/raid1/www/Hosts/bankrupt/TCRAP_Public/170405.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, April 5, 2017, Vol. 20, No. 68
Headlines
A U S T R A L I A
AUSTRALIAN SALES 2: Fitch Gives BB Rating to AUD49MM Class E Debt
AWARD BRANDS: First Creditors' Meeting Set for April 12
BRUCK TEXTILES: Liquidators Sue Execs Over Workers' Entitlements
GEELONG PRIVATE: Receivers Sell Medical Centre for AUD20 Million
GUVERA EMPLOYMENT: First Creditors' Meeting Set for April 12
KEYSTONE GROUP: Jamie Oliver Wins Back Australian Restaurants
QUEENSLAND NICKEL: Arrest Warrant Issued for Clive Mensink
QUINTIS LTD: S&P Revises Outlook to Negative & Affirms 'B+' CCR
S & H AUTOMOTIVE: First Creditors' Meeting Set for April 13
STARBOUT PTY: First Creditors' Meeting Set for April 13
C H I N A
CHINA HUISHAN: Files Missing Person Report for Executive Ge Kun
CHINA ORIENTAL: Fitch Revises Outlook to Pos.; Affirms BB- IDR
FUJIAN ZHANGLONG: Fitch Assigns BB+ Rating to US$200MM Notes
UNITED PHOTOVOLTAICS: 2016 Results Below Moody's Expectations
I N D I A
BHILAI ENG'G: CRISIL Reaffirms 'B/Issuer Not Cooperating' Rating
BRIJLAX AUTO: CRISIL Raises Rating on INR1.5MM Loan to B+
DAGAR FARM: CARE Assigns B+ Rating to INR7cr Long Term Loan
DHARAM INDUSTRIES: CARE Assigns B+ Rating to INR6.40cr LT Loan
DHARAM STAINLESS: CARE Assigns B+ Rating to INR0.50cr LT Loan
EMBIOTIC LABORATORIES: CRISIL Reaffirms B+ Rating on INR12MM Loan
GANAPATI INDIA: CRISIL Assigns B+ Rating to INR40MM Term Loan
GARUDA INFRATECH: CRISIL Ups Rating on INR17MM LT Loan to 'C'
GO GREEN: CARE Reaffirms 'D' Rating on INR9.56cr LT Loan
HASTALLOY INDIA: CRISIL Reaffirms B+ Rating on INR5.5MM Loan
JAI JAGDAMBA: Ind-Ra Migrates 'B' Rating to Non-Cooperating
JAI MATA: CARE Assigns 'B/Issuer Not Cooperating' Rating
LION INSULATION: CRISIL Assigns B- Rating to INR3.4MM Term Loan
MANJUSHREE TEA: CARE Assigns 'B+/Issuer Not Cooperating' Rating
NAV BHARAT: Ind-Ra Migrates 'D' Rating to Non-Cooperating
NILKANTH CHAWA: CARE Assigns 'D/Issuer Not Cooperating' Rating
PADMAVATI GINNING: CARE Assigns 'B/Issuer Not Cooperating' Rating
PARAMASHIVA MOTORS: CRISIL Assigns B+ Rating to INR8MM Cash Loan
PATEL AGRI: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
PRAGATI EDIBLE: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
QUAD LIFESCIENCES: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
R R DURAFABS: CRISIL Lowers Rating on INR5MM Overdraft to B-
RAJSHEKHAR CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR15M Loan
RAVIS EXPORTS: Ind-Ra Assigns 'B' Long-Term Issuer Rating
SAHARA ENGINEERING: Ind-Ra Migrates BB Rating to Non-Cooperating
SAI PRINT: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
SAIDRISTI SUITINGS: CARE Reaffirms B+ Rating on INR4.93cr Loan
SAN MARINE EXPORTS: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
SARTHAK ISPAT: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
SHIVANSH DIAMOND: CARE Lowers Rating on INR47cr LT Loan to D
SHREE RAMDEV: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
SHUBH ALUMINUM: CARE Reaffirms B/A4 Rating on INR14cr Loan
SHUBH GRAH: CARE Reaffirms 'B' Rating on INR8cr Loan
SIDDHESHWARI PAPER: CRISIL Ups Rating on INR4.95MM Loan to B+
SIKKO INDUSTRIES: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
SINGLACHERRA TEA: CARE Assigns 'B/Issuer Not Cooperating' Rating
SKY ALLOYS: Ind-Ra Migrates 'D' Rating to Non-Cooperating
SNEHA CONSTRUCTIONS: CRISIL Reaffirms 'B' Rating on INR12MM Loan
SPONGE SALES: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
SRI BHASKAR: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
SRI SHYAM: CARE Lowers Rating on INR5.0cr Long Term Loan to B
SUMERU PROCESSORS: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
SUNRISE TIMPLY: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
SURAJ VALUE: CARE Lowers Rating on INR13.16cr LT Loan to B
SURGICOIN MEDEQUIP: CARE Reaffirms 'D' Rating on INR5cr LT Loan
SYNERGY AGRI: Ind-Ra Migrates 'D' Rating to Non-Cooperating
SITARAM GEMS: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
SUPREME HOUSING: Ind-Ra Migrates 'D' Rating to Non-Cooperating
TAPI PRESTRESSED: CRISIL Assigns 'D' Rating to INR23MM Loan
TATA CHEMICALS: Fitch Affirms BB+ Long-Term IDR; Outlook Stable
TEZALPATTY TEA: CARE Assigns 'B+/Issuer Not Cooperating' Rating
TIRUPATI BASMATI: CARE Lowers Rating on INR123.50cr Loan to D
TIRUPATI BASMATI: CRISIL Cuts Rating on INR52MM Loan to 'D'
TRIGUN ENTERPRISE: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
U.C. JAIN: CARE Reaffirms 'D' Rating on INR9cr LT Loan
VIKAS HOME: CRISIL Assigns B+ Rating to INR4.4MM LT Loan
VISHRAMBHAI GORASIA: Ind-Ra Raises Issuer Rating to 'BB-'
VISITOR GARMENTS: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
VITAL HEALTHCARE: CRISIL Reaffirms 'B' Rating on INR11.3MM Loan
YASH AGRO: CRISIL Reaffirms 'B' Rating on INR5MM Cash Loan
YKM ENTERTAINMENT: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
YOGAA AND CO.: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
ZAMPA VINEYARDS: CRISIL Reaffirms 'B' Rating on INR13.5MM Loan
I N D O N E S I A
MODERNLAND REALTY: Fitch Assigns B Rating to Proposed USD Notes
MODERNLAND REALTY: Moody's Affirms B2 Corporate Family Rating
J A P A N
TOKYO ELECTRIC: New President Vows to Revive Business
S O U T H K O R E A
DAEWOO: Commercial Lenders Pressured to Accept Debt Rescheduling
DAEWOO SHIPBUILDING: External Auditor Gives 'Qualified Opinion'
DAEWOO SHIPBUILDING: Orders at Risk Due to Possible Receivership
DAEWOO SHIPBUILDING: Owner Working on Court Receivership Plan
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A U S T R A L I A
=================
AUSTRALIAN SALES 2: Fitch Gives BB Rating to AUD49MM Class E Debt
-----------------------------------------------------------------
Fitch Ratings has assigned ratings to the Australian Sales
Finance and Credit Cards No. 2 Trust's floating debt backed by
Australian consumer receivables. The receivables are originated
by Latitude Finance Australia.
The ratings are:
AUD350 million Class A1 debt: 'AAAsf'; Outlook Stable
AUD330 million Class A2 debt: 'AAAsf'; Outlook Stable
AUD70 million Class B debt: 'Asf'; Outlook Stable
AUD55 million Class C debt: 'BBBsf'; Outlook Stable
AUD29 million Class D debt: 'BBsf'; Outlook Stable
AUD49 million Class E debt: not rated
The classes of debt are issued by Perpetual Corporate Trust
Limited in its capacity as trustee of the Australian Sales
Finance and Credit Cards No.2 Trust.
The transaction establishes an asset-backed debt programme
featuring a multi-class structure. The programme involves the
purchase of receivables from the seller on a revolving basis. If
the revolving period is not extended or the debt not otherwise
voluntarily repaid in full at the end of the revolving period,
that series will enter a controlled amortisation period.
The transaction features performance triggers to protect debt
holders from deterioration in the credit quality of the
portfolio. These triggers either require rectification or may
cause a rapid amortisation event where collections will be used
to pay down the debt in sequential order.
The collateral pool consisted of approximately AUD873 million of
consumer receivables at the cut-off date. The receivables
comprise of 427,000 active accounts with an average balance
outstanding of approximately AUD2,045. The receivables were
originated by Latitude Australia Finance, the previous GE
consumer finance business. The revolving receivables pool is
subject to eligibility criteria and portfolio parameters.
KEY RATING DRIVERS
Solid Asset Performance: Fitch has set a yield steady state
assumption of 12.5%, a charge-off steady state assumption of 5.5%
and a monthly payment rate steady state of 13.0%. The yield and
monthly payment rate steady state assumptions are significantly
lower than most other international credit card trusts. The
charge-off steady state is in line with or lower than other
credit card trusts due to solid performance and Australia's
benign economic conditions in the last few years.
Experienced Originator and Servicer: Latitude, through its
previous ownership, has been managing large portfolios of
consumer receivables for well over a decade in Australia. Fitch
reviewed Latitude's underwriting and servicing capabilities and
found them satisfactory. Latitude is not rated and servicer risk
is mitigated through back-up servicer arrangements.
Steady Asset Outlook: Fitch expects stable Australian credit card
performance in the medium-term, with marginal upward charge-off
movements in 2017, since current levels are unsustainable in the
long term. Australian economic conditions are expected to remain
benign.
EXPECTED RATING SENSITIVITIES
Fitch modelled three scenarios to compare the rating sensitivity
with the expected performance for the trust: 1) increased charge-
offs; 2) a yield reduction and 3) a monthly payment rate
reduction.
The rating sensitivity indicates sensitivity to an increase in
defaults and a reduction in monthly payment rates, with less
sensitivity to yield reduction. The class B debt is less
sensitive to changes in performance than other debt classes.
AWARD BRANDS: First Creditors' Meeting Set for April 12
-------------------------------------------------------
A first meeting of the creditors in the proceedings of
Award Brands Pty Ltd will be held at the offices of the
Institute of Chartered Accountants, Level 18, 600 Bourke Street,
in Melbourne, Victoria, on April 12, 2017, at 10:30 a.m.
Daniel P Juratowitch and Barry Wight of Cor Cordis Chartered
Accountants were appointed as administrators of Award Brands on
March 31, 2017.
BRUCK TEXTILES: Liquidators Sue Execs Over Workers' Entitlements
----------------------------------------------------------------
Ben Butler at The Australian reports that liquidators of
Wangaratta's Bruck Textiles have launched legal action accusing
owner Philip Bart and other company executives of deliberately
avoiding more than AUD3.4 million in workers' entitlements during
a controversial restructure of the business.
The Australian relates that the 2014 restructure of Bruck, which
involved the sale of the business to a related company for just
AUD1 in cash, left taxpayers on the hook for the entitlements
under the Commonwealth's Fair Entitlements Guarantee Scheme.
Bruck had already been heavily subsidised by the taxpayer, with
figures provided to the Textile Clothing and Footwear Union of
Australia by then Industry Minister Ian Macfarlane showing it
received more than AUD34 million in government grants between
2006 and 2014, the report says.
According to the Australian, liquidators Barry Taylor and Andrew
Needham, of HLB Mann Judd, who have been investigating the
collapse using funding provided by the Department of Employment
and the Australian Securities & Investments Commission, went
ahead with the legal action despite dire warnings from Mr. Bart
last year that the probe could threaten the ongoing business.
In a concise statement filed with the Federal Court last month,
the liquidators claim Mr. Bart, Bruck chief executive officer
Geoffrey Parker and chief financial officer Ronald Johnson
restructured the business with intentions including "preventing
the recovery of the entitlements of the employees of Bruck, or
significantly reducing the amount of entitlements that the
employees of Bruck could recover," the Australian recalls.
The Australian notes that the executives are accused of breaching
their directors' duties to Bruck, which include stripping more
than AUD8 million out of the company six months before putting it
into administration and by selling the ongoing business to
another company owned by Mr. Bart, Australian Textile Mills.
Bruck received AUD1 in cash for the business and ATM also assumed
about AUD11 million in debts.
The Australian adds that the Bruck executives have yet to file a
defence but a spokesman said the case was "nonsense and it will
be vigorously defended."
GEELONG PRIVATE: Receivers Sell Medical Centre for AUD20 Million
----------------------------------------------------------------
Marc Pallisco at The Sydney Morning Herald reports that receivers
for the bank that financed Singapore's International Healthway
Corporation's AUD28 million purchase of the Geelong Private
Medical Centre three years ago have sold the regional property
for a speculated AUD20 million.
The 73-79 Little Ryrie Street holding has the potential to return
annual rent of AUD2.1 million and would therefore be exchanging
on a high market yield of more than 10%, according SMH.
Seven years old, the facility with 4,937 square metres of
lettable area across four floors, has Australia's second-largest
private hospital operator, the ASX-listed Healthscope, as its
major occupier, SMH discloses.
Also with a ground-floor cafe and 156-bay basement car park, the
complex includes an air bridge on the third floor connected to
Geelong Private Hospital.
At about the same time IHC purchased the medical centre, it
acquired two St Kilda Road office investments, at No. 553 (for
AUD45 million) and No. 541 (AUD35.75 million), SMH notes.
Those assets were sold late last year by KordaMentha,
representing Westpac, for a substantial premium to their combined
AUD89.8 million book value, says SMH. Milemaker Petroleum founder
Nick Andrianakos paid AUD70 million for the former building (he
had recently finalized the sale of his business to Caltex for
AUD95 million). Fund manager Bayley Stuart spent AUD47.75 million
on 541 St Kilda Road.
KPMG is the receiver for the Geelong asset, representing the
National Australia Bank, which reportedly holds a AUD16.5 million
loan against it, SMH discloses.
KPMG appointed CBRE's Victorian Health, Aged and Child Care
division. Five agents -- Sandro Peluso, Kiran Pillai, Scott
Orchard, Josh Twelftree and Julian White -- declined to comment
about the campaign, launched late last year, SMH adds.
GUVERA EMPLOYMENT: First Creditors' Meeting Set for April 12
------------------------------------------------------------
A first meeting of the creditors in the proceedings of
Guvera Employment Pty Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Suite 54 HQ@ Robina, 58
Riverwalk Avenue, in Robina, Queensland, on April 12, 2017, at
12:30 p.m.
Stephen Hundy and Simon Cathro of Worrells Solvency were
appointed as administrators of Guvera Employment on March 31,
2017.
KEYSTONE GROUP: Jamie Oliver Wins Back Australian Restaurants
-------------------------------------------------------------
Business Insider Australia reports that British celebrity chef
Jamie Oliver has bought back and taken control of six Australian
restaurants bearing his name from the receivers of the failed
Keystone Group.
When Keystone Group collapsed into receivership in June last
year, it placed the Jamie's Italian restaurants for sale.
The Jamie's Italian chain was launched in Sydney's central
business district five years ago and subsequently opened in
Canberra, Parramatta in western Sydney, Perth, Brisbane and
Adelaide, which are among the brand's best global performers, the
report says. The Jamie's Italian Trattoria in Parramatta will be
converted into Jamie's Italian for brand consistency.
Mr. Oliver has 42 restaurants in the UK and over 25
internationally, including on Royal Caribbean cruise ships. The
celebrity chef plans to visit Sydney in May, and launch a new
menu for the chain, Business Insider Australia reports. He is
also introducing "kids eat free" during the Easter school
holidays in each city, the news source relays.
"This is a process that I've never been through so it's all very
new, but it's a really happy ending," the report quotes Mr.
Oliver as saying. "The Jamie's Italian Australia business has
always been extraordinary and, now we've gone through this unique
process, everything I've ever dreamed of has happened."
The Jamie Oliver Restaurant Group Australia's new managing
director, Ben Shaughnessy, has moved to Sydney after seven years
at The Jamie Oliver Restaurant Group UK, Business Insider adds.
About Keystone
Founded in 2000, Keystone Group runs venues throughout Australia
such as the celebrity chef Jamie Oliver-branded chain Jamie's
Italian, as well as Sydney staples Kingsleys, the Sugarmill,
Cargo Bar and Bungalow 8.
On June 28, 2016, the Group was placed into receivership by a
syndicate of lenders due to an inability to reach agreement with
the Board on key aspects of the Keystone Group's financial
structure.
Morgan Kelly and Ryan Eagle of Ferrier Hodgson were appointed
Receivers and Managers to the Keystone Hospitality Group.
Venues continued to operate while Receivers commenced a sales
campaign for them.
QUEENSLAND NICKEL: Arrest Warrant Issued for Clive Mensink
----------------------------------------------------------
Mark Schliebs at The Australian reports that an arrest warrant
has been issued for Clive Mensink, director of Queensland Nickel,
after he repeatedly failed to appear in court in Brisbane in
relation to the collapse of the Company.
Mr. Mensink was the sole registered director of Clive Palmer's
Queensland Nickel Townsville refinery company when it collapsed
last year, costing 800 workers their jobs and leaving creditors
AUD300 million out of pocket, The Australian discloses.
Queensland Nickel's liquidators have been chasing Mr. Mensink --
who is on a year-long round-the-world holiday -- for months for
him to testify at the Brisbane Federal Court, The Australian
notes.
The Australian relates that the warrant, issued by the Federal
Court in Brisbane on March 27, directs that Mr. Mensink be
arrested and brought to court to answer questions about the
collapse of Queensland Nickel. This means Mr. Mensink can be
taken into custody as soon as he steps foot on Australian soil.
Judge John Dowsett also said he would issue a second warrant once
he receives an application for Mr. Mensink to be charged with
contempt of court, according to the report.
The Australian notes that a contempt of court charge will create
the possibility that Mr. Mensink could be extradited, depending
on whether he is in a country with an existing extradition treaty
and if the federal Attorney-General signs off on such a request.
March 27 was Mr. Mensink's final chance to appear in court to
answer questions about the collapse of Queensland Nickel without
a warrant being issued, after he shirked two previous summonses,
The Australian notes.
Justice Dowsett earlier suggested that Mr. Palmer be quizzed in
court, or provide a sworn affidavit, about any knowledge he has
about Mr. Mensink's whereabouts. Mr. Mensink is also Mr.
Palmer's nephew.
His lawyer, Sam Iskander, told the Federal Court on March 27 that
Mr. Mensink was not in court, according to The Australian. Mr.
Iskander also told Judge Dowsett that Mr. Palmer has said he had
no knowledge of his nephew's whereabouts.
The Australian relates that Judge Dowsett also suggested the
Department of Foreign Affairs could be contacted to see if it
knew Mr. Mensink's whereabouts.
About Queensland Nickel
Headquartered in Townsville, Australia, Queensland Nickel engages
in the production and marketing of nickel and cobalt. It owns
and operates the Palmer Nickel and Cobalt Refinery in Queensland,
Australia. It is owned by businessman and politician Clive
Palmer.
The Company experienced financial difficulties and Palmer sought
assistance from the Queensland Government in late 2015 but was
rejected. The Company's ownership was later transferred to a new
company named Queensland Nickel Sales Pty Ltd in a joint venture
between two of Clive Palmer's companies, QNI Resources Pty Ltd
and QNI Metals Pty Ltd, with the directorship going to Palmer's
nephew Clive Theodore Mesnick.
On January 19, 2016, the Company entered into voluntary
administration. John Park, Stefan Dopking, Kelly-Anne Trenfield
and Quentin Olde of FTI Consulting were appointed as voluntary
administrators of the Company.
FTI as administrators issued a report in early April 2106 that
the Company "incurred debts of $771 million after going insolvent
in November [2015]."
On April 22, 2016, the Companies' creditors voted for
liquidation.
FTI went from being administrators to liquidators at the second
creditors meeting in April.
QUINTIS LTD: S&P Revises Outlook to Negative & Affirms 'B+' CCR
---------------------------------------------------------------
S&P Global Ratings said that it had revised the rating outlook on
Quintis Ltd. to negative from stable. At the same time, S&P
affirmed the corporate credit rating at 'B+' and the issue rating
on the company's senior secured notes at 'B+' with a recovery
rating of '4'.
"We revised the outlook to negative to reflect the potential
impact of the recent resignation of Quintis' CEO and possible
delays in the sale of Indian sandalwood," said S&P Global Ratings
credit analyst Sam Heffernan. "In our view, these events could
undermine plantation investor confidence and affect the ability
of the company to manage its working capital commitment in a
seasonal business where the majority of cash flows are realized
during the second half of the year."
S&P expects Quintis will continue to perform in line with S&P's
base-case assessment. However, S&P acknowledges that recent
developments have increased risks around investor inflows and, as
such, S&P's view of the stability of the rating.
S&P views the Indian sandalwood industry as being robust with
strong demand for the product globally in medicinal, cosmetic,
and religious and spiritual end-markets. In addition, supply of
sandalwood is limited due to a lack of reliable legal sources and
long lead times to harvest of more than 15 years.
Despite the favorable conditions, Quintis recently announced that
it has experienced issues with a significant buyer of Indian
sandalwood into China. These issues may delay the sale of a
significant portion of Indian sandalwood. However, it is S&P's
understanding that Quintis is in advanced negotiations with an
alternative buyer on similar terms and conditions.
It is S&P's view that any significant delay in realizing the full
value of Indian sandalwood products from the first material
commercial harvests could undermine future investor confidence in
the product, cutting Quintis' cash flows and tightening
liquidity.
The resignation of the long-standing CEO and founder is also a
key factor in S&P's revision of the outlook. In S&P's view, the
resignation will test the solidity of Quintis' management and
governance, particularly in relation as to how the company
manages the interests of all shareholders in light of any take-
over approach. Any change of control and ownership structure
that results in a more aggressive financial risk appetite would
be negative for the rating. Further, given that the CEO has had
a long tenure and was the founder of the company, it remains to
be seen whether his resignation affects plantation investor cash
flows into the company over the next six to 12 months.
Mr. Heffernan added: "The negative outlook reflects our view of
the likelihood that the rating could come under pressure should
the resignation of Quintis' CEO and persistent supply chain
complexities materially undermine investor confidence on the
company."
In addition, recent developments regarding the potential
ownership structure of Quintis pose a risk. Negative pressure
could occur if the ownership structure results in the company
having a more aggressive financial risk appetite.
A downgrade could occur if the recent developments affected
investor sentiment and result in a significant decline in
plantation investor cash flows, precipitated by the anticipated
product sales not eventuating as S&P expected.
S&P would return the outlook to stable should it get further
clarity regarding the sale of Indian sandalwood products to
China, as well as how the company manages any potential take-over
approach. In addition, under such a scenario, investor sentiment
in plantations remains solid and the company's credit metrics
improves as S&P expected from increasing product sales, such that
its FFO to debt trends above 20%.
S & H AUTOMOTIVE: First Creditors' Meeting Set for April 13
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of S & H
Automotive Pty Ltd at the offices of HoganSprowles, Level 9, 60
Pitt Street, in Sydney, on April 13, 2017, at 11:00 a.m.
Christian Sprowles & Michael Hogan of HoganSprowles were
appointed as administrators of S & H Automotive on April 3, 2017.
STARBOUT PTY: First Creditors' Meeting Set for April 13
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Starbout
Pty Limited will be held at the offices of HoganSprowles,
Level 9, 60 Pitt Street, in Sydney, on April 13, 2017, at
11:30 a.m.
Christian Sprowles -- csprowles@hogansprowles.com.au -- &
Michael Hogan -- mhogan@hogansprowles.com.au -- of HoganSprowles
were appointed as administrators of Starbout Pty on April 3,
2017.
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C H I N A
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CHINA HUISHAN: Files Missing Person Report for Executive Ge Kun
---------------------------------------------------------------
CNNMoney reports that China Huishan Dairy related in a March 31
stock exchange filing that it has lodged a missing person's
report for Ge Kun, who oversaw the company's treasury.
CNNMoney relates that Huishan said it took the step "out of a
concern for her whereabouts." The report was filed in Hong Kong,
which was her last known location, CNNMoney relays.
Hong Kong police said they can't give details on missing person's
reports without more identifying information, which Huishan
declined to provide to CNNMoney.
Ge's disappearance has left Huishan under heavy pressure from
creditors as it scrambles to figure out what state its finances
are in, CNNMoney reports.
According to CNNMoney, Huishan said it has been unable to contact
Ge since March 21. That's the same day, according to the company,
that its chairman and controlling shareholder, Yang Kai, learned
that Huishan had failed to make some of its bank payments.
Ge and Yang are married, according to respected Chinese financial
news outlet Caixin, CNNMoney relays.
CNNMoney says Huishan revealed on March 31 that other problems
are mounting. It said that all four of its independent directors
have resigned, citing other commitments.
The Company is also facing legal action from an asset management
firm, which applied to a Hong Kong court to freeze the assets of
the dairy company, Yang and his wife. The Hong Kong court
rejected the application, Huishan said.
CNNMoney notes that trading in Huishan's shares in Hong Kong was
halted on March 24, the day of their huge drop. The stock was
down 85% at the time of the suspension.
The shares will remain on hold until the company's financial
review is finished.
CNNMoney notes that the massive plunge came more than three
months after U.S. investment research firm Muddy Waters slammed
Huishan in a lengthy report. It accused the company of engaging
in fraud and reporting fake profits.
Huishan rejected the Muddy Waters report when it was published in
December, calling the allegations "groundless" and saying the
report contained "obvious factual errors," CNNMoney relays.
About China Huishan
China Huishan Dairy Holdings Co Ltd (HKG:6863) is principally
engaged in the production and sales of raw milk, liquid milk
products and milk powder products. The Company operates its
business through three segments. The Dairy Farming segment is
engaged in planting, growing and harvesting alfalfa grass and
other feed crops, processing feeds and breeding dairy cows. The
Liquid Milk Products Production segment is engaged in the
production and sales of pasteurized milk, ultra-high temperature
(UHT) milk, yoghurt and milk beverages. The Milk Powders
Production segment is engaged in the production and sales of
infant milk formula products, adult milk powder products and
dairy ingredient products.
CHINA ORIENTAL: Fitch Revises Outlook to Pos.; Affirms BB- IDR
--------------------------------------------------------------
Fitch Ratings has revised the Outlook on China Oriental Group
Company Limited's (COG) Long-Term Issuer Default Rating (IDR) to
Positive from Stable. The IDR and senior unsecured rating on the
steelmaker have been affirmed at 'BB-'.
The revision in the Outlook reflects Fitch's expectation that
COG's FFO-adjusted net leverage will remain low at around 1.5x
following a substantial net debt reduction in 2016 and improved
EBITDA generation ability due to a better product mix and cost
efficiency.
KEY RATING DRIVERS
Lower Leverage to be Sustained: Fitch expects COG's FFO-adjusted
net leverage to remain at around 1.5x in 2016-18, driven by a
lower net debt position and higher profit due to a stable steel
sector outlook in China and better product mix. COG benefitted
from a rapid rebound in domestic steel prices in 2016. Gross
profit per tonne surged to CNY233 from CNY33 in 2015 due to low-
cost inventory and a lag in raw-material price adjustments. Fitch
expects Chinese steel consumption and demand to remain stable in
2017 reflecting slowing residential construction growth but
stable growth in infrastructure construction, which will benefit
COG's long products.
Higher-Value Products: Fitch also expects COG's product mix to
improve as it switches to manufacturing more high value-added
products. This includes a doubling of its pile sheet capacity to
600,000 tonnes in 2017. COG's steel pile sheets yielded gross
profit per tonne of about CNY321 in 2016, higher than the
company's overall average gross profit per tonne of CNY233. COG
is currently one of the few manufacturers in China capable of
processing this product.
Proven Financial Flexibility: COG continued to demonstrate its
strong financial flexibility through effective working capital
management in 2015, when it reduced its net debt by CNY5 billion
through conversion of the company's large pool of notes
receivable to cash. COG's net debt has remained low in 2016 at
around CNY1.3bn.
Suspension Resolved; Equity Market Access: COG regained its
access to equity markets in 2017, which will give it additional
financial flexibility. Trading in the company's shares resumed
trading in February 2017 after being suspended for almost three
years due to a public float issue. As part of the remedy, COG
placed out new shares and COG management sold down shares to
increase it public float to 25%. The company intends to use net
proceeds of HKD740 million from the share sales to expand its
pile sheet production capacity and as general working capital.
DERIVATION SUMMARY
COG is smaller in size and has lower profitability than Indian
steelmakers JSW Steel Limited (BB/Negative) and Tata Steel
Limited (standalone rating of BB- on Rating Watch Evolving),
which make higher-margin products and have significant self-
sufficiency in iron ore. However, COG's working capital
management has been effective in controlling leverage and
reducing its net debt position when operating conditions are
weak. Its leverage and coverage ratios are overall much better
than its 'BB' and 'B' rated peers, and comparable to some
investment-grade rated steel producers.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Total capacity to remain at around 11 million tonnes between
2017 and 2018
- Capex of CNY1 billion in 2017 and CNY600 million in 2018
RATING SENSITIVITIES
Developments that may, individually or collectively, lead to
positive rating action include:
- FFO-adjusted net leverage below 1.5x on a sustained basis
- Gross profit per tonne of steel products exceeding CNY80 on a
sustained basis
Fitch will consider revising COG's Outlook back to Stable if its
FFO-adjusted net leverage increases.
LIQUIDITY
Adequate Liquidity: As of end-2016, COG had about CNY1.1 billion
in short-term loans and around CNY1.3 billion of cash on hand
with another CNY1 billion in unused banking facilities.
FUJIAN ZHANGLONG: Fitch Assigns BB+ Rating to US$200MM Notes
------------------------------------------------------------
Fitch Ratings has assigned Fujian Zhanglong Group Co., Ltd.'s
(BB+/Stable) USD200 million 4.5% notes due 2019 a final rating of
'BB+'.
The assignment of the final rating follows the receipt of
documents conforming to information already received and the
final rating is in line with the expected rating assigned on
March 15, 2017. The notes are a tap of an earlier issuance and
carry the same terms and conditions.
KEY RATING DRIVERS
The notes are rated at the same level as Zhanglong's Issuer
Default Rating and constitute its direct, unconditional,
unsubordinated and unsecured obligations and rank at least pari
passu with all its other present and future unsecured
obligations.
Zhanglong is wholly owned by the Zhangzhou State-Owned Assets
Supervision and Administration Commission (SASAC) and is
supervised by Zhangzhou municipality. Zhanglong's ratings are
credit-linked with, but not equalised to, Fitch's internal credit
assessment of Zhanglong municipality. This link reflects strong
municipal control and oversight, mid-range assessment of
Zhanglong's strategic importance to the municipality, integration
with the government budget and legal status. These factors result
in a high likelihood of extraordinary support, if needed, from
the municipality.
The municipality monitors Zhanglong's major project investments
and financing plans. The company has also been receiving
subsidies from the municipality and more than CNY800 million in
other receivables were due from government entities as of end-
2015.
Zhanglong plays an important role in the city's daily operations
and development as one of the municipality's largest investment
and financing vehicles. It is the city's sewage treatment service
provider and its major water supplier to urban areas. It is also
a designated agency for sourcing building materials for certain
local government-owned housing and infrastructure projects.
RATING SENSITIVITIES
Link with Municipality: A stronger or more explicit support
commitment from Zhangzhou Municipality, or an increased focus on
public-service provision and infrastructure construction may
trigger a positive action on Zhanglong's ratings. Significant
weakening of Zhanglong's strategic importance to the
municipality, dilution of the government's shareholding, and/or
reduced government support could result in a downgrade.
Creditworthiness of Municipality: An upgrade of Fitch's internal
credit view on Zhangzhou Municipality may trigger a positive
rating action. Negative rating action could derive from
deterioration in Zhangzhou Municipality's credit profile.
A rating action on Zhanglong will also lead to a similar action
on the US dollar notes.
UNITED PHOTOVOLTAICS: 2016 Results Below Moody's Expectations
-------------------------------------------------------------
Moody's Investors Service says that United Photovoltaics Group
Limited's (United PV, Ba3 stable corporate family rating) 2016
results were marginally below Moody's expectations due to delays
in equity placements and refinancing completed in March 2017,
with no immediate impact on its current rating and outlook.
"United PV's reported 2016 earnings are consistent with Moody's
expectations and further remain consistent with its single-B
range standalone credit profile," says Ada Li, a Moody's Vice
President and Senior Analyst.
"We believe the company's reported 2016 financial profile is
distorted by its aggressive expansion, complex financing
practices and delays in equity placements. Moody's has considered
that the post-year-end bond issuance and share placements have
partly offset the refinancing pressure stated in its going-
concern audit opinion," adds Li.
Moody's notes United PV's reported earnings will not adequately
reflect its full performance as the company continues to expand
rapidly; this is because the results reflect the revenue and
EBITDA of projects acquired during the year from the respective
completion dates of the acquisitions.
United PV's subsidiaries' installed capacity at end-2016 rose 30%
from at end-2015 to 1GW, while total electricity generation rose
62% to 1,204 GWh, leading to a 58% increase in reported revenue
and an improvement in its EBITDA margin to 84% from 76% last
year.
United PV's auditor has issued a going-concern audit opinion
based on its high proposed capex and the significant shortfall
between the company's reported current assets of RMB4,536 million
and current liabilities of RMB5,130 million.
Moody's has considered the following major post-year-end
activities as having partly mitigated refinancing risks:
(1) Refinancing of current debt due by obtaining RMB1,280 million
long-term bank loans and issuance of medium-term notes of HKD36
million subsequent to end-2016
(2) Issuance of USD350 million, 3-year senior note in January and
February 2017, with proceeds to be used in redemption of existing
convertible bonds due in 2018 and 2019, repayment of existing
indebtedness, and working capital. As of end-March 2017, RMB667
million of the RMB2.4 billion equivalent bond gross proceeds were
used to redeem convertible bonds.
(3) Net proceeds from share and warrant placement totaling
RMB1,318 million to China Merchants New Energy Group Limited
(CMNE, unrated) (and parties acting in concert with it), Orix
Asia Capital Limited, a subsidiary of ORIX Corporation (Baa1
stable), PV China Investment Limited (unrated), and subsidiaries
of China Huarong Asset Management Co., Ltd (A3 stable).
Moody's understands certain capital expenditure is discretionary
and remains subject to the company's ability to balance its
capital structure and expansion ambition. In particular, United
PV had pledged deposit of around RMB2 billion in cash for working
capital purpose.
As a result, Moody's estimates United PV's end-2016 adjusted
funds from operations (FFO) to debt will be around 2.4% and its
adjusted debt to book capitalization will be around 77%, after
incorporating the post-year-end events. Such metrics are
consistent with Moody's projected 2016 financials profile, while
marginally below Moody's downgrade drivers of FFO to debt below
3% and debt to book capitalization above 75%.
Furthermore, Moody's expects additional cash flows from the
collection of accrued and unpaid renewable subsidies from
government-approved projects in 2017 of approximately RMB1,083
million, reported as tariff adjustment receivables in United PV's
end-2016 account.
Moody's assumes that United PV has fair access to domestic
funding, given its frequent capital market activities and its
links with its largest shareholder, China Merchants Group
(unrated).
The company has unused uncommitted bank facilities of RMB659
million, and CMG's subsidiary China Merchants New Energy Group
Limited (unrated) has issued a letter to United PV to provide
financial support, if needed.
The principal methodology used in this rating was Unregulated
Utilities and Unregulated Power Companies published in October
2014.
United Photovoltaics Group Limited (United PV) principally
engages in solar power generation in China. At end-2016, United
PV demonstrated 1.29GW of installed capacity based on 31 projects
through its subsidiaries (1GW), associates (84MW) and joint
venture (200MW).
United PV is listed on the Hong Kong Stock Exchange. As of 31
March 2017, United PV was 27.84%-owned by China Merchants Group
(CMG, unrated) and its parties acting in concert, before full
dilution of outstanding options, convertible bonds and completion
of proposed share placements. CMG - through China Merchants New
Energy Group Limited (CMNE, unrated) - assumes management control
over United PV. CMG is a conglomerate which is wholly owned by
the State-owned Assets Supervision and Administration Commission
of China's State Council.
=========
I N D I A
=========
BHILAI ENG'G: CRISIL Reaffirms 'B/Issuer Not Cooperating' Rating
----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Bhilai
Engineering Works (BEW) for obtaining information through letters
and emails dated January 17, 2017, and November 24, 2016, among
others, apart from telephonic communication. However, the issuer
has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.3 CRISIL A4/Issuer Not
Cooperating
Cash Credit 3.0 CRISIL B/Stable/Issuer Not
Cooperating
Letter of Credit 0.4 CRISIL A4/Issuer Not
Cooperating
Term Loan 1.0 CRISIL B/Stable/Issuer Not
Cooperating
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
CRISIL has reaffirmed its ratings on the bank facilities of BEW
at 'CRISIL B/Stable/CRISIL A4'.
The ratings continue to reflect the firm's modest scale of
operations, large working capital requirement, and below-average
financial risk profile because of small networth, high gearing,
and subdued debt protection metrics.These weaknesses are
partially offset by the extensive experience of its promoters in
fabrication and casting and established customer relationship in
the steel sector.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With turnover of INR6.11 crore in
fiscal 2016, scale remains small.
* Working capital-intensive operations: Gross current assets were
899 days as on March 31, 2016.
* Below-average financial risk profile: Networth was small and
gearing high at INR4.72 crore and 1.6 times, respectively, as on
March 31, 2016. Also, debt protection metrics were muted, with
interest coverage and net cash accrual to total debt ratios of
1.2 times and 0.03 time, respectively, for fiscal 2016.
Strength
* Extensive experience of promoters and strong customer
relationship: Presence of around 50 years in the fabrication and
casting industry has enabled the promoters to establish strong
relationship with clients such as Bhilai Steel Plant, Bokaro
Steel Plant, Visakhapatnam Steel Plant, Rourkela Steel Plant,
Durgapur Steel Plant, Steel Authority of India Ltd, ESSAR, TATA,
SIEMENS, and Bhushan Steel.
Outlook: Stable
CRISIL believes BEW will benefit over the medium term from its
promoters' extensive experience and established customer
relationship. The outlook may be revised to 'Positive' in case of
a significant and sustained improvement in scale of operations,
while improving working capital cycle and capital structure. The
outlook may be revised to 'Negative' if slowdown in revenue
growth, stretch in working capital cycle, or higher-than-expected
debt-funded capital expenditure affects financial risk profile.
Established as a partnership firm in 1968 in Bhilai, BEW
undertakes fabrication, casting, and forging of capital
equipment required by steel plants. Operations are managed by
Mr. Gurucharan Khurana and his sons, Mr. Arvinder Khurana and
Mr. Jeetinder Khurana.
Profit after tax was INR0.01 crore on net sales of INR6.11 crore
for fiscal 2016, against INR0.03 crore and INR4.32 crore,
respectively, for fiscal 2015.
BRIJLAX AUTO: CRISIL Raises Rating on INR1.5MM Loan to B+
---------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Brijlax Auto Private Limited to 'CRISIL B+/Stable'
from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Electronic Dealer 3.0 CRISIL B+/Stable (Upgraded
Financing Scheme from 'CRISIL B/Stable')
(e-DFS)
Long Term Loan 1.5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Cash 1.18 CRISIL B+/Stable (Upgraded
Credit Limit from 'CRISIL B/Stable')
The upgrade reflects sustenance of business risk profile backed
by the healthy demand prospects of principal supplier, Honda
Motorcycle & Scooter India Pvt Ltd, and better-than-expected
operating margin in fiscal 2016. Steady margin is supported by
increasing proportion of service income in total revenue and
efficient management of overhead costs.
Consequently, cash accrual over the medium term is likely to be
sufficient to meet debt obligation and fund part of incremental
working capital requirement, leading to limited reliance on bank
borrowing. Hence, capital structure is expected to improve
gradually, with total outside liabilities to adjusted networth
ratio expected at 3.0-3.5 times over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With expected turnover of INR24
crore for fiscal 2017, scale remains small compared with large
auto dealers. Furthermore, scaleability of operations is limited
owing to presence in a single location. The company also has to
compete with dealers of other two-wheeler automotive original
equipment manufacturers in Varanasi. Despite expected
improvement, scale will remain subdued over the medium term.
* Limited bargaining power with principals and exposure to
intense competition: To combat competitive pressure, principals
cut costs, which includes reducing commission to dealers. They
also impose stiff sales targets on dealers to improve market
penetration and sales, which creates need for differentiation and
forces auto dealers to regularly refurbish outfits and service
centres.
* Below-average financial risk profile: Networth was small due to
modest scale of operations. However, financial risk profile is
supported by a moderate interest coverage ratio. With healthy
profitability, no debt-funded capital expenditure (capex), and
sustenance of working capital cycle, financial risk profile is
expected to improve but financial flexibility is likely to remain
constrained by small networth.
Strength
* Extensive experience of promoter: Longstanding presence in the
automobile dealership segment through other companies has enabled
the promoter to establish strong relationship with principals and
scale up revenue to an estimated INR24 crore in fiscal 2017 from
INR0.9 crore in fiscal 2014.
Outlook: Stable
CRISIL believes BAPL will continue to benefit over the medium
term from its association with Honda and extensive experience of
promoter. The outlook may be revised to 'Positive' if a
significant increase in revenue and operating profitability,
while efficiently managing working capital, leads to a better
financial risk profile. The outlook may be revised to 'Negative'
if lower-than-expected net cash accrual or sizeable, debt-funded
capex further weakens financial risk profile.
Set up in Varanasi in 2014 by Mr. Bimal Kumar Agarwal, BAPL is a
dealer for Honda's two wheelers.
Profit after tax and net sales were INR13 lakh and INR22.59
crore, respectively, for fiscal 2016, against net loss and net
sales of INR29 lakh and INR16.84 crore, respectively, in the
previous fiscal.
DAGAR FARM: CARE Assigns B+ Rating to INR7cr Long Term Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Dagar
Farm (DF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7 CARE B+; Stable Assigned
The rating assigned to the bank facilities of DF is primarily
constrained by short track record and small scale of operations
coupled with low net worth base and leveraged capital structure
of the firm. The rating is further constrained by DF's inherent
risk associated with the poultry feed industry coupled with high
competition from local players. The ratings constraints are
partially offset by experienced promoter, moderate profitability
margins. Going forward, ability of DF to profitably scale up its
operations while improving its capital structure shall be a key
rating sensitivity.
Detailed description of the key rating drivers
Key rating weakness
Short track record and small scale of operations: The firm
commenced operations in June 2015 and has less than 2 years of
track record of operations as compared to other established
players. Furthermore, the scale of operations stood small limits
the firm's financial flexibility in times of stress and deprives
it of scale benefits.
Leveraged capital structure: The capital structure of the firm
stood leveraged mainly on account of low capital base coupled
along with debt funded capex undertaken to set up new poultry
farm. The working capital limits of the firm remained fully
utilized for 12 month period ending December, 2016.
Inherent risk associated with the poultry industry coupled with
high competition from local players: Poultry industry is driven
by regional demand and supply because of transportation
constraints and perishable nature of the products. Poultry
industry is also vulnerable to outbreaks of diseases, like bird
flu, extreme weather conditions and contamination by pathogens.
Diseases can also impact production of healthy chicks.
The poultry industry is highly fragmented and competitive marked
by the presence of numerous players in India. Given the fact that
the entry barriers to the industry are low, the players in the
industry do not have pricing power and are exposed to competition
induced pressures on profitability. Experienced promoter: The
firm is managed by Mr. Sandeep Dagar who has an overall
experience of around a decade in poultry farming business. Prior
to DF, Mr. Sandeep Dagar was a partner of partnership of Sweta
Breeding and Poultry; engaged in poultry farming business.
Moderate profitability margins: The profitability margins of the
firm stood moderate as reflected from PBILDT and PAT margins.
Also, owing to moderate profitability coverage indictors stood
moderate
Analytical Approach: Standalone
Haryana-based Dagar Farm (DF) was established in 2015 as a
proprietorship concern by Mr. Sandeep Dagar. DF is engaged in
poultry farming business which involves growing of 1 day chick
into egg laying birds and then their eggs are incubated till the
chicks are produced (incubation time is 180 days). The processing
facility of the firm is located at Jhajjar, Haryana with a
breeding capacity of 3,00,000 chicks per annum. DF sells a day
old chick mainly to broiler farmers through the commission agents
located Haryana and Punjab. Furthermore, the firm procures
feeding materials viz. maize, soyabean and defatted rice bran
from traders located in Haryana and near regions.
In FY16 (refers to the period April 1 to March 31), DF has
achieved a total operating income (TOI) of INR3.58 crore and
profits after tax (PAT) of INR0.09 crore, respectively.The firm
has achieved TOI of INR4.00 crore in 9MFY17 (refer to the
period April 1 to December 31, based on provisional results).
DHARAM INDUSTRIES: CARE Assigns B+ Rating to INR6.40cr LT Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Dharam
Industries (DI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.40 CARE B+;Stable Assigned
Short-term Bank
Facilities 1.60 CARE A4 Assigned
Detailed Rationale
The ratings assigned to the bank facilities of DI are primarily
constrained by weak financial risk profile as marked by small
scale of operations, declining profitability margins, leveraged
capital structure, modest coverage indicators and working capital
nature of operations. Furthermore, the ratings are also
constrained by risk related with raw material price volatility
and competitive nature of industry. These rating constraints are
partially offset by support from the experienced partners and
growing scale of operations.
Going forward, the ability of DI to increase its scale of
operations while improving its profitability margins and its
capital structure with effectively managing the working capital
requirements shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small scale of operations coupled with low net worth base: DI's
operations remained small evident from total operating income of
INR32.58 crore in FY16 (refers to the period April 1 to March 31)
and net worth base of INR5.34 crore as on March 31, 2016, which
limits the firm's financial flexibility in times of stress and
deprives it from scale benefits.
* Declining profitability margins Leveraged capital structure and
moderate coverage indicators: The firm's profitability margins
have been declining on y-o-y basis in last 3 financial years due
to high interest burden on working capital borrowing which in
turn restricts the net profitability of the firm. Furthermore,
the firm's debt coverage indicators as marked by interest
coverage and total debt to GCA stood modest.
* Working capital intensive nature of operations: The business
model of DI entails involvement of high working capital
requirements. The firm has high reliance on external
borrowing to meet the working capital requirements which are
largely met through high collection period which resulted
in almost full utilization of its working capital limits for the
past 12-month period ending December 2016.
* Raw material price variability: The key raw material for DI is
steel which constitutes about average of 70% the total cost of
production for the last 3 years (FY14-FY16) Hence, any volatility
in their prices has a direct impact on the profitability margins
of the firm. Furthermore, the firm has no long-term contract
price with raw material suppliers and it sources the material on
need basis as per the price prevailing in the market. This
exposes the firm's margins to fluctuations in the prices of raw
materials.
DI is directed by Mr. Bhupinder Pal Singh, Mr. S. Ramandeep
Singh, Mrs. Punit Kaur and Mrs Avneet Kaur, a family-run
business. Mr. Bhupinder Pal Singh looks after the technical
aspects and decision making of the firm having nearly four decade
years of experience in similar line of business. Mr. S. Ramandeep
Singh, graduate and having experience of two decade in
association with this entity. The firm is also supported by long
experience of Mrs Punit Kaur and Mrs Avneet Kaur, have nearly a
decade of experience through their association with this entity.
Growing scale of operations:
The scale of operations of DI has shown growth at a CAGR of
around 62.64% during FY14-FY16. The total operating income
increased from INR15.23 crore in FY15 to INR32.58 crore during
FY16 at a growth rate of around 113% on y-o-y attributable to
higher quantity sold to existing and new customers.
Dharam Industries (DI) was established in September 1987 as a
partnership firm by Mr. Bhupinder Pal Singh, Mr. S. Ramandeep
Singh, Mrs Punit Kaur and Mrs Avneet Kaur sharing profit and
losses in the ratio equally. The firm is engaged in fabrication
of stainless steel fixtures such as stainless steel (SS) rods, SS
railings, SS Sheet and coil. The manufacturing facility of the
firm is located at Sonipat, Haryana, with an installed capacity
of 100 tonnes per month (TPM) as on March 31, 2016. The major raw
materials required for fabrication of fixtures are stainless
steel sheet and stainless steel coil which are procured
domestically (around 85%) and imports (around 15%) from China. DI
sells its product to local dealers and traders located in Delhi &
Haryana. Dharam Stainless Steel Private Limited (rated 'CARE B+/
CARE A4') is the group associate which is engaged manufacturing
of kitchen cutleries.
DI reported a PAT of INR0.17 crore and PBILDT of INR1.61 crore on
a total operating income of INR32.58 crore in FY16 as against PAT
of INR0.02 crore and PBILDT of INR1.40 crore on a total operating
income of INR15.23 crore in FY15. In 9MFY17 (based on the
provisional results), the firm has achieved a total operating
income of close to INR30.00 crore.
DHARAM STAINLESS: CARE Assigns B+ Rating to INR0.50cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Dharam
Stainless Steel Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 0.50 CARE B+; Stable Assigned
Short-term Bank
Facilities 5.50 CARE A4 Assigned
Long-term/Short- 1.00 CARE B+; Stable/CARE A4
term Bank Assigned
Facilities
Detailed Rationale
The ratings assigned to the bank facilities of DSPL are primarily
constrained by small scale of operations, weak financial risk
profile marked by declining profitability margins, leveraged
capital structure, moderate coverage indicators & working capital
nature of operations. Furthermore, the ratings are also
constrained by risk related with foreign exchange fluctuation,
raw material price volatility and cyclicality in the steel
industry.
These rating constraints are partially offset by support from the
experienced promoters and growing scale of operations. Going
forward, the ability of DSPL to increase its scale of operations
while improving its profitability margins and its capital
structure with effectively managing the working capital
requirements shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations:
The operations of the company remained small in FY16 (Rs.17.54
crore) (refers to the period April 1 to March 31) which limits
the company's financial flexibility in times of stress and
deprives it from scale benefits.
Leveraged capital structure and moderate coverage indicators:
Though the company's has moderate PBIDLT margin, interest burden
and deprecation cost on working capital borrowing restricts the
net profitability of the company. The solvency position was weak
on account of high dependence on bank borrowings to meet the
working capital borrowings and low net worth base. Furthermore,
the company's debt coverage indicators as marked by interest
coverage and total debt to GCA stood modest.
Working capital intensive nature of operations:
The business model of DSPL entails involvement of high working
capital requirements. The company is mainly into export of
kitchen cutleries wherein the conversion from inventory to
debtors takes considerable time. The high working capital
requirement are largely met through the high payable period and
high reliance on external borrowing to meet which resulted in
high average utilization of its working capital limits for the
past 12-month period ending December 2016.
Foreign exchange exposure:
The business operations of DSSPL involve both imports and exports
resulting in sales realization and cash outflow in foreign
currency. Therefore, DSPL's profitability margins are exposed to
volatility in foreign exchange. Though the company has a policy
of hedging its foreign exchange transaction, it still exposes to
any sharp fluctuations in the value of rupee against foreign
exchange currency for the uncovered portion. However, being
importer and exporter, the foreign currency risk is partially
mitigated through a natural hedge.
Raw material price variability:
The key raw material for DSPl is steel which constitutes about
average of 80% the total cost of production for the last 3 years
(FY14-FY16). Hence, any volatility in their prices has a direct
impact on the profitability margins of the company. Furthermore,
the company has no long-term contract price with raw material
suppliers and it sources the material on need basis as per the
price prevailing in the market. This exposes the company's
margins to fluctuations in the prices of raw materials.
Key Rating Strengths
Experienced promoters:
Mr Bhupinder Pal Singh, Mr. Jaspreet Singh, Mr. Ardaman Singh and
Ms Ashpreet Kaur are promoters of DSPL. Mr. Bhupinder Pal Singh
(aged 69 years) looks after the technical aspects and decision
making of the company and has an experience of more than four
decades in the similar line of business. Mr. Jaspreet Singh,
graduate and his brother, Mr. Ardaman Singh has nearly two
decades of experience from this entity. Ms Ashpreet Kaur,
graduate (aged 32 years), having experience of half a decade
through her association with this entity.
Growing scale of operations:
The scale of operations of DSPL has shown growth at a CAGR of
around 8.07% during FY14-FY16. The total operating income
increased from INR14.36 crore in FY15 to INR17.54 crore during
FY16 at a growth rate of around 22% on y-o-y attributable to
higher quantity sold to existing and new customers.
Dharam Stainless Steel Private Limited (DSPL) was incorporated in
2010 and promoted by Mr. Bhupinder Pal Singh, Mr. Jaspreet Singh,
Mr. Ardaman Singh and Ms Ashpreet Kaur. The company is engaged in
manufacturing of kitchen cutleries such as spoon, knife, slicer,
steel skillet, etc. The manufacturing facility of the company is
located at Sonipat, Haryana, with an installed capacity of 350
tonnes per month (TPM) as on March 31, 2016. The major raw
materials required for manufacturing cutlery is stainless steel
sheet which is mainly procured domestically. The company also
imports (around 30%) from China and Brazil. The company mainly
exports cutlery to China, US and UK countries, etc.
The company is having a group concern, namely, Dharam Industries
(rated 'CARE B+/ CARE A4') which is a partnership firm and
engaged in manufacturing of stainless steel furniture's.
DSPL reported a PAT of INR0.02 crore on a total operating income
of INR17.54 crore in FY16 as against PAT of INR0.01 crore on a
total operating income of INR14.36 crore in FY15. In 9MFY17
(based on provisional results), the company has achieved sales of
INR12.00 crore.
EMBIOTIC LABORATORIES: CRISIL Reaffirms B+ Rating on INR12MM Loan
-----------------------------------------------------------------
CRISIL rating on the long-term bank facility of Embiotic
Laboratories Pvt Ltd continue to reflect ELPL's modest scale of
operations in a fragmented pharmaceuticals industry and its
exposure to risks relating to customer concentration.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12 CRISIL B+/Stable (Reaffirmed)
The rating also factors in the working capital-intensive
operations and the below-average financial risk profile because
of modest net worth and weak debt protection metrics. These
weaknesses are partially offset by the extensive experience of
the promoters in the pharmaceuticals industry and their
established presence and long track record in the contract
manufacturing industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a fragmented pharmaceuticals
industry: ELPL manufactures pharmaceutical formulations, the
market for which is highly fragmented in terms of number of
manufacturers and variety of products. According to CRISIL
Research, there are 300 to 400 organised players and around
15,000 unorganised players in the domestic formulations market.
Moreover, organised players dominate the formulations market, in
terms of sales. In 2014-15 (refers to financial year, April 1 to
March 31), the top 20 formulations companies accounted for 67 per
cent of total formulation sales in India. ELPL's scale of
operations is modest reflected in its revenue of around INR25.02
crores in 2015-16. CRISIL believes that the business risk profile
of the company will be constrained on account of its modest scale
of operations, over the medium term.
* Working-capital-intensive operations: ELPL's operations are
working capital intensive, marked by gross current assets (GCAs)
of around 292 days as on March 31, 2016. The GCA days have been
high, since the company maintains raw material inventory of 3 to
4 months and debtors ranging from 3 months. ELPL's working
capital cycle is partly supported by credit of 100-125 days, from
its suppliers. However, CRISIL believes that the company will
continue to depend on external bank borrowings to meet its
working capital requirements, because of moderate profitability
and cash accruals, as indicated by high bank limit utilisation of
around 98 per cent. CRISIL believes that efficient working
capital management will remain a rating sensitivity factor.
* Below-average financial risk profile because of modest net
worth and weak debt protection metrics: ELPL's net worth has
remained low at around INR5.5 crores as on March 31, 2016. The
net worth is expected to increase modestly over the medium term
on account of high dependence on bank lines to fund the business
thereby increasing the interest and financial charges and
limiting the accretion to reserves. ELPL has moderate gearing of
2 times as on March 31, 2016, because of its small net worth and
reliance on bank borrowings to meet its working capital
requirements. The gearing is expected to remain at similar levels
over the medium term in the absence of any major debt funded
capex plans.
ELPL has weak interest coverage and net cash accruals to total
debt (NCATD) of 1.49 times and 9 per cent respectively. Interest
coverage and NCATD are expected to remain at 1.5 times and 6per
cent respectively over the medium term on account of modest scale
of operations and moderate operating profitability.
Strengths
* Extensive industry experience of promoters and their
established presence and long track record in the contract
manufacturing industry: Mr. Kantilal V. Jain, the Managing
Director was instrumental in steering the company right from the
year of its establishment; 1987. The rich experience of in the
field of pharmaceutical trading of more than 40 years, made him
to start the manufacturing unit to present quality medicines to
the suffering humanity. His technical expertise and extensive
experience enabled ELPL to sustain its scale of operations over
the years. The qualified management team and its track record of
delivery have enabled consistent orders from clients. The company
also derives benefits from established supplier relationships.
CRISIL believes that ELPL will benefit from its promoter's
industry experience, over the medium term.
Outlook: Stable
CRISIL believes ELPL will maintain its business risk profile
aided by the promoters' extensive industry experience and
established relations with customers. The outlook could be
revised to 'Positive' if there is substantial improvement in the
financial risk profile backed by sustained improvement in
operating performance and profitability. Conversely, the outlook
may be revised to 'Negative' if there is further deterioration in
the financial risk profile led by large, debt-funded capital
expenditure or lengthening of ELPL's working capital cycle.
Set up in 1987, ELPL produces various pharmaceutical formulations
in the form of oral solid dosages and liquids. It is based in
Bengaluru and also undertakes contract manufacturing.
ELPL generated net sales of INR25.02 crores in 2015-16 (Refers to
financial year from 1st April 2015 to 31st March 2016) with
Profit after Tax of INR0.69 crores as compared to net sales of
INR26.52 crores with Profit after Tax of INR0.37 crores in 2014-
15.
GANAPATI INDIA: CRISIL Assigns B+ Rating to INR40MM Term Loan
-------------------------------------------------------------
CRISIL Ratings had revoked the suspension and assigned its rating
of 'CRISIL B+/Stable' rating to the bank facility of Ganapati
India International Private Limited. CRISIL had, on September 27,
2016, suspended the rating as GIIPL had not provided necessary
information required to maintain a valid rating. GIIPL has now
shared the requisite information, enabling CRISIL to assign
ratings to the bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 40 CRISIL B+/Stable (Assigned;
Suspension Revoked)
The rating reflects exposure to risks, associated with
implementation and stabilisation of its operations. These rating
weaknesses are partially offset by the entrepreneurial experience
of its promoters and their funding support.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risk relating to the project implementation and
stabilisation: Risk related to implementation is moderate as
around 61% of the project has been constructed. However, demand
risk remains high, as any adverse economic scenario may lower the
occupancy rate of the property.
* Weak financial risk profile: Debt protection metrics are
expected to remain weak on account of modest cash accrual.
Strengths
* Entrepreneurial experience of the promoters: The promoters, Mrs
Ranju Jha, Mr. Krishna Keyal and Mr. Surajit Ghose have
undertaken 3-4 projects in the real estate segment. Mrs. Ranju
Jha and Mr. Krishna Keyal are also present in the coal trading
business, and operate a petrol pump in Durgapur.
* Funding support from promoters: Promoters have offered regular
equity infusion, and are likely to infuse an additional INR11
crore in fiscal 2017.
Outlook: Stable
CRISIL believes GIIPL will benefit from the experience of its
promoters in real estate development. The outlook may be revised
to 'Positive' if the project is implemented without any cost or
time overrun, and if substantial increase in the scale of
operations and profitability, strengthens the financial risk
profile. The outlook may be revised to 'Negative' in case of any
time or cost overrun in the project, adversely affecting cash
accrual, or lower-than-expected infusion of funds, weakening the
debt-servicing ability.
GIIPL is engaged in construction and development of a hotel-cum-
commercial complex at Durgapur (Kolkata). The company has
appointed ITC Fortune Group of Hotels as its management and
operations partner. The commercial complex shall be leased out
for office space and retail outlets. The hotel and retail
properties are expected to commence operations by December 2018.
GARUDA INFRATECH: CRISIL Ups Rating on INR17MM LT Loan to 'C'
-------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Garuda Infratech India Private Limited (GIIPL) to
'CRISIL C/CRISIL A4' from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 6 CRISIL C (Upgraded from
'CRISIL D')
Proposed Long Term 17 CRISIL C (Upgraded from
Bank Loan Facility 'CRISIL D')
The rating upgrade reflects no overdrawals in cash credit account
for more than 30 days.
The rating reflects small scale of operations, large working
capital requirement, and a high degree of customer and geographic
concentration in outstanding orders. Moreover, it is exposed to
intense competition in the civil construction industry. These
weaknesses are partially offset by the extensive experience of
GIIPL's promoters in the civil engineering industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations and high degree of geographic and
customer concentration in outstanding orders: Modest scale of
operations is indicated by expected topline of INR22 crore in
fiscal 2017. Moreover, there is high degree of geographic and
customer concentration in unexecuted orders.
* Sizeable working capital requirement: Business is highly
working capital intensive, as reflected in gross current asset
days of 548 as on March 31, 2016, driven by substantial
inventory, receivables and creditors of 244, 331 and 246 days,
respectively.
* Exposure to intense competition: The construction and civil
works sector is highly fragmented with the presence of very large
companies as well as smaller local players.
Strength
* Promoters' extensive experience: Promoters have extensive
experience in the infrastructure industry. All the promoters come
from diverse backgrounds, with rich experience in undertaking
civil, power, and infrastructure projects.
Incorporated in 2010 and based in Hyderabad (Andhra Pradesh),
GIIPL undertakes civil construction work for residential
projects. It is promoted by Mr Sreenivas Babu Kode, Mr Ancha
Chittaranjan, Mr Satya Lakshmi Narayana Gottipati, Mr Raju
Venkata Manthena, and Mr Satya Sekhar Boppanna
GIIPL had net profit of INR0.6 crore on net sales of INR16.9
crore for fiscal 2016, against INR1.2 crore and INR 17.5 crore in
fiscal 2015.
GO GREEN: CARE Reaffirms 'D' Rating on INR9.56cr LT Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
The Go Green Buildtech Private Limited (GBP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.56 CARE D Reaffirmed
The reaffirmation of the rating assigned to the bank facilities
of GBP takes into account delays in the ongoing debt servicing
due to stressed liquidity position.
Detailed description of the key rating drivers
There was delay in stabilization of the newly set up
manufacturing facilities, which is also new venture for its
promoters. This has resulted into liquidity stress position and
ongoing delays in servicing the debt obligations.
Analytical approach: Standalone
The Go Green Buildtech Private Limited (GBP) was incorporated in
December 26, 2012. The company is promoted by Mr. Umesh Chand
Jain, Mr. Rishabh Jain and Mr. Nikhil Jain. GBP is a part of the
"Velveleen Group" which has interests in the manufacturing of
velvet and fabric, real estate infrastructure development,
manufacturing of concrete bricks and education. GBP is engaged in
manufacturing of civil construction materials such as fly ash
bricks at its manufacturing unit at Dadri, Uttar-Pradesh with
installed capacity of 5 crore pieces per annum. The commercial
production of its fly ash plant was commenced in June 2014. The
product finds its usage in construction of commercial building
and residential building. The main raw material for manufacturing
the products is fly ash. Other raw materials such as cement,
lime, etc, are procured from local market.
HASTALLOY INDIA: CRISIL Reaffirms B+ Rating on INR5.5MM Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating at 'CRISIL
B+/Stable/CRISIL A4' on the bank facility of Hastalloy India
Limited (HIL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4.5 CRISIL A4 (Reaffirmed)
Cash Credit 5.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5.0 CRISIL B+/Stable (Reaffirmed)
CRISIL's ratings on the bank facilities of HIL continue to
reflect the company's small scale of operations, below average
financial risk profile because of a small net worth, moderate
gearing, and weak debt protection metrics, and working capital-
intensive nature of operations. These rating weaknesses are
partially offset by the extensive experience of HIL's promoter in
manufacturing alloy steel castings, and established relationship
with customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale and exposure to intense competition in alloy steel
casting industry: Modest scale is indicated by revenue of
INR14.40 crore in fiscal 2016. Intense competition has
constrained ability to significantly scale up operations.
* Working capital-intensive operations: Working capital
requirement is large as reflected in gross current assets at 236
days as on March 31, 2016, driven by inventory of 70 days and
debtors of 83 days.
* Below-average financial risk profile: Financial risk profile is
expected to remain below-average, with networth and gearing
likely to be at INR3.24 crore and 1.72 times, respectively, as on
March 31, 2017. Debt protection metrics also should be below
average, with net cash accrual to adjusted debt ratio of 0.06
time and interest coverage ratio of 1.46 times for fiscal 2017.
* Susceptibility to volatility in raw material prices: Operating
margins of HIL are susceptible to changes in steel prices as the
players are unable to fully pass price increases to customers.
Strength
* Promoters' extensive experience: HIL's promoters have been in
the steel alloy casting industry for more than twenty years and
have established strong relationships with customers and
suppliers.
Outlook: Stable
CRISIL believes HIL will continue to benefit over the medium term
from its promoters' extensive industry experience. The outlook
may be revised to 'Positive' if there is a substantial and
sustained increase in revenue and profitability margins, or a
considerable improvement in the networth on the back of sizeable
equity infusion. Conversely, the outlook may be revised to
'Negative' in case of a steep decline in profitability margins,
or significant deterioration in the company's capital structure
caused most likely by large, debt-funded capital expenditure or a
stretch in its working capital cycle.
Incorporated in 1981 by Mr. G V K Rao, HIL manufactures alloy
steel castings of various grades. The current promoter, Mr. K
Eashwar, acquired HIL in 2006-07 (refers to financial year, April
1 to March 31). The company is based in Hyderabad.
HIL's profit after tax (PAT) was INR0.12 crore on total revenue
of INR14.40 Cr for fiscal 2016, against a PAT of INR0.18 crore on
total revenue of INR13.23 Cr for fiscal 2015.
JAI JAGDAMBA: Ind-Ra Migrates 'B' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Jai Jagdamba
Dairy's Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise, despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as
'IND B(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR7.57 mil. Term loan assigned with 'B' rating migrated to
Non-Cooperating Category; and
-- INR55 mil. Fund-based working capital limit assigned with
'B' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Aug. 24, 2016. Ind-Ra is unable to provide an update as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Jai Jagdamba Dairy is a Bulandshahar, Uttar Pradesh-based dairy-
product manufacturing unit, which was established in 2011 and
started operations in January 2012. It is managed by Mr. Ran Pal
Singh.
JAI MATA: CARE Assigns 'B/Issuer Not Cooperating' Rating
--------------------------------------------------------
CARE Ratings has been seeking information from Jai Mata Di Food
Processing Private Limited to monitor the rating vide e-mail
communications/ letters dated July 20, 2016, February 16, 2017
and 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 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 Jai Mata Di Food
Processing Private Limited's bank facilities will now be denoted
as CARE B; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.90 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 March 17, 2016, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced promoters: JMFP is promoted by Mr. Sanjay Kumar, a
graduate, having about 8 years of experience in the rice milling
and processing business, will look after the overall affairs of
the company.
Proximity to raw material sources: JMFP's plant is located in
Patna District, Bihar which is in the midst of paddy growing
region. The entire raw material requirement is met locally from
the farmers (or local agents) which helps the company to save
substantial amount of transportation cost and also procure raw
materials at effective price.
Subsidy entitlement: The firm is entitled to receive capital
subsidy of INR3.91 crore from government of Bihar. However,
exact period of receiving the subsidy is not clear and as a
result, it has not been considered in the financial projections.
Key Rating Weaknesses
Project implementation risk: JMFP is setting up a unit to carry
out processing and milling of rice at Patna district of Bihar
with an aggregate project cost of INR12.57 crore (excluding
margin money for working capital of INR0.97 Crore), which is
proposed to be financed by way of the promoter's contribution of
INR5.57 crore and debt of INR7 crore, at a debt equity mix of
1.26:1. The company has already invested INR2.10 crore towards
land, site development etc. till February 26, 2016 which was met
through promoter's contribution. The said project is expected to
be operational by January, 2017.
Highly fragmented and competitive nature of industry: JMFP's
plant is located in Patna, Bihar which is one of the hubs for
paddy/rice cultivating region. 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.
High regulations by Government: 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 2016-17 to INR1470/quintal from
INR1410/quintal in crop year 2015-16. 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. High working capital
intensity and exposure to vagaries of nature: Rice milling is a
working capital intensive business as the rice millers have to
stock rice by the end of each season till the next season as the
price and quality of paddy is better during the harvesting
season. Further, the millers are required to extend a credit
period of around 2-3 weeks to its customers. Also, paddy
cultivation is highly dependent on monsoons, thus exposing the
fate of the company's operation to vagaries of nature.
Jai Mata Di Food Processing Pvt. Ltd. (JMFP) was incorporated in
November, 2014 by Mr. Sanjay Kumar, Mrs. Sabita Devi and Mrs.
Ruma Devi of Patna, Bihar. The company was setting up a rice
milling unit at Patna, Bihar with a proposed aggregate processing
capacity of 22,810 metric tonne per annum (MTPA), which is in the
vicinity to a major rice growing area. The project was estimated
to be set up at a cost of INR12.57 crore to be financed at a debt
equity ratio of 1.26:1. The project was expected to be
operational by January, 2017.
LION INSULATION: CRISIL Assigns B- Rating to INR3.4MM Term Loan
---------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B-/Stable' rating to the
long-term bank facilities of Lion Insulation Pvt Ltd (LIPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B-/Stable
Term Loan 3.4 CRISIL B-/Stable
The rating reflects the company's below-average financial risk
profile because of moderate gearing, small networth, and weak
debt protection metrics; modest scale of operations and large
working capital requirement. These weaknesses are partially
offset by the extensive entrepreneurial experience of its
promoters and their funding support.
Analytical Approach
Unsecured loans from promoters (Rs 335.70 lakh) have been treated
as neither debt nor equity as these bear nominal interest rate
and are expected to remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: Networth was small at
INR4.53 crore and gearing moderate at over 1.6 times as on
March 31, 2016. Debt protection metrics were also weak due to low
cash accrual vis-a-vis large debt. Hence, the company has to
depend on funding from promoters.
* Modest scale of operations in competitive industry: With
topline of INR7 crore in fiscal 2016, scale remains small due to
start-up phase and capacity utilisation is around 40-45%. LIPL
has got approval to bid for tenders of BHEL and NTPC, and is in
the process of obtaining approvals from other players such as
Larsen & Toubro Ltd, Ministry of Defence etc. This will enable it
to source direct orders and ramp up its operations over the
medium term.
Strengths
* Extensive entrepreneurial experience of promoters: The
company's promoters have been in the engineering consultancy and
project management services for over 20 years, and are supported
by experienced professionals from the insulation industry.
Outlook: Stable
CRISIL believes LIPL will benefit over the medium term from the
experience and funding support of its promoters. The outlook may
be revised to 'Positive' if higher-than-expected revenue growth
and profitability leads to better cash accrual. The outlook may
be revised to 'Negative' if substantially low cash accrual or
stretch in working capital cycle further weakens financial risk
profile, particularly liquidity.
Incorporated in 2011 and promoted by Mr. Omkar Sharma and family,
LIPL manufactures rockwool insulation products at its plant in
Guna, Madhya Pradesh, which has installed capacity of 7500 tonne
per annum.
Net loss was INR-27 lakh on net sales of INR685.46 lakh for
fiscal 2016, against a profit after tax of INR20 lakh on net
sales of INR633.82 lakh for fiscal 2015.
MANJUSHREE TEA: CARE Assigns 'B+/Issuer Not Cooperating' Rating
---------------------------------------------------------------
CARE Ratings has been seeking information from Manjushree Tea &
India Pvt. Ltd. to monitor the ratings vide e-mail
communications/letters dated July 21, 2016, February 16, 2017,
February 28, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company 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 MTIPL's bank facilities will now be denoted as CARE B+/CARE
A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 6.61 CARE B+; Issuer not
cooperating; based on best
available information
Short term Bank 0.20 CARE A4; Issuer not
Facilities cooperating; based on best
available information
The rating takes into account small scale of operations with
moderate profit margin, dependence on the vagaries of the monsoon
which determines supply of paddy and hence fluctuations in its
price, working capital-intensive nature of operations, leveraged
capital structure and moderate debt coverage indicators and
fragmented nature of industry with government regulations.
Moreover, the rating continues to derive strengths by the
experienced Promoters and long operational track record and
proximity to raw material sources and favourable industry
scenario.
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 January 21, 2016, the following
were the rating strengths and weaknesses:
Key Rating Strengths:
Experienced Promoters and long operational track record MTIPL is
into rice milling business since 1994 and accordingly has 21
years of operational track record. The key promoter Mr. Sushil
Kumar Berlia aged about 62 years has around four decades of
experience in the rice milling business. Mr. Berlia looks after
the overall management of the company. Further he is supported by
other three directors who are also having over a decade of
experience in this line of business. Proximity to raw material
sources and favourable industry scenario MTIPL's plant is located
in Jalpaiguri District, West Bengal which is in close proximity
to the paddy growing areas of the state. 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. Rice being a staple food grain with
India's position as one of the largest producer and consumer,
demand prospects for the industry are expected to remain good in
near to medium term.
Key Rating Weaknesses:
* Small scale of operations with moderate profit margins: MTIPL
is a small player in the rice milling business with the total
operating income of INR6.12 crore with a PAT of INR0.23 crore in
FY15 (refers to the period April 01 to March 31). Further the
total capital employed was also low at INR11.60 crore as on March
31, 2015. The small size restricts the financial flexibility of
the company in times of stress and deprives it from benefits of
economies of scale. The profit margins of the company remained
moderate during last three years (FY13-FY15). The operating
margin remained moderate in the range of 8.70% to 21.61% during
last three years with deterioration in FY15 due to high increase
in raw material costs. Further PAT margin also remained moderate
in the range of 3.76% to 13.19% during the aforesaid period. The
PAT margin deteriorated in FY15 due to high increase in capital
charges vis-Ö-vis increase in operating profit level.
* Dependence on the vagaries of the monsoon which determines
supply of paddy and hence fluctuations in its price: Agro-based
industry is characterized by its seasonality, as it is dependent
on the availability of raw materials, which further varies with
different harvesting periods. The prices of rice move in tandem
with the prices of paddy. Availability and prices of agro
commodities are highly dependent on the climatic conditions.
Adverse climatic conditions can affect their availability and
lead to volatility in raw material prices. The monsoon has a huge
bearing on crop availability, which determines the prevailing
paddy prices. Since there is a long time lag between raw material
procurement and liquidation of finished stock, the firm is
exposed to the risk of adverse price movement resulting in lower
realization than expected. The surge in unexpected demand has to
be met by procuring semi-processed rice from smaller rice millers
which may also increase the average cost of raw materials.
* Working capital-intensive nature of operations: The millers
stock enough paddy by the end of each season as the price and
quality of paddy is better during the harvesting season. MTIPL
usually holds inventory of paddy and processed rice upto 2
months. The average operating cycle of the company is 102 days
for FY15. The paddy is procured from the agents generally and the
company avails credit of about a month from its suppliers. MTIPL
extends credit of about 2 and half months to its customers like
District Controller Government of West Bengal Food & Supply,
Pancham Marketers Private Ltd, Balgopal Commonsales Company Ltd
resulting in high working capital utilization reflecting the
working capital intensity of business.
* Leveraged capital structure and moderate debt coverage
indicators: Overall gearing ratio stood leveraged at 2.10x as of
March 31, 2015, due to availment of term loans for setting up
rice mill (Unit II) and its high dependence on working capital
borrowings. Interest coverage ratio declined with high increase
in capital charges vis-a-vis increase in PBILDT. Total Debt /GCA
also remained high at 16.78 times in FY15 owing to low gross cash
accruals and high debt levels. Total debt as on March 31, 2015,
stood at INR7.86 crore primarily in the form of working capital
borrowings to the tune of INR3.41 crore and remaining by way of
secured term loans of INR 4.45 crore.
* Fragmented nature of industry with Government regulations:
The commodity nature of the product makes the industry highly
fragmented with numerous players operating in the unorganized
sector with very less product differentiation. There are several
small scale operators which are not into end-to-end processing of
rice from paddy, instead they merely complete a small fraction of
processing and dispose-off semiprocessed rice to other big rice
millers for further processing. The raw material (paddy) prices
are regulated by government to safeguard the interest of farmers,
which in turn limits the bargaining power of the rice millers.
The
government of India (GOI), every year decides a minimum support
price (MSP - to be paid to paddy growers) for paddy.
The MSP of paddy has been increased during the crop year 2015-
2016 to INR1,410/quintal from INR1,360/quintal in 2014-15. The
sale of rice in the 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 of
rice millers are highly vulnerable, especially in times of high
paddy harvest.
Manjushree Tea & India Private Ltd (MTIPL), incorporated in 1994,
is engaged in the milling of non-basmati rice (parboiled rice) at
its manufacturing facilities in Alipurduar, West Bengal, having
an installed capacity of 13056 metric tons per annum (MTPA). The
company is also engaged in rubber plantation and tea plantation
activities which accounted for around 2% of total revenue in
FY15.
The company is promoted by the Berlia family based out of
Siliguri, West Bengal. MTIPL has an associate company, viz.
Gaurav Tree & Agro Products Private Limited, also engaged in
milling of non-basmati rice (raw and parboiled rice).
Mr Sushil Kumar Berlia (Director) has around four decades of
experience in rice milling business, looks after the overall
management of the company. Further he is supported by other three
directors who are also having over a decade of experience in this
line of business.
NAV BHARAT: Ind-Ra Migrates 'D' Rating to Non-Cooperating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Nav Bharat
Buildcon Private Limited's Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND D(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR82.5 mil. Long-term loan assigned with 'D' rating
migrated to Non-Cooperating Category;
-- INR46 mil. Fund-based working capital limit assigned with
'D' rating migrated to Non-Cooperating Category; and
-- INR50 mil. Non-fund-based working capital limit assigned
with 'D' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 25, 2016. Ind-Ra is unable to provide an update as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
The company was established by Mool Chand Luhadia in 1974 as Nav
Bharat Construction Company. In 1996, the company was changed
into a private limited company and renamed Nav Bharat Buildcon
Private Limited. It operates a civil construction business and
has a 1.25MW wind turbine generator plant in Jaisalmer
(Rajasthan) and a 1MW solar photovoltaic power plant in Bhadasar
Dhiknada village, Rajasthan.
NILKANTH CHAWA: CARE Assigns 'D/Issuer Not Cooperating' Rating
--------------------------------------------------------------
CARE Ratings has been seeking information from Nilkanth Chawal
Mills Private Limited to monitor the rating vide e-mail
communications/letters dated July 15, 2016, February 16, 2017,
February 23, 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 Nilkanth Chawal Mills Private Limited's bank
facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.07 CARE D; ISSUER NOT
Facilities COOPERATING; BASED ON BEST
AVAILABLE INFORMATION
Short-term Bank 2.75 CARE D; ISSUER NOT
Facilities COOPERATING; BASED ON BEST
AVAILABLE INFORMATION
The ratings take into account NCMPL's delays in debt servicing.
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
Key Rating Weaknesses
Delays in debt servicing
Continuous high working capital requirement (average utilisation
stood at more than 100% during February 2016 to January 2017) on
the back of high average inventory period has lead to stressed
liquidity position for the company Accordingly, there have been
delays in honouring of debt servicing obligations and the delay
occurred in servicing of interest on cash credit.
Nilkanth Chawal Mills Private Limited (NCMPL), incorporated in
September 2005 was promoted by Mr. Sunil Kumar, Mr. R.C.P Sharma
and Mr. Arun Kumar of Gaya, Bihar to set up a rice processing &
milling unit and sale of its by-products like husk, bran, khudi,
etc. in the domestic market. The unit commenced commercial
operation in 2007. The plant, having an installed capacity of
27,000 metric tonnes per annum (MTPA) is situated in Gaya
district of Bihar, a major paddy growing area and is in close
proximity to local grain market enabling easy paddy procurement.
During FY16 (refers to the period April 1 to March 31), the
company has reported a total income of INR25.30 crore with a
PAT of INR0.01 crore.
PADMAVATI GINNING: CARE Assigns 'B/Issuer Not Cooperating' Rating
-----------------------------------------------------------------
CARE Ratings has been seeking information from Padmavati Ginning
& Pressing Private Limited to monitor the rating(s) vide email
communications/letters dated October 19, 2016, November 28, 2016,
March 6, 2017, and numerous phone calls. However, despite CARE's
repeated requests, the company 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 Padmavati Ginning & Pressing Private
Limited's bank facilities will now be denoted as CARE BB-; ISSUER
NOT 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).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7 CARE B; ISSUER NOT
Facilities COOPERATING; Based
on best available
information
Detailed description of the key rating drivers
At the time of last rating in March 10, 2016, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced promoters: The current promoter by Mr. Shyamsunder
Goyal, has an experience of around four decades in the cotton
ginning and pressing industry and looks after the overall
management of the company. Other directors Mr. Shrikant Goyal and
Mr. Aditya Goyal, have more than a decade of experience in the
cotton ginning industry.
Key rating weakness
Modest scale of operations: The overall size of operations
continues to be modest with low capitalization marked by a total
operating income of INR41.63 crore and gross cash accruals of
INR0.08 crore in FY15 (refers to the period April 1 to March 31).
Net worth also stood small limiting its financial flexibility and
depriving it of benefits of economies of scale.
Leveraged capital structure with weak debt coverage indicators:
The capital structure of the company remained leveraged on
account of low networth base and high reliance on working to
support its scale of operations. Further, the debt coverage
indicators have also remained at weak level over the years
primarily on account of loss incurred coupled with high interest
cost on unsecured borrowings.
Working capital intensive nature of operations: The operation of
the entity remained working capital intensive with funds largely
being blocked in inventory resulting in high utilization of
working capital limits.
Presence in a highly fragmented industry marked by low entry
barriers & high regulatory risk: High proportion of the small
scale units operating in the cotton ginning and pressing industry
has resulted in fragmented nature of the industry leading to
intense competition amongst the players. Further profit margins
of the cotton ginning players are also highly susceptible to
adverse changes in the government policy.
Seasonality associated with cotton business and susceptibility of
margins to cotton price fluctuations: Operations of cotton
business are seasonal in nature, as sowing season is during March
to July and harvesting cycle (peak season) is spread from
November to February every year. Prices of raw material i.e. raw
cotton are highly volatile in nature and depend upon factors
like, area under cultivation, yield for the year, international
demand supply scenarios, export policy decided by government and
inventory carry forward of last year.
Padmavati Ginning and Pressing Private Limited was originally
incorporated in 2000 by Mr. O.H. Agrawal, however, the control of
the company was taken over by Mr. Shyamsunder Goyal in August
2011. Post the takeover; the company resumed operations in
November 2011. It is engaged in the manufacturing of cotton bales
through cotton ginning & pressing.
The entity earns its entire revenues from domestic market. The
company procures its raw material directly from Mandis and
through commission agents and distributes its product through
brokers in the states of Maharashtra and Madhya Pradesh. The
company operates 4 branches located in Maharashtra (Ralegaon,
Bori, Parbhani and Tamsa) which does the work on job-work basis.
The plant of the company is located in Dhule, Maharashtra, with
an installed capacity of 560 quintals per day for cotton bales
and 1,080 quintals per day for cotton seeds as on March 31, 2015.
PARAMASHIVA MOTORS: CRISIL Assigns B+ Rating to INR8MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating on the
long term bank facilities of Paramashiva Motors Private Limited
(PMPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
Long Term Loan 2 CRISIL B+/Stable
The rating reflects its below-average financial risk profile
marked by high Total outside liabilities to adjusted net worth
(TOL/ANW) ratio and modest interest coverage ratio, and exposure
to intense competition in the automobile dealership industry. The
rating also reflects its nascent stage of operations and limited
bargaining power with its key principal Maruti Suzuki India
Limited (MSIL; rated 'CRISIL AAA/Stable/CRISIL A1+'). These
rating weaknesses are partially offset by the benefits derived
from the extensive experience of the promoters in automobile
dealership business and its established relationship with its key
principal.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: PMPL has below average
financial risk profile marked by its estimated net worth of
INR1.8 crores and estimated high total outside liabilities to
tangible net worth ratio (TOL/TNW) of around 3.9 times as on
March 31,2017. This is primarily on account of modest accretion
to reserves due to modest operating profitability of the company.
The company has estimated modest interest coverage ratio of 2.6
times as on March, 2017.
* Exposure to intense competition in automobile dealership
industry: The automotive sector is intensely competitive with a
large number of players in the mini, compact, mid-size,
executive, premium, and luxury passenger car segments. CRISIL
believes that PMPL's business risk profile will remain
constrained owing to its susceptibility to intense competition in
the automobile dealership industry.
* Exposure to risks relating to low bargaining power with
principal, MSIL: PMPL is exposed to risks relating to low
bargaining power with principal, MSIL. MSIL faces intense
competition from other four-wheeler manufacturers. PMPL also
faces competition from other MSIL dealers in Andhra Pradesh.
Stiff competition has compelled automobile companies to cut
costs, including reducing their commissions to dealers. All this
demands continual expenditure, which is significant given the
scale of operations of dealers such as PMPL.
* Nascent stage of operations: PMPL has nascent stage of
operations as reflected by year-to-date revenues of around
INR27.2 crores till February, 2017 of 2016-17 (refers to the
financial year April 1 to March 31). PMPL has started operations
in April, 2016 and 2016-17 is expected to be its first full year
of operations.
Strength
* Extensive industry experience of the promoters and its:
established relationship with its key principal
PMPL benefits from extensive industry experience of the promoters
in the automobile dealership business and its established
relationship with MSIL through its associate entities dealing
with MSIL. The promoters of PMPL have an extensive experience of
over two decades in the automotive dealership industry and have
aided PMPL to establish a comfortable presence in Vijaywada,
Andhra Pradesh automobile dealership market. CRISIL believes that
will benefit from the extensive industry experience of its
promoters.
Outlook: Stable
CRISIL believes PMPL will continue to benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' in case of substantial and sustainable
increase in the company's profitability, or there is a better
than- expected improvement in its capital structure on the back
of sizeable equity infusion by the promoters. Conversely, the
outlook may be revised to 'Negative' in case of a steep decline
in the company's profitability margins, or significant
deterioration in its capital structure caused most likely by a
stretch in its working capital cycle.
Established in April, 2016 as a private limited company,
Paramashiva Motors Pvt Ltd (PMPL) is an authorized dealer for
Maruti Suzuki India Ltd (MSIL; rated 'CRISIL AAA/Stable/CRISIL
A1+') for Nexa range. Based in Vijaywada (Andhra Pradesh), the
company is promoted and managed by Mr.Cheruvu Sreenivas.
PATEL AGRI: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Patel Agri
Industries Private Limited's (PAIPL) Long-Term Issuer Rating to
'IND BB+' from 'IND BB-'. The Outlook is Stable. The
instrument-wise rating actions are:
-- INR68 mil. Fund-based limit raised to 'IND BB+/Stable'
rating;
-- INR101 mil. (reduced from INR125.5) Term loan raised to
'IND BB+/Stable' rating; and
-- INR82 mil. Proposed fund-based limit withdrawn rating
KEY RATING DRIVERS
The upgrade reflects an improvement in PAIPL's credit metrics and
scale of operations in 10MFY17. In 10MFY17, revenue was
INR1.182 billion (FY16: INR695 million), EBITDA interest coverage
was 2.8x (2.4x), net financial leverage was 3.09x (5.3x).
Operating EBITDA margin was 5% in 10MFY17 (FY16: 6.5%). In In
10MFY17, revenue growth was driven by a higher a number of orders
executed. Meanwhile, net financial leverage improved due to
reduced debt during the period.
The ratings continue to factor in PAIPL's tight liquidity
profile, indicated by an average utilization of 96% during the 12
months ended February 2017; the fragmented nature of the rice
processing industry; and the industry's susceptibility to
government interventions.
The ratings, however, benefit from the 10-year experience of the
directors in the rice milling business.
RATING SENSITIVITIES
Negative: Any deterioration in credit metrics will be negative
for the ratings.
Positive: A substantial improvement in the scale of operations,
along with an improvement in operating EBITDA margin, while
maintaining credit metrics will be positive for the ratings.
COMPANY PROFILE
Incorporated in May 2013, PAIPL commenced commercial operations
from August 2015. It is engaged in the rice milling business.
The company is managed by Mr Munna Prasad and his family. Its
registered office is in Bihar.
PRAGATI EDIBLE: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Pragati Edible
Processing Private Limited's (PEPPL) Long-Term Issuer Rating to
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. Instrument-wise rating actions are:
-- INR144 mil. Fund-based working capital limits migrated to
Non-Cooperating Category; and
-- INR86 mil. Long-term loans with 'BB+' rating migrated to
Non-Cooperating Category; and
-- INR20 mil. Non-fund-based working capital limits with
'IND A4+' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 18, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
PEPPL was incorporated in 2007 by Mr. Purushottam Agarwal and
Mr. Sunil Kumar Agarwal. The company manufactures, and trades
and exports a wide assortment of rice. Its manufacturing
facility is located in Mednapore, West Bengal. The unit
commenced commercial production in June 2011 with an installed
capacity of 29,820mtpa of parboiled rice, 3,780mtpa of rice bran
and 8,400mtpa of rice husk.
The company sells its products under the Pragati brand to traders
and wholesalers located across various states in the country.
PEPPL started exports from February 2014 to countries such as
Singapore, Indonesia, Bangladesh, the UAE, Germany and Sri Lanka.
QUAD LIFESCIENCES: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Quad
Lifesciences Private Limited's (QLPL) Long-Term Issuer Rating to
'IND BB+' from 'IND BB'. The Outlook is Stable. The instrument-
wise rating actions are:
-- INR180 mil. Fund-based working capital limit raised to
'IND BB+/Stable' rating;
-- INR180 mil. Fund-based working capital limit affirmed with
'IND A4+' rating;
-- INR70 mil. Proposed fund-based working capital limit*
assigned with Provisional IND BB+/Stable/Provisional
IND A4+ rating; and
-- INR12 mil. Term loan raised to 'IND BB+/Stable' rating
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by QLPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The upgrade reflects the improvement in QLPL's overall revenue to
INR396.96 million in FY16 (FY15: INR292.27 million), mainly on
account of increased product demand. However, margins and credit
metrics declined further during FY16, on account of raw material
price volatility as well as a higher revenue contribution from
low-margin products. Margins were 12.77% in FY16 (FY15: 14.80%),
net leverage (total Ind-Ra adjusted net debt/operating EBITDAR)
was 3.04x (2.87x) and interest cover (operating EBITDA/gross
interest expense) was 2.72x (3.16x). Ind-Ra expects the credit
metrics to improve in FY17 on back of an increase in margins and
higher revenue, which will be supported by the higher volumes of
its high-margin product, i.e. Thiocolchicoside, sold during the
year.
The ratings factor in QLPL's comfortable liquidity as evident
from its 82.89% average utilization of the working capital limits
for the 12 months ended March 2016. The ratings are supported by
more than two decades of experience of QLPL's promoter in
manufacturing active pharmaceuticals ingredients.
RATING SENSITIVITIES
Positive: A significant improvement in the overall revenue and
EBITDA margin leading to a sustained improvement in the credit
metrics could lead to a positive rating action.
Negative: Deterioration in the profitability leading to sustained
deterioration in the credit metrics will be negative for the
ratings.
COMPANY PROFILE
Incorporated in March 2012, QLPL started operations in February
2013. It manufactures active pharmaceutical ingredients from
herbs, seeds, and plants. The company's manufacturing unit is
located in Derabassi, Punjab.
R R DURAFABS: CRISIL Lowers Rating on INR5MM Overdraft to B-
------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of R R Durafabs Private Limited (RRDPL) to 'CRISIL B-
/Stable' from 'CRISIL B/Stable', while reaffirming the rating on
the short-term bank facility at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 9 CRISIL A4 (Reaffirmed)
Overdraft 5 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects continued stretch in the working capital
cycle. Delay in realisation of receivables and full utilisation
of working capital bank limit weaken liquidity. While operations
are expected to remain working capital intensive, any enhancement
in bank limit, or long-term fund infusion by the promoters will
be a key rating driver over the medium term.
The ratings continue to reflect RRDPL's modest scale, working
capital-intensive operations, and susceptibility to risks related
to intense competition in the power transmission segment. These
weaknesses are partially offset by its promoters' extensive
experience in the business.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale, and susceptibility to intense competition in the
engineering industry: Modest scale is indicated by expected
topline of INR24 crore in fiscal 2017. Also, exposure to intense
competition and low pricing flexibility constrain profitability.
* Large working capital requirement: Business is highly working
capital intensive, as reflected in gross current asset days of
314 days as on March 31, 2016, driven by receivables of 226 days
and creditors of 252 days.
Strength
* Promoters' extensive experience: Promoters' experience of over
two decades in the engineering industry has helped develop
established relationships with key customers and suppliers.
Outlook: Stable
CRISIL believes RRDPL will continue to benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' if sustained scaling up of operations and
profitability strengthens the financial risk profile. Conversely,
the outlook may be revised to 'Negative' if the financial risk
profile deteriorates owing to reduced revenue and margins, or if
any large, debt-funded capital expenditure, or any delay in
receipt of bills from its main principal leads to deterioration
in liquidity.
Incorporated in 2000, RRDPL erects electrical transmission lines.
Initially set up as a partnership concern, RRDPL was
reconstituted as a private limited company in 2009. The company
is promoted by Mr Venkata Ramana and his family.
Profit after tax stood at INR0.5 crore on net sales of INR19.8
crore for fiscal 2016, vis-a-vis INR0.3 crore and INR19.4 crore,
respectively, for fiscal 2015.
RAJSHEKHAR CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR15M Loan
-----------------------------------------------------------------
CRISIL has assigned the 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Rajshekhar Constructions Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4
Drop Line Overdraft
Facility 15 CRISIL B+/Stable
The rating reflects the modest scale of operations in the
intensely competitive civil construction industry, the large
working capital requirement and geographic concentration risk.
These rating weaknesses are partially offset by the extensive
experience of the promoters, and above-average financial risk
profile, marked by moderate networth and low total outside
liabilities to adjusted networth (TOL/ANW) ratio.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the intensely competitive civil
construction industry: Intense competition from large,
established players and small, local entities, keeps the scale of
operations modest (as reflected in expected net sales of INR15
crore in fiscal 2017), and limits the negotiating power with
customers and suppliers.
* Large working capital requirement: Operations are highly
working capital intensive, marked gross current assets of around
469 days as on March 31, 2016, mainly owing to sizeable work-in-
progress inventory, and large receivables, which include security
deposits and retention money.
* Geographic concentration risk: The company mainly undertakes
projects in Assam, and thus, faces risk from geographical
concentration in revenue.
Strengths
* Extensive experience of the company's promoters in civil
construction industry: The three decade-long experience of the
promoters, Mr Manoj Agarwal, Mr Rajshekhar Agarwal and Mr BK
Modi, and their established relationships with customers and
suppliers, will help strengthen the market position, and continue
to support the business risk profile.
* Above-average financial risk profile: Financial risk profile
is marked by moderate networth of INR22.4 crore and low TOL/ANW
ratio of 1.3 times as on March 31, 2016. However, the interest
coverage ratio was average at 1.7 times in fiscal 2016.
Outlook: Stable
CRISIL believes RCPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if sustained improvement in the scale of operations
and profitability, leads to higher cash accrual. The outlook may
be revised to 'Negative' if a stretch in the working capital
cycle or large debt-funded capital expenditure, weakens the
capital structure or liquidity.
RCPL was set up by promoters, Mr Manoj Agarwal, Mr Rajshekhar
Agarwal, Mr B.K. Modi and Ms Sangeeta Devi Agarwal in 1984. The
Guwahati, Assam-based company undertakes civil construction work
for the Assam government.
Profit after tax (PAT) was INR0.55 crore on net sales of INR14.9
crore in fiscal 2016, vis-a-vis INR1.72 crore and INR25.8 crore,
respectively, in fiscal 2015.
RAVIS EXPORTS: Ind-Ra Assigns 'B' Long-Term Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Ravis Exports
(RE) a Long-Term Issuer Rating of 'IND B'. The Outlook is
Stable. The instrument-wise rating actions are:
-- INR40.63 mil. Term loan assigned with 'IND B/Stable'
rating;
and
-- INR100 mil. Fund-based working capital assigned with
'IND B/Stable/IND A4' rating
KEY RATING DRIVERS
The ratings reflect the nascent stage of operations at RE's
cashew processing unit, which is slated to commence commercial
operations by end-March 2017. Trial production at the unit
started in February 2017.
The ratings also reflect a six-month project execution delay,
primarily due to a delay in the delivery and installation of
machinery imported from Vietnam.
The ratings, however, are supported by the firm's comfortable
liquidity position and the promoter's 10 years of experience in
cashew processing. The company has not started utilizing its
fund-based facilities.
RATING SENSITIVITIES
Negative: Failure to achieve substantial revenue leading to a
stressed liquidity position will be negative for the ratings.
Positive: Successful commencement of commercial operations
leading to substantial revenue and profitability will lead to a
positive rating action.
COMPANY PROFILE
Formed in March 2015, RE has set up a fully mechanised unit in
Pavithreswaram Village, Kottarakara Taluka, Kollam District,
Kerala, to process only imported raw cashew nuts for exporting.
The total cost of the project is INR111.55 million (funded
through bank loan (40.34%) and promoter equity (59.66%).
SAHARA ENGINEERING: Ind-Ra Migrates BB Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sahara
Engineering Private Limited's Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
surveillance exercise, despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The
rating will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR75 mil. Fund-based limit with 'BB' rating migrated to
non-cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 11, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2000, SEPL was founded by Manoj Kumar Jena and is
engaged in providing comprehensive shipping services of clearing
and forwarding, contract handling and transportation services at
the various ports of east coast of India.
SAI PRINT: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sai Print &
Pack's Long-Term Issuer Rating to non-cooperating category. The
issuer did not participate in the surveillance exercise despite
continuous requests and follow ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as
'IND B+(ISSUER NOT COOPERATING)' on the agency's website.
Instrument-wise rating actions are:
-- INR 30 mil. Fund-based limit with 'B+' rating migrated to
Non-Cooperating Category; and
-- INR20 mil. Proposed fund-based limit with 'B+' rating
migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 22, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1998, Sai Print & Pack is a proprietorship firm
providing packaging solutions. It manufactures solid fibre
folding cartons, large decorative cases and multicolored printed
litho laminated corrugated cartons. The firm is managed by
Mr. Anuj Dayal and has its registered office in Faridabad.
SAIDRISTI SUITINGS: CARE Reaffirms B+ Rating on INR4.93cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Saidristi Suitings Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4.93 CARE B+; Stable Reaffirmed
The rating assigned to the bank facilities of SSPL continues to
remain constrained on account of its relatively modest scale of
operations and its financial profile marked by declining
profitability margins during last three financial years ended
FY16 (refers to the period April 1 to March 31), moderately
leveraged capital structure, weak debt coverage indicators and
moderate liquidity profile. The rating further, remains
constrained on account of the susceptibility of the company's
profitability to fluctuations in the raw material prices and its
presence in the highly competitive and fragmented industry.
The rating, however, continues to draw strength from the long
standing experience of the promoters with its established track
record of operations and location advantage by way of proximity
to the raw material as well as customers due to its presence in
the textile cluster, Bhilwara (Rajasthan). SSPL's ability to
increase its scale of operations while improving/maintaining
profitability in light of the volatile raw material prices 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
Key Rating Weakness
Declining profitability margin
Profitability margins of the company have witnessed declining
trend during past three financial years ended FY16, mainly on
account of volatility associated with its primarily raw
materials, higher cost of traded goods along with its presence in
the highly fragmented and competitive textile industry leading to
pressure on profitability. During FY16, the PBILDT margin of the
company registered decline on the back of higher cost of raw
material consumed including cost of traded goods along with
higher other manufacturing and selling expenses. In line with
PBILDT margin, PAT margin of the company also declined although
lower in quantum than PBILDT margin, on the back of
proportionately lower interest and depreciation expenses as well
as provision for deferred tax.
Moderate solvency position
Its capital structure continued to remain moderately leveraged;
attributed to higher total debt level owing to the company's
higher reliance on external borrowing to fund its working capital
requirements.
The debt coverage indicators of the company remained weak with
total debt to GCA of 14.98 times as on March 31, 2016 along with
interest coverage at 1.48 times in FY16.
Moderate liquidity position
The liquidity profile of the company stood moderate with moderate
liquidity ratios and elongated operating cycle in FY16.
Furthermore, average utilization of its working capital limit
stood almost full for the last 12 months ended January, 2017.
Key Rating Strengths
Steady growth in TOI
The scale of operations of SSPL as indicated by Total Operating
Income (TOI) grew modest at a Compounded Annual Growth Rate
(CAGR) of around 5% in the last three financial years ended FY16.
During FY16, TOI witnessed growth by around 8% y-o-y on the back
of increase in sales volume of fabrics along with higher revenue
generated from trading activity as well as job work receipt.
Bhilwara-based (Rajasthan) SSPL was initially incorporated in the
name of Sairam Suitings Private Limited in 2003 by Mr. Kamal
Singh Jain along with his son, Mr. Amit Kumar Mahnot. However in
July, 2014, the name of the company changed to its current form.
SSPL is primarily engaged in the business of manufacturing of
synthetic grey fabrics from polyester yarn and outsources the
processing work required for the manufacturing of finished
fabrics on job work basis to the nearby process house located at
Bhilwara. Furthermore, the company also does trading of grey and
finished fabrics. The manufacturing facility of SSPL is located
at Bhilwara with total of 56 sulzar looms having an installed
capacity of 36 Lakh Meters Per Annum (LMPA) as on March 31, 2016.
The company caters to domestic market and sells its products
through the network of its agents located all over India under
the brand name of "SSPL".
SAN MARINE EXPORTS: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed San Marine
Export's (SME) Long-Term Issuer Rating at 'IND B+'. The Outlook
is Stable. The instrument-wise rating actions are:
-- INR150 mil. (increased from INR120) Fund-based cash credit
affirmed with 'IND B+/Stable/IND A4' rating; and
-- INR5.5 mil. Term loan withdrawn rating
KEY RATING DRIVERS
The affirmation reflects SME's continued weak credit metrics and
small scale of operations. SME's revenue was INR400 million in
FY16 (FY15: INR296 million and FY14: INR387 million). The firm's
operating margin improved to 5.4% in FY16 (FY15: 4.6%). The
improvement in revenue and margin in FY16 was due to an increase
in the price of shrimps in the global market along with favorable
market condition. Consequently, gross interest coverage
(EBITDA/gross interest expenses) was 1.6x in FY16 (FY15: 1.4x)
and adjusted net leverage (net adjusted debt/EBITDA) was 6.0x
(6.2x).
The ratings factor in the company's moderate liquidity position,
with around 92% average working capital utilization during the 12
months ended February 2017.
The ratings are constrained by the inherent vulnerability of the
seafood industry to diseases and viral attacks. The ratings are
further constrained by the stiff competition in the seafood
industry, currency fluctuation risks, and SME's partnership form.
The ratings, however, benefit from SME's promoters' experience of
over three decades in the fish processing and seafood export
segments.
RATING SENSITIVITIES
Positive: A substantial increase in the revenue, along with an
improvement in the credit metrics, will be positive for the
ratings.
Negative: A substantial decline in the profitability, resulting
in sustained deterioration in overall credit metrics, will lead
to a negative rating action.
COMPANY PROFILE
Incorporated in 2010, SME is a Kerala-based partnership firm
engaged in the processing and export of seafood.
SARTHAK ISPAT: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sarthak Ispat
Private Limited's (SIPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR210 mil. Fund-based working capital limit assigned with
'BB+' rating migrated to Non-Cooperating Category; and
-- INR77.8 mil. Long-term loans assigned with 'BB+' rating
migrated to Non-Cooperating Category;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 5, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SIPL manufactures and supplies premium quality mild steel
products such as mild steel angles, mild steel beams, mild steel
channels, and mild steel round bars. The company uses high-grade
billet for manufacturing these products. SIPL has a 75,000tpa
facility in Raipur, Chattisgarh.
SHIVANSH DIAMOND: CARE Lowers Rating on INR47cr LT Loan to D
------------------------------------------------------------
CARE Ratings has been seeking information from Shivansh Diamond
Private Limited (SDPL) to monitor the rating vide e-mail
communications/letters dated January 06, 2017, January 12, 2017,
January 18, 2017 & February 23, 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. The
rating on Shivansh Diamond Private Ltd.'s bank facilities will
now be denoted as CARE D; ISSUER NOT COOPERATING. The ratings
have been revised on account of ongoing delays in meeting the
debt obligations.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 47 CARE D; ISSUER NOT
Facilities COOPERATING; Revised from
CARE BB
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
The rating has been revised on account of the banker's feedback
of ongoing delays in debt servicing.
Shivansh Diamonds P Ltd (SDPL) was started as M/s Shivansh
(proprietorship firm) by Mr. Ashutosh Sharma in 1998. This was
later converted into a private limited company in January, 2010
promoted by Mr. Ashutosh Sharma and Mrs. Gunjan Garg. SDPL is
engaged in whole-selling and retailing of diamond and studded
gold jewellery. The company in October, 2012 started its retail
operations from its Karol Bagh showroom. SDPL gets most of its
jewellery manufactured on job work basis from Mumbai based
jewellery makers.
During FY15 (refers to the period April 1 to March 31), SDPL has
registered a total income of INR 275.59 crore with PAT of INR0.48
crore as against a total income of INR 257.91 crore with PAT of
INR 0.53 crore in FY13.
SHREE RAMDEV: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shree Ramdev
Cotton Industries' (SRCI) Long-Term Issuer Rating at 'IND B+'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR4.5 mil. (reduced from INR7.5) Term loan limit affirmed
with 'IND B+/Stable' rating
-- INR75 mil. (increased from INR73.5) Fund-based working
capital limit affirmed with 'IND B+/Stable/IND A4' rating
KEY RATING DRIVERS
The affirmation reflects SRCI's continued moderate credit profile
and small scale operations. Revenue increased to INR545 million
in FY16 (FY15: INR473 million) on account of an increase in
orders inflow. Net leverage (total adjusted debt/operating
EBITDAR) deteriorated to 7.8x at FYE16 (FYE15: 5.6x) on account
of a decline in EBITDA, and EBITDA interest cover (operating
EBITDA/gross interest expense) improved to 1.7x (1.5x) on
account of scheduled repayment of debts. EBITDA margins declined
to 1.1% in FY16 (FY15: 1.4%) on account of an increase in the raw
material price.
Management expects the revenue to decrease in FY17 on account
industry slackness. The firm has recorded INR356.27 million of
revenue in 11MFY17 (unaudited).
The ratings, however, continue to be supported by the promoter's
more than a decade of experience in the cotton ginning and
pressing industry. The ratings further continue to be supported
by the company's comfortable liquidity as the fund-based facility
had been utilized at an average of 59.6% over the 12 months ended
February 2017.
RATING SENSITIVITIES
Negative: A substantial decline in the firm's profitability
leading to sustained deterioration in the credit metrics will be
negative for the ratings.
Positive: An increase in the scale of operations while
maintaining the profitability leading to a sustained improvement
in the credit metrics will be positive for the ratings.
COMPANY PROFILE
SRCI was established as a proprietary concern in the year 2007 by
Mrs. Sangitaben Kapuriya. Later in September 2009 SRCI was
converted into a partnership firm constituted by four partners
namely Mr. Vallbhbhai Manjibhai, Mr. Sanjaybhai Kapuriya,
Mrs. Sangitaben Kapuriya and Mr. Jentibhai Kakdiya. SRCI is
engaged in the cotton ginning and pressing business. SRCI has
installed production capacity of 100-200 cotton bales per day.
SHUBH ALUMINUM: CARE Reaffirms B/A4 Rating on INR14cr Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shubh Aluminum Private Limited (SAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 14.00 CARE B; Stable/CARE A4
term Bank Reaffirmed
Facilities
The ratings assigned to the bank facilities of SAPL continue to
remain constrained on account of its short track record of
operations in the highly competitive and fragmented trading
industry and its financial risk profile marked by the relatively
modest scale of operations, thin profitability margins, moderate
solvency position and working capital intensive nature of
operations. The ratings, further, remain constrained on account
of the susceptibility of the company's profitability to
fluctuations in the raw material prices and foreign exchange
rates.
The ratings, however, continue to draw strength from the long
standing experience of the promoters in the diversified line of
business along with stabilization of its operations. SAPL's
ability to increase its scale of operations while improving
profitability in light of the volatile raw material prices and
foreign exchange rate along with efficient management of working
capital shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Thin profitability margin
Profitability margins of the company stood thin in FY16 (refers
to the period April 1 to March 31), on account of trading nature
of operations coupled with its presence in the highly fragmented
and competitive industry as well as vulnerability of its margin
due to volatility in raw material prices and foreign exchange
rate.
Moderate solvency position
Its capital structure stood moderately leveraged as on March 31,
2016, on account of lower utilization of its working capital bank
borrowings as on balance sheet coupled with high net worth level
pertaining to infusion of capital by the promoters along with
accretion of profit to reserve. The debt coverage indicators of
the company stood moderate with total debt to GCA of 6.29 times
as on March 31, 2016 along with interest coverage at 1.72 times
during FY16. Working capital intensive nature of operations The
business of the company is working capital intensive in nature
with net working capital forming 85% of the total capital
employed as on March 31, 2016. Furthermore, the liquidity ratios
of the company stood moderate with current ratio and quick ratio
at 1.15 times and 1.08 times respectively as on March 31, 2016
along with moderate average utilization of its working capital
limit for the last 12 months ended January, 2017.
Key Rating Strengths
Stabilization of operations
SAPL commenced its commercial operations from September, 2015 and
within its relatively short track of operations the company has
successfully stabilised the operations and has been able to
establish clientele base for its products in the market. Within
six months of operations of FY16, SAPL has achieved TOI of
INR19.24 crore. Further, as per 10MFY17 result, it has registered
TOI of around INR29.99 crore.
Udaipur-based (Rajasthan) SAPL was incorporated in 2012 by
'Motawat family' along with Mr. Ashok Agarwal. SAPL commenced its
commercial operation from September, 2015 onwards and is
primarily engaged in trading of Iron & Steel, Aluminium scrap
Polyester Yarn and PET bottles. SAPL mainly caters to the
domestics market with sales concentrated predominantly in
Rajasthan, Gujarat and Delhi to various processing and end user
manufacturing units pertaining to industry. The company procures
iron and steel mainly form dealers located in Jaipur as well as
directly through SAIL (Steel Authority of India), aluminium scrap
from Gulf countries mainly Dubai, Kuwait and Saudi Arab while it
procures polyester from Del Cadre Agents of Reliance Industries
Limited and PET bottles from all over Rajasthan. Furthermore,
'Motawat family' have promoted other group concerns namely "Shubh
Mangal Marbles and Granite Private Limited, Shubh Builders and
Developers and Shubh Grah Metals Private Limited having interest
in mining and processing of marbles, trading as well as real
estate industry.
SHUBH GRAH: CARE Reaffirms 'B' Rating on INR8cr Loan
----------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shubh Grah Metals Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 8.00 CARE B; Stable/CARE A4
term Bank Reaffirmed
Facilities
The ratings assigned to the bank facilities of SMPL continue to
remain constrained on account of its weak financial profile
marked by fluctuating scale of operations and profitability
during last three financial years ended FY16 (refers to the
period April 1 to March 31), highly leveraged capital structure,
weak debt coverage indicators and working capital intensive
nature of operations. The ratings, further, remain constrained on
account of the susceptibility of the company's profitability to
fluctuations in the raw material prices and foreign exchange
rates along with its presence in the highly competitive and
fragmented industry.
The ratings, however, continue to draw strength from the long-
standing experience of the promoters in in the diversified line
of business.
SMPL's ability to increase its scale of operations while
improving/maintaining profitability in light of the volatile raw
material prices and foreign exchange rate 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
Key Rating Weakness
Fluctuating total operating income (TOI) and profitability
margins The scale of operations of SMPL as indicated by TOI has
shown an erratic trend over the three financial years ended FY16.
TOI declined in FY15 vis-a-vis FY14; however the same registered
growth during FY16, attributed to higher trading activity carried
out by the company backed from higher demand from its established
clientele along with expand of its customer base.
Furthermore, the profitability of the company has remained
volatile during the last three years (FY14-16) owing to adverse
movement in raw material prices. During FY16, PBILDT margin of
the company declined on the back of higher cost of traded goods.
In line with PBILDT margin, PAT margin of the company also
decreased, although lower in quantum than PBILDT margin mainly on
account of lower proportionate interest expenses.
Weak solvency position
Its capital structure continued to remain highly leveraged and
deteriorated significantly as on March 31, 2016; on the back of
higher total debt level pertaining to higher utilization of
working capital bank borrowings as on balance sheet date along
with higher unsecured loan, The debt coverage indicators of the
company remained weak with total debt to GCA of 54.71 times as on
March 31, 2016, along with moderate interest coverage at 1.16
times during FY16.
Weak liquidity profile
The business of the company is working capital intensive in
nature with net working capital forming 99% of the total capital
employed as on March 31, 2016. Furthermore, the average working
capital utilization also stood high with almost full utilization
during last 12 months ended January 2017. The liquidity ratios of
the company stood moderate along with elongated operating cycle
at 89 days in FY16.
Key Rating Strengths
Experienced promoters in in the diversified line of business
The promoters of the company have wide experience of more than a
decade in diversified line of business activities. 'Motawat
family' have promoted other group concerns namely Shubh Mangal
Marbles and Granite Private Limited, Shubh Builders and
Developers and Shubh Aluminum Private Limited having interest in
mining and processing of marbles, trading as well as real estate
industry.
Udaipur-based (Rajasthan) SMPL, incorporated in October 2012, was
promoted by Mr. Babulal Motawat, Mr. Rohit Motawat and Mr. Pankaj
Kothari. SMPL was set up to primarily engage in the trading of
aluminium scrap and commenced its commercial operations from
December 2012 onwards. The company imports aluminium scrap from
Gulf countries mainly Dubai, Kuwait and Saudi Arab and sells it
all over India with sales concentrated predominantly in Gujarat,
Maharashtra, Delhi and Rajasthan. It sells scrap directly to end
users all over India. Furthermore, Motawat family' have promoted
other group concerns, namely, "Shubh Mangal Marbles and Granite
Private Limited, Shubh Builders and Developers and Shubh Aluminum
Private Limited having interest in mining and processing of
marbles, trading as well as real estate industry.
SIDDHESHWARI PAPER: CRISIL Ups Rating on INR4.95MM Loan to B+
-------------------------------------------------------------
CRISIL Ratings has upgraded the ratings on the long term bank
facilities of Siddheshwari Paper Mill (SPM) to 'CRISIL B+/Stable'
from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term 2.05 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
Term Loan 4.95 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects CRISIL's belief that the financial risk
profile is expected to improve marked by improved gearing and
debt protection metrics over the medium term. The improvement is
on account of ramp up of scale of operations along healthy
profitability leading to improved accruals. Over the medium term,
the gearing of the firm is expected to improve and be less than 2
times vs. 3.4 times in 2015-16. Similarly, the interest coverage
and net cash accruals to total debt (NCATD) ratio are expected to
improve to 3 to 5 times and 0.3 to 0.4 times respectively over
the medium term vs. 1.3 times and 0.03 times respectively in
2015-16.
The rating continues to reflect modest scale of operations in the
highly competitive industrial paper industry, and its working
capital intensive operations.These rating weaknesses are
partially offset by the SPM management's extensive experience in
the paper industry.
Analytical Approach
The unsecured loans from promoters are continued to be treated as
neither debt nor equity as they are subordinated from other bank
facilities and carry lower than market rate of interest.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the highly competitive industrial
paper industry: The Indian paper industry is highly fragmented
with more than 500 players having uneconomical capacities. SPM's
modest scale of operations in a highly competitive and fragmented
industry will limit the firm's pricing power and render it
susceptible to changes in raw material prices.
* Working capital intensive operations: SPM's operations are
expected to be working capital intensive, marked by gross current
assets of 210 to 215 days on account of large debtors and
inventory. CRISIL believes that SPM will depend on bank borrowing
for funding working capital requirements and effective working
capital management will be a rating sensitivity factor for SPM.
Strength
* Extensive experience in the paper industry: All the partners in
SPM have experience of over 10 years in various fields. CRISIL
believes that SPM will benefit from the promoters' understanding
of local market dynamics, and leverage their technical expertise
to stabilise and ramp up operations.
Outlook: Stable
CRISIL believes that SPM will benefit over the medium term from
its management's extensive industry experience. The outlook may
be revised to 'Positive' if SPM stabilises its operations on
time, leading to large cash accruals, or improves its working
capital cycle. Conversely, the outlook may be revised to
'Negative' if the firm's accruals are low because of reduced
order flow or profitability, or if the firm's financial risk
profile weakens because of stretch in working capital cycle or
large debt-funded capital expenditure.
SPM, set up in 2013, will manufacture kraft paper. Its production
facility is in Palanpur (Gujarat) and has capacity of 9036 tonnes
per annum. SPM's commercial operations began from April 2015.
SPM reported a net loss of INR70 lakhs on sales of INR5 Cr. for
2015-16 (refers to financial year, April 1 to March 31), which
was its first year of operations.
SIKKO INDUSTRIES: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sikko Industries
Limited a Long-Term Issuer Rating of 'IND B+'. The Outlook is
Stable. The instrument-wise rating actions are:
-- INR70 mil. Fund-based limit assigned with
'IND B+/Stable/IND A4' rating; and
-- INR30 mil. Proposed fund-based limit* assigned with
Provisional IND B+/Stable rating
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility
by Sikko to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect small scale of operations and moderate credit
metrics. In FY16, revenue was INR201 million (FY15: INR112
million), gross interest coverage (operating EBITDA/gross
interest expense) was 2.3x (3.2x) and net leverage (total
adjusted net debt/operating EBITDA) was 4.2x (3.3x). The
deterioration in net leverage was owing to an increase in total
debt and a decline in EBITDA margin. EBITDA margin declined to
6.4% in FY16 from 13.1% in FY15 due to a substantial increase in
raw material expenses. Revenue growth was driven by a rise in the
number of orders executed.
The ratings, however, are supported by Sikko's comfortable
liquidity position, indicated by a 64.86% utilization of fund-
based limits during the 12 months ended February 2017, and long
operational track record of over two decades.
RATING SENSITIVITIES
Negative: Deterioration in credit metrics will lead to a negative
rating action.
Positive: An improvement in the scale of operations or EBITDA
margin leading to a substantial improvement in credit metrics
will lead to a positive rating action.
COMPANY PROFILE
Sikko was founded by Mr Jayantibhai Kumbhani in 1997 as a
proprietorship firm in Ahmedabad, Gujarat. Initially, it
operated as Sikko Sprayers & Export Company and manufactured
knapsack sprayers for spraying pesticides. In 2000, it was
renamed Sikko Sprayers Private Limited. In 2009-10, it was
renamed Sikko Industries Limited.
SINGLACHERRA TEA: CARE Assigns 'B/Issuer Not Cooperating' Rating
----------------------------------------------------------------
CARE has been seeking information from Singlacherra Tea Company
Private Limited (STCPL) to monitor the rating vide email
communications/letters dated July 18, 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 STCPL's bank facilities will now be denoted as CARE B; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 11.56 CARE B; ISSUER NOT
Facilities COOPERATING; Based on
best available information
The rating takes into account its small sized tea garden lacking
economies of scale, pre and post implementation risk associated
with large brownfield project, susceptibility to vagaries of
nature and labour intensive nature of business. Moreover, the
rating continues to derive strengths by its experienced promoters
with strong management team, assured off-take arrangement and
stable outlook of the tea industry. 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 January 19, 2016, the following
were the rating strengths and weaknesses:
Key Rating Strengths:
Experienced promoters with strong management team
Mr. Prahlad Rai Chamaria, Mr. Bijay Kumar Garodia and Mr. Santosh
Kumar Bajaj, promoters of STCPL, are highly experienced in cement
and power industry, through the Barak group which has been in
operations for more than a decade. Mr. Sushil Kumar Kothari
(Director) having rich experience of about three decades in
diversified industries, looks after the day to day affairs of the
company, with adequate support from a team of experienced
professionals.
Assured off-take arrangement
STCPL has entered into an arrangement with Goombira Tea Company
Limited (an associate company engaged in the business of
cultivation and manufacturing of tea) for supplying 100% of tea
leaves output (present & after expansion).
This has resulted in assured off-take for its entire production.
Stable outlook of the tea industry
The demand for tea in India (world's second biggest producer) has
remained consistent as tea is being consumed in over 90% of the
households. Prices are expected to remain firm in CY14 year due
to strong domestic demand as well as demand from export market.
The contribution of small tea manufacturers are expected to
increase in the coming years and are projected to constitute
around 50% of the country's total tea production.
Key Rating Weaknesses:
Relatively small sized tea garden-lacking economies of scale
The scale of operations continues to be small marked by total
operating income of INR 31.83 lakh in FY15 with a networth
base of INR 117.47 lakh as on March 31, 2015.
Pre and post implementation risk associated with large brownfield
project
STCPL has been developing the available aggregate area for
cultivation at aggregate project cost of INR 1839 lakh, being
financed at a debt equity ratio of 1.69:1. The present area under
cultivation is only 336.70 hectares and the company is developing
the balance 463.3 hectares of unutilised land at its garden. The
entire available land is expected to be fit for tea cultivation
by 2019.
Susceptibility to vagaries of nature and Labour intensive nature
of business
Tea cultivation, besides being cyclical, is susceptible to
vagaries of nature. STCPL has its sole garden in Assam, the
largest tea producing state in India. However, the region
sometimes witnesses erratic weather conditions including frequent
floods in the past. Though demand for tea is expected to have a
strong growth rate, supply can vary depending on climatic
conditions in the major tea growing countries. Unlike other
commodities, tea price cycles have no linkage with the general
economic cycles, but with agro-climatic conditions. Therefore
adverse natural events have negative bearing on the productivity
of tea gardens in the region and accordingly STCPL is exposed to
the vagaries of nature.
STCPL was incorporated in April 1962 for cultivation of tea at
its tea garden at Karimganj (Assam). The aggregate area available
for cultivation is 800 hectares. STCPL has been developing the
available aggregate area for cultivation at aggregate project
cost of INR1839 lakh, being financed at a debt equity ratio of
1.69:1. The present area under cultivation is only 336.70
hectares and the company is developing the balance 463.3 hectares
of unutilised land at its garden. The entire available land is
expected to be fit for tea cultivation by 2019. Along with tea
plantation, the company also proposes to grow rubber and bamboo
plants (to derive the benefits of rubber-tea intercropping) in
the proposed cultivable land within the tea estate.
Currently, STCPL is a part of Barak group, having interests in
cement, power and tea industries, promoted by Mr. Prahlad Rai
Chamaria, Mr. Bijay Kumar Garodia and Mr. Santosh Kumar Bajaj.
During FY15 (refers to the period April 1, 2014 to March 31,
2015), STCPL reported a total operating income of INR31.83
crore (as against INR27.32 crore in FY14) and a loss of INR41.25
crore (as against loss of INR2.32 crore in FY14).
SKY ALLOYS: Ind-Ra Migrates 'D' Rating to Non-Cooperating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sky Alloys &
Power Private Limited's (SAPPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR500 mil. Fund-based working capital limit with
'D' rating migrated to Non-Cooperating Category;
-- INR1.161 bil. Long-term loans with 'D' rating migrated to
Non-Cooperating Category; and
-- INR100 mil. Non-fund-based working capital limit with 'D'
rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 29, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2009, SAPPL manufactures sponge iron, ingots and
ferro alloys, and generates power. Its plant is located in
Temtema village, Raigarh, Chhattisgarh. The site has an
installed capacity of 60,000TPA of sponge iron, 16MW of power
generation, 3*10 MT induction furnace and 1*9MVA ferro alloys.
SNEHA CONSTRUCTIONS: CRISIL Reaffirms 'B' Rating on INR12MM Loan
----------------------------------------------------------------
CRISIL's ratings on the bank facilities of Sneha Constructions
continues to reflect Sneha's modest scale of operations in the
intensely competitive civil construction segment, and its below-
average financial risk profile, marked by a small net worth.
These rating weaknesses are partially offset by the extensive
industry experience of the firm's promoter.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL A4 (Reaffirmed)
Cash Credit 12 CRISIL B/Stable (Reaffirmed)
Proposed Working
Capital Facility 0.5 CRISIL B/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive civil
construction industry: Sneha's scale of operations is modest as
reflected in the revenue of INR 7.8 crores in fiscal 2016. The
civil construction sector is highly fragmented, marked by the
presence of several large and small players. Additionally, the
firm participates in tender based projects and it faces intense
competition from local and small unorganized players competing
with it for tenders.
* Below-average financial risk profile: Financial risk profile is
below-average due to small networth estimated at INR 4.1 crores
as on March 31, 2016. The small networth restricts Sneha's
ability to ramp up its operations.
Strengths
* Extensive experience of firm's promoter: Sneha's promoter, Mr.
K Bhaskaran, has more than two decades of experience in the civil
construction sector and over the years has executed construction
of several roads and bridges contract for the Kerala Public Works
Department.
Outlook: Stable
CRISIL believes that Sneha will continue to benefit over the
medium term from its proprietor's extensive industry experience.
The outlook may be revised to 'Positive' if the firm
significantly scales up its operations and improves operating
profitability and working capital management, resulting in a
better financial risk profile. Conversely, the outlook may be
revised to 'Negative' if Sneha's accruals decline or working
capital management weakens, leading to deterioration in its
financial risk profile, especially its liquidity.
Sneha is a Kerala-based civil contractor. The firm's operations
are managed by its promoter, Mr. K Bhaskaran.
Sneha reported Profit after tax (PAT) of INR 0.5 crore on
revenues of INR 7.8 crores in fiscal 2016, as against INR 0.6
crore and INR 7.4 crores, respectively in fiscal 2015.
SPONGE SALES: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Sponge Sales
India Private Limited's (SSIPL) Long-Term Issuer Rating at
'IND BB'. The Outlook is Stable. Instrument-wise rating actions
are:
-- INR100 mil. Fund-based limits affirmed with
'IND BB/Stable/ IND A4+' rating; and
-- INR260 mil. (Increased from INR150) affirmed with 'IND A4+'
rating
KEY RATING DRIVERS
The affirmation reflects SSIPL's continued weak credit metrics
with low EBITDA margin of 1.87% in FY16 (FY15: 2.42%) as inherent
in the trading business, net financial leverage (total adjusted
net debt/operating EBITDAR) of 4.23x (1.22x) and interest
coverage (operating EBITDA/gross interest expenses) of 1.27x
(1.24x). The deterioration in financial leverage was on account
of an increase in external borrowings and a decrease in cash and
bank balance.
The company's liquidity position continued to remain moderate
with 94.58% average utilization of fund-based limits during the
12 months ended February 2017.
However, the ratings continue to be supported by SSIPL's moderate
scale of operations with revenue of INR1,748.8 million in FY16
(FY15: INR1,337.1 million) and comfortable net working capital
cycle of 10 days (negative 20 days). The ratings also continue
to draw support from the promoters' about three-decade-long
experience in the sponge iron business.
RATING SENSITIVITIES
Negative: A decline in operating profitability, resulting in
deterioration in the credit metrics will be negative for the
ratings.
Positive: An increase in operating profitability, resulting in an
improvement in the credit metrics will be positive for the
ratings.
COMPANY PROFILE
Incorporated in 1994, SSIPL supplies raw materials to induction
furnace and arc furnace facilities in north India and major
sponge iron producers across the country. The company's head
office is located in New Delhi and manufacturing facility in
Mandi Gobindgarh, Punjab.
SRI BHASKAR: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sri Bhaskar
Contractors Company's (SBCC) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR40 mil. Fund based working capital limit with 'B+'
rating migrated to Non-Cooperating Category; and
-- INR105 mil. Non fund based working capital limits with
'IND A4' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 28, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SBCC was established in 1996. The firm is a civil contractor and
executes work orders in Andhra Pradesh and Telangana. Mostly,
the firm executes work orders issued by public works department.
SRI SHYAM: CARE Lowers Rating on INR5.0cr Long Term Loan to B
-------------------------------------------------------------
CARE Ratings has been seeking information from Sri Shyam Millers
Private Limited (SSM) to monitor the rating vide e-mail
communications/letters dated July 19, 2016, February 17, 2017,
February 23, 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 Sri Shyam Millers Private Limited.'s bank facilities will now
be denoted as CARE B; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.00 CARE B; ISSUER NOT
COOPERATING; REVISED from
CARE BB- BASED ON BEST
AVAILABLE INFORMATION
Short-term Bank
Facilities 0.05 CARE A4 ISSUER NOT
COOPERATING; BASED ON BEST
AVAILABLE INFORMATION
The ratings have been revised on account of weakening of
financial risk profile marked by decline in turnover & net loss
incurred during FY16 (refers to the period April 1 to March 31),
deterioration in the capital structure & operating cycle and weak
debt service coverage indicators. Furthermore, the ratings take
into account SSM's small scale of operations in the highly
fragmented and competitive agro industry, volatility in profit
margins subject to government regulations, seasonal nature of
availability of paddy resulting in high working capital intensity
and exposure to vagaries of nature.
The aforesaid constraints are partially offset by the experience
of the promoters in the agro industry and its proximity to major
paddy-growing areas enabling easy availability & logistic
advantage.
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
Key Rating Weaknesses
Weakening of financial risk profile marked by decline in turnover
& net loss incurred during FY16, deterioration in the capital
structure & operating cycle and weak debt service coverage
indicators.
During FY16, the company achieved total operating income of
INR2.89 crore as compared with INR14.41 crore in FY15 with a y-o-
y decline of about 79.94%. However, the PBILDT margins exhibited
an increase by about 1323 bps during FY16 over FY15. Furthermore,
the company incurred net loss of INR0.04 crore during FY16 as
against net profit of INR0.08 crore during FY15. However, SSM
did not incur any cash loss during FY16 although the GCA declined
from INR 0.37 crore during FY15 to INR0.20 crore during FY16. The
company does not have any long-term debt and the overall gearing
ratio of the company deteriorated as on March 31, 2016, as
against
March 31, 2015, and remained high at 1.65x. The interest coverage
ratio albeit deteriorated from 2.38x during FY15 to 2.10x during
FY16, the same remained adequate.
Furthermore, the total debt to GCA also deteriorated from 9.65x
during FY15 to 24.80x during FY16. The operating cycle of the
company also deteriorated to 478 days in FY16 from 72 days in
FY15 marked by deterioration in average collection period from 35
days in FY15 to 247 days in FY16 and average inventory period
from 41 days in FY15 to 260 days in FY16. The average utilisation
of fund-based working capital facilities remained high at around
80% during the last 12 months ended January 31, 2017.
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 2016-17 to
INR1470/quintal from INR1410/quintal in crop year 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.
Fragmented and competitive nature of industry: SSM's plant is
located in Purulia district, West Bengal which is one of the
hubs for paddy/rice cultivating region. 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.
Seasonal nature of availability of paddy resulting in high
working capital intensity and exposure to vagaries of nature:
Rice milling is a working capital intensive business, as the rice
millers have to stock paddy by the end of each season till the
next season since the price and quality of paddy is better during
the harvesting season. Furthermore, while paddy is sourced
generally on cash payment, the millers are required to extend
credit period to their customers. Average utilisation of working
capital limit remained high at around 98% during the last twelve
month ending January 31, 2017.
Key Rating Strengths
Experienced promoters: The company is being promoted by Mr. Manoj
Kumar Fogla and Mr. Manish Kumar Agarwal based out of Purulia,
West Bengal. Mr. Manoj Kumar Fogla (aged 46 years) having an
experience of around two decade in the agro-commodity business
through family owned rice milling unit , looks after the overall
affairs of the entity. Mr. Fogla is also the Vice-President of
Rice Mill Association, West Bengal. He is adequately supported by
Mr. Manish Kumar Agarwal (aged 44 years, graduate) having an
average experience of 13 years in a similar line of business.
Proximity to raw material sources: SSM's plant is located in
Purulia district, West Bengal which is in the midst of paddy
growing areas of the state. The entire raw material requirement
is met locally from the farmers (or local agents) which helps the
company to save substantial amount of transportation cost and
also procure raw materials at effective price.
Sri Shyam Millers Private Limited (SSM), incorporated in February
2005 by Mr. Manoj Kumar Fogla and Mr. Manish Kumar Agarwal based
out of Purulia, West Bengal is engaged in the processing and
milling of rice with an installed capacity of 25,920 Metric Tonne
Per Annum (MTPA). The milling unit of the company is located at
Purulia, West Bengal.
During FY16, the company has reported total income of INR2.89
crore with a net loss of INR0.04 crore.
SUMERU PROCESSORS: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sumeru
Processors Private Limited's (SPPL) Long-Term Issuer Rating to
non-cooperating category. The issuer did not participate in the
surveillance exercise, despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The
rating will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the
agency's website. Instrument-wise rating actions are:
-- INR100 mil. Fund-based limit with 'BB' rating migrated to
Non-Cooperating Category;
-- INR50 mil. Proposed fund-based limit with provisional 'BB'
rating migrated to Non-Cooperating Category;
-- INR50 mil. Proposed non-fund-based limit with provisional
'IND A4' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 10, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SPPL was incorporated in 1986 by Mr. Dhiren Navlakha and
Mr. Farhad Suri and their families. The company commenced
operations as a trader for lime and other mineral products, but
is now engaged in product distribution for Nestle India and ITC,
as well as managing Nestle India's vending work in Delhi, NCR.
SUNRISE TIMPLY: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sunrise Timply
Company Private Limited's (STCPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
surveillance exercise despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The
ratings will now appear as 'IND BB+(ISSUER NOT COOPERATING)' on
the agency's website. The instrument-wise rating actions are:
-- INR60 mil. Fund-based working capital limit with 'BB+'
rating migrated to Non-Cooperating Category; and
-- INR208.10 mil. Non-fund-based working capital loan with
'IND A4+' rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 4, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
STCPL was incorporated in 2000 by Late Gopal Bagla. The family
has been in the timber trading business for the last five decades
under its proprietorship firms Sunrise Timber Company and R.K
Timber Company. The company imports round timber logs from
Malaysia, Myanmar, Ivory Coast, Nigeria, New Zealand and
Indonesia. The plywood is procured from the domestic market.
The company then sells its products to wholesalers, retailers and
saw mills in the domestic market. STCPL's warehousing facility
is located in Khidderpore.
Ramesh Kumar Bagla is the managing director and chairman of the
company and Mr Gaurav Bagla is the executive director.
SURAJ VALUE: CARE Lowers Rating on INR13.16cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Suraj Value Infrastructures Private Limited (SVIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 13.16 CARE B; Stable Revised
Facilities from CARE B+
Detailed Rationale
The revision in the rating assigned to the bank facilities of
SVIPL takes into account the erosion of net-worth due to
continuous losses and negative gross cash accruals registered
over the last two years ended FY16 (refers to the period April 1
to March 31), despite growth in the total operating income. The
rating further remains constrained on account of the intense
competition due to fragmented nature of the steel industry along
with working capital intensive nature of business operations.
The rating, however, continues to derive strength from the
extensive industry experience of the promoters in steel tubes
manufacturing business, established customer base and operational
synergies associated with group concerns having an established
presence in the trading of steel pipes.
The ability of the company to further increase its scale of
operations, efficiently manage its working capital requirements
and strengthen the capital structure and debt coverage indicators
are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Extensive experience of the promoters the steel industry: SVIPL
have qualified and experienced directors with an average
experience of more than 15 years in the steel industry. The key
promoter of the company, Mr. Ramesh Parsewar, has an experience
of more than two decades. The group has presence in the industry
since 1947. Synergies with group concern, with established
presence in trading of steel pipes: SVIPL belongs to the Nanded-
based (Maharashtra) Suraj group which is engaged in the business
of trading of steel pipes since three decades and benefits from
the established and readily available marketing channel and the
group's established customer and supplier base.
Key Rating Weaknesses
Growth in scale of operations albeit small scale: The company
registered a y-o-y growth of 38.52% to INR89.40 crore (as against
a y-o-y growth of 108% to INR64.54 crore in FY15), supported by
an increase in capacity utilization during the year.
Weak capital structure and debt coverage indicators: The losses
in the last three years resulted in a complete erosion of net
worth as on March 31, 2016, which in-turn resulted in a weak
capital structure and debt coverage indicators.
Cyclicality inherent in the steel industry: The steel industry is
sensitive to the shifting business cycles, including changes in
the general economy, interest rates and seasonal changes in the
demand and supply conditions in the market.
Presence in the highly competitive and fragmented industry: The
Steel industry in India is characterized by a high degree
of competition, resulting from high fragmentation with a presence
of large number of unorganized players.
SVIPL is a part of the Nanded-based (Maharashtra) Suraj group.
The company was previously known as 'Suraj Tubes India Private
Limited' and later on April 23, 2015, was renamed as 'Suraj Value
Infrastructures Private Limited'. The group has presence in
various business segments such as steel trading, manufacturing
and trading of fertilizers and polymers, etc. SVIPL was
incorporated in the year 2011 to undertake manufacturing of
various types of steel tubes like Hot-Rolled (HR), round tubes,
galvanised- plain (GP) tubes, HR square tubes, Cold- Rolled (CR)
tubes, CR round tubes, C shape purling, Z shape purling. The
company has installed capacity of 36,000 MTPA and started with
the commercial operations in May 2013. The products manufactured
by SVIPL find application in the construction segment, railways
and other retail market.
During FY16, the company reported a total operating income of
INR89.40 crore (as against INR64.54 crore in FY15) and a
loss of INR2.80 crore (as against negative 2.60 crore in FY15).
SURGICOIN MEDEQUIP: CARE Reaffirms 'D' Rating on INR5cr LT Loan
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Surgicoin Medequip Private Limited (SMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5 CARE D Reaffirmed
Short-term Bank
Facilities 2 CARE D Reaffirmed
The rating reaffirmed in SMPL takes into account delays in the
ongoing debt servicing due to stressed liquidity position.
Detailed description of the key rating drivers
There has been a delay in payments by the customers, mainly
government hospitals, due to procedural delays. The
nonrealisation of debtors has resulted in liquidity stretch and
reflected in delays in debt servicing.
Analytical approach: Standalone
Sonipat-based (Haryana) Surgicoin Medequip Private Limited (SMPL)
was incorporated January 27, 1986 under the name of Super Cardiac
Breaths Private Limited by Mr. Naresh Grover. Later on February
02 2006, the name of the entity was changed to Surgicoin Medequip
Private Limited. The company is currently managed by Mr. Naresh
Grover. The firm is engaged in manufacturing and trading of
medical equipment like operation Theatre Equipment, Respiratory
Apparatus, Electro Medical Equipment, Patients ward Equipment and
other medical products. The company has its manufacturing
facility located at Rai, Sonipat and it is an ISO 9001:2000 and
ISO 13485:2003 certified. SMPL supplies equipment and other
products to government hospitals on a PAN India basis.
SYNERGY AGRI: Ind-Ra Migrates 'D' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Synergy Agri
Products Private Limited's Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
surveillance exercise despite continuous requests and follow ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The
ratings will now appear as 'IND D(ISSUER NOT COOPERATING)' on the
agency's website. Instrument-wise rating actions are:
-- INR22.5 mil. Fund-based limit with 'D' rating migrated to
Non-Cooperating Category; and
-- INR78.79 mil. Term loan with 'D' rating migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 13, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SAPPL, situated in Bargoria village, Durgapur, West Bengal,
started its operations in 2006. The company is engaged in plant
tissue culture. It is managed by Francis Antony and Ritu
Francis.
SITARAM GEMS: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sitaram Gems
(SG) a Long-Term Issuer Rating of 'IND BB'. The Outlook is
Stable. The instrument-wise rating actions are:
-- INR250 mil. Fund-based limit assigned with 'IND BB/Stable'
rating;
-- INR9.4 mil. Term loan assigned with 'IND BB/Stable' rating;
and
-- INR20 mil. Non-fund-based limit assigned with 'IND A4+'
rating
KEY RATING DRIVERS
The ratings reflect SG's modest scale of operations and moderate
credit profile. In FY16, revenue was INR2,901 million (FY15:
INR2,399 million) operating EBITDA margin was about 2.1% (1.5%),
interest coverage (Operating EBITDA/gross interest expense) was
3.9x (4.5x) and net financial leverage (Total adjusted net
debt/operating EBITDAR) was 4.7x.(3.1x). Revenue growth in FY16
was driven by a higher number of orders received. Increased debt
led to the deterioration in net financial leverage in FY16. The
deterioration in the interest coverage in FY16 was mainly due to
increased interest expenses.
The ratings also reflect the partnership nature of the business
and the volatility in diamond prices and exchange rates, as the
majority of revenue is derived from exports.
The ratings, however, benefit from the partners' experience of
close to three decades in the diamond business.
RATING SENSITIVITIES
Negative: Any sustained deterioration in credit metrics will be
negative for the ratings.
Positive: An improvement in operating EBITDA margin leading to an
overall improvement in credit metrics on a sustained basis will
be positive for the ratings.
COMPANY PROFILE
Incorporated in 2001, SG is engaged in diamond manufacturing, and
rough diamond cutting and polishing. The firm exports to Hong
Kong and Bangkok. Its domestic markets are Mumbai, Surat and
Kolkata. It is managed by Mr Manjibhai Kevadia.
SUPREME HOUSING: Ind-Ra Migrates 'D' Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Supreme Housing
and Hospitality Private Limited's (SHHL) Long-Term Issuer Rating
to the non-cooperating category. The issuer did not participate
in the rating exercise despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The
rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR3.9 bil. Long term loan with 'D' rating migrated to Non-
Cooperating Category;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 27, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SHHL was incorporated as a private limited company on Nov. 20,
2006. The company is engaged in real estate development. The
company is in the process of developing a commercial and
residential complex in Mumbai (Supreme City) and has acquired the
development rights for the Project. The commercial complex
comprises of and IT Park and the residential complex of villas
and service apartments. SHHL has no ongoing projects other than
Supreme City.
TAPI PRESTRESSED: CRISIL Assigns 'D' Rating to INR23MM Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL D/CRISIL D' ratings to
the bank facilities of Tapi Prestressed Products Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 23 CRISIL D
Bank Guarantee 20 CRISIL D
Cash Credit 20 CRISIL D
The ratings reflect delays in meeting interest obligation on cash
credit limit due to weak liquidity.
The company also has a modest scale of operations and large
working capital requirement. However, it benefits from a healthy
gearing and extensive experience of promoter in the construction
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of INR34.73 crore in
fiscal 2016 (Rs 45.37 crore estimated for fiscal 2017), scale
remains small.
* Large working capital requirement: Gross current assets were
1439 days as on March 31, 2016, due to stretched receivables of
536 days and inventory of 891 days.
Strengths
* Extensive experience of promoter: The promoter has been in the
infrastructure development segment for over three decades. Tapi
is a registered special 'Class 1' contractor with different
states.
* Healthy gearing: Gearing was 0.84 time supported by healthy
networth of INR 90.97 crs as on March 31, 2016, and will remain
steady over the medium term.
Set up as a closely held public limited company in 1986 by Mr. M
K Kotecha, Tapi constructs and maintains bridges, dams, and
buildings; and undertakes irrigation works for various government
and semi-government entities. The company also manufactures pre-
stressed concrete pipes at its plant in Bhusawal, Maharashtra,
which has installed capacity of 50,000 pipes annually.
In fiscal 2016, profit after tax was INR 0.43 crore on net sales
of INR 34.73 crore, against INR0.62 crore and INR 85.13 crore in
fiscal 2015.
TATA CHEMICALS: Fitch Affirms BB+ Long-Term IDR; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Tata Chemicals Limited's (TCL) Long-
Term Issuer Default Rating (IDR) at 'BB+'. The Outlook is Stable.
TCL, in which Tata Sons Limited (TSOL) and other companies in the
Tata Group hold an aggregate stake of 30.8%, is the world's
second-largest manufacturer of soda ash by output and a leading
manufacturer of fertilisers and branded salt in India.
TCL's rating reflects its small size relative to global peers,
strong market position in key businesses and high leverage. The
company's financial profile has been improving as it has reduced
exposure to working-capital intensive products in its complex
fertilisers business. In addition, the planned sale of its urea
business will reduce the company's exposure to the highly
regulated, low margin and working-capital intensive business.
The Stable Outlook is underpinned by steady demand for soda ash
globally, which Fitch expects to mitigate the effect of new
capacity in Turkey, and the expiry of anti-dumping duties in
India in financial year ending 31 March 2018 (FY18). The Outlook
also captures Fitch's expectation that leverage will improve to a
level commensurate with TCL's rating.
KEY RATING DRIVERS
Improving Working Capital Cycle: TCL has reduced its working-
capital intensity by focusing on existing products with short
cash cycles in its complex fertiliser business. TCL's
consolidated net working capital (defined as receivables plus
inventory minus payables) reduced to INR25.6 billion at Sept. 30,
2016 from INR31.1 billion a year earlier, driven by a 45%
reduction in inventory levels. In Fitch's view, TCL's strategy to
focus on short-cycle products in its complex fertiliser business,
will add stability to operating cash flows.
The proposed sale of the urea business, if completed, will
further reduce its working-capital investments in FY18 by around
INR8 billion-INR9 billion, Fitch estimates.
Urea Sale Positive: Aside from reducing TCL's working capital
requirements, Fitch believes that the proposed sale of the urea
business to Yara International ASA will also improve TCL's EBITDA
margin to more than 15% from 12.2% in FY16. Urea pricing is
volatile and the government controls retail prices of the product
via subsidies to producers because it is a key fertiliser in the
Indian agriculture sector. The sale will reduce TCL's dependence
on government subsidy receivables, which will reduce volatility
in its operating cash flows. These positives outweigh the
marginal reduction in business diversification, as urea accounted
for about 10% of consolidated EBITDA in 9MFY17.
TCL appears to be on track to complete the sale to Yara, for an
estimated gross cash consideration of INR26.7 billion (before
deducting capital gain taxes and working capital adjustments), by
August 2017. The proposal has been cleared by the Competition
Commission of India, and the Securities and Exchange Board of
India, and is currently pending the approval of the National
Company Law Tribunal.
Stable Soda Ash Business: Fitch expects TCL's margins from soda
ash sales in India and the US to narrow over the near term due to
the expiry of soda ash anti-dumping duties in India and increased
competition from nearly 3 million tonnes of new capacity in
Turkey. Nonetheless, Fitch expects TCL's soda ash business to
continue to perform well, supported by balanced demand and supply
globally. Soda ash and related products fall under TCL's
inorganic chemicals segment, which accounted for around 75% of
its consolidated EBITDA in 9MFY17.
Improving Financial Profile: Fitch expects TCL's net leverage to
reduce to 3.1x by FYE17, from 4.1x at FYE16, mainly due to the
reduction in working capital in the complex fertiliser business.
Fitch estimates TCL's free cash flow to remain positive in the
next two years, supported by stable profitability, a shorter
working-capital cycle, and assuming there is no major
expansionary capex. Fitch has not factored in any material debt
reduction using the proceeds from the sale of the urea business,
as the TCL board has not yet decided on the use of the proceeds.
Strong Market Position: TCL is the second-largest soda ash
producer globally by output, and one of the largest in India.
TCL's access to trona mines at its US and Kenyan operations
support its leading market position. The company's credit profile
also benefits from its position as one of the leading players in
branded salt and fertiliser products in India. The rating factors
in the integrated nature of TCL's Indian operations and a steady
growth outlook.
Diversified Business Profile: TCL is well-diversified
geographically, deriving around 60% of its revenue from the
growing markets of India and about 35% from developed markets in
US and Europe. TCL's portfolio spans the value chain in soda ash
and related products. The diversification helps TCL tide over
swings in sectoral demand caused by factors such as seasonality,
unpredictable weather patterns and volatile crop prices.
Linkages to the Tata Group: Fitch believes that the linkage
between TCL and the Tata Group is moderate. However no uplift is
currently applied to TCL's IDR. Fitch will evaluate the
applicability of a one-notch uplift should TCL's IDR be
downgraded. Any uplift for support at that point will be a
function of several factors, including TCL's strategic importance
to TSOL and TSOL's credit profile.
DERIVATION SUMMARY
TCL enjoys strong market positioning in soda ash, but its
profitability remains lower compared with that of peers like
Solvay SA (Solvay, BBB/Stable), The Mosaic Company (Mosaic, BBB-
/Stable) and CF Industries, Inc (CF, BB+/Stable), given Solvay's
focus on specialty chemicals and the strong cost competitiveness
of Mosaic and CF. Further, TCL's credit metrics are weaker than
that of Solvay and Mosaic, resulting in a lower rating. TCL's
rating is on a par with CF as TCL's more diversified business
profile and relatively stable industry conditions counterbalance
CF's larger size and higher margins.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Moderate reduction in India soda ash margins in FY18 on
account of expiry of anti-dumping duties; limited impact from
FY18 of new soda ash capacities in Turkey on US operations.
- Disposal of urea business to be completed in August 2017. No
debt reduction from sale proceeds.
- Working capital to reduce by INR1 billion in FY18 on top of
INR6 billion reduction already achieved so far in FY17.
- Capex intensity, measured by capex/revenues, of around 6% in
FY18 and FY19 and then about 5% in FY20
- UK profitability to remain stable. EBITDA margins in Kenya to
stabilise in FY18 following quality remediation measures in
FY17.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Net leverage (net adjusted debt/operating EBITDAR) sustained
below 2.0x
- TCL generating positive free cash flows on a sustained basis
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Net leverage exceeding 3.5x on a sustained basis
- EBITDA margin deteriorating to below 12% on a sustained basis
- TCL trending towards negative free cash flows on a sustained
basis
LIQUIDITY
Adequate Liquidity: TCL has sizeable debt maturities in FY18
(INR19.3 billion as of March 31, 2016), but these will be covered
by its large cash balance (nearly INR22 billion at end-2016) and
cash flows as Fitch expects TCL to generate positive FCF in FY17
and FY18. TCL also had undrawn committed credit facilities of
about INR9.7 billion as of Dec. 31, 2016. Fitch has not factored
in the proceeds from the sale of the urea business in the
liquidity analysis, given that there is no clear guidance on the
use of proceeds.
TEZALPATTY TEA: CARE Assigns 'B+/Issuer Not Cooperating' Rating
---------------------------------------------------------------
CARE Ratings has been seeking information from Tezalpatty Tea
Private Limited (TTPL) to monitor the ratings vide e-mail
communications/letters dated July 21, 2016, February 16, 2017,
February 28, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company 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 TTPL's bank facilities will now be denoted as CARE B+; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.35 CARE B+; Issuer not
Facilities cooperating; based on best
available information
The rating takes into account small size of operations,
susceptible to vagaries of the nature, labour intensive nature of
business, volatility in tea price and high competition. Moreover,
the rating continues to derive strengths by the long &
established track record, experienced management and backward
integration for its raw material.
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 April 7, 2016, the following were
the rating strengths and weaknessess:
Key Rating Strengths:
Long & established track record
TTPL has been engaged in cultivation and sale of green leaf since
1994. Now the company has also set up its own tea manufacturing
factory in FY16 which will help TTPL to grow constantly by
increasing the quality of produced tea.
Experienced management
Mrs. Rumena Rahman, Mrs. Nilufar Rahman and Mr. Atikur Rahman are
the directors of TTPL and looks after the overall management of
the company. Mrs. Rumena Rahman have around four decades of
experience in the tea industry and are ably supported by other
directors, Mrs. Nilufar Rahman and Mr. Atikur Rahman, having
experience of more than two decades in tea industry along with
team of experienced professional who have rich experience in the
same line of business.
Backward integration for its raw material
TTPL has its own tea garden having a tea producing capacity of
about 7.50 lakhs kilograms per annum enabling the company to
produce and supply tea, as per the demand scenario. As the
production in its own garden is satisfactory, TTPL does not
depend on external raw material suppliers and resultantly the
pressure on margin due to higher raw material cost is nil.
TTPL is a relatively small player in the tea industry with total
operating income and PAT of INR3.63 crore and INR0.42 crore
respectively in FY15. Further, the total capital employed was
also modest at INR11.75 crore as on March 31, 2015. The
management is stated to have achieved total operating income of
INR7.34 crore during 11MFY16. Hence, TTPL suffers on account of
lack of economies of scale.
Susceptible to vagaries of the nature
Tea production, besides being cyclical, is susceptible to
vagaries of nature. TTPL has it's garden in Sonitpur, Assam, the
largest tea producing state in India. However, the region has
sometimes witnessed erratic weather conditions in the past.
Though demand for tea is expected to have a stable growth rate,
supply can vary depending on climatic conditions in the major tea
growing areas. Therefore adverse natural events have negative
bearing on the productivity of tea gardens in the region and
accordingly TTPL is exposed to vagaries of nature.
Labour intensive nature of business
Tea is amongst the most labour intensive of all plantation crops.
Employee cost accounted for about 70-80% of total cost of sales
in the last three years (i.e., FY13-FY15) and was major cost
component in the entire cost structure of the company. High cost
of labour has been the primary reasons for the high cost of
production. Cost of employment also includes the social welfare
cost which is mainly incurred on account of statutory provisions
like water supply, medical, primary education, etc. that are to
be provided to workers in India under the Plantation Labour Act.
In addition to these, there is significant increase in the wage
cost which is periodically revised through bilateral negotiations
with worker unions and other parties. Thus, improvement in the
productivity of labour is the most essential area to be addressed
for overall reduction in cost of production of tea. Though TTPL
has not experienced any labour problem since inception, it
remains a key factor in the smooth running of the business. Given
the past track record of TTPL, this factor should not hinder the
growth of the company.
Volatility in tea price
The prices of tea are linked to the auctioned prices, which in
turn, are linked to prices of tea in the international market.
Hence, significant price movement in the international tea market
affects TTPL's profitability margins. Further, tea prices
fluctuate widely with demand-supply imbalances arising out of
both domestic and international scenarios. Tea is perishable
product and demand is relatively price inelastic, as it caters to
all segments of the society. While demand has a strong growth
rate, supply can vary depending on climatic conditions in the
major tea growing countries. Unlike other commodities, tea price
cycles have no linkage with the general economic cycles, but with
agro-climatic conditions.
High competition
While the tea industry is an organised agro-industry, it is
highly fragmented in India with presence of many small, midsized
and large players. There are about 1000 of tea brands in India,
of which 90% of the brands are represented by regional players
while the balance of the 10% is dominated by Tata Tea, HUL, Wag
Bakri Chai, Godrej, Sapat International and others.
Tezalpatty Tea Pvt. Ltd. (TTPL) was incorporated in December 16,
1994 by Guwahati based Rahman family. Since its incorporation the
company is engaged in the business of producing green tea leaf.
Till August 2015, TTPL produced green tea leaf and sold to its
sister concern Mohijuli Tea Co. Pvt. Ltd. (rated CARE BB). The
company has recently set up its own black tea manufacturing unit
with an approximate installed capacity of 7.5 lakh kg per annum
which became operational in October 2015.
TTPL presently owns one tea estate at Sonitpur, Assam and a
manufacturing facility located adjacent to the tea estate, which
processes the leaf from the garden. The aggregate area available
for cultivation is 261.37 hectares, of which area under
cultivation is 248.37 hectares, having average yield of 2400 kgs
per hectare. The company has obtained the manufacturing license
from Tea Board in the month of September 2015. Presently the
company is selling tea in Guwahati Tea Auction Centre.
TIRUPATI BASMATI: CARE Lowers Rating on INR123.50cr Loan to D
-------------------------------------------------------------
CARE Ratings has been seeking information from Tirupati Basmati
Exports Pvt. Ltd. to monitor the rating(s) vide e-mail
communications/letters dated February 7, 2017; February 9, 2017 &
February 15, 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.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.57 CARE D; ISSUER NOT
COOPERATING; revised from
CARE BBB-; on the basis of
best available information
Short term Bank
Facilities 0.75 CARE D; ISSUER NOT
COOPERATING; revised from
CARE A3; on the basis of
best available information
Long-term/Short- 123.50 CARE D; ISSUER NOT
term Bank Facilities COOPERATING; revised from
CARE BBB-; on the basis of
best available information
The rating on Tirupati Basmati Exports Pvt. Ltd.'s bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
The ratings have been revised on account of feedback from the
banker's that the said account is under stress and there have
been delays in the interest and term loan installments servicing.
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
The ratings have been revised on account of feedback from the
banker's that the said account is under stress and there
have been delays in the interest and term loan installments
servicing.
Tirupati Basmati Exports Pvt Ltd (TBEPL) was established as a
partnership firm (under the name and style M/s Tejinder
Kumar and Brothers) in 1985 by first generation entrepreneur, Mr.
Nathi Ram Gupta in Karnal, Haryana. The firm was reconstituted as
a private limited company and was renamed to TBEPL in March 2009.
The company is engaged in milling, processing and selling of
various varieties of basmati rice. The company's manufacturing
unit is located in Karnal (Haryana) with a total installed
capacity of 24 Metric Tonnes per Hour (MTPH) as on December 31,
2015 and additional sorting capacity of 18 MTPH through its 3
sortex plants. The company also processes semi-processed rice
procured from small rice millers.
During FY16 (refers to the period April 1 to March 31), TBEPL
registered a total income of INR443.44 crore with PAT of INR5.56
crore as against a total income of INR378.82 crore with PAT of
INR4.76 crore during FY15.
TIRUPATI BASMATI: CRISIL Cuts Rating on INR52MM Loan to 'D'
-----------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Tirupati Basmati Exports Pvt Ltd (TBEPL) to 'CRISIL D/CRISIL
D' from 'CRISIL BBB-/Stable/CRISIL A3'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 43.5 CRISIL D (Downgraded from
'CRISIL BBB-/Stable')
Export Packing 52 CRISIL D (Downgraded from
Credit 'CRISIL BBB-/Stable')
Foreign Bill 17.5 CRISIL D (Downgraded from
Purchase 'CRISIL BBB-/Stable')
Foreign Exchange 5.0 CRISIL D (Downgraded from
Forward 'CRISIL A3')
Proposed Long Term 3.5 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL BBB-/Stable')
Standby Line of 10.5 CRISIL D (Downgraded from
Credit 'CRISIL BBB-/Stable')
Term Loan 8 CRISIL D (Downgraded from
'CRISIL BBB-/Stable')
The downgrade reflects recent delays in interest payment on term
debt and instances of overdrawal in the working capital bank
facilities availed by the company lasting more than 30 days. The
delays are on account of stretched liquidity as a result of
stretched payments from its customers. CRISIL notes the company's
management had concealed the information about the delays and
overdue in bank facilities. On the contrary, TBEPL's management
has misrepresented by providing undertakings confirming timely
repayments of banking facilities, which is crucial for forming a
credit opinion.
Key Rating Drivers & Detailed Description
Weakness
* Weak liquidity leading to irregularities in bank facilities
TIEIPL's liquidity has deteriorated due to delays in recovery of
receivables from overseas clients leading to its bank facilities
remaining overdue for more than 30 days.
* Large working capital requirement: TBEPL had gross current
assets of 149 days as on March 31, 2016, marked by inventory of
124 days and moderate debtors of 45 days. The incremental working
capital requirement are high as operations entail high inventory
storage.
* Modest scale of operations in competitive basmati rice
industry: With a turnover of INR443 crore in fiscal 2016, the
company is a modest player in the basmati rice industry.
Strengths
* Extensive experience of promoters: The promoters are in the
rice milling business since 1987 and, over the years, have
established strong relationships with their suppliers and
customers.
Incorporated in 2009, TBEPL is a Karnal, Haryana based company
engaged in milling, processing, and sorting of PUSA 1121 basmati
rice. The company's operations are being looked after by Mr.
Lalit Kumar and his two brothers, Mr. Vijendra Kumar and Mr.
Ravinder Kumar.
For fiscal 2016, TBEPL reported a profit after tax (PAT) of
INR5.56 crore on an operating income of INR442.8 crores as
against a PAT of INR4.76 crores on an operating income of
INR378.7 crores in fiscal 2015.
TRIGUN ENTERPRISE: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Trigun
Enterprise (TE) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable. Instrument-wise rating actions are:
-- INR40 mil. Fund-based limits assigned with 'IND B+/Stable'
rating; and
-- INR40 mil. Proposed fund-based limits* assigned with
'Provisional IND B+/Stable' rating
*The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by SE to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect TE's small scale of operations and weak
credit metrics. Revenue increased to INR290.46 million in FY16
(FY15: INR206.68 million) on account of an increase in sales
volumes. However, operating EBITDA margins declined to 1.3% in
FY16 (FY15: 2.2%) owing to an increase in overhead costs. EBITDA
interest coverage (operating EBITDA/interest) was stable at 1.2x
in FY16 (FY15: 1.3x), while net financial leverage (net
debt/operating EBITDA) deteriorated to 15.8x (8.7x) on the back
of a rise in total debt to INR62 million (INR40 million).
The ratings also factor in the company's moderate liquidity
position with an average maximum utilization of fund-based limits
of 95% during the 12 months ended February 2017.
The ratings are further constrained by TE's presence in the
highly competitive iron and steel industry, which is vulnerable
to fluctuations in raw material prices.
However, the ratings benefit from the promoters' about three
decades of experience in the ferrous and non-ferrous metal scrap
trading business and the company's established customer base in
Gujarat, Rajasthan and Maharashtra.
RATING SENSITIVITIES
Positive: A positive rating action may result from a substantial
increase in revenue, along with an improvement in the credit
metrics.
Negative: A negative rating action may result from a decline in
revenue and deterioration in the credit metrics.
COMPANY PROFILE
Incorporated in 2006 as a proprietorship concern by Sanjay
Jaiswal, TE is engaged in trading of ferrous and non-ferrous
metal scrap, girders, storage tanks, angels, pipes, iron flat
bars and mild steel scraps. The company's office is located in
Ahmedabad, Gujarat.
U.C. JAIN: CARE Reaffirms 'D' Rating on INR9cr LT Loan
------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
U.C. Jain Foundation Trust (UCJ), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Bank 9 CARE D Reaffirmed
Facilities
The reaffirmation of the rating assigned to the bank facilities
of UCJ takes into account delays in the ongoing debt servicing
due to stressed liquidity position.
Detailed description of the key rating drivers
There were losses on account of lower receipts received due to
lower enrolment of students. The corpus fund of the trust eroded
due to the losses. This has resulted in financial stress in the
trust and hence resulted in ongoing delays in the debt
obligation.
U.C. Jain Foundation Trust (UCJ) is an educational trust and was
formed in July 2012 by Mr. U. C. Jain (aged 63 years) and his
sons; Mr. Rishab Jain (aged 32 years) and Mr. Nikhil Jain (37
years) with the objective to provide education services. Mr. U.C.
Jain has a decade of experience in the education sector. For
imparting education, the trust started school under the name of
Wisdom Global School in June 2012 affiliated from Central Board
of Secondary Education (CBSE). The first academic session was
started in April 2014.
VIKAS HOME: CRISIL Assigns B+ Rating to INR4.4MM LT Loan
--------------------------------------------------------
CRISIL Ratings has assigned 'CRISIL B+/Stable' rating to long
term facilities of Vikas Home Furnishing (VHF).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 3 CRISIL B+/Stable
Cash Credit 2.6 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 4.4 CRISIL B+/Stable
These ratings reflect exposure to demand risk and expected
average financial risk profile. These rating weaknesses are
partially offset by extensive experience of the promoters in the
home furnishing industry and proximity to suppliers.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to demand risk: Firm has started the operations in
January 2017 and being in a niche segment the firm is thus
exposed to demand risk.
* Expected average financial risk profile: Financial risk profile
is average as indicated in expected gearing of 2-2.2 times and
interest coverage ratio of around 2 times in fiscal 2017.
Strengths
* Experience of promoters in the home furnishing industry:
Partners have extensive experience in the home furnishing
industry and established relationship with the customers.
* Proximity to suppliers: Partners have their manufacturing unit
located in Ludhiana and thus have easy access to key raw
materials
Outlook: Stable
CRISIL believes VHF will continue to benefit over the medium term
from its promoters' extensive industry experience. The outlook
may be revised to 'Positive' in case of earlier than expected
stabilization of operations thus generating higher revenues than
expected, leading to increase in cash accruals. Conversely, the
outlook may be revised to 'Negative' if VHF's cash accruals are
very low, or if it's financial risk profile weakens, most likely
because of a stretch in its working capital cycle, or large debt-
funded capital expenditure, capital withdrawal or disruption in
its operations due to any regulatory changes.
Vikas Home Furnishing (VHF); incorporated in 2016; is established
as a partnership firm for manufacturing of polyester bed sheets.
The plant is established at Panipat with capacity of about 40000
meters per day. The firm is promoted by Mr. Anuj Goel, Mr. Navin
Goel, Mr. Anuj Bajaj and Anubhav Bajaj who gain expertise through
family business in the similar line.
VISHRAMBHAI GORASIA: Ind-Ra Raises Issuer Rating to 'BB-'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Vishrambhai
Gorasia Construction Private Limited's (VGCPL) Long-Term Issuer
Rating to 'IND BB-' from 'IND B+'. The Outlook is Stable.
Instrument-wise rating action is:
-- INR50 mil. Fund-based working capital limits raised to
'IND BB-/Stable/IND A4+' rating
KEY RATING DRIVERS
The upgrade reflects VGCPL's continuous improvement in revenue
and overall credit metrics. Revenue surged 92.8% yoy to
INR270.5 million in FY16 on account of stable product demand and
strong marketing network. Net leverage (Ind-Ra adjusted net
debt/operating EBITDAR) improved to 3.8x (FY15: 5.3x) and
interest coverage (operating EBITDA/gross interest expense) to
2.5x (2.3x) on the back of an increase in absolute EBITDA to
INR32.1 million (INR20.7 million). However, EBITDA margins
declined to 11.9% in FY16 (FY15: 14.8%) owing to intense
competition in the ready mix concrete supply business and
additional discounts offered to customers to procure more orders.
The ratings continue to be supported by the presence of an
escalation clause for cement prices in the company's contracts
for ready mix concrete, safeguarding its margins from input price
volatility. The ratings also benefit from VGCPL's around a
decade of customer relationships, which has enabled it to obtain
repeat orders. Also, the company's founders' experience of over
two decades in the construction and ready mix concrete industry
benefits the ratings.
However, the ratings remain constrained by VGCPL's tight
liquidity position with almost full utilization of fund-based
facilities over the 12 months ended February 2017. Ind-Ra
believes that easing of the liquidity position and further
revenue growth in FY17 and FY18 are contingent upon the company's
ability to arrange working capital funds and/or infuse equity
when required.
RATING SENSITIVITIES
Positive: A substantial growth in revenue and increased
profitability leading to a sustained improvement in the credit
metrics will lead to a positive rating action.
Negative: A decline in revenue and/or profitability resulting in
a sustained deterioration in the credit metrics will lead to a
negative rating action.
COMPANY PROFILE
Incorporated in 2008, VGCPL supplies readymade concrete, and
undertakes civil project works such as roads, buildings, dams,
railways, and drainage and water supply line. The company's
readymade concrete facilities are located in four locations in
Gujarat with a combined capacity of 190.0 cubic meters per hour.
It is a closely held private limited company founded by
Mr. Vishram Karsan Gorasia.
VISITOR GARMENTS: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Visitor
Garments' (VG) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
now appear as
'IND BB(ISSUER NOT COOPERATING)' on the agency's website.
Instrument-wise rating action is:
-- INR100 mil. Fund-based working capital limit with 'BB'
rating migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 5, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
VG was established in 1988. It manufactures and exports
garments. The firm is associated with a fashion apparel company
in London Primark Store. VG exports to the UK, Ireland and
Spain. It outsources a part of its production to different
entities in Tirupur. VG also undertakes certain job orders such
as knitting, stitching and embroidery.
M Muthukrishnan is the managing partner of the firm.
VITAL HEALTHCARE: CRISIL Reaffirms 'B' Rating on INR11.3MM Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Vital Healthcare Private Limited (Santacruz) at 'CRISIL
B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 15 CRISIL A4 (Reaffirmed)
Bill Negotiation 2 CRISIL A4 (Reaffirmed)
Buyers Finance 2 CRISIL A4 (Reaffirmed)
Cash Credit 10 CRISIL B/Stable (Reaffirmed)
Letter of Credit 10 CRISIL A4 (Reaffirmed)
Long Term Loan 3.7 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 11.3 CRISIL B/Stable (Reaffirmed)
Term Loan 3.0 CRISIL B/Stable (Reaffirmed)
Working Capital
Demand Loan 3.0 CRISIL B/Stable (Reaffirmed)
The ratings reflect VHPL's modest business risk profile because
of working capital-intensive operations and modest scale of
operations and intense competition. These rating weaknesses are
partially offset by the extensive industry experience of the
company's promoters.
Analytical Approach
CRISIL has treated unsecured loans (outstanding at INR6.57 crore
as on March 2016) extended to VHPL by promoters as neither debt
nor equity since these loans have interest rates lower than the
marker and are expected to remain in the business.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Modest
scale of operations, reflected in revenue of INR35.9 crore in
fiscal 2016, limits bargaining power with suppliers and
customers, in the highly fragmented pharmaceutical formulations
industry.
* Large working capital requirement: Operations are working
capital intensive, reflected in gross current assets of 331 days
as on March 31, 2016, driven by stretched receivables of 206 days
due to delayed payments from government agencies.
Strength
* Experience of promoters: The promoters' two-decade experience
helped build strong relationship with customers and suppliers.
Outlook: Stable
CRISIL believes VHPL will maintain the stable business risk
profile over the medium term, backed by experience of promoters.
The outlook may be revised to 'Positive' if significant and
sustainable increase in revenue and margin strengthens capital
structure and working capital cycle. Conversely, the outlook may
be revised to 'Negative' if significant, debt-funded capital
expenditure or decline in cash accrual weakens financial risk
profile.
Incorporated in 1992, VHPL manufactures and markets
pharmaceutical formulations and healthcare products.The company,
which commenced operations in 1997, has its manufacturing
facilities in Nashik (Maharashtra).
Profit after tax and net sales increased to INR0.95 crore and
INR35.9 crore, respectively, in fiscal 2016, from INR0.39 crore
and INR32.2 crore, respectively, in fiscal 2015.
YASH AGRO: CRISIL Reaffirms 'B' Rating on INR5MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Yash Agro Industries (YAI) at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B/Stable (Reaffirmed)
Term Loan 3.5 CRISIL B/Stable (Reaffirmed)
Scale of operation is expected to remain moderate despite
operating revenue for the fiscal 2017 is expected at grow more
than 25% to around INR28.0 Crore. In the medium term growth rate
of operating revenue is not likely to sustain due to intense
competitive cotton ginning segment and expected to be remain at
around 5 to 10%. Further, operating profitability is expected to
remain vulnerable due to sharp fluctuations in cotton prices and
small scale of operations. Liquidity is likely to remain
stretched as accrual will be just sufficient to repay term debt.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in competitive industry: With an
expected operating revenue of INR30-32 crore over the medium term
and low profitability of 3-4%, scale will remain small in the
intensely competitive cotton ginning segment, where players have
limited differentiation in end product. Volatility in raw
material prices and government intervention also affect
operations.
* Stretched liquidity: Cash accrual is expected to be just
sufficient to meet debt obligation. Moreover, in the absence of
adequate funding from the proprietor, bank limit utilisation was
high at 93% in the eight months ended February 2016. Liquidity is
expected to remain weak over the medium term.
* Weak financial risk profile: Total outside liabilities to
adjusted networth ratio was high at 15.6 times as on March 31,
2016, because of small networth of INR0.50 Crore. Ratio is
expected to remain leveraged over the medium term because of low
cash accrual. Debt protection metrics were weak, with interest
coverage and net cash accrual to adjusted debt ratios of 1.7
times and 0.07 time, respectively, for fiscal 2016. Metrics will
remain muted over the medium term.
Strength
* Extensive entrepreneurial experience of proprietor: Presence of
more than six decades in the cotton industry through another
firm, Net Ram and Radheshyam, has enabled the proprietor to
understand local market dynamics and establish strong
relationship with farmers and customers.
Outlook: Stable
CRISIL believes YAI will benefit over the medium term from its
proprietor's extensive experience. The outlook may be revised to
'Positive' if earlier-than-expected stabilisation of operation
leads to a better financial risk profile. The outlook may be
revised to 'Negative' if a low operating margin, debt-funded
expansion, or inefficient working capital management further
weakens financial risk profile.
Set up in May 2015 in Mandi Adampur, Haryana, as a proprietorship
firm by Mr. Kulbir Singh Beniwal, YAI gins and presses cotton and
also extracts cotton oil at its unit that has installed capacity
of 800 quintal per day. Commercial operations began in fiscal
2016.
Profit after tax is likely to be INR0.02 crore on an operating
income of INR22.27 crore for fiscal 2017.
YKM ENTERTAINMENT: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded YKM
Entertainment & Hotels Private Limited's (YEHPL) Long-Term Issuer
Rating to 'IND D' from 'IND B' while simultaneously migrating it
to the non-cooperating category. The Outlook was Stable. The
rating action reflects YEHPL's continuous delays in debt
servicing.
The issuer did not participate in the surveillance exercise
despite continuous requests and follow-ups by the agency. Thus,
the rating is on the basis of best available information. The
rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR1.36 bil. Term loans with 'D' rating lowered and
migrated to Non-Cooperating category; and
-- INR27 mil. Non-fund-based working capital limits with 'D'
rating lowered and migrated to Non-Cooperating category
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
The rating action reflects YEHPL's continuous delays in debt
servicing, details of which are not available.
RATING SENSITIVITIES
Timely debt servicing for three consecutive months could result
in a rating upgrade.
COMPANY PROFILE
Incorporated in 2009, YEHPL is implementing a five-star hotel in
Tirupati, containing 215 rooms of different categories, an
international convention centre, a health spa and an open
marriage garden.
YOGAA AND CO.: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Yogaa & Co.'s
Long-Term Issuer Rating at 'IND B+'. The Outlook is Stable.
Instrument-wise rating actions are:
-- INR50 mil. Fund-based limit affirmed with 'IND B+/Stable'
rating; and
-- INR100 mil. Non-fund-based limit affirmed with 'IND A4'
rating
KEY RATING DRIVERS
The affirmation reflects the company's continued small scale of
operations and moderate credit metrics. Revenue was INR243
million (FY15: INR268 million), interest coverage was 2.2x (3.8x)
and net financial leverage was 3.5x (2.1x). The deterioration in
interest coverage and net financial leverage was mainly on
account of a decline in EBITDA. Operating margin deteriorated to
5.1% in FY16 (FY15: 8.6%) due to an increase in raw material
costs.
The ratings continue to be constrained by the company's
partnership nature of business and high geographical
concentration risk, as the company mainly executes projects in
Karnataka and Tamil Nadu.
However, the ratings benefit from Yogaa's strong liquidity
position as reflected by lower average utilization of fund-based
limits of 20% during the 12 months ended February 2017 (95%
during the 12 months ended January 2016). The affirmation also
supports Yogaa's strong net interest coverage in FY16, since the
company recorded total interest income of INR5.75 million, as
opposed to total interest expense of INR5.77 million.
The ratings also draw support from the partners' two-decade-long
experience in the construction business.
RATING SENSITIVITIES
Positive: An improvement in the scale of operations, while
maintaining the credit metrics will be positive for the ratings.
Negative: A reduction in the profitability margin leading to
deterioration in the credit metrics will be negative for the
ratings.
COMPANY PROFILE
Incorporated in 2007, Yogaa constructs roads and bridges, and
executes orders mainly for government companies such as Public
Works Department and National Highways Authority of India
('IND AAA'/Stable). The company is managed by A.D.
Meenaachisundram.
ZAMPA VINEYARDS: CRISIL Reaffirms 'B' Rating on INR13.5MM Loan
--------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Grover Zampa Vineyards Limited (GZVL) at CRISIL B/Stable CRISIL
A4.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Reaffirmed)
Cash Credit 13.5 CRISIL B/Stable (Reaffirmed)
Foreign Bill .85 CRISIL B/Stable (Reaffirmed)
Discounting
Short Term Loan 2.65 CRISIL A4 (Reaffirmed)
The ratings continue to reflect GZVL's exposure to intense
competition and government regulation in the wine-making
industry. The rating also factors in high working capital
intensity on account of large debtor cycle and inventory
requirements. These weaknesses are partially offset by the
extensive experience and track record of the promoters in the
industry and average financial risk profile, marked by low
gearing and moderate net worth, though constrained by average
debt protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks related to high government regulation in
wine-making industry and intense competition: The wine industry's
profitability is sensitive to changes in climate and government
policies. The structure of duties and taxes levied on the wine
industry in India are complex and differ from state to state. Any
adverse change in the duty structure adversely affects the demand
for wine. As with manufacturers of all agriculture-based
products, wine manufacturers are susceptible to adverse climatic
conditions such as drought and pest-attack leading to crop
failure, which, in turn, leads raw material shortage. Moreover,
prices of alternative crops are key determinants of availability
of raw material and the area under cultivation could reduce if
farmers switch to other crops. Further, GZVL faces intense
competition from various indigenous and foreign players, which
restricts its pricing power. GZVL's business will remain
susceptible to government regulation and intense competition over
the medium term.
* Working capital-intensive operations: Working capital
requirements are high as reflected in gross current assets of 380
days as on March 31, 2016, mainly on account of large inventory
and high credit allowed to customers. The debtors have remained
high as majority of the domestic sales (65-70 percent) are done
to the state boards. Thus after realising the payments from the
distributors the state boards pay the company in 90-120 days.
Further, 90 days of credit is offered to distributors and
retailers, leading to high debtors of more than 100 days over the
three years through 2016. Additionally, the working capital
requirements are also high due to large inventory. Grapes being a
seasonal crop needs to be stocked from December to March which
leads to high raw material inventory during the year end.
Moreover the lead time for manufacturing wine is high leading to
large WIP inventory and in turn to inventory of more than 200
days over the three years ended March 31, 2016. However, working
capital requirement was partly funded by large funding support
from creditors. About 25 percent of the payment to creditors is
in advance and the remaining 75 percent is to be paid in
installments in 4-5 months thus reflecting large creditors of 200
days over the three years through 2016.
Strength
* Promoters' extensive experience and track record in the
industry and established brand image: GVZL has been formed with
merger of Grover Vineyard Limited (GVL) and Vallee de Vin (VDV)
and its promoters have vast experience in manufacturing of wine.
GZVL owns reputed brands Grover and Zampa, both are well-
recognized and premium wines in India. It also has diversified
product portfolio with multiple varieties of white, red and rose
wine. It has also won numerous awards like Decanter Asia Wine
Award and Decanter World Wine Awards. This helped the company to
sell over 1.9 lakh bottles in a year 2015-16 (refers to financial
year, April 1 to March 31), thus making it second largest
indigenous wine maker in India.
Outlook: Stable
CRISIL believes GZVL will continue to benefit over the medium
term from the promoters' extensive industry experience. The
outlook may be revised to 'Positive' if sales and margins improve
significantly leading to better cash generation, along with
better working capital management. Conversely, the outlook may be
revised to 'Negative' if the financial risk profile, particularly
liquidity, weakens because of stretch in working capital cycle,
low cash generation or any unanticipated large debt-funded
capital expenditure.
GZVL was formed by the merger of Vallee de Vin (VDV) with Grover
Vineyards Ltd (GVL) in April 2013. The company manufactures wines
and its vineyards are located in Nandi hills near Bengaluru and
Nashik (Maharashtra).
GVL was established in 1988 by Mr. Kanwal Grover and sells its
wines under the Grover brand.
VDV was set up in 2006 by Mr. Ravi Jain and sells its wines under
the Zampa brand.
GZVL reported a net loss of INR14.6 cr on net sales of INR54.2 cr
for 2015-16, as against a net loss of INR17.2 cr on net sales of
INR35.1 cr for 2014-15.
Status of non-cooperation with previous CRA: GZVL has not
cooperated with ICRA Ltd, which has suspended its rating on the
company through a release dated June 23, 2016. The reason
provided by ICRA Ltd is non-furnishing of information required
for monitoring of ratings.
=================
I N D O N E S I A
=================
MODERNLAND REALTY: Fitch Assigns B Rating to Proposed USD Notes
---------------------------------------------------------------
Fitch Ratings has assigned Indonesia-based PT Modernland Realty
Tbk's (Modernland, B/Negative) proposed US dollar-denominated
senior unsecured notes an expected rating of 'B(EXP)' with a
Recovery Rating of 'RR4'. The notes will be issued by
Modernland's wholly owned subsidiary, Modernland Overseas Pte
Ltd, and guaranteed by Modernland and certain subsidiaries.
Fitch believes Modernland's financial profile will remain
unchanged and consistent with its rating, as proceeds from the
new notes will be used mainly for refinancing and to extend the
maturity profile of the company's debt, allowing it more
flexibility to manage cash flows. The company plans to use the
proceeds to partly redeem its existing USD248m 9.75% senior
unsecured notes maturing in 2019.
The notes are rated at the same level as Modernland's senior
unsecured rating as they represent unconditional, unsecured and
unsubordinated obligations of the company. The final rating on
the notes is contingent upon the receipt of final documents
conforming to information already received.
KEY RATING DRIVERS
Negative Outlook; Recovering Macroeconomic Condition: The
Negative Outlook on Modernland's Long-Term Issuer Default Rating
(IDR) reflects the risk that the company could breach a number of
its local-currency debt covenants in 2017, as EBITDA may remain
weak unless presales improve in the next six to 12 months. In
2016, Modernland reported presales of around IDR4.5 trillion
(2015: IDR3.1 trillion). However this included IDR3.2 trillion
booked as proceeds from a one-off land sale to a joint venture
(JV) between Modernland and PT Astra Land Indonesia, where
Modernland will only receive half of this sale in cash, with the
balance going towards its investment in the JV.
In Fitch's view, Modernland may not achieve its presales target
for 2017, as the domestic macroeconomic environment is only
starting to recover and Fitch believes there will be a lag before
Fitch see a sustained improvement in demand for property.
Nevertheless, the company may take measures to improve the
recognition of EBITDA or obtain waivers on covenant breaches.
Volatile Industrial Cash Flows: Around 70% of Modernland's
contracted sales in 2016 stemmed from industrial land sales and
the one-off land sale to the JV. Therefore its cash flows tend to
be more volatile during economic downturns than those of peers
that depend on residential sales. Nevertheless, the low
development risk associated with industrial land sales mitigates
this cash flow volatility.
Modernland has a 20-year track record in developing industrial
estates, and has built strong relationships with tenants. Its
flagship Cikande industrial estate has a very low average land
cost compared with the current average selling price (ASP) of
around IDR1.7 million per square metre (sqm), and Modernland has
sufficient land to continue developing there for around five
years, even if Fitch assume that the company makes no further
land acquisitions. Fitch believes Modernland can build on its
success in Cikande and replicate its business model for future
developments in its newer industrial estate in Bekasi.
Limited Residential Track Record: Fitch expects Modernland's
residential and commercial segment to account for around 55% of
presales by 2018, driven by the Jakarta Garden City (JGC) project
and the new launches in Bekasi. The growing proportion of
residential sales will counterbalance volatility in industrial
land sales, but Modernland's track record in developing an
integrated, large-scale residential project is still limited
relative to the other rated developers, like PT Bumi Serpong
Damai Tbk (BB-/Stable), PT Lippo Karawaci Tbk (BB-/Stable) and PT
Alam Sutera Realty Tbk (B+/Negative).
Manageable Forex Risk: Modernland has entered into a few call-
spread options to partially hedge the principal of its USD248
million bond due 2019, covering rupiah depreciation of up to
IDR15,500 per US dollar. The company is also planning to enter
into a similar hedging arrangement for its new proposed bond. In
addition, Fitch believes Modernland's thick margins are
sufficient to absorb short-term currency volatility.
DERIVATION SUMMARY
Modernland's rating is well-positioned relative to other Fitch-
rated property developers, such as PT Kawasan Industri Jababeka
Tbk (KIJA, B+/Stable) and PT Alam Sutera Realty Tbk (ASRI,
B+/Negative). Fitch believes that KIJA's stronger recurring
interest coverage, lower leverage and relatively more strategic
industrial development location compared to that of Modernland
supports its higher rating. Fitch believes ASRI's longer track
record in residential developments and more defensive cash flow
mix support a higher rating than Modernland.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Presales of around IDR2.1trillion in 2017
- Land acquisition capex of around IDR350 billion in 2017
RATING SENSITIVITIES
Future developments that may, individually or collectively, lead
to negative rating action include:
- If there are heightened risk that the company may breach
covenants on its local-currency debt, or the company fails to
negotiate waivers on covenant breaches
- Presales/ gross debt sustained at less than 40% (2016: 62%)
Future developments that may, individually or collectively, lead
the Outlook to be revised back to Stable include:
- If the risk of the company breaching its local-currency debt
covenants is reduced, or the company successfully manages to
negotiate waivers on covenant breaches
LIQUIDITY
As of December 2016, Modernland has readily available cash of
around IDR400 billion compared with IDR470 billion of maturing
short-term debt. Fitch currently expects the company to post
positive free cash flows of around IDR400 billion for 2017, which
supports its liquidity. Modernland's capex in the short term is
going to be limited to construction costs, which are partly
contingent upon meeting sales thresholds in the current period.
This, coupled with the discretionary nature of land acquisitions,
may allow Modernland to accumulate cash and shore-up its
liquidity profile. Liquidity is also supported by Modernland's
access to local banks.
MODERNLAND REALTY: Moody's Affirms B2 Corporate Family Rating
-------------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating of Modernland Realty Tbk (P.T.) and affirmed the B2 senior
unsecured rating of the 2019 bonds issued by Marquee Land Pte.
Ltd., a wholly owned subsidiary of Modernland. The bonds are
guaranteed by Modernland.
At the same time, Moody's has assigned a senior unsecured bond
rating of B2 to the proposed senior unsecured bonds to be issued
by Modernland Overseas Pte. Ltd., a wholly owned subsidiary of
Modernland. The proposed bonds are unconditionally and
irrevocably guaranteed by Modernland and rank pari passu with the
2019 bonds.
The outlook on the ratings is stable.
Modernland will use the majority of the net proceeds towards the
partial redemption of the USD248 million 2019 senior unsecured
notes issued by Marquee Land Pte. Ltd.
RATINGS RATIONALE
"The ratings affirmation reflects Modernland's healthy financial
and liquidity profile - despite a challenging operating
environment in 2016 - supported by its ability to successfully
execute its joint venture agreement with Astra Land Indonesia,"
says Jacintha Poh, a Moody's Vice President and Senior Analyst.
In October 2016, Modernland's wholly-owned subsidiary, PT Mitra
Sindo Makmur (MSM, unrated), entered into a 50:50 joint venture
agreement with Astra Land Indonesia (unrated), which is in turn a
joint venture company between Hongkong Land Holdings Limited
(Hongkong Land, A3 stable) and PT Astra International Tbk
(unrated). The MSM-Astra Land Indonesia joint venture company
agreed to buy from Modernland, a 67 hectare plot at the Jakarta
Garden City township for approximately IDR3.2 trillion to develop
residential properties.
"While most of the bond proceeds will be used for refinancing,
Moody's anticipates a net increase in borrowings of around USD50
million for the premium on early redemption of its 2019 notes and
working capital purposes. This incremental debt can be
accommodated within its B2 rating parameters," adds Poh, who is
also Moody's Lead Analyst for Modernland. "More importantly, the
partial refinancing of its 2019 bonds is credit positive, because
the company's weighted-average debt maturity will be extended."
Over the next 12-18 months, Moody's expects that Modernland's
revenue will grow around 20%-25%, driven by residential sales at
its Jakarta Garden City township and industrial land sales at
Modern Cikande, given that the developer will likely increase the
launch of new products at these projects.
Consequently, Moody's expects that over the next 12-18 months,
Modernland's adjusted debt/homebuilding EBITDA will measure
around 4.0x and adjusted homebuilding EBIT/interest expense will
stand at around 2.5x.
In 2017, Modernland targets to achieve IDR4.3 trillion of
marketing sales; specifically, IDR3 trillion from the Jakarta
Garden City township and IDR1.3 trillion from the Modern Cikande
Industrial Estate. Moody's base case expectation is that
marketing sales in the same period will total around IDR3.8
trillion.
Due to a challenging macro environment - which led to lackluster
demand for property and therefore a slowdown in new project
launches in 2016 - Modernland's revenue for the year ended 31
December 2016 (FY2016) fell 17% year-on-year to IDR2.5 trillion.
The decline was offset by an increase in its profit margin,
because more than half of its revenue was contributed by land
sales, which typically generate higher margins than property
sales.
As a result, Modernland's key credit metrics in FY2016 remained
broadly stable, with adjusted debt/homebuilding EBITDA
registering 3.4x (FY2015: 3.2x) and an adjusted homebuilding
EBIT/interest expense of 2.3x (FY2015: 2.3x).
The stable ratings outlook reflects Moody's expectation that
Modernland will achieve its sales target and grow its operational
cash flow, build a record of executing successfully its Jakarta
Garden City township, and maintain financial discipline while
pursuing growth.
The ratings could be upgraded if Modernland successfully executes
its expansion strategy - supported by sustained improvements in
sales performance and positive free cash flow generation - and
maintains solid liquidity in the form of cash balances and
committed facilities.
The credit metrics that will support an upgrade include an
adjusted debt/homebuilding EBITDA below 3.5x and adjusted
homebuilding EBIT/interest coverage above 3.0x on a sustained
basis.
By contrast, the ratings could face downward pressure if: (1)
Modernland fails to implement its business plans; and/or (2)
there is a deterioration in the property market, leading to
protracted weakness in Modernland's operations and credit
profile. Moody's considers an adjusted debt/ homebuilding EBITDA
over 5.0x, and adjusted homebuilding EBIT/interest coverage below
2.0x on a sustained basis as indications that a downgrade may be
necessary.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Modernland Realty Tbk (P.T.) is an integrated property developer
in Indonesia that focuses on industrial town development,
residential development and township development. It also has
small exposures to the hospitality and commercial property
segments.
The company listed on the Jakarta Stock Exchange in 1993, and is
controlled by the Honoris Family through direct ownership and
various holding companies, including a 9.6% stake held by AA Land
Pte Ltd (unrated).
=========
J A P A N
=========
TOKYO ELECTRIC: New President Vows to Revive Business
-----------------------------------------------------
Kyodo News reports that the newly appointed president of Tokyo
Electric Power Company Holdings Inc. said on April 3 he will push
through reforms to put business back on track, while fulfilling
the firm's responsibilities over the 2011 disaster at its
Fukushima nuclear power plant.
"We will carry out reforms and contribute to the development of
the energy industry. We will also work to reconstruct our
business to meet the expectations of the people of Fukushima and
our customers," the report quotes Tomoaki Kobayakawa as saying in
a news conference also attended by current President Naomi
Hirose, who has served in the post since 2012. Mr. Kobayakawa
will take over in June, the report notes.
Kyodo relates that Tepco decided to revamp its top management to
seek a breakthrough in its stalling turnaround plan, with massive
costs stemming from the disaster at the Fukushima No. 1 nuclear
power complex continuing to weigh heavily.
Among 13 directors slated to replace the current board following
the annual general shareholders meeting in late June, 10 have
been newly appointed. Takashi Kawamura, honorary chairman of
Hitachi Ltd., will serve as new chairman to back the new
president, according to Kyodo.
Kyodo says Mr. Kobayakawa, as the head of Tokyo Energy Partner
Inc., Tepco's electricity retail arm, has worked through
increasing competition in the power sector following the full
liberalization of the electricity retail market, which brought an
end to regional monopolies on power supply.
According to Kyodo, Mr. Kawamura said the utility needed to
undergo a "different level of reform" to secure enough funds to
deal with one of the world's worst nuclear crises that resulted
in nuclear fuel meltdowns at three reactors.
Kyodo relates that the company has been seeking to revive its
business after being placed under effective state control in
exchange for a JPY1 trillion capital injection in 2012. But
disaster cleanup costs have continued to rise, with the latest
estimate reaching JPY22 trillion -- twice the sum earlier
expected.
In a new business turnaround plan announced on March 22, the
company said it aims to realign and integrate its nuclear and
power transmission and distribution businesses with other
utilities to improve its profitability, Kyodo discloses.
But other utilities are believed to be cautious about such tie-
ups, as they are concerned about possible intervention by the
government, which holds the majority of Tepco's voting rights
through a state-backed bailout fund, the report states.
Kyodo adds that Mr. Kawamura expressed hope on April 3 that
realignment moves will accelerate, while adding that the company
will seek to reactivate its Kashiwazaki-Kariwa nuclear plant in
Niigata Prefecture despite public concern over the safety of
nuclear power.
"We want to take time in sincerely communicating (with locals)
that we will place top priority on safety," Kyodo quotes
Mr. Kawamura as saying.
Kyodo reports that Mr. Kobayakawa, meanwhile, was not clear on
whether the Fukushima No. 2 nuclear power plant, located around
12 km south of the crippled Fukushima No. 1, would be scrapped.
Mr. Hirose will take up the new post of vice chairman responsible
for disaster compensation payments. He will not serve on the
board.
"There have been a series of problems and incidents I had to
apologize for," Mr. Hirose said, recalling his five years as
president, Kyodo relays.
About Tokyo Electric
Tokyo Electric Power Company is the largest electric power
company in Japan and the largest privately owned electric
utility in the world. TEPCO supplies electricity to meet the
increasingly diversified and sophisticated demands of its over
28.09 million customers in the metropolitan Tokyo, which is the
political, economic, and cultural center of Japan, and eight
surrounding prefectures.
Bloomberg News said the utility is battling radiation leaks at
the Fukushima Dai-Ichi power plant north of Tokyo after a
March 11 earthquake and tsunami knocked out its cooling systems,
causing the biggest atomic accident in 25 years. More than
50,000 households were forced to evacuate and Bank of America
Corp.'s Merrill Lynch estimates TEPCO may face compensation
claims of as much as JPY11 trillion (US$135 billion).
As reported in the Troubled Company Reporter-Asia Pacific on
May 11, 2012, Bloomberg News said Japan's government took control
of Tepco and agreed to provide JPY1 trillion (US$12.5 billion) as
part of the nation's largest bailout since the rescue of the
banking industry in the 1990s.
Bloomberg related that the government will obtain more than 50%
of the voting rights in the utility under a 10-year plan approved
on May 8 by Trade and Industry Minister Yukio Edano. The
government stake may rise to two-thirds if TEPCO fails to meet
goals that include cost cuts and compensation payments, said
Bloomberg.
Under the plan, Bloomberg disclosed, the utility aims for an
unconsolidated profit of JPY106.7 billion in the year ending
March 2014, based on an electricity rate increase and the restart
of the Kashiwazaki Kariwa nuclear station. Bloomberg says
nationalization of TEPCO paves the way for the government to
restructure the electricity industry monopolized by regional
utilities and possibly break up power generation and transmission
networks to allow more competition.
====================
S O U T H K O R E A
====================
DAEWOO: Commercial Lenders Pressured to Accept Debt Rescheduling
----------------------------------------------------------------
Yonhap News Agency reports that creditors of cash-hungry Daewoo
Shipbuilding & Marine Engineering Co. are ratcheting up pressure
on commercial lenders to accept a massive debt-for-equity swap, a
three-year grace period on remaining debt and other debt
rescheduling measures to keep the shipyard afloat, industry
sources said on April 2.
According to the report, sources said the creditors, led by the
state-run Korea Development Bank, are also pressing the labor
union of Daewoo Shipbuilding to accept a pay cut and job cuts as
well.
Late last month, the creditors announced a fresh rescue package
worth KRW6.7 trillion (US$5.98 billion) for the ailing
shipbuilder, but only if all stakeholders agree to a debt-for-
equity swap plan, Yonhap recalls.
Yonhap relates that the huge rescue measures represent the second
round of bailouts for the shipbuilder that has been suffering
from severe liquidity problems over heavy losses in its offshore
projects.
Under the rescue package, Daewoo Shipbuilding will receive new
loans worth KRW2.9 trillion if lenders and bondholders agree to
swap KRW2.9 trillion of debt for new shares in the shipbuilder,
Yonhap notes.
Bondholders are also required to give a three-year grace period
to the repayment of the remaining debt, the report relates.
According to Yonhap, the KDB demanded that commercial lenders
present a written pledge to join the massive debt-for-equity swap
and other rescue measures by April 7. Under the proposed rescue
plan, commercial lenders are required to swap 80% of their
unsecured loans worth KRW700 billion into Daewoo Shipbuilding
stocks, and the maturity of the remaining loans should be
extended by five years.
But commercial lenders countered that KDB and the Export-Import
Bank of Korea (EXIM Bank) should shoulder more of a burden,
demanding that the two policy lenders' haircut ratio should be
further raised, Yonhap states.
They also demanded that new Daewoo Shipbuilding stocks be sold at
a lower-than-proposed price, and perpetual bonds to be sold by
Daewoo Shipbuulding to the EXIM Bank should carry a lower rate as
well, the report says.
But the state lenders and the government sternly rejected their
calls saying that 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 a debt workout
and court receivership, resulting in more losses to interested
parties, Yonhap adds.
About Daewoo Shipbuilding
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.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(US$1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
DAEWOO SHIPBUILDING: External Auditor Gives 'Qualified Opinion'
---------------------------------------------------------------
Yonhap News Agency reports that Daewoo Shipbuilding & Marine
Engineering Co. said on March 29 that it has received a
"qualified opinion" from its external auditor on its 2016
financial statement, heralding the publicly traded firm to be
classified as a supervised stock on the local stock market.
In a regulatory filing by the shipyard, Daewoo Shipbuilding said
its external auditor, Samil PricewaterhouseCoopers, gave the
result of the audit review of its financial statement, Yonhap
says.
Yonhap notes that the qualified opinion is usually expressed when
an external auditor is not able to obtain sufficient and
appropriate audit evidence to provide a basis for its audit
opinion.
Daewoo Shipbuilding was also given the same audit opinion from
the auditor for its third-quarter financial statement, Yonhap
says.
"Given (Daewoo Shipbuilding's) financial status and unusual
environment, its creditors' bailout plan and the loss-sharing
among interested parties affect its going concern's value, and we
could not review the company sufficiently with concrete
information," the accounting firm, as cited by Yonhap, said.
With the qualified audit opinion, Daewoo Shipbuilding will be
designated as a company under administrative supervision on the
local bourse, Yonhap notes.
According to Yonhap, trading of Daewoo Shipbuilding has been
suspended since July last year due to its eroded capital base.
The government is seeking to resume the company's stock
transactions during the second half of the year after improving
its financial status through a massive debt-for-equity swap and
debt write-offs.
Meanwhile, Daewoo Shipbuilding said it suffered a net loss of
KRW2.79 trillion (US$2.5 billion) last year and an operating loss
of KRW1.53 trillion, Yonhap discloses. For 2016, its sales
reached KRW12.82 trillion, adds Yonhap.
About Daewoo Shipbuilding
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.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(US$1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
DAEWOO SHIPBUILDING: Orders at Risk Due to Possible Receivership
----------------------------------------------------------------
Joyce Lee at Hellenic Shipping News reports that South Korea's
Daewoo Shipbuilding & Marine Engineering Co Ltd is expected to
receive considerable calls from shipowners for "builder's
default" if the company goes into court receivership, its CEO
Jung Sung-leep said.
Shipowners can call builder's default, which is cancelling
existing orders for ships, in the event of a shipyard entering
court receivership, according to Hellenic Shipping News.
South Korean state banks on March 23 said they were preparing a
fresh USD2.6 billion bailout for Daewoo Shipbuilding, which has
built up huge losses from offshore projects and risks missing
debt repayments, the report relays.
About Daewoo Shipbuilding
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.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(US$1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
DAEWOO SHIPBUILDING: Owner Working on Court Receivership Plan
-------------------------------------------------------------
Maritime Executive reports that sources within Korea Development
Bank, the majority owner of Daewoo Shipbuilding and Marine
Engineering, said that they are already working on a prepackaged
court receivership plan in case DSME's creditors will not
participate in another bailout package. "We are taking a two-
track approach," a KDB official told Yonhap.
Formal talks between the government and the yard's creditors
began on March 27, and the stakeholders have limited time to
agree on how (or whether) to help the yard pay back its maturing
debt, according to Maritime Executive. Under the terms of the
government's latest rescue proposal, KDB and Korea Export-Import
Bank would provide DSME with USD2.6 billion in new loans, and the
yard's other creditors would swap half their debt for equity and
delay the maturity of the rest, the report notes.
Institutional investors for Korea's public-sector pension funds
are reportedly balking at the plan: they complain that they only
invested in DSME's bonds because the yard misrepresented its
earnings, and they would like to recoup a larger share of their
funds, the report relays.
The report discloses Korea's financial regulators warn that DSME
could slip into receivership as early as April if it is not
provided with another round of assistance, with potentially dire
consequences for the nation's economy. However, the agencies
involved have produced differing estimates for the extent of the
damage, the report notes. The Financial Services Commission
suggests that the losses could exceed USD50 billion, assuming
that DSME's huge yard in Okpo ceases operation; about two thirds
of this amount would come from the unrealized value of vessels
currently under construction, the report relays. The Ministry of
Trade, Industry and Energy puts the total number much lower, at
USD15 billion, based on the assumption that the Okpo stays open
through a prepackaged bankruptcy, the report notes.
The calculations behind these damage forecasts rest in part upon
the extent of any order cancelations, the report relays. DSME's
chief executive recently warned that receivership would allow
owners to cancel orders under the "builder's default" clause in
their contracts and that many owners would have an economic
motive to cancel in the current business environment, the report
adds.
About Daewoo Shipbuilding
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.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(US$1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
*********
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.
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*** End of Transmission ***