, which however, in
CARE's opinion is not sufficient to arrive at a fair rating. The
rating on NEFA's bank facilities will now be denoted as CARE B+;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.95 CARE B+; Issuer not
Facilities cooperating; Based on
best available information
The ratings take into account the financial performance of the
entity in FY16.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in February 16, 2016, the following
were the rating strengths and weaknesses:
Key Rating Strengths:
Experienced promoters
The company is being promoted by Smt. Minu Goyal (aged about 39
years) and Smt. Indu Goyal (aged about 33 years) of Darjeeling,
West Bengal. Both of them are graduates and possesses around a
decade of experience in the same business by virtue of having
worked in other iron & steel manufacturing company. However, the
manufacturing operations are managed by their husbands, Shri Arun
Goyal and Shri Mukesh Goyal, with adequate support from team of
experienced personnel.
Strategic location of the plant
The manufacturing facility of NEFA is strategically located at
Darjeeling, West Bengal which is well connected through all form
of logistics. Further, there are number of companies operating in
the vicinity producing raw materials for iron & steel industry
which will ensure steady supply of raw materials to its
manufacturing facilities thus reducing its raw material holding
levels and freight costs. Moreover, the logistical advantage of
the site also ensures good connectivity with its end users.
Key Rating Weaknesses:
Modest scale of operations with low profitability margins NEFA is
a small player in the iron & steel industry with total operating
income of INR87.0 crore in FY14 (refers to the period April 1 to
March 31) and total capital employed of INR20.0 crore as on
March 31, 2014. Furthermore, total operating income (TOI)
witnessed an erratic trend over the last three years (FY12-FY14).
It improved in FY13 over FY12 on account of increase in trading
sales backed by steady demand. However, the same declined in FY14
on account of the overall slowdown in the steel sector. Small
size restricts the financial flexibility of the company in times
of stress and deprives it from scale benefits.
Further, the profitability (PBILDT) margin of the company has
remained low during the past three financial years ended FY14 on
account of higher proportion of low margin trading sales. The
PBILDT margin has remained in the range of 1.82% - 2.59% during
the last three years. This apart, interest burden on bank
borrowings also dented the net profitability of the company.
Lack of backward integration vis-a-vis volatility in prices The
degree of backward integration defines the ability of the company
to minimize price volatility risk and withstand cyclical
downturns generally witnessed in the iron and steel industry.
NEFA does not have any backward integration for its basic raw
material (Sponge iron) and has to purchase the same from open
market. Since the raw material is the major cost driver and raw
material prices are volatile in nature, the profitability margin
of the company is susceptible to fluctuation in raw material
prices. Further, the company does not have any long-term
contracts for purchase of material.
Intense competition due to fragmented nature of steel industry
The spectrum of the steel industry in which the company operates
is highly fragmented and competitive marked by the presence of
numerous players in eastern India (particularly in Odisha, West
Bengal & Chhattisgarh), given the fact that the entry barriers to
the industry are low. Hence, the players in the industry (incl.
NEFA) do not have pricing power and are exposed to competition
induced pressures on profitability. Foreign exchange fluctuation
risk Since, the company derived about 50% of its revenue in FY14
from exports sales, thus exposing it to foreign exchange
fluctuation risk. The company does not have any delineated policy
to hedge its forex risk. Being a net exporter of goods, the
impact of rupee appreciation can have an impact on it's
operational performance.
Working capital intensive nature of business
NEFA's business is working capital intensive in nature as
reflected by moderately high average collection period and
average inventory period. The inventory period remained high as
the company maintains the adequate level of raw material
inventory to assure uninterrupted production and finished goods
for meeting the urgent demand. Furthermore, the average
collection period of the company also remained long due to its
low bargaining power owing to its small size and subdued demand
scenario from steel industries. Accordingly, the working capital
limit utilization remained high at around 96% during last twelve
months ending of May 30, 2015. However, despite the high working
capital intensive operations, liquidity position of the company
remained moderate marked by current ratio of 1.59x as on Mar. 31,
2014.
Analytical approach: Standalone
North East Ferro Alloys Co. Pvt. Ltd. (NEFA), incorporated in
July, 2008 and having commenced commercial operation from April,
2009 was promoted by Goyal Family of Darjeeling, West Bengal. The
company is engaged in manufacturing of mild steel (MS) Ingots
(capacity - 24,000 MTPA) with plant being located at Darjeeling,
West Bengal. Apart from manufacturing, it is also involved in
trading activities of sponge iron (contributing around 47.4% of
total sales in FY14). Apart from India, the company also sells MS
Ingots internationally by exporting the same to Bhutan, which
contributes around 50% of the total sales in FY14.
During FY15 (refers to the period April 1, 2014 to March 31,
2015), NEFA reported a total operating income of INR107.14 crore
(as against INR87.00 crore in FY14) and a loss of INR0.04 crore
(as against profit of INR0.16 crore in FY14).
PALAK FERRO: CARE Lowers Rating on INR6.10cr LT Loan to 'D'
-----------------------------------------------------------
CARE Ratings has been seeking information from Palak Ferro Alloys
(PFA) to monitor the rating vide e-mail communications/letters
dated February 20, 2017, February 17, 2017, February 3, 2017,
September 9, 2016, August 17, 2016 and numerous phone calls.
However, despite CARE's repeated requests, the PFA has not
provided the requisite information for monitoring the rating. In
the absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. In line
with the extant SEBI guidelines, CARE's rating on PFA's long term
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.10 CARE D; Issuer not
Facilities cooperating; Revised from
CARE B+ on the basis of best
available information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
The revision in the rating takes into account the continuous
overdrawals in the cash credit facility of the firm.
Key Rating Weaknesses
Continuous overdrawals in the cash credit facility: As per
interaction with the banker, there are continuous overdrawals
in the cash credit facility availed by the firm.
Incorporated in 2008, Palak Ferro Alloys (PFA), is promoted by
Rahul Parwani and is currently engaged in manufacturing of ferro
alloys and manganese oxides. PFA products include ferro
maganesium, manganese oxide and di-oxide, silico magnesium, ferro
manganese low carbon etc. The firm supplies its products in the
state of Maharashtra, Punjab, Gujarat and Delhi directly as well
as through 7 agents and brokers.
PIONEER GLOBEX: ICRA Lowers Rating on INR15cr Cash Loan to 'D'
--------------------------------------------------------------
ICRA Ratings has revised the long term rating assigned to the
INR25.00 crore fund based limits of Pioneer Globex Private
Limited from [ICRA]C+ to [ICRA]D. The rating action is based on
the continued delays in the company's debt servicing.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit cum EPC 15.00 Revised to [ICRA]D from
[ICRA]C+
Working Capital 10.00 Revised to [ICRA]D from
Term Loans [ICRA]C+
Established in 2008, Pioneer Globex Private Limited (PGPL) is a
private limited company managed by Mr. Narendra Shah and Mr.
Hardik Shah. It is engaged in the export of iron ore fines and
mill scales. Earlier the business was conducted as a part of
Sheth Ship Breaking Corporation (SSBC, rated at
[ICRA]B+/[ICRA]A4), a group firm engaged in ship breaking
activities, and trading of iron ore fines and mill scales. From
2010-11, the trading operations are being conducted entirely by
PE, while SSBC continues to handle ship recycling activities.
R.B. RICE: ICRA Reaffirms 'B' Rating on INR13.50cr Loan
-------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR13.50-crore fund-based limits of R.B. Rice Industries
(RBRI). The rating has been assigned a 'Stable' outlook.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 13.50 [ICRA]B; reaffirmed (Stable
outlook assigned)
Rationale
The rating action factors in the healthy growth in sales in
FY2016 as well as the decline in gearing levels. These factors
were, however, accompanied with a decline in operating margins as
well as a deterioration in interest coverage ratio and net worth
caused by low operating margins and high working capital
intensity.
The rating continues to factor in the weak financial profile and
stretched liquidity position of the firm as reflected by low
profitability, high working capital limits utilisation and high
gearing level. The rating further continues to be constrained by
high industry competition and agro climatic risks that can affect
paddy availability in adverse weather conditions. ICRA has also
taken note of the risks, such as limited ability to raise equity
capital and risk of dissolution inherent in a partnership firm.
The rating, however, continues to favourably take into account
the extensive experience of promoters in the rice industry and
the proximity of the mill to major rice growing area, which
results in easy availability of paddy.
Going forward, the firm's ability to increase its scale of
operations in a profitable manner, improve its capital structure
and optimise its working capital intensity will be the key rating
sensitivity.
Key rating drivers
Credit strengths
* Experienced promoters with long industry presence
* Healthy growth in operating income in past few years
* Presence in a major rice growing area ensures easy
Availability of paddy
* Good demand prospects as rice is a staple food grain and India
is world's second largest producer and consumer
Credit weaknesses
* Weak financial profile characterised by low profitability,
high gearing and weak coverage indicators
* Stiff competition due to low-entry barriers, which has
resulted in the presence of numerous established players and a
large base of unorganised small players
* Agro-climatic risks affect paddy availability
* Risks inherent in a partnership firm
Description of key rating drivers highlighted:
The promoters and their family members have been involved in the
business of rice milling from more than a decade. The management
has a long track record in this business, which helps the firm to
add customers and provides an edge against its competitors.
The firm mainly procures traditional basmati, Pusa 1121,
Sharbati, varieties of paddy which differ in length, breadth,
aroma etc. The procurement is done through Aadhti firms from
different mandis located nearby. As the basmati variety is grown
only in the foothills of the Himalayas in India, the location of
the manufacturing facility ensures easy access to the basmati
paddy.
Rice industry is a highly competitive industry, characterised by
low-entry barriers and thus a large number of unorganised players
and a few established players. This exerts pressure on margins of
the firm.
Given that majority of the basmati paddy is procured during
October-December (procurement season) and is held for 6-12 months
for ageing purposes (which fetches higher realisations), the
business is inherently working capital intensive. Also, given
that the firm operates in the agro- based industry, it remains
exposed to the inherent cyclicality, volatility in prices, and
changes in government regulations, not just domestically but also
the regulations of the export destinations.
R.B. Rice Industries (RBRI) is a partnership firm established in
2000. The firm is primarily engaged in milling of basmati rice.
RBRI's milling unit is based in Fazilka, Ferozepur, Punjab with
an installed capacity of 4 tons/hr. The firm purchases paddy from
the local markets in and around Jalalabad. The firm is also
involved in the export of rice to countries such as Iran, the UAE
and Iraq.
In FY2016, the firm reported a profit after tax (PAT) of INR0.23
crore on an operating income of INR80.07 crore as against a PAT
of INR0.23 crore on an operating income of 63.40 crore in FY2015.
RATAN ENGINEERING: CARE Reaffirms B+ Rating on INR12.75cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Ratan Engineering Company Private Limited (REPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 12.75 CARE B+; Stable Reaffirmed
Short term Bank
Facilities 0.25 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings of REPL continue to be constrained by its small scale
of operations, low profitability margins, leveraged capital
structure and elongated operating cycle. The ratings are further
constrained by its presence in the highly fragmented and
competitive industry. The ratings, however, continue to be
supported by experienced management. Going forward, the ability
of the company to increase its scale of operations along with
improvement in the capital structure shall be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations
The total operating income (TOI) of REPL grew by 27.17% during
FY16 over previous financial year (refers to the period April 1
to March 31) and stood at INR15.54 crore. The growth in TOI was
mainly attributed to increase in quantity sold.
Despite the growth in TOI, the same continues to remain small
which inherently limits company's financial flexibility in times
of stress and deprives it from scale benefits. The company has
achieved a total operating income of approximately INR17.25 crore
in 9MFY17 (refers to the period April to December 31).
Below average financial risk profile
The financial risk profile of the company stood weak as
characterised by moderated profitability margin, leveraged
capital structure and weak debt service coverage indicators. REPL
is engaged in manufacturing of industrial valves, turbine
components and other type of casting using radiography technology
which fetches better operating profitability margins. However,
PBILDT margin of the company has decreased from 18.70% in FY16 to
15.03% in FY15 owing to increase in raw material and overhead
cost. Consequently, PAT margin decreased from 0.38% in FY16 to
0.16% in FY15.The capital structure of the company continues to
be leveraged marked by debt equity ratio and overall gearing of
2.29 and 3.11x respectively as on as on March 31, 2016 due to
debt funded capital expansion concluded in the recent past for
the setting up of new manufacturing unit at Kahrani- Rajasthan.
Coverage indicators of the company remained weak marked by
interest coverage ratio and total debt to gross cash accrual of
1.73x and 12.86x respectively for FY16 owing to high interest
cost and low gross cash accruals.
Elongated operating cycle
REPL operations continues to remain working-capital intensive
marked by elongated operating cycle of 139 days for FY16. The
company has large product profile (industrial valves, turbine
components and other type of casting), the company needs to
maintain sufficient inventory of raw material to meet the demand
of its customers. Furthermore, the product manufactured by the
company are customised as per the specification given by the
customer and dispatched only after quality check which resulted
in high inventory holding of 133 days in FY16. REPL receives
credit up to 60 days from its customers and gives credit up to 60
days to its suppliers. The average utilization of working capital
limits remained high with around 75% for the past 12 months
period ended February, 2017.
Intense competition in the industry due to low entry barriers
REPL operates in a highly fragmented industry marked by the
presence of a large number of players in the unorganized sector.
The industry is characterized by low entry barriers due to low
technological inputs and easy availability of standardized
machinery for the production. This further leads to high
competition among the various players and low bargaining power
with suppliers.
Experienced management
REPL is promoted by Mr. Ram Parkash, Mr. Naresh Garg and Mr.
Vikram Garg. Mr. Ram Parkash and Mr. Naresh Garg have around
three decades of experience in the manufacturing of steel casting
product through their association with REPL. All of them handle
the overall operations of the company and are supported by Mr.
Vikram Garg who has a decade of experience through his
association with REPL.
REPL was established in 1985 by Mr. Ram Parkash, Mr. Naresh Garg
and Mr. Vikram Garg. REPL is engaged in manufacturing of
customized steel casting products, which includes industrial
valves, turbine components and other type of casting using
radiography technology. The company has manufacturing facilities
located at Kahrani and Bhiwadi in Rajasthan, which have a
combined installed capacity of 5000 Metric tonnes per annum for
finished casting.
SABARI KRISHNA: ICRA Reaffirms 'B' Rating on INR13.50cr Loan
------------------------------------------------------------
ICRA has reaffirmed the long term rating at [ICRA]B to the
INR4.00 crore cash credit facility and the short term rating at
[ICRA] A4 to the INR2.25 crore non-fund based limits of Sabari
Krishna Enterprises. ICRA has also assigned the long term rating
of [ICRA]B to INR14.00 crore unallocated limits of SKE. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 13.50 [ICRA]B; reaffirmed (Stable
outlook assigned)
Rationale
The ratings assigned take into account the firm's small scale of
operations in a highly competitive industry limiting financial
flexibility and margin expansion. The ratings are constrained by
high client concentration risk faced by the firm with its entire
order book comprising of orders from Indian Railways. The ratings
are further constrained by weak financial profile of the firm
characterized by low margins, working capital intensive nature of
operations and stretched liquidity profile resulting in high
utilisation of working capital limits. ICRA also notes the delays
in execution in the past and that the earnings of the firm are
exposed to raw material price fluctuations in absence of price
escalation clause for the ongoing projects.
The ratings, however, positively factor in long track record of
partners in civil and electrical contract business resulting in
healthy inflow of fresh orders from railway departments. The
ratings also reflect unexecuted order book to operating income
ratio of 4.45 times for FY2015 providing revenue visibility for
short to medium term.
Going forward ability of the company to improve its scale,
profitability and manage its working capital requirement would
remain the key rating sensitivities from credit perspective.
Key rating drivers
Credit Strengths
* Long track record of 16 years of the partners in civil and
electrical contract business
* The unexecuted order book/ revenue for FY2016 is 4.45 times
which provides visibility to revenues in the medium to long
term
Credit weaknesses
* Weak financial profile characterised by low profitability,
high gearing and weak coverage indicators
* Stiff competition due to low-entry barriers, which has
resulted in the presence of numerous established players
and a large base of unorganised small players
* Agro-climatic risks affect paddy availability
* Risks inherent in a partnership firm
Description of key rating drivers highlighted:
The promoters and their family members have been involved in the
business of rice milling from more than a decade. The management
has a long track record in this business, which helps the firm to
add customers and provides an edge against its competitors.
The firm mainly procures traditional basmati, Pusa 1121,
Sharbati, varieties of paddy which differ in length, breadth,
aroma etc. The procurement is done through Aadhti firms from
different mandis located nearby. As the basmati variety is grown
only in the foothills of the Himalayas in India, the location of
the manufacturing facility ensures easy access to the basmati
paddy.
Rice industry is a highly competitive industry, characterised by
low-entry barriers and thus a large number of unorganised players
and a few established players. This exerts pressure on margins of
the firm.
Given that majority of the basmati paddy is procured during
October-December (procurement season) and is held for 6-12 months
for ageing purposes (which fetches higher realisations), the
business is inherently working capital intensive. Also, given
that the firm operates in the agro- based industry, it remains
exposed to the inherent cyclicality, volatility in prices, and
changes in government regulations, not just domestically but also
the regulations of the export destinations.
R.B. Rice Industries (RBRI) is a partnership firm established in
2000. The firm is primarily engaged in milling of basmati rice.
RBRI's milling unit is based in Fazilka, Ferozepur, Punjab with
an installed capacity of 4 tons/hr. The firm purchases paddy from
the local markets in and around Jalalabad. The firm is also
involved in the export of rice to countries such as Iran, the UAE
and Iraq.
In FY2016, the firm reported a profit after tax (PAT) of INR0.23
crore on an operating income of INR80.07 crore as against a PAT
of INR0.23 crore on an operating income of 63.40 crore in FY2015.
SAISONS TECHNOCOM: ICRA Assigns B+ Rating to INR20cr Loan
---------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B+ to the INR20.00
crore Non-Convertible Debentures (NCDs) of Saisons Technocom
Private Limited. The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible
Debentures 20.00 [ICRA]B+ (Stable); assigned
Rationale
The assigned rating is constrained by STPL's stretched liquidity
as depicted by its weak cash flows and high utilisation of the
working capital limits. The company largely caters to reputed
players against whom its bargaining power remains limited. It
extends elongated credit to these customers, which coupled with
its long manufacturing cycle leads to working capital intensive
operations. Moreover, the company largely relies on external
borrowings to fund its high working capital requirements leading
to a leveraged capital structure as reflected by a gearing of
1.93 times as on December 31, 2016. Furthermore, on account of
the high interest costs incurred on the external borrowings, the
profitability and resultantly the coverage indicators remain
modest. The rating also factors in the susceptibility of STPL's
profitability to fluctuations in raw material prices as well as
the competitive pressures in the industry which limits its
pricing flexibility.
The assigned rating, however, favourably factors in the
established track record of the company in the electrical and
electronics industry for over a decade. Additionally, the
company's clientele comprises reputed players, which limit the
counter-party credit risk to an extent. The rating also takes
into account the healthy growth in the company's revenues during
the past four years as supported by the additions to capacity and
customer base. Furthermore, the company also has orders worth
INR138 crore that, are to be completed during 6M FY2018, which
lends visibility to the revenues in the near-term.
Key rating drivers
Credit Strengths
* Established track record in the electrical and electronics
industry for over a decade
* Reputed customer profile
* Healthy growth in revenues as supported by additions to
capacity and customer base; healthy revenue visibility in the
near term supported by the orders-in-hand.
Credit Weakness
* Stretched liquidity as depicted by the high utilisation of
working capital limits on account of a long manufacturing
cycle and elongated credit extended to customers
* Leveraged capital structure as reflected by a gearing of
1.93 times as on December 31, 2016, coupled with modest
coverage indicators.
* Profitability remains vulnerable to fluctuations in raw
material prices; pricing policy followed by the company
mitigates the risk to an extent.
* Competition from several large and small players leading
to limited pricing flexibility
Description of key rating drivers highlighted:
STPL derives about 45% of its revenues from the sale of
electrical control panels, which have a long manufacturing cycle.
The products are inspected and approved by the company's
customers at each stage of manufacturing which extends the cycle
further. Since the company's bargaining power remains limited
against its large reputed customers, it extends elongated credit
of 60-180 days to them. Consequently, the company's liquidity
remains stretched as reflected by its weak cash flows. The
company thus relies on external borrowings to fund its working
capital requirements leading high utilisation of working capital
limits. Due to the high debt levels, STPL's capital structure
remains leveraged as reflected by a gearing of 1.93 times as on
December 31, 2016. Moreover, on account of the high interest
costs incurred on the external borrowings, the profitability and
resultantly the coverage indicators remain modest. Since the
manufacturing cycle of the company is long, its profitability
remains vulnerable to any adverse fluctuations in the raw
material prices which is the principal cost of the company. STPL
follows a pricing policy wherein it quotes prices during the
commencement of the order, which remain valid for a period of 45-
60 days. Any escalations in costs beyond 60 days are open for
negotiation with customers, protecting the company from cost
escalations beyond this period. However, the company often
absorbs these escalations by compromising its margins because of
its limited pricing flexibility in a highly competitive industry.
Nevertheless, the promoters of the company have an experience of
over two decades in the industry, which coupled with limited
counter-party credit risk arising from the company's reputed
clientele, lend some comfort. STPL has also registered a healthy
growth in its revenues at a compounded annual growth rate (CAGR)
of 19% from INR120.80 crore in FY2013 to INR242.69 crore in
FY2016, and further up to INR230.70 crore during 9M FY2017,
backed by an increase in sales volume aided by additions to
capacity. Furthermore, the company also has orders of INR138
crore that are to be completed during 6M FY2018, which lends
visibility to revenues in the near-term.
Analytical approach:
ICRA has assigned the ratings following a detailed evaluation of
the issuer's business and financial risks.
Incorporated in 1999, Saisons Technocom Private Limited (STPL)
manufactures electrical panels, fire panels and accessories, wire
harness, accessories for telecommunication towers and fabricated
products. The operations of the company are collectively managed
by Mr. Siddharth Shah and his brother, Mr. Ankit Shah, who have
an experience of over 15 years in the industry. The manufacturing
unit of the company is located at Bhiwandi in Thane (Maharashtra)
and spans across 30,000 square feet. It has manufacturing
capacity of 6,000 control panels per annum. STPL also has an
assembling unit at Vadodara in Gujarat, which spans across 12,000
square feet.
STPL has a group company, J E Marketing Private Limited (JEMPL),
where Mr. Siddharth Shah and Mr. Ankit Shah are common directors.
JEMPL commenced operations in FY2017; it trades in electrical and
electronic products.
STPL reported a net profit after tax and depreciation of INR1.53
crore and INR2.46 crore, respectively, on operating incomes of
INR244.19 crore and INR230.70 crore for the periods ended
March 31, 2016 and December 31, 2016, respectively.
Status of non-cooperation with previous CRA: CARE has revised the
long-term rating assigned to the INR35.00 crore bank facilities
of Saisons Technocom Private Limited to CARE BB (Stable) from
CARE BB- (Stable) vide its press release dated April 13, 2016.
The short-term rating assigned to the INR3.00 crore bank
facilities of the company has been re-affirmed at CARE A4.
SHREE GANESH: CARE Lowers Rating on INR28.75cr LT Loan to B+
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shree Ganesh Jewellers Ltd (SGJL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 28.75 CARE B+; Stable Revised
from CARE BB
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
SGJL takes into account declining scale of operations, elongating
operating cycle and weakening of the credit profile of the group
flagship company- Deepak Fasteners Limited (DFL), with whom SGJL
has certain financial linkages. The rating is further constrained
by the weak debt coverage indicators, geographical concentration
risk and competition from players in the organised and the
unorganized sectors. The rating, however, favourably factors in
experience of the promoters, long track record of operations and
established brand image in the Ludhiana (Punjab) market.
The ability of the company to profitably scale-up its operations,
efficiently manage the working capital requirements, improve its
overall solvency position and the extent of support given to
group entities would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Declining scale of operations with elongating operating cycle and
weakening credit profile of the group concern- DFL: In FY16
(refers to the period April 01 to March 31), the total operating
income of the company decreased substantially by ~45% to INR45.60
crore from INR83.65 crore in FY15 on account of lower income
achieved from trading (of gold bars & coins), general slowdown in
the industry and disruption of operations due to strike in
February-March 2016. However, the PBILDT margins improved to
10.94% in FY16 (PY: 6.34%) on account of higher proportion of
income derived from sale of jewellery items (better margin giving
segment). Furthermore, in 9MFY17 (Provisional), the company has
achieved a total operating income of INR40.40 crore with PBILDT
margins of 8.59%.
With increased focus of the company on jewellery sales, the need
for display of inventory had also increased which led to
elongation of the operating cycle to 440 days, as on March 31,
2016 (PY: 229 days). The average cash credit limit utilization
remained close to 100% for the last 12 months ended January 2017.
Furthermore, there has been a deterioration in the liquidity
profile of the flagship company of the group- DFL, on account
of disruptions in operations at one of its plants at Madhya
Pradesh due to floods in the July-August 2016 period leading to
loss of inventory and delay in fulfillment of orders from the
plant. SGJL held 30.08% equity stake in DFL (as on March 31,
2016) and has extended corporate guarantee to various banks for
the loans availed by DFL. Also, DFL holds 49.75% equity stake in
SGJL and has extended corporate guarantee for the entire bank
facilities availed by SGJL.
To support the operations at the Madhya Pradesh plant, the
promoters have infused additional funds in the form of unsecured
loans and equity. Any increased support from SGJL to DFL will
remain a key rating sensitivity.
Geographical concentration risk: SGJL has a single showroom
located in Ludhiana (Punjab) and sells jewellery under its
own brand name- 'Ganpati Jewellers'. The company also has a
manufacturing unit located at Ludhiana (Punjab) where it
manufactures bangles and does casting work. Since the operations
of the company are highly concentrated in the Ludhiana market, it
substantially increases the business risk of SGJL and limits its
scale of operations too.
Vulnerability of margins to gold price fluctuations: The prices
of gold have experienced high volatility in the past. Therefore,
any adverse change in prices of the same is likely to have a
significant impact on SGJL's margins. However, the company tries
to somewhat mitigate this risk by adopting a regular inventory
replenishment policy (it purchases the same quantity of gold as
sold at the same day rate).
Key Rating Strengths
Experienced promoters and long operational track record: The
directors in the company have vast experience in varied fields
including manufacturing and export of fasteners, manufacturing/
trading of clothes/fabrication clothes and have
been into the jewellery business since 1997. Over the period, the
directors have managed to establish a strong brand image of SGJL
in the Ludhiana market. Furthermore, the promoters have continued
to support the operational needs of SGJL by infusion of funds.
The total unsecured loans infused by the promoters stood at
INR5.54 crore in FY16 (declined from INR7.55 crore, as on March
31, 2015).
SGJL, incorporated in year 1997, is engaged in the business of
manufacturing and trading of gold jewellery, diamond/precious
stones, gold coins, etc. The company sells its jewellery and
precious stones to retail customers at its showroom located at
First Mall, Mall Road, Ludhiana under the brand name of 'Ganpati
Jewellers'.
During FY16 (refers to the period April 1 to March 31), SGJL has
reported a PAT of INR0.29 crore on a total operating income of
INR45.60 crore as against a PAT of INR0.35 crore on a total
operating income of INR83.65 crore in FY15. During 9MFY17
(Provisional), the company has reported a total operating income
of around INR40.40 crore with PBILDT margins of 8.59%.
SHREE GANESH: CARE Assigns B+ Rating to INR13.30cr LT Loan
----------------------------------------------------------
CARE Ratings has been seeking information from Shree Ganesh Rice
Mills to monitor the rating(s) vide e-mail communications/letters
dated February 22, 2017 and numerous phone calls. However,
despite our repeated requests, the firm has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on Shree Ganesh Rice Mills
bank facilities will now be denoted as CARE B+/CARE A4; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 13.30 CARE B+; Issuer Not
Cooperating
Short-term Bank 1.70 CARE A4; Issuer Not
Facilities Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in April 18, 2016, the following were
the rating strengths and weaknesses.
Key Rating Weakness
Small scale of operations
The TOI of the firm has exhibited fluctuating trends in the past
three years i e FY13 to FY15 (refers to the period April 1 to
March 31). However, in FY15 TOI registered growth of 39% which
stood at INR52.26 crore as against INR37.36 crore owing to
increase in quantity sold to its existing and new customers.
Despite growth, the scale of operations has remained small. The
small scale limits the firm's financial flexibility in times of
stress and deprives it from scale benefits.
Weak financial risk profile
The financial risk profile of the firm is characterized by low
profitability margins, highly leveraged capital structure and
weak coverage indicators.
The PBILDT margin of the firm stood moderately low at about 5% in
last 2 financials years (FY14 & FY15) on account of low value
addition and its presence in highly fragmented and competitive
nature of industry. However, high financial charges and
depreciation cost restricted the net profitability of the firm
below unity at 0.20% in FY15.
The capital structure of the firm remained highly leveraged
marked overall gearing ratio of 5.56x as on March 31, 2015 on
account of infusion in the form of unsecured loans from partners
and high dependence on external working capital borrowings for
managing working capital requirements of the business. The debt
service coverage indicators of the firm remained weak in FY15 on
account of high reliance on external borrowings coupled with low
profitability.
Working capital intensive nature of operations
The operations of the firm is working capital intensive in nature
and the peak paddy procurement season is during November to
January during which the firm builds up raw material inventory to
cater to the milling and processing of rice throughout the year.
The working capital limits of the firm remained 90% utilized
during the past 11 months ended February 29, 2016.
Constitution of the entity being a partnership firm SGRM's
constitution as a partnership firm has the inherent risk of
possibility of withdrawal of the partner's capital at the time of
personal contingency and the firm being dissolved upon the
death/retirement/insolvency of partners.
Fragmented and competitive nature of industry
The commodity nature of the product makes the industry highly
fragmented, with numerous players operating in the unorganized
sector with very less product differentiation. Furthermore, the
concentration of rice millers around the paddy growing regions
makes the business intensely competitive.
Regulatory policy risk
The Government of India (GoI), every year decides a minimum
support price (MSP) of paddy which limits the bargaining power of
the rice millers over the farmers. Sale of rice in the open
market is also regulated by the government through the levy
system under which the rice millers have to first supply to the
government through Food Corporation of India (FCI) at the
predetermined prices. The millers can sell rice at the market
rates in the open market only after they fulfill the levy quota.
Business susceptible to the vagaries of nature
Rice being mainly a 'kharif' crop is a seasonal crop and is
cultivated from June-July to September-October, and the peak
arrival of crop at major trading centers begins in October. The
output is highly dependent on the monsoon. Unpredictable weather
conditions could affect the domestic output and result in
volatility in the price of rice.
Key Rating Strenghts
Experienced partners in processing of paddy
SGRM is currently being managed by Mr. Bhim Singal and Mr. Sunil
Singal. Mr. Bhim Singal has an experience of three and a half
decades through his association with "Kashi Ram Pawan Kumar Rice
Mills" a family run firm. He is supported by his son Sunil Singal
in managing the overall operations of the firm who has experience
of a decade through his association with SGRM.
Favorable manufacturing location
The firm's processing facility is situated in Haryana which is
one of the highest producers of paddy in India. Its presence in
the region gives advantage in terms of easy availability of the
raw material as well as favorable pricing terms. SGRM owing to
its location is in a position to cut on the freight component of
incoming raw materials.
Sirsa-based (Haryana) Shree Ganesh Rice Mills(SGRM) was
established in 1999 as a partnership concern by Mr. Bhim Singhal
and Mr. Sunil Singhal. The firm is engaged in milling and
processing and trading of both basmati and non-basmati rice with
an installed capacity of 250 tonnes per day as on March 31, 2015.
The firm procures the raw material (paddy) from the grain market
located in Haryana through commission agents and sells its
product to wholesellers in Haryana, Delhi and Gujarat.
In FY15, SGRM achieved total operating income (TOI) of INR52.26
crore with PAT of INR0.11 crore.
SHRIKALYANI AGRITECH: CARE Assigns 'B+' Rating to INR11.67cr Loan
-----------------------------------------------------------------
CARE Ratings has been seeking information from Shrikalyani
Agritech Pvt. Ltd. (SAPL) to monitor the ratings vide e-mail
communications/letters dated May 31, 2016, February 16, 2017,
February 20, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requiste information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on SAPL's bank facilities
will now be denoted as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 11.67 CARE B+; Issuer not
Facilities Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in July 10, 2015, the following were
the rating strengths and weaknesses:
Key Rating Strengths:
Experienced Promoters
The company is being promoted by Shri Ganesh Kr. Goyal (aged
about 52 years) and Shri Ramesh Kr. Goyal (aged about 50 years)
of Dhanbad, Jharkhand. Both of them are graduates and possesses
around a decade of experience in rice milling business by virtue
of having worked in other rice milling company. Both of them
together look after the overall operations of the company with
adequate support from team of experienced personnel.
Proximity to raw material sources
SAPL's plant is located in Govindpur, Dhanbad, Jharkhand, which
is in the vicinity to a major rice growing area, thus, resulting
in logistic advantage. The entire raw material requirement is met
locally from the farmers (or local agents) helping the company to
save simultaneously on transportation cost and paddy procurement
cost.
Key Rating Weaknesses:
Short track record coupled with small scale of operations
SAPL is engaged in the business of rice milling and processing.
The track record of the company is short as it has commenced
commercial production from July 2014; hence, FY15 was its first
nine months of operation. Further, in terms of installed
capacity, SAPL is a small player in the highly competitive and
fragmented industry. Small size restricts the financial
flexibility of the company in times of stress and it suffers on
account of economics of scale.
Intensely competitive nature of the industry characterized by a
number of small players
SAPL's plant is located in Dhanbad district of Jharkhand, which
is in close proximity to hubs for paddy/rice cultivating region
of Jharkhand. Owing to the advantage of close proximity to raw
material sources, large numbers of small units are engaged in
milling and processing of rice in the region. This has resulted
in intense competition which is also fuelled by low entry
barriers. Given that the processing activity does not involve
much of technical expertise or high investment, the entry
barriers are low.
Volatility in profit margins subject to government regulations
The Government of India (GOI), every year decides a minimum
support price (MSP - to be paid to paddy growers) for paddy,
which limits the bargaining power of rice millers over the
farmers. The MSP of paddy was increased during the crop year
2014-15 to INR1360/quintal from INR1310/quintal in crop year
2013-14 (proposed to be revised to INR1410/quintal for 2015-16).
The sale of rice in open market is also regulated by the GoI
through the levy of quota, depending on the target laid by the
central government for the central pool. Given the market
determined prices for finished product vis-a-vis fixed
acquisition cost for raw material, the profitability margins are
highly vulnerable. Such a situation does not augur well for the
company, especially in times of high paddy cultivation.
Working capital intensive nature of business and exposure to
vagaries of nature
Owing to the seasonality of rice harvest, the business requires
maintaining higher raw material inventory as well as high
inventory balances of finished products. The raw material
procurement happens at the end of the cultivation seasons but
the milling is carried out almost entire year, hence company has
to maintain high raw material inventory. Further, while paddy is
sourced on cash payment, the millers are required to extend
credit period to their customers. Accordingly, the working
capital intensity will remain high marked by persistent high
utilization of working capital limit which remained at 96% for
the twelve months ending May 30, 2015. Also, paddy cultivation is
highly dependent on monsoons, thus exposing the fate of the
company's operation to vagaries of nature.
Shrikalyani Agritech Pvt. Ltd. (SAPL) was incorporated in
June 2009 as Shri Kalyani Coke & Iron Pvt. Ltd. (SCIPL) by Goyal
family of Dhanbad, Jharkhand. SCIPL was de-functional and later
on in May, 2013, it was renamed to Shrikalyani Agritech Pvt. Ltd.
for the purpose setting up a paddy processing unit at Govindpur,
Dhanbad, Jharkhand. The company commenced commercial production
in June, 2014 with rice processing capacity of 57,600 metric
tonne per annum (MTPA).
SIDDHI FERROUS: ICRA Hikes Rating on INR9.5cr Cash Loan to B+
-------------------------------------------------------------
ICRA Ratings has upgraded the long-term rating from [ICRA]B to
[ICRA]B+ assigned to the INR9.50 crore cash credit facility and
the INR0.70 crore (reduced from INR0.87 crore) crore term loan of
Siddhi Ferrous LLP. ICRA has re-affirmed the short-term rating at
[ICRA]A4 assigned to the INR4.00 crore short-term non-fund based
facilities of the firm. ICRA has also upgraded and re-affirmed
the ratings at [ICRA]B+ and [ICRA]A4 respectively assigned to the
INR2.80 crore (enhanced from INR2.63 crore) unallocated limit of
the firm. The outlook assigned on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Cash
Credit 9.50 [ICRA]B+ (Stable); upgraded
from [ICRA]B
Long Term-Term 0.70 [ICRA]B+ (Stable); upgraded
Loan from [ICRA]B
Short Term-Non-
Fund Based Limit 4.00 [ICRA]A4; re-affirmed
Unallocated Limits 2.80 [ICRA]B+ (Stable); upgraded
from [ICRA]B/[ICRA]A4;
re-affirmed
Rationale
The revision in the rating factors in the favorable demand from
the key consuming sector i.e. Railways, and the significant
improvement in operating profitability during FY 2016 owing to
the efficiencies achieved by the firm on account of increased
production levels as well as decline in the key raw material
prices. The ratings, however, continue to remain constrained by
the stretched receivables of the company which led to high
utilization of the working capital limits and the moderate scale
of the firm's operations along with the cyclicality inherent in
steel industry making the cash flows volatile. Moreover, the firm
is exposed to cyclicality inherent in the steel industry, which
results in volatile cash flows and exposure to raw material
availability and price fluctuation risks. ICRA also takes note of
the risk of capital withdrawal given the partnership nature of
the entity. Nevertheless, the rating takes comfort from the
experience of the promoters with long track record in
manufacturing of Spheroidal Graphite Cast Iron (SGCI) inserts and
the accreditation by Research Designs & Standards Organization
(RDSO) for the quality of its products. Going forward, SFL's
ability to further increase its scale of operations while
sustaining its profitability and improve its working capital
position will remain the key rating sensitivities.
Key rating drivers
Credit Strengths
* Long experience of promoters in the manufacturing of SGCI
Inserts
* Accreditation by the Research Designs and Standards
Organization (RDSO) for manufacturing SGCI inserts
* Improved profitability during 2015-16 owing to efficiencies
achieved by the firm as well as decline in the key raw
material prices
* Healthy orders from the key consuming sector, the Railways
Credit Weakness
* Moderate scale of operations
* High working capital intensity due to stretched receivables;
high working capital utilisation reduces financial flexibility
* Cyclicality inherent in the steel industry, which results in
volatile cash flows and exposure to raw material availability
and price fluctuation risks
* Risk of capital withdrawal due to the partnership nature of
the entity
Description of key rating drivers highlighted:
SFL derives the bulk of its total sales from the sale of SGCI
inserts, followed by automobile parts such as brackets and spacer
tubes. SGCI inserts are used for interlocking railway tracks on
concrete sleepers. While SGCI inserts are basically sold to
concrete sleeper manufacturers, automobile parts are sold to OEMs
like Tata Motors. The demand outlook for concrete sleepers and
hence, SGCI inserts remains favorable given huge investment plans
of the Indian Railways. In FY 2017, Railways have commissioned
2,800 kms of track; commissioning broad gauge lines @ over 7 kms
per day against an average of about 4.3 kms per day in the last 6
years. For FY 2018, the target for commissioning of 3500 km of
railway lines, is likely to result in healthy demand for
sleepers. The firm has an induction furnace unit with an
installed capacity of 700 tonnes per month. The firm had
manufactured 53.12 lacs in FY 2016 and 35.78 lacs inserts in FY
2015 as against 26.89 lacs in FY 2014. Owing to the increased
volume off-take by the end-consumer, the Railways, the firm has
witnessed increased production during last two years. This led to
economies of scale which along with decline in the steel prices
resulted in improved profitability during FY2016. The firm
maintains raw material inventory of 15-30 days, and hence, the
profitability remains vulnerable to fluctuations in raw material
prices. The firm generally offers a credit period of 30-45 days
to its customers. and charges interest at the rate of 14% per
annum, if the payment is made beyond the stipulated time period.
Given the high receivables, the firm's working capital intensity
remained high, resulting in high working capital utilization.
Going forward, the revenue is expected to be driven by the
healthy demand from the Indian Railways; however, the firm's
ability to sustain its profitability and efficient manage its
working capital requirement will remain the key rating
sensitivities.
SFL was incorporated in the year 2003 as a partnership firm. It
was converted to Limited Liability Partnership (LLP) in the year
2010. The company is engaged in the mass production of ductile
ferrous castings. SFL manufactures (i) SGCI inserts which are
used for interlocking the railway tracks onto the concrete
sleeper and (ii) automotive parts such as brackets etc. for OEMs
like Tata Motors etc. The manufacturing plant is located at
Silvassa at union territory of Dadra & Nagar Haveli.
Based on provisional numbers for nine months of FY 2017, the firm
reported an operating income of INR35.42 crore and a profit
before tax of INR4.99 crore. For FY 2016, the firm reported an
operating income of INR51.54 crore with a profit after tax of
INR2.25 crore as against an operating income of INR41.37 crore
and profit after tax of INR0.66 crore for 2014-15.
SPEEDAGE TRADE: ICRA Assigns 'B' Rating to INR60cr Loan
-------------------------------------------------------
ICRA Ratings has assigned a rating of [ICRA]B to the INR60.00
crore proposed non-convertible debenture programme of Speedage
Trade Limited. The outlook on the rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Proposed Non-
Convertible
Debentures 60.00 [ICRA]B (Stable) assigned
Detailed rationale
The assigned rating primarily takes into consideration the high
reliance of STL on external borrowing from a foreign
institutional investor (FII), which is likely to put pressure on
its credit metrics. The company proposes to issue non-convertible
debentures (NCDs) of INR60.00 crore, which is likely to be
subscribed to by a FII. ICRA notes that the funds raised from the
issue of NCDs are proposed to be invested in compulsory
convertible preference shares (CCPS) of Keventer Agro Limited
(KAL) at zero per cent coupon, which in turn would be utilised
for repayment of existing loans. Although the coupon rate on the
NCDs is high at 15%, the structure of actual payment is such that
only a limited portion of the accrued interest is payable in the
initial period with the balance would be compounded and payable
on redemption. The limited interest outgo in the initial years
provides for some headroom to the company to scale up its
business.
The rating, however, derives comfort as STL is a part of the
Keventer Group, which has an established track record in the
food-processing space. The company has a strong management
linkage for being a wholly-owned subsidiary of MKJ Enterprises
Limited (a Keventer Group company).
In ICRA's opinion, the company's ability to carry out its
operations while maintaining its capital structure and managing
its working capital requirement efficiently would be the key
credit-rating factors.
Key rating drivers
Credit strengths
* STL is a part of the Keventer Group, which has an established
track record in the food-processing space; the company has a
strong management linkage for being a wholly-owned subsidiary
of MKJ Enterprises Limited (a Keventer Group company)
Credit weaknesses
* High reliance on external borrowing, likely to put pressure
on the credit metrics of STL
* High coupon rate on the NCDs; however, limited actual interest
outgo in initial years, and scheduled principal repayment at
the end of five years likely to provide some cushion to the
liquidity position
Detailed description of key rating drivers highlighted:
STL is a part of the Keventer Group. The Keventer group comprises
various entities engaged in the diversified businesses like
dealing in fast moving consumer goods (FMCG), real-estate, food
products and agro-related businesses. The group is expected to
support the business of the company in operational aspect as well
as by extending financial assistance through infusing equity/
unsecured loans as and when required. High reliance of STL on
external borrowing from group companies is likely to put pressure
on the credit metrics of STL. The company proposes to issue non
convertible debentures (NCDs) of INR60.00 crore, which will be
subscribed to by an FII. ICRA notes that the funds raised from
the issue of NCDs are proposed to be invested in CCPS of KAL at
zero percent coupon, which in turn will be utilised for repayment
of existing loans. Although the coupon rate on the NCDs is high
at 15%, the structure of actual payment is such that only a
limited portion of the accrued interest is payable in the initial
periods with the balance being compounded and payable on
redemption, at the end of 5 years from the date of subscription,
of the NCD. For the first four years, actual interest outgo will
be limited to 10%, while in the fifth year it would rise to 15%.
The limited interest outgo in the initial years provides some
headroom to the company to scale up its business.
In ICRA's opinion, the company's ability to start its operations
while maintaining its capital structure and managing its working
capital requirement would be the key credit-rating factors.
Analytical approach: For arriving at the rating, ICRA has taken
into consideration the overall business risk profile of the
Keventer Group, which includes Keventer Agro Limited (KAL), Metro
Dairy Limited (MDL) (rated at IrA- (Stable)/ IrA2+ by ICRA),
Edward Food Research and Analysis Centre Limited (EFRAC) (rated
at [ICRA]BB- (Stable) by ICRA), MKJ Tradex Limited (MTL) and MKJ
Enterprises Limited (MEL), because of the strong managerial,
operational and financial linkages among the group companies.
Besides, ICRA has also taken into account the debt-servicing
track record of STL, its business risk profile, financial risk
drivers and the management profile.
Speedage Trade Limited (STL), a part of the Keventer Group, was
incorporated on December 26, 2016 to carry out wholesale trading
business in FMCG and stainless steel products. The company will
get business insights from some its group companies viz. Keventer
Agro Ltd and MKJ Tradex Ltd.
SRI LAKSHMI: ICRA Lowers Rating on INR5.50cr Cash Loan to D
-----------------------------------------------------------
ICRA has revised the long term rating assigned to INR5.50 crore
cash credit and INR2.87 crore term loans facilities of Sri
Lakshmi Poultry farm to [ICRA]D from [ICRA]B.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 5.50 Revised to [ICRA]D from
[ICRA]B
Term Loan 2.87 Revised to [ICRA]D from
[ICRA]B
Rationale
The revision in ratings takes into the delays in term loan
repayments owing to stretched liquidity position of the company
with high working capital intensity on account of high inventory
and delay in receivables from its customers owing to
demonetization effect; average utilization of working capital
limits has been high at 99% over the past 12 months. The ratings
also reflect the firm's relatively small scale of operations in
the poultry farming business with weak financial profile as
reflected by high gearing of 3.12 times and weak coverage
indicators as reflected by interest coverage ratio of 1.31 times
as on March 31, 2016. The rating also factors in the cyclicality
associated with the poultry industry, resultant table egg price
volatility and vulnerability of profits to fluctuation in prices
of feed (primarily maize, broken rice and soya), which accounts
for more than 80%-85% of manufacturing cost. The rating, however,
draws comfort from the vast experience of the management in the
poultry farming and the healthy demand outlook for the layer eggs
on account of increasing acceptance of eggs as a daily meal
component.
Key rating drivers
Credit Strengths
* Experienced management in the poultry industry
* Healthy demand outlook for the layers segment of the industry;
demand for eggs expected to increase
Credit Weakness
* Recent delays in debt servicing of its term loans owing to
stretched liquidity
* Small scale of operations
* Cyclicality associated with the Indian poultry industry and
resultant volatility in prices of eggs
* Vulnerability to rise in feed prices (primarily maize, broken
rice and soya) which are ~80-85% of the expenses
* Weak financial profile characterized by low profitability,
high gearing and low coverage indicators for FY 2016.
* Risks associated with the partnership nature of the firm
Description of key rating drivers highlighted:
The company is engaged in the business of commercial layer
poultry farming and operates through facilities located in
Brahmanagudem Village and Chikkala Village with total capacity of
2,80,000 commercial layers. The business is highly working
capital intensive as the firm has to maintain higher feed
inventory which accounts for 80%-85% of manufacturing cost and
vulnerability to rise in feed prices (primarily maize, broken
rice and soya) exposes the firm to margin volatility. The
liquidity position of the firm is constrained on account of
higher inventory holding; receivables have been stretched in the
months of November and December 2016 owing to demonetization
because of which there have been delays in repayments of term
loans and interest payments. However, the same has been paid as
on February, 2017. The business is exposed with the cyclicality
in the Indian poultry industry and volatility in prices of eggs.
The firm has witnessed healthy revenue growth of around 25% from
INR13.62 crore in FY2015 to INR16.97 crore in FY2016 on the back
of increase in sales volumes supported by improvement in price
realizations. However the net margins have lower on account of
higher depreciation and interest expenses which has lead to
higher gearing of 3.12 times and weak coverage indicators with
interest coverage at 1.31 times for FY2016.
The promoter has 12 years of experience in poultry industry,
which helps them to establish long standing relationships with
customers and the healthy demand outlook for the layer eggs on
account of increasing acceptance of eggs as a daily meal
component.
Going forward, the ability of the company to service its debt
obligations in a timely manner by improving its liquidity
position, improve its scale and effective management of working
capital requirements are key rating sensitivities from credit
perspective.
Sri Lakshmi Poultry Farm (SLPF) was incorporated as a partnership
firm during the year 2007. The firm is engaged in the business of
commercial layer poultry farming and currently operates through
facilities located in Brahmanagudem Village and Chikkala Village
with total capacity of 2,80,000 commercial layers.
SRI SRINIVASA: ICRA Reaffirms B+ Rating on INR6.0cr Loan
--------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating of [ICRA]B+
assigned to INR6.00 crore fund based limits and INR4.00 crore
unallocated limits of Sri Srinivasa Rice Mill (Mahendrawada).
The outlook assigned for long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 6.00 [ICRA]B+(Stable) re-affirmed
Unallocated limits 4.00 [ICRA]B+ (Stable) re-affirmed
Rationale
The reaffirmation of rating continues to be constrained by SSRM's
weak financial profile characterized by thin profitability
indicators with an operating margins of 1.87 % and net profit
margins of 0.71% in FY 2016. The ratings also consider small
scale of operations of the firm in the rice milling industry and
risks arising from partnership nature of the firm. The rating is
further constrained by intensive competitive nature of the rice
milling industry restricting operating margins and agro climatic
risks, which can affect the availability of the paddy in adverse
weather conditions. The rating is however supported by healthy
gearing of 0.05 times of the firm as on December 31, 2016 due to
reduction in total debt of the firm, The rating further supported
by long track record of the promoters in the rice milling
business, ease in paddy procurement due to plant location in
major paddy cultivating region of the country, and favorable
demand prospects of the industry with India being the second
largest producer and consumer of rice internationally augurs well
for the firm.
Going forward, the firm's ability to improve its scale of
operations, profitability and manage its working capital
requirements effectively will be key rating sensitivities from
credit perspective.
Key rating drivers
Credit Strengths
* Experienced management with long presence in rice industry
* Presence in major rice growing area of East Godavari District
resulting in easy availability of paddy
* Rice being a staple food grain and the position of India as
world's second largest producer and consumer, demand prospects
for the industry are expected to remain good
Credit Weakness
* Decrease in Operating Income in FY2016
* Financial profile of the firm is characterized by low
profitability indicators.
* Regulatory risks and agro climatic risks, which can affect
the availability of the paddy in adverse weather conditions.
* Highly competitive nature of the industry with presence of
large number of organized and unorganized players put pressure
on margins
* Risk inherent in Partnership nature of the firm.
Description of key rating drivers highlighted:
ICRA notes that the dip in revenues by about 8% in FY 2016 is due
to decline in sales volumes and decrease in price realizations of
rice in FY2016 which has also resulted in lower margins. The
reduction in price realizations has been on account of increase
in supply of rice in open market due to change in government
policy. ICRA also notes the rice milling industry is highly
competitive in nature with presence of large number of organized
and unorganized players exerting pressure on margins and the
industry is also susceptible to regulatory and agro climatic
risks, which can affect the availability of the paddy in adverse
weather conditions. ICRA has taken note of promoters long
experience in rice milling industry and location of the firm in
major rice growing region of the Andhra Pradesh which provides
easy availability of paddy.
Founded in 1978, Sri Srinivasa Rice Mill (Mahendrawada) (SSRM) is
engaged in the milling of paddy and produces raw and boiled rice.
The rice mill is located at Mahendrawada village in East Godavari
district of Andhra Pradesh. Its installed production capacity is
24000 metric tons per annum.
SSRM has reported an operating income of INR30.03 crore and net
profit of INR0.21crore respectively in FY2016 as against an
operating income of INR32.79 crore and net profit of INR0.32
crore respectively in FY2015.
STANLUBES & SPECIALITIES: CARE Rates INR4.42cr Loan at B-
---------------------------------------------------------
CARE Ratings has been seeking information from Stanlubes &
Specialities (India) Private Limited (SSIPL) to monitor the
ratings vide e-mail communications/letters dated July 15, 2016,
November 18, 2016, January 18, 2017, February 4, 2017, February
15, 2017, February 17, 2017, and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided
the requisite information for monitoring the ratings. In line
with the extant SEBI guidelines, CARE has reviewed the rating on
the basis of the publicly available information which however, in
CARE's opinion is not sufficient to arrive at a fair rating. The
rating on SSIPL's bank facilities will now be denoted as CARE B-
/CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 4.42 CARE B-; Issuer not
Facilities Cooperating; Revised
from CARE B on the basis
of best available information
Short term Bank 1.00 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
The ratings have been revised on account of decline in the scale
of operations in FY16 (refers to the period April 1 to March 31),
and significant deterioration in profit margins, capital
structure, debt coverage indicators and operating cycle in the
same year.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
Key Rating Strengths
Long & established track record of the company along with
experienced management: SSPL has been involved in the business of
manufacturing & selling industrial greases & oils for over two
decades and has established itself in the industry. Further, the
directors have experience of over two decades in the same line of
business.
Reputed clientele with diverse end user industry: SSPL, over the
years have been dealing with reputed players in the industry
like, HPCL, IOCL, Gandhar Oil Refinery Ltd and others. The
company's end product has uses across different industries like
oil, automotive, capital goods and others. Thus, the risk of fall
in demand in any particular industry for SSPL's products is
mitigated to an extent as it deals with a wide variety of
products which cater to the needs of various industries.
Key Rating Weakness
Weak financial risk profile: SSPL's financial risk profile is
characterized by relatively small scale of operations, high
leveraged capital structure, weak debt coverage indicators and
low profitability margins.
Vulnerability of profitability to volatility in prices of raw
material and foreign exchange fluctuation: The price SSPL's
major raw material, base oil, is a linked to crude oil which is
volatile in nature. Thus any change in the prices of crude oil
has effect on the prices of base oil thereby, exposing SSPL's
profitability to volatility in prices. Furthermore, SSPL imports
part of the raw materials, thereby exposing it to volatility in
foreign exchange prices the entity does not undertake any
hedging activity.
High degree of fragmentation and competitive intensity: The
industrial grease industry in India is characterized by a high
degree of competition, resulting from high fragmentation due to
the low entry barriers and low capital intensity of the
business. This competitive nature of industry results in price
competition thereby effecting the realizations of companies
operating in the industry.
Incorporated in 1992, Stanlubes & Specialities (India) Private
Limited (SSPL),is engaged in the business of manufacturing of
industrial greases &oils. The company's product range include
multiple purpose grease, wheel bearing grease, chassis grease,
hydraulic oil, machine oil, tool oils and others. SSPL is majorly
a contract manufacturer of greases for HPCL, Indian Oil
Corporation Limited (CARE AAA) and other large oil & lubricant
manufacturers who uses and also sells to other industrial
clients. The company earns majority of the revenue from the
domestic market (forming about 98%) where it sells industrial
greases to large refining companies & lubricant manufacturers.
SSPL's major raw material is base oil which is procured from
both, the domestic (99.60% in FY15) & international markets. The
company's plant is located in Navi Mumbai and it has its
registered office in Mumbai.
During FY16, the total operating income of the company stood at
INR19.43 crore (vis-a-vis INR21.60 crore in FY15), whereas
the net loss during the same year stood at INR0.73 crore
(vis-a-vis INR0.08 crore in FY15).
STATUS CLOTHING: ICRA Lowers Rating on INR9cr Cash Loan to D
------------------------------------------------------------
ICRA Ratings has downgraded the long term rating to [ICRA]D from
[ICRA]B+ for the INR14.50 crore fund based facilities of Status
Clothing Company Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 5.50 [ICRA]D; Downgraded from
[ICRA]B+
Cash Credit 9.00 [ICRA]D; Downgraded from
[ICRA]B+
Rationale
The rating revision takes into account the delays in meeting debt
obligations by SCCL on account of its strained liquidity position
arising from overdue receivables. The rating also continues to
remain constrained by the company's modest scale of operations in
a highly fragmented and cost competitive fabric manufacturing
industry which restricts its pricing power. ICRA also takes note
of the company's weak financial profile characterised by low
profitability, leveraged capital structure and weak coverage
indicators.
The rating, however, considers the long standing experience of
the promoters in the weaving business.
Status Clothing Company Limited was set up in 1996 as a
partnership firm. In July, 2011, the firm was converted into a
private limited company and the name was changed to its current
name. It is engaged in manufacturing and trading of greige fabric
i.e. fabric for shirting and suiting. The registered office and
manufacturing plant of the company is located in Tarapur, Thane.
The manufacturing plant is spread over an area of 45,000 square
feet with installed capacity of 5.60 lakh meters per month.
The company primarily sells greige fabric mainly to exporters and
local traders. It is also an outsourcing house for other branded
finished fabric players. The company has an in-house design team
and also manufactures as per customer's design specifications.
Recent results
As per audited results, for the financial year ending March 31,
2016, SCCL reported operating income of INR42.98 crore and profit
after tax of INR0.17 crore as compared to operating income of
INR42.36 crore and profit after tax of INR0.05 crore as on
March 31, 2015.
TERRA INFRA: CARE Revises Rating on INR9.28cr Loan to B-
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Terra Infra Development Limited (TIDL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long/Short-term
Bank Facilities 9.28 CARE B-; Stable/CARE A4
Revised from CARE B/CARE A4
Detailed Rationale & Key rating Drivers
The revision in the long-term rating assigned to the bank
facilities of TIDL takes into consideration the stretched
liquidity position on account of delay in receipt of payment for
the two major projects executed in the past, lack of revenue
visibility in absence of any new projects being awarded.
The ratings continue to be constrained by the modest scale of
operations of the company as Engineering, Procurement and
Construction (EPC) contractor, fixed-price and fixed-time nature
of the EPC contracts and continued dependence on subcontracting
activities owing to small fixed asset base.
The ratings take into consideration the affiliation of TIDL with
the diversified Jayaswal Neco group (NECO group) having presence
in sectors like iron, steel, power and metals and mining along
with the Government of India's policy focus on infrastructure
development especially roads.
TIDL's ability to timely realize blocked funds and secure new
contracts thus increasing its scale of operations along with
improvement in profitability and liquidity position with
efficient working capital management are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Strong presence of group entity in different sectors: TIDL is
affiliated with the diversified Neco group (NECO group) having
presence in sectors like iron, steel, power, metals and mining.
Furthermore, Government of India's policy focus on infrastructure
development especially roads has given boost to infrastructure
sector.
Key Rating Weakness
Modest scale with low profitability: The scale of operations of
TIDL has remained modest on account of limited projects executed
in the past. Furthermore, owing to lower asset base of TIDL has
led to increase in hire charges with most of the work was being
subcontracted, profitability margins remained low.
Weak liquidity position: Furthermore, low cash accruals led to
decline in net worth base, as a result of that capital structure
of the company deteriorated and debt coverage indicators remained
weak. The working capital cycle of the company also remained
stretched on account of delay in receipt of payment for the two
major projects executed in the past.
Lack of revenue visibility: The revenue visibility is weak as the
company has not won any new orders.
Terra Infra Development Limited (TIDL) is a company promoted by
Jayaswal Neco group for infrastructure development. TIDL was
incorporated in 1991 as Siltra Energy Pvt Ltd, and later was
reconstituted as TIDL (public limited) to explore the business
opportunities in the infrastructure sector and execute
infrastructure projects for the NECO group on Engineering,
Procurement and Construction (EPC) basis. TIDL won orders for two
projects viz. Cyberabad Expressways Limited (CEL) in June 2009
and Pondicherry Tindivanum Tollway Limited (PTTL) in June 2009.
The company reported a total operating income of INR1.30 crore
and a net loss of INR0.47 crore in FY16 (refers to the period
April 1 to March 31) as against a total income of INR1.04 crore
and a net loss of INR0.03 crore in FY15.
UTTAM GALVA: CARE Reaffirms 'D' Rating on INR3933.94cr Loan
-----------------------------------------------------------
CARE Ratings revised/reaffirmed ratings on certain bank
facilities of Uttam Galva Metallics Limited (UGML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities
(Term Loans) 3933.94 CARE D Reaffirmed
Long-term Bank
Facilities
(Fund-based) 170.00 CARE D Revised from CARE C
Short-term Bank
Facilities
(Non-fund-based) 910.00 CARE D Reaffirmed
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of UGML have been
reaffirmed and revised on account of the ongoing delays in the
servicing of debt obligations. UGML incurred heavy losses of
INR201 crore in FY16 (refers to the period April 1 to March 31)
due to subdued industry scenario for steel products.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in Debt Servicing: The heavy losses incurred during FY16
have constrained the company's ability to service its debt
in a timely manner and there have been continuing delays in
servicing of debt obligations to the lenders. Furthermore,
there were overdrawals of more than 30 days in the Cash Credit
account.
Heavy Losses during FY16: Due to the subdued industry scenario
for steel products during FY16 with reducing steel prices, the
turnover of the company started diminishing from Q3 FY16 onwards.
Also, the capital cost of the company are on a higher side which
resulted into heavy losses (net) of INR201 crore in FY16 vis-a-
vis net profit of INR27.42 crore in FY15.
Key Rating Strength
Financial support from promoters and strategic investors: Since
inception, promoters and strategic investors have regularly
infused capital into UGML for improvement in quality and
enhancement of capacities. During FY16, the promoters infused
INR52.18 crore equity into UGML.
UGML, the group company of Uttam group promoted by Mr. Rajinder
Miglani, is engaged in the manufacturing of Hot Metal/Pig Iron
from iron ore, which are intermediate products for manufacturing
of value added steel. These products are sold to foundries and
secondary steel/ HRC manufacturers. UGML had commenced the trial
production of the plant in June 2010 and achieved the
stabilization of operation in March 2011. The company has a
capacity to manufacture sinter (802,000 tpa), a Coke oven plant
(500,000 tpa), Top Gas Recovery Turbine (TGRT) (3MW) and a
Captive Power Plant (CPP) (15 MW) (Gas based power plant, which
uses Blast Furnace (BF) gas as input) as on March 31, 2014.The
entire hot metal (which constitutes around 60% of the total sales
in FY15) is supplied to group company Uttam Value Steels Limited
(UVSL rated CARE D), which is located near to the factory site on
the same day.
During FY16 (refers to the period April 1 to March 31), UGML
reported a Net Loss of INR201 crore on total operating income of
INR2,204 crore against PAT of INR28 crore on total operating
income of INR2,564 crore in FY15.
VAMSI PHARMA: ICRA Assigns 'B+' Rating to INR14.05cr LT Loan
------------------------------------------------------------
ICRA has assigned the rating of [ICRA]B+ for the INR14.05 crore
long term fund based facilities of Vamsi Pharma Private Limited.
The outlook on the long term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund
based limits 14.05 [ICRA]B+ (Stable)/assigned
Rationale
The assigned rating takes into consideration long standing
experience of promoters spanning over two decades in the
pharmaceutical API (active pharmaceutical ingredient) industry.
The rating also takes comfort from proposed forward integrated
operations of VPPL in the form of manufacturing of pre-mixes from
API which will be supplied by group company i.e. Vamsi Labs
Limited (VLL, rated [ICRA]BB-/Stable/A4) providing operational
synergy. The assigned rating also factors in the moderately
advanced stage of project with civil work being close to
completion and machinery orders already placed along with
favourable moratorium period of twelve months from proposed COD
of April 2017. The project which lies close to the pharmaceutical
hub of Hyderabad will leverage on its group company's (VLL)
established client relationships in domestic as well as exports
market. The company is targeting niche product segment of steroid
based anti-asthmatic APIS and pre mixes.
The ratings, however, remains constrained given project nature of
operations as of date with 60% of project cost yet to be
incurred. The company is also exposed to regulatory environment
prevailing in pharmaceutical industry in domestic as well as
exports market; with timely facility and product approvals
critical in ramping up operations. Ensuring that the plant
becomes operational within budgeted costs and timelines; and
scaling up operations remains critical to meet debt repayment
obligations given limited financial flexibility of the promoters
to meet any cash flow mismatches.
Key rating drivers
Credit Strengths
* Long standing experience of promoters in the pharmaceutical
industry
* Forward integration of operations by manufacturing pre-mixes
from APIs supplied by group company
* Project in moderately advanced stage of completion
* Established relations with key pharmaceutical players in
domestic market through Group Company
* Favorable demand prospects for steroid based anti-asthamatic
APIs
Credit Weakness
* Project stage of the company with 60% of project cost yet
to be incurred; achieving target COD of April 2017 remains
a challenge though moratorium of 12 months provides some
cushion
* Requisite plant and product approvals remain critical for
ramping up operations
Description of key rating drivers highlighted:
Vamsi Pharma Private Ltd. incorporated on July 16, 2015 will be
manufacturing a combination of anti-asthamatic APIs with
corticosteroids and pre-mixes targeted for the regulated markets
of the world; thus the facility will be a USFDA compliant
facility. The company is promoted by Mr. Kesava Reddy, Mr. Pratap
Reddy, Mr. Madhusudhan Reddy and Dr. Ravindra Purohit. The
project lies in the vicinity of Hyderabad, which is a prominent
pharmaceutical hub of the country which imparts logistical
advantage in addition to raw material availability and
technically skilled man power. Additionally, fiscal benefits like
sales tax incentives, subsidized electricity among others from
the Telangana State also add to the location advantage.
The project currently is in moderately advanced stages with ~40%
of the total INR16.88 crore project cost being incurred.
Management expects plant to begin commercial operations in the
first quarter of 2017 post which the company will obtain
requisite regulatory approvals. VPPL is expected to benefit from
the established presence of group company, Vamsi Labs Limited in
similar product segment. Timely completion of the project within
budgeted cost and timelines and scaling up the operations will be
the key rating sensitivity, going forward.
Vamsi Pharma Private Ltd. (VPPL/'The company') is a private
limited company incorporated on July 16, 2015. The Registered
Office is located at Plot No 20, Huda Heights, Banjara Hills,
Hyderabad. The company has proposed to have an annual production
capacity of 28,200 kgs in manufacturing anti-asthmatic,
corticosteroids and pre-mixes. It is a forward integration of
Vamsi Labs as it will be manufacturing pre-mixes for which the
API will be supplied by Vamsi Labs The company is promoted by Mr.
Kesava Reddy, Mr. Pratap Reddy, Mr. Madhusudhan Reddy and Dr.
Ravindra Purohit. The promoters are currently engaged in
manufacturing of API's through Vamsi Labs Ltd. Solapur
(Maharashtra).
VINSHIL POLYCHEM: CARE Reaffirms B+ Rating on INR0.50cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Vinshil Polychem (VNP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 0.50 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 6.00 CARE A4 Reaffirmed
Detailed Rationale
The rating assigned to the bank facilities of VNP continues to
remain constrained by its small scale of operations with low
partner's capital base; low profitability margins, leveraged
capital structure, weak coverage indicator and elongated
operating cycle. The ratings, further, continue to remain
constrained by partnership nature of its constitution, foreign
exchange fluctuation risk, volatility associated with the traded
product, and competitive nature of industry. The rating, however,
continue to take comfort from experienced partners in the trading
business.
Going forward, ability of the firm to profitably increase its
scale of operations while improving capital structure and ability
to manage exchange rate fluctuations shall be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Small scale of operations with low partner's capital base: The
small scale of operations has remained small which limits the
company's financial flexibility in times of stress and deprives
it from scale benefits.
Low profitability, leveraged capital structure and weak coverage
indicators: The profitability margins continue to remain low on
account of trading natures of business activities having limited
value addition and coupled with competitive nature of business.
Also, finance cost has further restricted the net profitability
of the company.
The capital structure of the company continues to remain
leveraged owing to low partners' capital base. Furthermore, the
debt service coverage indicators also continued to remain weak
owing to low profitability levels.
Elongated operating cycle: The operating cycle of the firm stood
elongated mainly on account of prolonged collection period as it
operates in a highly competitive and fragment industry and adopts
a liberal credit policy for its customers. On the contrary, it
receives credit period of around a month from its suppliers. The
firm maintains minimum inventory of around a month to meet
immediate requirements of its customers.
Foreign exchange fluctuation risk: VNP's procurement is majorly
in the form of imports and dependent from the overseas market
than the domestic market. Therefore, the firm's profitability
margins are exposed to volatility in foreign exchange for the
unhedged portion.
Volatility associated with the traded product: The firm is
exposed to price volatility risk due to the volatility
experienced in the prices of the traded product such as polymers
etc. which is a crude derivative. Thus any steep fluctuation in
their prices has a direct impact on the profitability margins of
the firm.
Key Rating Strengths
Experienced partners in trading business: Mr. Kapil Goyel has an
experience of around half a decade in trading of synthetic
polymer and chemical. Prior to VNP, he was associated with a
Private Limited entity (engaged in trading of synthetic polymer
and chemical) as marketing manager. He looks after the overall
operations of the firm with the support of his sister; Ms Shilpa
Agarwal.
Delhi-based Vinshil Polychem (VNP) was established as a
partnership firm in June, 2014 and commenced its operations
from July, 2015. The firm is currently being managed by Mr. Kapil
Goel and Mrs Shilpa Agarwal sharing profits and loss equally. The
firm is engaged in trading of synthetic polymers (such as EVA,
PVC, PVAC etc.) and chemicals (such as stearic acid, oleic acid
etc.) which finds its application in footwear industries. VNP
primarily procures synthetic polymers (about 70% of the total
purchases for FY16) from manufacturers located in Korea,
Thailand, UAE and China. Also, VNP procures the traded product
domestically from various traders located in pan India. The firm
sells its products directly to footwear manufacturers located in
Haryana and Delhi.
For FY16 (refers to the period April 01 to March 31), VNP
achieved a total operating income (TOI) of INR7.95 crore with
profit after tax (PAT) of INR0.05 crore, respectively, as against
TOI of INR4.20 crore with PAT of INR0.04 crore, in FY15.
Furthermore, the firm has achieved total TOI of INR10 crore till
10MFY17 (refers to the period April 1 to January 31, based on
provisional results).
=========
J A P A N
=========
TOSHIBA CORP: Memory Unit Suitors Seek Partners for Joint Offers
----------------------------------------------------------------
Nikkei Asian Review reports that a week away from the March 29
deadline for tendering bids for Toshiba Corp's memory chip
business, potential buyers are seeking partners for joint offers,
with rivals, customers and investment funds negotiating a web of
conflicting interests.
Toshiba aims to sell a majority of the unit to be spun off next
month, dubbed Toshiba Memory, Nikkei says. With a value estimated
at JPY1.5 trillion to JPY2 trillion ($13.3 billion to $17.8
billion), the business would be difficult for a single company to
afford on its own, according to Nikkei.
Nikkei says Toshiba's development capabilities are highly
regarded. The company invented NAND flash memory, for which
demand has soared for use in smartphones and data centers. Yet
not all of the memory unit's 10-plus suitors are after this know-
how.
According to Nikkei, rivals Western Digital and Micron
Technology, both of the U.S., and South Korea's SK Hynix, are
eyeing Toshiba's share of the global flash memory market, where
the Japanese industrial group is the second-largest player.
Buying Toshiba's memory operations would let any of these
chipmakers stand shoulder to shoulder with No. 1 Samsung
Electronics, the report states.
For Western Digital in particular, this offense is also a form of
defense. SanDisk -- acquired by Western Digital last year -- and
Toshiba have operated chip fabrication facilities in Yokkaichi,
Japan, through a joint venture for more than 15 years, says
Nikkei. With more than JPY1 trillion already invested in the
facilities on Western Digital's side, the company cannot afford
to let another player into the venture, Nikkei relates.
With flash memory prices climbing in a tight market, personal
computer and smartphone makers that buy chips, such as Hon Hai
Precision Industry, are considering bids in hopes of securing a
steady NAND supply, according to Nikkei.
Nikkei notes that investment funds have set their sights on
Toshiba to capitalize on this rise in memory prices. These firms
would seek to recoup their outlays via a public listing or sale.
Japanese government-affiliated financial institutions, such as
the Development Bank of Japan or the public-private Innovation
Network Corp. of Japan, are also considering buying into the
memory unit, says Nikkei. Chinese, South Korean and Taiwanese
suitors are expected to tender bids, raising concerns in Tokyo
about the potential for outflows of vital technology. Toshiba has
requested government support as well, Nikkei adds.
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 March 21, 2017, that S&P Global Ratings
said it has lowered its long-term corporate credit rating on
Japan-based capital goods and diversified electronics company
Toshiba Corp. two notches to 'CCC-' from 'CCC+' and lowered the
senior unsecured debt rating three notches to 'CCC-' from 'B-'.
Both ratings remain on CreditWatch with negative implications.
Also, S&P is keeping its 'C' short-term corporate credit and
commercial paper program ratings on the company on CreditWatch
negative. The long- and short-term ratings on Toshiba have
remained on CreditWatch with negative implications since December
2016, when S&P also lowered the long-term ratings because of the
likelihood that the company might recognize massive losses in its
U.S. nuclear power business; S&P kept them on CreditWatch
negative when it lowered the long- and short-term ratings in
January 2017.
===============
M A L A Y S I A
===============
PRIME GLOBAL: Expects to Report First Quarter Revenue of $327K
--------------------------------------------------------------
Prime Global Capital Group Incorporated filed a Form 12b-25 with
the Securities and Exchange Commission notifying the delay in the
filing of its quarterly report on Form 10-Q for the period ended
Jan. 31, 2017. The Company was unable to file the subject report
in a timely manner because it was not able to timely complete its
financial statements without unreasonable effort or expense.
The Company's Consolidated Statements of Operations are expected
to reflect net revenues of approximately $326,576 for the three
month period ended Jan. 31, 2017, compared with net revenues of
$412,749 for the same period ended Jan. 31, 2016. The Company is
expected to have cost of revenue of approximately $131,702 for
the three month period ended Jan. 31, 2017, as compared to
$172,414 for the same period ended Jan. 31, 2016. The Company
also decreased its general and administrative expenses from
$129,945 for the three months ended Jan. 31, 2016, to
approximately $111,472 for the same period ended Jan. 31, 2017.
Accordingly, the Company expects to have income from operations
of approximately $83,402 for the three-month period Jan. 31,
2017, as compared to a $110,390 from the same period ended Jan.
31, 2016.
About Prime Global
Kuala Lumpur, Malaysia-based Prime Global Capital Group Inc
(OTCBB:PGCG), through its subsidiaries, is engaged in the
operation of a durian plantation, leasing and development of the
operation of an oil palm plantation, commercial and residential
real estate properties in Malaysia.
Prime Global reported a net loss US$1.59 million for the year
ended Oct. 31, 2015, compared to a net loss of US$1.33 million
for the year ended Oct. 31, 2014.
As of July 31, 2016, the Company had US$48.2 million in total
assets, U$18.3 million in total liabilities and US$29.8 million
in total equity.
Crowe Horwath (HK) CPA Limited, in Hong Kong, China, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Oct. 31, 2015, citing that the
Company has a working capital deficiency, accumulated deficit
from recurring net losses and significant short-term debt
obligations maturing in less than one year as of Oct. 31, 2015.
All these factors raise substantial doubt about its ability to
continue as a going concern.
====================
N E W Z E A L A N D
====================
MAINZEAL PROPERTY: Court Action Still at Pre-hearing Stage
----------------------------------------------------------
Phil Doyle at Stuff.co.nz reports that Mainzeal Property's
liquidators continue to pursue legal action against the collapsed
firm's directors.
Mainzeal creditors remain at least $112 million out of pocket as
the liquidators wait for a date in court over the building
company's collapse, Stuff discloses.
Stuff relates that a six monthly creditors update by liquidators
BDO said it has received 1,400 claims totalling $157.7 million,
and 1,383 had been admitted in full or part totalling $112.3
million. Another $37.7 million worth of claims had been
rejected, and two claims worth a total of $7.7 million remained
under review.
"We expect that this process will be completed shortly," Stuff
quotes liquidator Andrew Bethell as saying.
BDO has secured third-party funding to pursue court action
against Mainzeal's directors and former directors, but Bethell
said but this was still in the discovery phase of the court
system, Stuff notes. A timetable leading to a hearing date had
not yet been set.
According to Stuff, a civil suit worth $47.4 million was lodged
in 2015 against Mainzeal's current sole director Richard Yan and
former directors including former Prime Minister Jenny Shipley.
Stuff relates that the claims included reckless trading, claims
against related parties, and breaching directors' duties in
relation to inter-group business restructures in the two years
prior to liquidation.
Ms. Shipley and others have said they would fight the
allegations, the report says.
Mr. Bethell said there was some of the outstanding money in
theory available to unsecured creditors but it hinged on the
recovery actions of the liquidators, the companies and subsidiary
KFL, Stuff relays.
A distribution prior to the completion of legal action would be
considered when the receivership and claim assessment processes
had been finished, the report states.
Currently there was $5,358,000 in the liquidator's account, Stuff
discloses.
Mainzeal was one of the country's biggest construction firms
before it collapsed in 2013, initially owing unsecured creditors
an estimated $138 million.
About Mainzeal Property
Mainzeal Property and Construction Ltd is a New Zealand-based
property and construction company. The company forms part of the
Mainzeal Group, which is owned by Richina Inc, a privately held
New Zealand-based company with a strong China focus.
On Feb. 6, 2013, Colin McCloy and David Bridgman, partners from
PricewaterhouseCoopers, were appointed receivers to Mainzeal
Property and Construction Limited and associated entities as a
result of a request made by its director to BNZ.
Mainzeal's director, Richard Yan advised that following a series
of events that had adversely affected the Company's financial
position coupled with a general decline in major commercial
construction activity, and in the absence of further shareholder
support, the Company could no longer continue trading.
On Feb. 28, 2013, BDO's Andrew Bethell and Brian Mayo-Smith were
appointed liquidators to those three companies in receivership
and nine others in the group that were not in receivership.
The companies now under the control of the liquidators are
Mainzeal Group, Mainzeal Property and Construction, Mainzeal
Living, 200 Vic, Building Futures Group Holding, Building Futures
Group, Mainzeal Residential, Mainzeal Construction, Mainzeal,
Mainzeal Construction SI, MPC NZ and RGRE.
Mainzeal is estimated to owe NZ$11.3 million to the BNZ,
NZ$70 million to unsecured creditors and NZ$5.2 million to
employees, NZN discloses. Subcontractors are among the unsecured
creditors, said NZN.
PUMPKIN PATCH: Catch Group Buys brand and intellectual property
---------------------------------------------------------------
BusinessDesk reports that the receivers of Pumpkin Patch have
confirmed that the company's brand and intellectual property have
been sold to Australian online retailer Catch Group.
No price was disclosed for the sale in the statement from Brendon
Gibson and Neale Jackson of KordaMentha, BusinessDesk says. In
January, the receivers said they had failed to find a buyer for
the chain and its stores would be progressively closed,
BusinessDesk relates.
BusinessDesk says the company was tipped into receivership by its
lenders in October and appointed voluntary administrators after
failing to reinvent itself in the face of shrinking sales and too
much debt. The receivers wanted to sell the business as a going
concern, but couldn't shake out any buyers.
Pumpkin Patch owed its lender ANZ Bank New Zealand NZ$59.5
million as of the date of receivership, BusinessDesk discloses.
"We are pleased to have been able to successfully complete a
transaction that will see the Pumpkin Patch brand resurrected
online in both New Zealand and Australia," the report quotes Mr.
Gibson as saying in a statement.
BusinessDesk adds that Catch Group chief executive Nati Harpaz
said the Pumpkin Patch brand would be relaunched with its
offering expanded for "mums, kids and babies."
BusinessDesk notes that the buyer operates retailing websites
including www.catchoftheday.com.au, www.mumgo.com.au and
www.scoopon.com.au
About Pumpkin Patch
Based in New Zealand, Pumpkin Patch Limited (NZE:PPL) --
http://www.pumpkinpatch.biz/-- is a designer, marketer, retailer
and wholesaler of children's clothing. The Company's product
range encompasses all stages of a child's growth, from baby to
toddler, primary school kid to pre and early teen, including
clothing, nightwear, accessories, rainwear, footwear and teddy
collection. Pumpkin Patch also caters for mums-to-be with a
maternity collection. The Company also has a fashion mini-brand
for discerning pre and early-teen girls, Urban Angel Girls. The
Company's collections are available in numerous countries and
regions, including New Zealand, Australia, the United Kingdom,
the United States, South Africa and the Middle East. Pumpkin
Patch predominantly sells through its own store network in
New Zealand, Australia, the United Kingdom and the United States.
The Company's subsidiaries include Torquay Enterprises Limited,
Pumpkin Patch Originals Limited, Pumpkin Patch LLC, Pumpkin Patch
Direct Limited, Patch Kids Limited and Urban Angel Girls Limited.
Pumpkin Patch employed almost 600 people in New Zealand and
1,000 in Australia, according to Stuff.co.nz.
On Oct. 26, 2016, the Board of Pumpkin Patch has placed the
company into Voluntary Administration under Part 15A of the
Companies Act 1993.
The board has therefore appointed Andrew Grenfell and Conor
McElhinney of McGrathNicol as administrators for Pumpkin Patch
and a number of its subsidiaries. Pumpkin Patch's bank has
appointed Neale Jackson and Brendon Gibson of KordaMentha as
receivers.
Pumpkin Patch was placed into liquidation on March 9.
=====================
P H I L I P P I N E S
=====================
ATLAS CONSOLIDATED: Reports PHP879 Million Net Loss in 2016
-----------------------------------------------------------
Ronnel W. Domingo at the Philippine Daily Inquirer reports that
Atlas Consolidated Mining and Development Corp. saw its
consolidated net loss rise by 8% to PHP879 million in 2016 mainly
due to a one-time loss on tax credits.
The Inquirer relates that Atlas Mining said in a statement that
it made provisions last year for a PHP495-million loss on
disputed input tax credits. Excluding that, the company said it
was able to improve underlying net loss by 53% to PHP384 million
compared to PHP814 million in 2015.
"The company realized both higher revenues and lower operating
costs, benefiting from an ongoing cost and efficiency program,"
Atlas Mining, as cited by the Inquirer, said.
Revenues went up 7% to PHP12.1 billion due to an increase in the
volume of copper shipped as well as higher turnover on gold that
tempered the impact of lower copper prices, the Inquirer
discloses.
The Inquirer relates that the company sold 4% more copper
concentrates at 173,130 dry metric tons (dmt), but the prices
fell by 10% to a full-year average of $2.21 per pound.
On the other hand, Atlas Mining sold 18% more gold at 32,211
ounces, with the average price jumping by 8% to $1,241 an ounce.
"Additional revenue was also realized from the sale of 25,000 dmt
of magnetite for PHP12 million as compared to none in 2015," the
company said, the Inquirer relays.
Atlas' subsidiary, Carmen Copper Corp., was among 12 mine
operators not threatened with an order for closure or suspension
of operations when Environment Secretary Regina Lopez announced
in February the results of a mine audit, the report adds.
About Atlas Consolidated
Headquartered in Mandaluyong City, Philippines, Atlas
Consolidated Mining and Development Corporation was established
through the merger of assets and equities of three Soriano-
controlled pre-war mines, the Masbate Consolidated Mining
Company, IXL Mining Company and the Antamok Goldfields Mining
Company. The company is engaged in mineral and metallic mining
and exploration that primarily produces copper concentrates and
gold with silver and pyrites as major by-products. The
company's copper mining operations are centered in Toledo City,
Cebu, where two open pit mines, two underground mines and
milling complexes (concentrators) are located.
The Cebu copper mine ceased operations in 1994. Activities after
the shutdown were limited to safeguarding and maintaining the
property, plant and equipment at the mine site. The closure has
brought huge losses to the mining firm. In January 2004, Atlas
decided to rehabilitate the company and its assets since copper
and nickel prices have recovered.
=================
S I N G A P O R E
=================
HEALTHWAY MEDICAL: Agree on Amended Terms for SGD70MM Bonds Deal
----------------------------------------------------------------
Ann Williams at The Strait Times reports that Healthway Medical
Corporation, the listed private clinic chain operator facing a
cash crunch from doubtful loans, said on March 23 that it has
reached agreement to amended terms for a lifeline SGD70 million
convertible bonds deal with private equity fund Gateway Partners.
"The board, after taking into consideration amongst others, the
more favourable terms of the alternate proposal, including
overall lower cost of funding, as well as the speed of
disbursement of funds to address the company's immediate
liquidity needs, is of the view that the amended and restated
agreement is in the best interests of the company and
shareholders," the report quotes Healthway as saying in a filing
with the Singapore Exchange.
The Strait Times relates that the proposed changes to the
financing deal involve a change of investment structure. The
aggregate SGD70 million fully-convertible notes and will be
issued in two tranches of SGD10 million and SGD60 million. Both
tranches will carry no coupon and will mature in five years from
the date the first tranche is issued.
The notes are also redeemable at maturity at 100 per cent of the
principal amount, and a redemption premium that will allow
Gateway to achieve an internal rate of return of 6 per cent, the
report says.
There is no change of control redemption provisions for the
notes, relates The Strait Times.
According to The Strait Times, Healthway said SGX has informed
the company that the first tranche of SGD10 million may be issued
without the need for shareholders' approval. But this approval
must be obtained before the second, much larger tranche can be
drawn upon.
The Strait Times adds that the company said it plans to use all
of the SGD8.3 million in net proceeds from the first tranche to
meet short term liquidity needs, including payment of salaries or
repayment of existing facilities.
Of the expected SGD59.8 million in net proceeds from the second
tranche, Healthway said it intends to use approximately SGD23.8
million for short term liquidity needs, The Strait Times
discloses.
The remaining SGD36.0 million will be used for the organic
expansion of GP clinics in various locations and the acquisition
of specialists' clinics for specialties such as oncology,
dermatology and paediatrics, adds The Strait Times.
Healthway Medical Corp is one of Singapore's largest private
clinic operators with close to 50 family clinics.
====================
S O U T H K O R E A
====================
DAEWOO SHIPBUILDING: State-Run Creditors to Provide KRW6.7TT
------------------------------------------------------------
Yonhap News Agency reports that South Korea's state-run creditors
of Daewoo Shipbuilding & Marine Engineering Co. said March 23 it
will provide a fresh rescue package worth KRW6.7 trillion
(US$5.98 billion) to the ailing shipbuilder, but only if all
stakeholders agree to a painful debt-for-equity swap plan.
The huge rescue measures, proposed by the state-run Korea
Development Bank and Export-Import Bank of Korea, are the second
round of bailout for the shipbuilder that has been suffering
severe liquidity problems over heavy losses from offshore
projects, Yonhap relates.
Under the rescue packages, Daewoo Shipbuilding will receive new
loans worth KRW2.9 trillion, if lenders and bondholders agree to
swap KRW2.9 trillion of debts for new shares in the shipbuilder,
according to Yonhap.
Yonhap says the rescue package also included a three-to-five year
grace period for unsecured loans worth KRW900 billion.
Unless they agree on the debt-for-equity swap plan, Daewoo
Shipbuilding will be placed under a new corporate rehabilitation
program, which is a combination of debt workout and court
receivership, the creditors, as cited by Yonhap, said.
"If private lenders and bondholders disagree on the debt-for-swap
plan, we will implement an intensive restructuring program by
using legally binding measures," the creditors said in the
statement, the report relays.
According to Yonhap, Daewoo Shipbuilding will be required to cut
25% of its personnel costs and slash its workforce by 1,000 jobs.
The fresh rescue package calls for the labor union of Daewoo
Shipbuilding not to stage a strike, the report says.
Yonhap notes that the latest rescue package is a reversal of the
government's previous stance that it would not use fresh money to
help salvage Daewoo.
Yonhap relates that the Financial Services Commission (FSC) said
in a statement that Daewoo Shipbuilding will face bankruptcy
unless fresh funds are injected into the shipbuilder.
If Daewoo Shipbuilding files for bankruptcy, the FSC said it
would lead to a loss of 50,000 jobs and affect about 1,300 sub-
contractors, the report adds.
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.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro 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 ***