/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170410.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 Monday, April 10, 2017, Vol. 20, No. 71 Headlines A U S T R A L I A AG COMPANY: Second Creditors' Meeting Set for April 19 ASMARK2 PTY: Second Creditors' Meeting Set for April 21 CRONULLA SUTHERLAND: First Creditors' Meeting Set for April 18 FOXROCK SHARED: First Creditors' Meeting Set for April 19 LATITUDE AUSTRALIA: Fitch Assigns 'BBsf' Rating to Cl. E Notes N O & O ORDEN: Second Creditors' Meeting Set for April 13 THREE TREE: In Administration, First Meeting Set for April 20 WRELD TRANSPORT: Second Creditors' Meeting Set for April 21 C H I N A CHINA OIL: Moody's Assigns Ba2 Senior Unsecured Bond Rating CHINA OIL: S&P Assigns 'BB' Rating to Proposed US$ Sr. Notes CHINA ZHENGTONG: S&P Lowers CCR to 'B+' on Weaker Leverage HENGDELI HOLDINGS: Fitch's B+ Ratings Hinges on Asset Disposal JIANGSU NEW: S&P Lowers CCR to 'BB' on China Rating Downgrade JINGRUI HOLDINGS: Fitch Affirms 'B-' IDR on Improved Liquidity POWERLONG REAL: Moody's Hikes Corporate Family Rating to B1 YANZHOU COAL: S&P Assigns 'B+' Rating to Proposed US$ Securities H O N G K O N G IMPERIAL PACIFIC: Moody's Lowers Corporate Family Rating to Caa1 I N D I A AMUL FEED: Ind-Ra Assigns 'BB' Long-Term Issuer Rating CHLORO PARAFFINS: Ind-Ra Affirms 'D' Long-Term Issuer Rating CONSOLIDATED CONSTRUCTION: ICRA Reaffirms INR1275cr Loan Rating D DHINGRA EXPORTS: CARE Assigns B+ Rating to INR8.50cr ST Loan ELECTROMEC ENGINEERING: Ind-Ra Assigns D Long-Term Issuer Rating GAYATRI DYE: Ind-Ra Assigns 'B+' Long-Term Issuer Rating GOKUL STEELS: Ind-Ra Assigns 'B+' Long-Term Issuer Rating HEM CERAMICS: ICRA Assigns B+ Rating to INR4.72cr Loan JECRC UNIVERSITY: CARE Lowers Rating on INR105.23cr Loan to D JOSEPH LESLIE: Ind-Ra Raises Long-Term Issuer Rating to 'B+' K. VENKATA: ICRA Reaffirms 'B+' Rating on INR25cr Loan KAMINENI HEALTH: CARE Withdraws 'D' Rating on INR18.28cr Loan KARAN RICE: CARE Assigns B- Rating to INR9.90cr LT Loan KATARIA MOTORS: CARE Reaffirms B+ Rating on INR2.09cr Loan LATHA RICE: CARE Reaffirms 'B' Rating on INR9.39cr LT Loan M.T. PATIL: Ind-Ra Affirms 'BB' Long-Term Issuer Rating MADHUSUDAN GARAI: ICRA Reaffirms 'B' Rating on INR3.50cr Loan MANI EXPORT: Ind-Ra Lowers Long-Term Issuer Rating to 'BB-' MB POWER: CARE Lowers Rating on INR5,196cr LT Loan to 'D' MODERN MACHINERY: CARE Assigns B+ Rating to INR9.30cr LT Loan NAGAPATTINAM MUNICIPALITY: Ind-Ra Assigns 'BB' Issuer Rating PANKAJ ISPAT: CARE Denotes Rating as B-/Issuer Not Cooperating PB LIFESTYLE: Ind-Ra Migrates 'B' Rating to Non-Cooperating PRAGATI ENGINEERING: ICRA Assigns B- Rating to INR3.28cr LT Loan PRATHAMESH: CARE Denotes Rating as B+/Issuer Not Cooperating PROVOGUE INDIA: CARE Denotes Rating as D/Issuer Not Cooperating PUREWAL STONE: ICRA Reaffirms 'B' Rating on INR8.60cr Loan REGEN POWERTECH: ICRA Hikes Rating on INR1530cr Loan to 'D' SAHARA INDUSTRIES: ICRA Reaffirms 'B' Rating on INR11.63cr Loan SAHU KHAN: ICRA Reaffirms 'B+' Rating on INR12cr LT Loan SANGAM STEELS: CARE Denotes Rating as B/Issuer Not Cooperating SATHYAM GREEN: Ind-Ra Migrates BB- Rating on INR358.4MM Bank Loan SHARVI RICE: Ind-Ra Assigns 'BB' Long-Term Issuer Rating SHRI PRABHULINGESHWAR: ICRA Ups Rating on INR74.69cr Loan to B SHRI VARU: Ind-Ra Assigns 'B' Long-Term Issuer Rating SMS9 AGRO: ICRA Assigns 'B' Rating to INR10cr Fund Based Loan SRI SAI: CARE Denotes Rating as D/Issuer Not Cooperating SRI SATNAM: CARE Assigns B+ Rating to INR12cr LT Bank Loan SUNLAND CERAMIC: ICRA Reaffirms B+ Rating on INR6.74cr Loan TRISHUL TREAD: Ind-Ra Assigns 'BB' Long-Term Issuer Rating TULIP TELECOM: ICRA Reaffirms 'D' Rating on INR150cr Loan VARDHMAN WIRES: Ind-Ra Assigns 'B+' Long-Term Issuer Rating WINWIND POWER: ICRA Reaffirms 'D' Rating on INR288.22cr Loan I N D O N E S I A INDIKA ENERGY: Fitch Hikes Long-Term Issuer Default Rating to B- PT TOWER: S&P Affirms BB- CCR on Resilient Operating Performance J A P A N SHARP CORP: Egan-Jones Downgrades Commercial Paper Rating to C SHOWA SHELL: Egan-Jones Cuts Unsecured Debt Rating to BB TOSHIBA CORP: Trust Banks File Lawsuit Over Accounting Scandal N E W Z E A L A N D PROPERTY VENTURES: ALF May Emerge as Beneficiary of Litigation SOLID ENERGY: Finalizes Sale of Ohai and New Vale Mines S I N G A P O R E EZRA HOLDINGS: To Meet Noteholders on April 17 S O U T H K O R E A SAMSUNG HEAVY: Halt Wage Talks to Focus on Work - - - - - ================= A U S T R A L I A ================= AG COMPANY: Second Creditors' Meeting Set for April 19 ------------------------------------------------------ A second meeting of creditors in the proceedings of AG Company Pty Ltd, trading as Bootooloo Farms; Bootooloo Staff Services Pty Ltd; GLN & Sons Pty Ltd, JAGS Investments Pty Ltd; and SGAJ Investments Pty Ltd, has been set for April 19, 2017, at 1:00 p.m., at the offices of Deloitte Financial Advisory Pty Ltd, at Level 25, Riverside Centre, 123 Eagle Street, in Brisbane, Queensland. The purpose of the meeting are (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by April 18, at 4:00 p.m. Neil Robert Cussen and Richard John Hughes of Deloitte Financial Advisory Pty Ltd were appointed as administrators of AG Company on January 6, 2017. Bowen, Queensland-based Bootooloo Farms operates an agricultural business specializing in the growing of capsicums and seedless watermelons. ASMARK2 PTY: Second Creditors' Meeting Set for April 21 ------------------------------------------------------- A second meeting of creditors in the proceedings of Asmark2 Pty Ltd, formerly Ausurv Surveyors Pty Ltd, has been set for April 21, 2017, at 11:30 a.m., at Vibe Hotel Darwin Waterfront Neptuna and Mavie Room, Level 1, 7 Kitchener Drive, in Darwin City, NT. The purpose of the meeting are (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by April 20, at 3:00 p.m. Hamish Alan MacKinnon and Michael Quin of Bent & Cougle were appointed as administrators of Asmark2 Pty on March 10, 2017. CRONULLA SUTHERLAND: First Creditors' Meeting Set for April 18 -------------------------------------------------------------- A first meeting of the creditors in the proceedings of Cronulla Sutherland Pty Ltd will be held at the offices of Cor Cordis Chartered Accountants, at One Wharf Lane, Level 20, 161 Sussex Street, in Sydney, New South Wales, on April 18, 2017, at 11:30 a.m. Mark Hutchins & Jason Tang of Cor Cordis were appointed as administrators of Cronulla Sutherland on April 4, 2017. FOXROCK SHARED: First Creditors' Meeting Set for April 19 --------------------------------------------------------- A first meeting of the creditors in the proceedings of Foxrock Shared Services Pty Ltd will be held at the offices of Hall Chadwick, Level 10, 575 Bourke Street, in Melbourne, Victoria, on April 19, 2017, at 11:00 a.m. David Ross and David Ingram of Hall Chadwick were appointed as administrators of Foxrock Shared on April 5, 2017. LATITUDE AUSTRALIA: Fitch Assigns 'BBsf' Rating to Cl. E Notes -------------------------------------------------------------- Fitch Ratings has assigned final ratings to Latitude Australia Credit Card Loan Note Trust-Series 2017-1's floating-rate notes. The issuance consists of notes backed by credit card receivables originated by Latitude Finance Australia. The ratings are: AUD685.90 million Class A1 notes: 'AAAsf'; Outlook Stable AUD125.65 million Class A2 notes: 'AAAsf'; Outlook Stable AUD57.60 million Class B notes: 'AAsf'; Outlook Stable AUD52.35 million Class C notes: 'Asf'; Outlook Stable AUD41.86 million Class D notes: 'BBBsf'; Outlook Stable AUD36.64 million Class E notes: 'BBsf'; Outlook Stable AUD47.12 million Originator VFN Subordination notes: 'NRsf' AUD100.00 million Series 2017-VFN notes: 'Asf'; Outlook Stable The notes are issued by Perpetual Corporate Trust Limited in its capacity as trustee of the Latitude Australia Credit Card Loan Note Trust. The notes are backed by a collateral pool of credit card receivables with an average outstanding balance across active accounts of AUD2,044. The portfolio is well-seasoned; by balance, 59% is held in accounts seasoned in excess of 36 months. The portfolio is geographically diversified among Australian states with no specific geographic concentration. 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 (MPR) steady state of 13.0%. The yield and MPR 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. Variable Funding Notes (VFN): The VFN structure provides funding flexibility that is typical and necessary for credit card trusts; the structure also employs a separate "originator VFN" purchased and held by Latitude. This serves four main purposes: providing credit enhancement to the rated notes, adding protection against dilution by way of a separate transferor interest, supporting a liquidity reserve and serving minimum retention requirements. 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. RATING SENSITIVITIES Fitch believes the main rating drivers for credit card transactions are charge-offs, the MPR and the portfolio yield. Rating sensitivity to increased charge-off rate Increase base case by 25% / 50% / 75% Series 2017-1 A1: AAAsf / AAAsf / AAAsf Series 2017-1 A2: AA+sf / AAsf / AA-sf Series 2017-1 B: AA-sf / A+sf / Asf Series 2017-1 C: A-sf / BBB+sf / BBBsf Series 2017-1 D: BBB-sf / BB+sf / BBsf Series 2017-1 E: BB-sf / B+sf/ Bsf Series 2017-VFN: Asf / A-sf / BBB+sf Rating sensitivity to decreased MPR Reduce base case by 15% / 25% / 35% Series 2017-1 A1: AAAsf / AAAsf / AAAsf Series 2017-1 A2: AA+sf / AAsf / A+sf Series 2017-1 B: A+sf / Asf / A-sf Series 2017-1 C: A-sf / BBB+sf / BBBsf Series 2017-1 D: BBB-sf / BB+sf / BBsf Series 2017-1 E: BB-sf / B+sf / B+sf Series 2017-VFN: Asf / BBB+sf / BBBsf Rating sensitivity to decreased yield Reduce base case by 15% / 25% / 35% Series 2017-1 A1: AAAsf / AAAsf / AAAsf Series 2017-1 A2: AAAsf / AA+sf / AA+sf Series 2017-1 B: AAsf / AA-sf / AA-sf Series 2017-1 C: Asf / A-sf / A-sf Series 2017-1 D: BBBsf / BBB-sf / BBB-sf Series 2017-1 E: BB-sf / B+f / B+sf Series 2017-VFN: Asf / Asf / Asf N O & O ORDEN: Second Creditors' Meeting Set for April 13 --------------------------------------------------------- A second meeting of creditors in the proceedings of N O & O Orden Pty Limited has been set for April 13, 2017, at 11:00 a.m., at the offices of Cor Cordis, at One Wharf Lane, Level 20, 161 Sussex Street, in Sydney, NSW. The purpose of the meeting are (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by April 12, at 4:00 p.m. Jason Tang and Mark Hutchins of Cor Cordis were appointed as administrators of N O & O Orden on March 9, 2017. THREE TREE: In Administration, First Meeting Set for April 20 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of Three Tree Investments Pty Ltd will be held at 105A Bowen Street, in Spring Hill, QLD, on April 20, 2017, at 11:00 a.m. David Clout and Patricia Talty at David Clout & Associates were appointed as administrators of Three Tree on April 6, 2017. WRELD TRANSPORT: Second Creditors' Meeting Set for April 21 ----------------------------------------------------------- A second meeting of creditors in the proceedings of Wreld Transport Pty Ltd has been set for April 21, 2017, at 11:00 a.m., at the offices of Vince & Associates, 51 Robinson Street, in Dandenong, Victoria. The purpose of the meeting are (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by April 20, at 4:00 p.m. Peter Robert Vince and Paul William Langdon of Vince & Associates were appointed as administrators of Wreld Transport on March 21, 2017. ========= C H I N A ========= CHINA OIL: Moody's Assigns Ba2 Senior Unsecured Bond Rating ----------------------------------------------------------- Moody's Investors Service has assigned a Ba2 senior unsecured bond rating to China Oil and Gas Group Limited's (COG, Ba2 stable) proposed bond issuance. The ratings outlook is stable. COG plans to use the bond proceeds to redeem the outstanding USD350 million senior unsecured note maturing in April 2018. RATINGS RATIONALE "The proposed bond issuance will not materially affect COG's credit profile as the proceeds will be mainly used for debt refinancing," says Ivy Poon, a Moody's Vice President and Senior Analyst. "Furthermore, the company's 2016 results are consistent with Moody's expectations, underpinned by its improved financial profile following the resolution of the issue of the prolonged delay in cost pass-through in Qinghai Province in late 2015," adds Poon. "Moody's expects COG's credit profile will remain consistent with its Ba2 rating." COG's total gas sales volume increased by roughly 9% to 2,769 million cubic meters in 2016, after excluding the impact from the disposal of its Yinchuan subsidiary. However, its revenue declined by 12.6% to HKD6,446 million in 2016, as a result of (1) an average reduction rate for non- residential gas tariffs of 28% in late 2015, (2) RMB depreciation, and (3) the subsidiary disposal. Its adjusted EBITDA remained stable despite the lower revenue. Its average dollar margin improved to RMB0.37 per cubic meter in 2016 from RMB0.31 per cubic meter a year ago, after the resolution of the cost pass-through issue for its Qinghai project in late 2015. At the same time, the company deleveraged its balance sheet by using its stronger cash flow. Adjusted retained cash flow (RCF)/ debt and debt/ capitalization improved to 16.1% and 50.2%, up from 12.7% and 53.2% a year ago. Moody's expects COG's growing city gas operations and stable financials will continue to counterbalance its heavy concentration in Qinghai Province, where there has been a weakened track record in cost pass-through; the higher business risk exhibited by its upstream operations; and the presence of considerable minority interests. COG's projected metrics will remain broadly comparable to the levels of 2016 in the next two years. However, its margins will face higher levels of seasonality effects as well as mild compression, given that its gas supplier introduced a new pricing mechanism to adjust prices during peak and slack seasons in late 2016. Correspondingly, its average dollar margin dropped in 2H16 compared to 1H16. Moody's will monitor changes in COG's unit costs during 2017. The outlook on the ratings is stable, reflecting Moody's expectation that COG will show stable city gas operations and will keep its upstream operations at a manageable scale. Upgrade pressure on COG's ratings could emerge over time if it 1) establishes a proven track record with timely cost pass-through for its Qinghai projects, and 2) shows increased diversity in revenue, such that Qinghai Province contributes less than 30% of total revenue. Financial metrics indicative of an upgrade could include RCF/debt exceeding 18% and debt/capitalization below 40%-45%. On the other hand, the rating could be downgraded if COG (1) experiences a material increase in its upstream risk, (2) carries out aggressive debt-funded expansion projects or acquisitions, (3) faces adverse regulatory changes, and/or (4) needs to provide additional funding support to its upstream business. Financial metrics indicative of a downgrade could include RCF/debt falling below 12% and debt/capitalization rising above 50% on a sustained basis; or total unencumbered cash and liquid securities held by the holding company and majority controlled subsidiaries falling below RMB700 million. The principal methodology used in this rating was Regulated Electric and Gas Utilities published in December 2013. China Oil and Gas Group Limited mainly engages in the piped city gas business in China. The company also expanded into oil and gas production in Canada in 2014. Its revenue reached around HKD6.5 billion in 2016. The company is listed on the Hong Kong Exchange. Mr. Xu Tieliang, the company's chairman, is the largest shareholder, with a 24.5% stake. CHINA OIL: S&P Assigns 'BB' Rating to Proposed US$ Sr. Notes ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' long-term issue rating and 'cnBBB' long-term Greater China regional scale rating to a proposed issue of U.S.-dollar-denominated senior unsecured notes by China Oil and Gas Group Ltd. (BB/Positive/--; cnBBB/--). The ratings on the notes are subject to S&P's review of the final issuance documentation. The issue rating is the same as the issuer credit rating on China Oil and Gas Group. In S&P's view, the company's diversified portfolio of city-gas concession projects mitigates subordination risk associated with debt at the holding company level. The company intends to use the notes' proceeds to refinance outstanding notes due in April 2018. Based on the preliminary fiscal 2016 financial results published recently, S&P estimates the ratio of funds from operations to debt in 2016 is in line with S&P's expectation. S&P estimates fiscal 2016 EBITDA increased 9% to Hong Kong dollars (HK$) 1.24 billion, according to reported 2016 results, while reported debt decreased 10% to HK$5.36 billion. The gas business was weaker than S&P's expectation but that was offset by its better-than- expected upstream exploration and production business and deleveraging. The gas business suffered from dollar-margin squeeze because the company could not pass through cost increases during the winter. However, to compensate for the margin squeeze, the company's gas procurement costs will decrease from April 1, 2017, which will improve margins this year. The implementation of the gas cost cut and the corresponding dollar-margin expansion will be key to S&P's rating. The better- than-expected operating cash flow and gain from the disposal of a subsidiary also helped reduce leverage in 2016. Despite China Oil and Gas Group's weaker-than-expected financial results, S&P will maintain its positive outlook on the company. The outlook continues to reflect S&P's expectation that China Oil and Gas Group's financial strength will gradually improve due to a growing domestic gas distribution business, as well as stable capital expenditure over the next 12 months. CHINA ZHENGTONG: S&P Lowers CCR to 'B+' on Weaker Leverage ---------------------------------------------------------- S&P Global Ratings lowered its long-term corporate credit rating on China Zhengtong Auto Services Holding Ltd.to 'B+' from 'BB-'. The outlook is stable. S&P affirmed its 'cnBB' long-term Greater China regional scale rating on the China-based auto retailer. "We lowered the rating because Zhengtong's leverage has deteriorated more than we expected and we do not anticipate any material improvement over the next 12 months," said S&P Global Ratings credit analyst Shalynn Teo. "We expect the company's ratio of debt to EBITDA to remain high at 4.0x-5.0x in the next 12 months, compared with about 4.4x in 2016 and 3.3x in 2015, due to aggressive debt-funded expansion amid a slowing economy in China." Lower profitability has also contributed to rising leverage. Zhengtong's EBITDA margin fell to 5.6% in 2016, from 6.4% in 2015, mainly due to weaker new car sales margin and slower after- sales services. S&P revised its assessment of the company's financial risk profile to aggressive from significant based on the above factors. S&P expects Zhengtong will continue to incur significant capital expenditures of Chinese renminbi (RMB) 1.0 billion- RMB1.3 billion for new store openings, while maintaining high working capital outflows to support its new car sales. In S&P's view, profitability will roughly stabilize at current levels. S&P expects Zhengtong to maintain its adjusted EBITDA margins at 5.0%-6.0% over the next 12 months, compared with about 5.6% in 2016, helped by stable gross margins for new car sales and growth in after-sales services. S&P expects gross margins for new car sales to be 2.8%-3.1%, compared with 2.9% in 2016, benefiting from new product cycles of its BMW brands and increasing contribution of higher margin brands such as Mercedes and Porsche. S&P anticipates Zhengtong's profitability and cash flow will stabilize with a better product mix. However, these items could deteriorate over the next 12 months if operating conditions become more challenging, resulting in more aggressive pricing and weaker sales rebates from auto manufacturers, or if the company's operating expenses increases more than S&P expects because of the opening of new stores. In S&P's preliminary assessment of Zhengtong's key credit ratios, S&P excludes the financials of the captive finance subsidiary, Shanghai Dongzheng Automotive Finance Co. Ltd. This is because S&P considers the finance and corporate assets are of a different nature, with varying leverage tolerance. As such, S&P separately assess the captive company's financial profile, together with the parent's financial risk, to arrive at S&P's final assessment of Zhengtong's financial risk profile. Currently, the financial risk profile of the captive does not materially impact S&P's assessment of Zhengtong's financial risk profile as aggressive. S&P's base case assumes Dongzheng's loan balance will increase to RMB6.0 billion-RMB8.0 billion in the next 12 months, from about RMB3.3 billion in 2016. S&P also considers the captive finance segment has no further impact on the rating because S&P believes that it does not introduce further risks such as borrower concentration, currency, or asset and liability mismatches. "We expect Zhengtong's revenue to grow moderately at 3.0%-8.0% over the next 12 months, compared with 7.3% in 2016, despite weak retail sales and rising competition in China. We expect the company will continue to benefit from the still low luxury penetration and stronger product cycle of its key brands, which will support growth of new car sales. Sales of luxury and ultra- luxury branded automobiles accounted for 87.0% of Zhengtong's new car sales in 2016. We expect the company's satisfactory market position and improving product mix and services will continue to support its competitive position. We assess its business risk profile as fair," S&P said. The stable outlook reflects S&P's view that Zhengtong will be able to generate stable and recurring operating cash flows over the next 12 months due to a better product mix. S&P expects the ratio of debt to EBITDA to remain high at 4.0x-5.0x in the next 12 months due to the company's aggressive debt-funded expansion appetite and high working capital outflows. In addition, S&P anticipates that the company will continue to implement strict underwriting standards and satisfactory delinquency ratios for its captive finance operations. S&P could lower the rating if the company's debt-to-EBITDA ratio increases to above 5.0x or EBITDA interest coverage declines to below 2.0x without any sign of improvement. This could happen if: (1) Zhengtong's new car sales are significantly below S&P's expectation or cash flow generation deteriorates more rapidly than S&P anticipates due to higher working capital outflows or weaker profitability; (2) the company takes on a more aggressive debt-funded expansion; or (3) the captive finance operations' leverage is higher than S&P expects. S&P could upgrade the company if Zhengtong's debt-to-EBITDA ratio remains below 4.0x on a sustained basis, which can happen if 1) Zhengtong can increase its profitability through an improved product mix or prudent cost controls; or 2) the company undertakes more disciplined financial management to slow down its aggressive debt-funded expansion. HENGDELI HOLDINGS: Fitch's B+ Ratings Hinges on Asset Disposal -------------------------------------------------------------- Hengdeli Holdings Limited's 'B+' ratings, which are on Rating Watch Negative, will still depend on whether it gains the approval of independent shareholders to dispose of its core operations, even though the company reported an improvement in retail sales in 2H16, Fitch Ratings says. The company said as it released its 2016 financial results that it has scheduled an extraordinary general meeting (EGM) on April 25 and if the plan is approved, the transaction is likely to be completed before June 30. Fitch will resolve the Rating Watch Negative on Hengdeli's ratings on the outcome of the EGM. Fitch placed Hengdeli on Rating Watch Negative in January 2017 following Hengdeli's proposal to dispose a large portion of its core operations, Xinyu Group and Harvest Max, to its founder and chairman Mr. Zhang Yuping. Should the disposal be approved and completed, it would inject abundant liquidity that Hengdeli is expected to use to repay nearly all of the remaining business's debt, but at the cost of the loss of its position as the market leader in the retailing of Swiss watches in China and a severe shrinkage in operating scale. Fitch estimates the size of the remaining group would have been approximately CNY110 million EBITDA in 2015 on a pro forma basis, representing less than 20% of the original consolidated group, which will not warrant a 'B+' rating. If the sale is not approved, the company will continue to actively search for buyers and expects to dispose of either the equity interest or assets of Harvest Max within 2017. Hengdeli said revenue from its continuing operations (excluding Harvest Max) rose 1% in 2H16 from the previous half-year, but declined 4% yoy. The improvement in luxury demand is consistent with observations from other retailers starting in 4Q16, driven by a wealth effect from higher property prices, narrower gaps between domestic and international prices and a curb on overseas purchases EBITDA margin for the continuing operations declined slightly in 2016 due to lower gross margin in Hong Kong from inventory clearance, but distribution costs and administrative expenses was maintained at a stable level of 18% relative to sales. With stringent efforts by the company to reduce inventory, inventory days has also decreased to 230 from a peak of 248 in 2015. JIANGSU NEW: S&P Lowers CCR to 'BB' on China Rating Downgrade ------------------------------------------------------------- S&P Global Ratings lowered its long-term corporate credit rating on Jiangsu New Headline Development Group Co. Ltd. (NHL) to 'BB' from 'BB+'. The outlook is stable. S&P also lowered its long- term Greater China regional scale rating on the company to 'cnBBB-' from 'cnBBB'. At the same time, S&P lowered its long-term corporate credit rating on HK Zhiyuan Group Ltd. (Zhiyuan) to 'BB-' from 'BB'. The outlook is stable. S&P affirmed its long-term Greater China regional scale rating on the company at 'cnBB+'. S&P also lowered its issue rating on the U.S. dollar-denominated senior unsecured notes issued by ZHIYUAN Group (BVI) Co. Ltd. to 'BB-' from 'BB'. At the same time, S&P affirmed its long-term Greater China regional scale rating on the notes at 'cnBB+'. Zhiyuan unconditionally and irrevocably guarantees the notes. NHL is a construction services provider and one of the largest financing and investment companies of the Lianyungang municipal government, which wholly owns NHL. Zhiyuan is NHL's fully owned subsidiary, primarily positioned as the group's sole offshore funding vehicle. "We downgraded NHL and Zhiyuan because we believe the Lianyungang municipal government's weakened credit quality will continue to constrain these companies' credit profiles over the next two years," said S&P Global Ratings credit analyst Apple Li. The Lianyungang government's deteriorated creditworthiness reflects the city's weaker revenue growth and still strong infrastructure investment that push up its debt burden, and higher contingent liabilities than fiscal revenues. "In our view, the city of Lianyungang will maintain a high level of investment in public infrastructure in 2017-2019 to bolster its economic growth. We also project that the city's revenue growth will moderate, driven by the economic slowdown. These factors combined will result in the city's budget deficit after capital accounts to be around 9% of revenues and a rapid accumulation of debt both at the city level and at its government-related entities (GREs). We project that the city's tax-supported debt will exceed 270% of the city-level operating revenues. Contingent liabilities related to state-owned enterprises (SOEs) will also remain high. Also constraining Lianyungang's creditworthiness is the evolving and unbalanced institutional framework in which Lianyungang operates, which constrains the government's budgetary flexibility due to the relatively centralized fiscal system in China. Nevertheless, we assume that Lianyungang will maintain more than adequate cash reserves and liquid investments to cover its annual debt service," S&P said. The rating on NHL mainly reflects the credit profile of the Lianyungang government. In S&P's opinion, the company has an extremely high likelihood of receiving timely and sufficient extraordinary government support if it comes under financial stress. The rating on NHL is three notches above the company's stand-alone credit profile (SACP) of 'b', which reflects the company's high dependence on the government's public spending plan, small scale, limited diversification, and significant debt- funded expansion. S&P's assessment of extraordinary government support reflects these characteristics of NHL: -- Very important role to the government. NHL undertakes construction services on behalf of the Lianyungang government and develops infrastructure projects on a build- and-transfer basis, particularly for the Lianyungang Economic and Technological Development Zone, an important economic region for the city. Corporates with operations in the zone could consistently contribute 15%-20% to the city's important economic measures, such as production value, and budgetary revenues. NHL is the sole construction operator in the zone. Most of NHL's businesses are not commercial in nature and the company performs these mainly for public service, such as urban roads and public housing. Still, S&P do not consider NHL as having a critical role to the government. This is because the company's construction and infrastructure development activity can be replaced by other providers whenever necessary, although that won't be so easy considering NHL's dominant position in the city. -- Integral link with the government. The municipal government owns 100% of NHL, and S&P do not expect it to reduce its stake because the company will continue to undertake a public service for the government. The government appoints NHL's senior management, drives the company's business strategy, and directly controls it through a commission such that S&P believes it has direct control over its operations. The government is also NHL's primary client and dominant counterpart of account receivables; accordingly, S&P believes the severability of non-government debt from government debt is limited. The stable outlook on NHL reflects S&P's view of the credit profile of the Lianyungang municipal government. S&P expects Lianyungang's financial management will be able to prevent slippage of budget deficit and limit debt accumulation of its GREs in the medium term despite high infrastructure spending. It will allow the city to stabilize its debt burden, albeit at high levels, and ensure exceptional debt service coverage with cash and investments. At the same time, S&P continues to see an extremely high likelihood that NHL will receive extraordinary support from the government over the next 12 months. Ms. Li added: "The stable outlook on Zhiyuan reflects that on NHL and our view that Zhiyuan will remain highly strategic to its parent over the next 12 months. The rating on Zhiyuan will move in tandem with that on NHL (with a one-notch differential) unless we reassess Zhiyuan's group status." A downgrade is remote in the coming 12 months. But S&P could lower the rating on NHL if S&P believes the creditworthiness of the Lianyungang government will further substantially deteriorate, the likelihood of extraordinary government support has materially diminished, or the company's SACP deteriorates substantially. Heightened policy risk that may prevent the Lianyungang municipal government from providing extraordinary support in a timely manner would trigger a downgrade. The Lianyungang government significantly reducing its ownership of NHL or loosening its supervision control could indicate diminishing government support. Government support could also decline if NHL's role as a construction services provider and one of the largest financing and investment companies of the Lianyungang municipal government weakens. This could happen if the government reduces its new project releases due to a local economic slowdown, or opens such services for other SOEs or for commercial entities. An upgrade is also remote in the coming 12 months. But S&P could raise the rating on NHL if S&P believes the creditworthiness of the Lianyungang government can improve. In an unlikely scenario, S&P could raise its assessment of the Lianyungang government's creditworthiness if faster-than-expected revenue growth allows the city's financial management to curb debt accumulation both at the city level and at its GREs, reducing tax-supported-debt to less than 270% of operating revenue. S&P could also raise its assessment of the Lianyungang government's creditworthiness if the government adopts more prudent fiscal management. JINGRUI HOLDINGS: Fitch Affirms 'B-' IDR on Improved Liquidity -------------------------------------------------------------- Fitch Ratings has downgraded Chinese homebuilder Jingrui Holdings Limited's (Jingrui) senior unsecured rating and the ratings of all outstanding bonds to 'CCC' from 'CCC+' and removed the Rating Watch Negative, with a Recovery Rating of 'RR6' from 'RR5'. The agency has affirmed the Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B-', and the Outlook remains Negative. The affirmation of the IDR reflects Jingrui's significantly improved liquidity, driven by higher contracted sales and slowing land replenishment. The Negative Outlook has been maintained because the company still faces uncertainties over profitability as local governments maintain tight control of housing prices in Jingrui's core markets; while the company also faces pressure to replenish its land bank. Furthermore, Fitch believes Jingrui's obligation towards its JVs will put pressure on its financial profile. The two-notch difference between the senior unsecured rating and the IDR reflects Fitch's expectations of lower recovery in the event of a default because higher priority debt to Jingrui's US dollar senior notes was 92% of total debt in 2016 compared with 81% in 2015. On the other hand, adjusted inventory had fallen by 45% to CNY7.3 billion, resulting in drastically lower liquidation value. The issuance of the USD400 million senior notes on April 5, 2017 will lower the proportion of higher-priority debt, but this by itself is insufficient to improve its Recovery Rating. KEY RATING DRIVERS Leverage under Pressure: Jingrui's leverage (as measured by net debt/adjusted inventory) had increased to 70% by end-2016 from 56% in 2015. Despite the decline in 2016 net debt to CNY3.7 billion from CNY7.3 billion in 2015, a sharper fall in its adjusted inventory and its guarantees to JVs have pushed up leverage. The large increase in the net amount owing to its JVs in 2016 -- by CNY4.6 billion relative to a CNY79 million decrease in investments in JVs -- was the main adjustment resulting in the lower adjusted inventory. The CNY1.2 billion increase in guarantee provided by Jingrui for debt of its JVs indicated that the indebtedness of its JVs has increased. Fitch estimates Jingrui's leverage would be 56% if its JVs are proportionately consolidated. Fitch expects Jingrui's leverage to remain above 60% in 2017- 2018, driven by high land-replenishment requirements. Jingrui's total land bank fell by 25% in 2016. Management has the option to manage its land-acquisition pace, but flexibility is limited - given its land bank to revenue ratio measured by GFA had fallen to below 2X by end-2016. Lower Recovery Rating: Jingrui's lower adjusted inventory at end- 2016 had partly contributed to its lower Recovery Rating, and Fitch expects this situation is likely to persist over the next 12 months despite Jingrui having acquired more projects in 1Q17. Fitch has reviewed multiple recovery analysis scenarios that include Jingrui's newly issued USD400 million bond issuance, additional repayment of onshore debt, and acquisition of more projects in 1Q17. Fitch believes that homebuilders need a safety level of available cash balances to meet operational expenses, debt servicing, as well as initial funding for project acquisitions. Fitch Recovery Rating does not take into account such cash balances, and Fitch ascribe no recovery value to it since it may substantially be used to meet operational and financial commitments. Thin Margin: Jingrui's EBITDA margin improved to 6% in 2016 from -0.1% in 2015, thanks to a higher selling price and larger operating scale. The average selling price (ASP) for contracted sales increased by 16% to CNY12,406/square metre (sq m). Fitch believes the EBITDA margin will remain under pressure in 2017 as it recognises poor profitability projects sold in the past, and will only see slow margin improvement from 2018 - given its high land acquisition costs. Strong Contracted Sales: Jingrui's contracted sales increased by 93% to CNY 16.8 billion, driven by a 67% increase of gross floor area (GFA) sold and a 16% increase by ASP. Fitch expects contracted sales growth to come off in 2017 as the company will slow the sales pace to ease the inventory depletion and manage its leverage. Contracted sales increased by 2% in 3M17. Improved Liquidity: The company has restructured its debt maturity by replacing the short-term borrowings with longer- maturity corporate bonds. Jingrui's total cash of CNY10 billion and undrawn credit facilities of CNY6bn at end-2016 are sufficient to cover its CNY4bn short-term borrowings. The newly issued USD400m 7.75% senior notes due 2020, to be partially used to refinance its existing higher-coupon US dollar notes, have provided additional liquidity to support land-bank expansion as well as lowering financing costs. Liquidity in the next 12-18 months will be determined largely by the scale of its land acquisition. DERIVATION SUMMARY Jingrui has a similar EBITDA scale to Sunshine 100 China Holdings Ltd (B-/Negative), but Sunshine 100 has a slower sales and better profitability. Sunhine 100 has higher leverage, but a larger land bank. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Jingrui include: - Contracted sales GFA to decrease 35% in 2017, but increase 5% and 5% in 2018 and 2019, respectively, due to the higher quality land bank with smaller GFA. - Contracted sales ASP to increase around 40% in 2017, 25% in 2018 and 20% 2019 due to price increases in Tier 1 and 2 cities in the Yangtze River Delta area and Jingrui's shift to higher- tier cities - Land premium of CNY10bn in 2017 with higher per sq m land costs due to the focus on higher-tier cities. Land purchases accelerates in 2017 and 2018 slowdown afterwards to replenish the land bank, with the ratio of land acquisition GFA to contracted sales GFA at around 0.8-1.0x for 2017-2019 - Construction cost per sq m around CNY4,000-4,500 in 2017-2019. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Net debt/ adjusted inventory sustained above 70% (2016:70% or 56% if joint ventures are proportionately consolidated) - EBITDA margin sustained below 10% (2016: 6%) - Cash / short-term debt sustained below 60 %( 2016: 2.5x) - Deterioration in refinancing prospects that has significant adverse impact on its liquidity profile The current rating is on Negative Outlook. Fitch does not anticipate developments with a material likelihood, individually or collectively, of leading to a rating upgrade. However, if the above factors do not materialise, then the Outlook may revert to Stable. LIQUIDITY Jingrui has restructured its debt maturity by replacing the short-term borrowings with longer-maturity corporate bonds. Total cash of CNY11 billion and undrawn credit facilities of CNY6 billion at end-2016 are sufficient to cover its short-term borrowings (CNY4 billion). The liquidity position in the next 12- 18 months will be determined largely by the scale of its land acquisition. Jingrui has been repurchasing its offshore bonds with proceeds from its lower-cost onshore issuance. This had reduced its borrowing cost to 8.50% by end-2016 from 9.68% at end-2015. FULL LIST OF RATING ACTIONS Company Name Jingrui Holdings Limited Long Term Foreign-Currency IDR affirmed at 'B-', Outlook Negative Senior unsecured rating downgraded to 'CCC' from 'CCC+', with a Recovery Rating of 'RR6' from 'RR5'; Rating Watch Negative removed Rating on USD150 million 13.625% senior unsecured bond due 2019 downgraded to 'CCC' from 'CCC+', with a Recovery Rating of 'RR6' from 'RR5'; Rating Watch Negative removed Rating on USD150 million 13.25% senior unsecured bond due 2018 downgraded to 'CCC' from 'CCC+', with a Recovery Rating of 'RR6' from 'RR5'; Rating Watch Negative removed POWERLONG REAL: Moody's Hikes Corporate Family Rating to B1 ------------------------------------------------------------ Moody's Investors Service has upgraded Powerlong Real Estate Holdings Limited's corporate family rating to B1 from B2, and its senior unsecured ratings to B2 from B3. The ratings outlook is stable. RATINGS RATIONALE "The ratings upgrade reflects Moody's expectations that the company's growth in scale, as well as the improvement in its liquidity position and debt-service ability, as measured by EBIT/interest coverage and rental revenue/interest, will be sustained over the next 12 to 18 months," says Anthony Lee, a Moody's Analyst. Powerlong grew its scale in 2016 when its contracted sales increased year-on-year by 23% to reach RMB17.6 billion and revenue by 20% to RMB14.3 billion. Such levels well position the company in relation to its B1 rated Chinese property peers. Moody's expects Powerlong to continue the modest growth in its contracted sales and revenue, even if the residential property market weakens in 2017. This is because the company can receive sales contributions from commercial properties, though their cash collections could be longer than that of residential properties. In addition, Moody's expects Powerlong will maintain its track record of ramping up its mall operations; as well as achieving stable occupancy rates and rental yields for its growing mall portfolio. Powerlong's rental income will register another 25% - 30% growth in the next 12-18 months, as it will open five retail malls to reach a total of 36 malls by end-2017. Its average level of mall revenue will improve over the next 12- 18 months because it will increase lifestyle services to attract traffic and spending. Moody's estimates that the company will generate an annual rental income of about RMB750 million to RMB800 million in 2017. Therefore, Powerlong's adjusted rental income/interest coverage will further improve to 0.4x -- 0.5x in the next 12-18 months from 0.3x in 2016. Furthermore, the enhanced stability in debt servicing ability has reached a level similar to that for its rated B1 peers which have streams of non-development revenue to cover interest payments. Powerlong has also benefited from the low-cost funding environment. Its weighted average funding cost declined to 6.2% in 2016 from 7.6% in 2015. As a result, its EBIT/Interest increased to 2.8x in 2016 from 2.4x in 2015. Moody's expects the company's EBIT/interest will improved to 3.0x in 2017 from 2.8x in 2016. Such a level is comparable to that of its B1 rated Chinese property peers. Powerlong's improved liquidity management also supports the upgrade. The company has extended its debt maturity profile. Its proportion of borrowings with a maturity of shorter than 2 years fell to 43% at end-2016 from 60% at end-2015. The company's liquidity position is adequate. Its cash and deposit balances totaled RMB10.1 billion at end-2016, covering 1.3x of its short-term debt compared to 1.1x in 2015. Its B1 corporate family rating (CFR) reflects its: (1) Track record of developing and selling commercial and residential properties; (2) Ability to generate non-development revenue, which improves the stability of its debt servicing; and (3) Expansion into higher-tier cities where demand for its properties is more favorable. However, its credit profile is constrained by execution risk, the high level of capital demand associated with its business strategy, and high debt leverage, as measured by revenue/debt. Powerlong's bond ratings are notched down to B2, reflecting structural and legal subordination. Secured and subsidiary debt (priority debts)/total assets stood at around 36% at end-2016. Moody's expects the company's priority debt/total assets will remain above 15% of total assets over the next 12-18 months. The stable outlook reflects Moody's expectations that Powerlong is able to (1) maintain growth in its contracted sales, especially of commercial properties, even in a weak property market in 2017; (2) ramp up its malls to generate streams of rental revenue that will improve coverage on interest expenses to a level of about 0.4x-0.5x over the next 12-18 months; and (3) maintain adequate liquidity and exercise prudence in land acquisitions. Rating upgrade pressure could arise if Powerlong demonstrates a track record of stable growth at a larger scale and of maintaining adequate liquidity and sound credit metrics, especially an improved level of debt leverage that matches its business model of holding investment properties. With respect to its credit metrics, upgrade pressure will be indicated by (1) adjusted EBIT/interest rising above 3.5x; (2) rental income/interest rising above 0.6x; (3) adjusted debt/adjusted total capitalization falling below 50%; and/or (4) cash/short-term debt rising above 1.5x on a sustained basis. On the other hand, rating downgrade pressure could emerge if the company shows a deterioration in sales or undertakes more aggressive expansion that weakens its credit metrics, including (1) adjusted EBIT/interest declining below 2.5x; (2) rental income/interest declining below 0.4x;(3) adjusted debt/adjusted total capitalization trends above 55%; and/or (4) cash/short term debt ratio falls below 100%. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in April 2015. Powerlong Real Estate Holdings Limited is a Chinese developer focused on building large-scale integrated residential and commercial properties in China (Aa3 negative). At end-2016, its land bank for development totaled around 10.7 million square meters (sqm) in gross floor area (GFA) under development and for future development, as well as 2.5 million sqm of malls in operation. The company listed on the Hong Kong Exchange in October 2009. The founding Hoi family held an aggregate 64.13% stake in Powerlong at end-2016. YANZHOU COAL: S&P Assigns 'B+' Rating to Proposed US$ Securities ---------------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issue rating and 'cnBB-' long-term Greater China regional scale rating to a proposed issue of U.S. dollar-denominated fixed-rate senior perpetual securities by Yancoal International Resources Development Co. Ltd. Yanzhou Coal Mining Co. Ltd. (Yanzhou Coal: BB-/Negative/--; cnBB/--) provides an unconditional and irrevocable guarantee for the securities. China-based Yanzhou Coal is the second-largest coal producer controlled by the Shandong provincial government and is the sole owner of the issuer Yancoal International Resources Development. The ratings on the perpetual securities are subject to S&P's review of the final issuance documentation. The issuer intends to use the issuance proceeds to refinance its existing debt and on-lend to Yanzhou Coal's subsidiaries for capital expenditure, working capital, and general corporate purposes. S&P Global Ratings considers the securities to have minimal equity content due to: (1) lack of subordination as the securities/the guarantee constitutes the senior obligations of the issuer/guarantor; (2) the issuer's option to call after three years although it has no fixed repayment date, which is shorter than the minimum five/ten years non-call period for intermediate/high equity content under our criteria; and (3) a step-up coupon of 400 basis points at the first reset date, which is higher than the maximum of 100 basis points step-up coupon for equity content under our criteria. S&P will therefore treat 100% of the securities as debt in the financial ratio calculations of Yanzhou Coal. The issue rating on the securities is one notch below the issuer credit rating on Yanzhou Coal to reflect the optional deferral of the coupon. The rating on Yanzhou Coal has factored in the extraordinary government support if needed, which in S&P's view, could flow down to the perpetual securities, given that the company's guarantee constitutes its senior obligations. S&P noted there are no financial covenants applicable to the securities and the securities may be redeemed early under a number of circumstances including but not limited to change of control, breach of covenants, and a relevant indebtedness default event. S&P believes the issuance will have a minimal impact on Yanzhou Coal's cash flow and leverage ratios. The issuer rating on Yanzhou Coal and issue ratings on the US$450 million guaranteed notes (BB-/--; cnBB/--) and the US$550 million guaranteed notes (BB-/--; cnBB/--) issued by Yancoal International Resources Development are unaffected by the proposed issuance of the guaranteed perpetual capital securities. On March 31, 2017, Yanzhou Coal announced that it had recorded a net profit of Chinese renminbi 2.1 billion (under Chinese generally accepted accounting principles) in 2016, up 140% year- over-year. The company's adjusted EBITDA increased approximately 29% year-over-year. The financial improvement is mainly due to a rebound in coal prices in the second half of 2016 and Yanzhou Coal's cost cutting and optimization of production mix. ================ H O N G K O N G ================ IMPERIAL PACIFIC: Moody's Lowers Corporate Family Rating to Caa1 ---------------------------------------------------------------- Moody's Investors Service has downgraded Imperial Pacific International Holdings Ltd.'s corporate family rating to Caa1 from B3. The rating outlook is negative. At the same time, Moody's has withdrawn the B2 senior secured rating on the proposed USD bonds of Imperial Pacific International (CNMI), LLC., because the bonds have not been issued as planned. RATINGS RATIONALE "The downgrade of Imperial Pacific's corporate family rating reflects Moody's concern over the company's trend of weak operating cash flow," says Kaven Tsang, a Moody's Vice President and Senior Credit Officer. "The downgrade also reflects Moody's considerations that the high collection risk on the company's accounts receivables will unlikely improve further over the next 12-18 months," adds Tsang. Moody's estimates that the company's operating cash flow could be negative in 2016, if the deposits of around HKD2.1 billion to guarantee its overdue accounts receivables are excluded. The company reported negative operating cash flow of HKD711 million and HKD166 million in 2015 and 2014, respectively. There is no visibility over when its operating cash flows will prove strong, although the company has announced that it will open its new casino in Saipan in April 2017. Moody's is also concerned over Imperial Pacific's liquidity position and the sustainability of its business model, given its high levels of accounts receivables. The company reported accounts receivables totaling HKD5.3 billion in 2016 against gross revenue of HKD7.5 billion, a situation that is indicative of its weak management of accounts receivables. Moody's notes that the current temporary casino is reliant on VIP gaming operations, which accounted for HKD7.1 billion or 95% of total revenue in 2016. The company also demonstrates some concentration of credit risk, as seen by the fact that at end-2016 its five largest customers accounted for 33% of its accounts receivables (53% in 2015). Imperial Pacific has asked its clients to arrange for collateral in the form of guaranteed deposits. However, the risk related to its accounts receivables remains high. This situation is reflected in the company writing off HKD300 million of accounts receivables and increasing its impairment provision by HKD847 million in 2016. Nevertheless, Imperial Pacific's Caa1 corporate family rating also reflects its monopoly status in Saipan's gaming market. At the same time, the rating takes into account: (1) the lack of a track record in operating a gaming business with strong operating cash flows in Saipan; (2) the high liquidity risk related to its overdue accounts receivables; and (3) the high risk related to the ramping up of the new casino in Saipan, which is under construction. The negative rating outlook incorporates the company's weak liquidity position and the high risk around the ramping up of its new casino. These factors raise the risk of a default on its debt obligations. The company's rating is unlikely to be upgraded in the near term, given the negative outlook. Nonetheless, the rating outlook could return to stable, if the company: (1) improves the collection of its accounts receivables; (2) completes the new hotel with adequate funding and within the time granted by the authorities; and (3) improves its liquidity position and operating cash flow. On the other hand, the company's rating could be downgraded, if the company's defaults on its payment obligations. The principal methodology used in these ratings was Global Gaming Industry published in June 2014. Imperial Pacific International Holdings Ltd. is a holding company listed on the Hong Kong Stock Exchange. Through its 100%-owned subsidiary - Imperial Pacific International (CNMI), LLC - it holds an exclusive gaming license for the island of Saipan, in the Commonwealth of the Northern Mariana Islands (unrated). ========= I N D I A ========= AMUL FEED: Ind-Ra Assigns 'BB' Long-Term Issuer Rating ------------------------------------------------------ India Ratings and Research (Ind-Ra) has assigned Amul Feed Private Limited (AFPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR117.5 mil. Fund-based working capital limit assigned with 'IND BB/Stable' rating; -- INR19.67 mil. Long-term loans assigned with 'IND BB/Stable' rating KEY RATING DRIVERS The ratings reflect AFPL's moderate credit profile. Revenue was INR534 million in FY16 (FY15: INR93 million), EBITDA margins were 4.9% (5.2%), net leverage (total Ind-Ra adjusted net debt/operating EBITDAR) was 4.4x (19.8x) and interest cover (operating EBITDA/gross interest expense) was 2x (1.5x). The improvement in the net leverage and interest coverage resulted from an improvement in the operating EBITDA. The ratings are also constrained by the firm's tight liquidity position as reflected by 99.47% average utilization of fund-based limits during the 12 months ended February 2017. The ratings, however, are supported by AFPL's strong relationships with customers and suppliers, and the promoter's over 10 years of experience in the poultry feed industry. Also, the company has a distribution network of over 150 dealers in Jharkhand, Bihar and Uttar Pradesh. The agency believes the company's credit metrics will improve with revenue growth and a decline in debt level on account of repayment of the existing loan. RATING SENSITIVITIES Positive: An increase in the scale of operations, along with a sustained improvement in the credit metrics will be positive for the ratings. Negative: Any decline in revenue or the EBITDA margins leading to deterioration in the credit metrics will be negative for the ratings. COMPANY PROFILE Incorporated in December 2003, AFPL manufactures poultry feed at its installed capacity of 43,200MTPA in Ranipur, Patna. AFPL also has its own hatchery unit with a production capacity of 130,000 units of eggs per month. Directors of AFPL are Ashok Kumar Singh, Ranju Devi, Veena Devi, Asha Devi, Sanjay Prasad and Anand Kumar. The day-to-day affairs of the company are looked after by Mr. Ashok Kumar Singh. CHLORO PARAFFINS: Ind-Ra Affirms 'D' Long-Term Issuer Rating ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has affirmed United Chloro Paraffins Private Limited's (UCPPL) Long-Term Issuer Rating at 'IND D'. Instrument-wise rating actions are: -- INR117.5 mil. Fund-based limits affirmed with 'IND D' rating; and -- INR182.5 mil. Non-fund-based limits affirmed with 'IND D' rating KEY RATING DRIVERS The affirmation reflects UCPPL's tight liquidity position with an average utilization of over 115% of working capital limits for the 12 months ended March 2017, leading to delays in debt servicing. RATING SENSITIVITIES Positive: Timely debt servicing and use of working capital facilities within limits for three consecutive months would be positive for the ratings. COMPANY PROFILE Kolkata-based, UCPPL was incorporated in July 2003. The company manufactures chlorinated paraffin wax, hydro chloric acid and plastic masterbatches and antifab compounds. Mr. Debdip Ghosh, Mr. Gobinda Charan Ghosh, Mr. Vijay Kumar Tiwary and Mr. Gopal Khandelwal are the promoters. CONSOLIDATED CONSTRUCTION: ICRA Reaffirms INR1275cr Loan Rating D ----------------------------------------------------------------- ICRA Ratings has re-affirmed the rating assigned to the INR1962.05 crore term loans, fund based and non-fund based working capital facilities and INR50 crore Non-Convertible Debenture programme of Consolidated Construction Consortium Limited at [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term, Fund based facilities 380.00 [ICRA]D; re-affirmed Long term, Term Loans 72.05 [ICRA]D; re-affirmed Short term, Fund based facilities 190.00 [ICRA]D; re-affirmed Short term, Non fund based facilities 1275.00 [ICRA]D; re-affirmed Proposed facilities 45.00 [ICRA]D; re-affirmed Non-Convertible Debentures 50.00 [ICRA]D; re-affirmed Rationale The rating re-affirmation takes into account the continued delays in debt servicing by the company. The rating action is based on the best available information. As part of its process and in accordance with its rating agreement with CCCL, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings, and had sent reminders to the company for the same and for the payment of surveillance fee that became overdue; however despite multiple requests; the company's management has remained non-cooperative. ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the company's rating is now denoted as: "[ICRA]D ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Consolidated Construction Consortium Limited was incorporated in 1997 as a public limited company by four former employees of L&T: Mr. R. Sarabeswar, Mr. S. Sivaramakrishnan, Mr. V. Janarthanam, and Mr. T.R. Seetharaman. Since inception, the company has concentrated on construction and related activities in the commercial, infrastructure, industrial and residential sectors. To provide turnkey construction solution to clients, CCCL has set up subsidiaries including Consolidated Interiors Limited (for interior contracting and fit-out services); Noble Consolidated Glazings Limited (for glazing services); and CCCL Power Infrastructure Limited (for undertaking BOP orders for power projects). DHINGRA EXPORTS: CARE Assigns B+ Rating to INR8.50cr ST Loan ------------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of Dhingra Exports, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 1.50 CARE B+; Stable Assigned Short-term Bank Facilities 8.50 CARE A4 Assigned Detailed Rationale & Key Rating drivers The ratings assigned to the bank facilities of Dhingra Exports are constrained by small & fluctuating scale of operations with low profitability margins, leveraged capital structure, elongated operating cycle and customer concentration risk. The ratings are further constrained by foreign exchange fluctuation risk, susceptibility to fluctuation in raw material prices, monsoon dependent operations, firm's presence in fragmented nature of industry and partnership nature of its constitution. The ratings, however, derive strength from experienced management, established track record of entity and its favorable processing location. Going forward, the ability of the firm to scale up its operations while improving margins & gearing and managing its working capital requirements efficiently would remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced management and established track record of entity: Mr. Shankar Dhingra has seven years of experience while Mr. Narendra Dhingra & Mr. Ram Ditta Mal Dhingra have around three and a half decades of industry experience. The firm is into business for the past two and a half decades which aids the firm in having established relationship with customers and suppliers. Favorable processing location: The firm's processing facility is situated at Kurukshetra, Haryana which is one of the highest producers of paddy in India. Its presence in the region gives additional advantage over the competitors in terms of easy availability of the raw material as well as favorable pricing terms. Key Rating Weakness Small and fluctuating scale of operations with low profitability margins: Despite being in operations for around two and a half decades, the firm's scale of operations has remained low marked by TOI of INR32.38 crore for FY16 (refers to the period April 01 to March 31). Furthermore, the profitability margins of the firm stood weak as indicated by PBILDT margin and PAT margin of 2.44% and 0.45% respectively in FY16. Leveraged capital structure and elongated operating cycle: DE has leveraged capital structure with overall gearing ratio of 4.01x as on March 31, 2016. The average operating cycle of the firm stood elongated at 130 days for FY16. Customer concentration risk: The firm mainly exports its products to single customer based in UK. Thus, the firm is exposed to customer concentration risk and any adverse change in procurement policies of this customer may adversely affect the business of DE. Foreign exchange fluctuation risk The firm is dependent upon exports and its exports contribution to total sales stood at 89% in FY16 while the raw material is completely procured from the domestic markets. With initial cash outlay for sales in domestic currency & significant chunk of sales realization in foreign currency, the firm is exposed to the fluctuation in exchange rates. Though, the firm hedges 70% of its exports receivables through forward contracts, around 30% remains unhedged exposing it to sharp appreciation in the value of rupee against foreign currency which may impact its cash accruals. Susceptibility to fluctuation in raw material prices and monsoon dependent operations: 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 price of rice moves in tandem with the prices of paddy but usually with a time lag. Since there is a long time lag between raw material procurement and liquidation of inventory, the firm is exposed to the risk of adverse price movement resulting in lower realization than expected. Fragmented nature of industry coupled with high level of government regulation: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. Furthermore, the 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. Partnership nature of constitution: BBS's constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency and the firm being dissolved upon the death/retirement/insolvency of partners. Dhingra Exports (DE) was established in April, 1992 and is currently being managed by Mr. Shankar Dhingra, Mr. Narendra Dhingra and Mr. Ram Ditta Mal Dhingra as its partners sharing profit and loss in the ratio of 35%, 40% and 25% respectively. The firm is engaged in processing of paddy and milling of rice at its manufacturing facility located at Kurukshetra, Haryana having an installed capacity of 21600 tonnes per annum as on March 31, 2016. DE procures paddy directly from local grain markets through commission agents located in Haryana. The firm mainly exports its products to single customer based in UK [exports constituted around 89% of the total income in FY16]. DE is also engaged in processing of rice on job work basis which constituted around 3% of the total income in FY16. In FY16, DE has achieved a total operating income of INR32.38 crore with PAT of INR0.15 crore, as against the total operating income of INR48.78 crore with PAT of INR0.09 crore in FY15. In 7MFY17 (Provisional), the firm has achieved total operating income of INR23.35 crore. ELECTROMEC ENGINEERING: Ind-Ra Assigns D Long-Term Issuer Rating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Electromec Engineering Enterprises (EEE) a Long-Term Issuer Rating of 'IND D'. The instrument-wise rating actions are: -- INR35 mil. Fund-based working capital limit assigned with 'Long-term IND D/ Short term IND D' rating; and -- INR32.50 mil. Non-fund-based working capital limit assigned with 'Short-term IND D' rating KEY RATING DRIVERS The ratings reflect the company's overutilization of the cash credit limits and inconsistency in the payment of interest due on them during the six months ended March 2017. RATING SENSITIVITIES Positive: Timely debt servicing for at least three consecutive months could result in a positive rating action. COMPANY PROFILE Electromec Engineering Enterprises was established in 1988 and manufactures power & distribution transformers and related components. The firm has a manufacturing facility and head office in Rampur (Uttar Pradesh) and a branch office in Rudarapur (Uttarakhand). GAYATRI DYE: Ind-Ra Assigns 'B+' Long-Term Issuer Rating -------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Gayatri Dye Chem (GDC) a Long-Term Issuer Rating of 'IND B+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR11.55 mil. Term loan assigned with 'IND B+/Stable' rating; and -- INR50 mil. Fund-based limits assigned with 'IND B+/Stable' rating KEY RATING DRIVERS The ratings reflect GDC's nascent stage of operations as the company started its commercial operations from February 2016. During FY16, GDC reported a revenue of INR31 million. The ratings, however, are supported by GDC's moderate credit profile with interest coverage (operating EBITDA/gross interest expense) of 11.3x in FY16, net leverage (net adjusted debt/operating EBITDA) of 9.1x and operating EBITDA margin of 6.8%. The ratings are further supported by the promoter's experience of more than three decades in manufacturing of reactive dyes. The ratings also reflect GDC's moderate liquidity position with around 40% average maximum utilization of its fund based limits for the four months ended February 2017. RATING SENSITIVITIES Positive: An improvement in the scale of operations and the overall credit metrics could be positive for the ratings. Negative: Deterioration in the overall credit metrics could be negative for the ratings. COMPANY PROFILE GDC was incorporated in 2015, and started the production of reactive dyes during 4QFY16. The company is into manufacturing of wide range of reactive dyes for industrial application. The company is based out in Ahmedabad, Gujarat operating with an installed capacity of 1680000kg per annum. According to 11MFY17 unaudited financials, GDC reported revenue of around INR408 million. GOKUL STEELS: Ind-Ra Assigns 'B+' Long-Term Issuer Rating --------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Gokul Steels Private Limited (GSPL) a Long-Term Issuer Rating of 'IND B+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR42.4 mil. Fund-based limits assigned with 'IND B+/Stable' rating; and -- INR64.5 Term loans assigned with 'IND B+/Stable' rating KEY RATING DRIVERS The ratings reflect GSPL's small scale of operations and moderate credit metrics. Revenue increased to INR377 million in FY16 from INR221 million in FY15, driven by the execution of a higher number of orders resulting from an increase in capacity utilization. In FY16, EBITDA interest coverage (operating EBITDA/interest) was 2x (FY15: 1.2x), net financial leverage (net debt/operating EBITDA) was 3.9x (7.6x). The improvement in EBITDA interest coverage and net financial leverage was due to a rise in EBITDA. EBITDA margin stood at 7.4% in FY16 (FY15: 7.0%). The ratings also reflect GSPL's tight liquidity position, indicated by an average maximum utilization of 97% for the 12 months ended February 2017. The ratings, however, are supported by GSPL's founder's experience of more than a decade in the iron and steel industry and strong customer base. RATING SENSITIVITIES Positive: A positive rating action may result from a sustained improvement in the liquidity position and credit metrics. Negative: A negative rating action may result from sustained deterioration in the liquidity position and credit metrics. COMPANY PROFILE GSPL was founded in May 2014 by Mr. Vivek Kasera. GSPL is engaged in the manufacturing of angles, flats, bars, rounds and other structural steel items. The company has a steel structural rolling mill with a production capacity of 28,000 metric tonnes per annum in Fatwa, Patna District, Bihar. The mill commenced operations in May 2014. HEM CERAMICS: ICRA Assigns B+ Rating to INR4.72cr Loan ------------------------------------------------------ ICRA Ratings has assigned the long-term rating of [ICRA]B+ on the INR1.22-crore term-loan facility and the INR3.50-crore working capital facility of Hem Ceramics (HC). ICRA has also assigned the [ICRA]A4 rating on the INR1.85-crore short-term non-fund based facility of HC. Further, ICRA has also assigned the long-term rating of [ICRA]B+ and short-term rating of [ICRA]A4 on the INR0.43 crore unallocated limits of HC. The outlook assigned on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Limits 4.72 [ICRA]B+(Stable); Assigned Non-fund Based Limits 1.85 [ICRA]A4; Assigned Unallocated Limits 0.43 [ICRA]B+(Stable) and [ICRA]A4; Assigned Rationale The assigned ratings are constrained by HC's modest operating scale, characterised by stagnancy in the revenue witnessed in the previous four years and a decline in revenue in FY2016 due to limited product portfolio and diminishing realisations. The ratings are further constrained by the firm's weak financial profile, evident from its low profitability and stretched working capital intensity, cause of significantly higher year-end inventory holdings. The ratings also take into account the high competition in the ceramic tile industry due to the presence of large established tile manufacturers and unorganised players as well as dependence of the firm's vulnerability to the performance of its key consuming sector-the real estate industry. The ratings also factor in the firm's vulnerability to adverse movements in prices of key input materials and gas. ICRA also notes that HC is a partnership concern and thus, any substantial withdrawal from the capital account in future could adversely impact the credit profile of the firm. The ratings, however, favourably factor in the experience of the partners in the ceramics business as well as HC's locational advantage, giving it easy access to raw materials. ICRA further notes that the declining gas prices will result in considerable savings in fuel cost, alleviating the cost pressures to some extent. ICRA expects HC's turnover to witness a marginal decline in FY2017 and remain stagnant over the next two to three years, considering the current demand scenario and lower realisations in the ceramic industry, mainly in the wall tiles segment. ICRA expects HC's working capital intensity to remain stretched in the near term. Furthermore, the firm's ability to increase the scale of operations and manage its working capital efficiently would be the key rating sensitivity. Key rating drivers Credit strengths * Extensive experience of the partners in the ceramic industry * Location in Morbi, India's ceramic hub, provides easy access to raw material sources Credit weaknesses * Modest scale of operations; financial profile characterised by stagnancy in revenue since last 4 years and low profitability * High working capital intensity resulting from significantly higher inventory holdings as on FY2016 year-end * Susceptibility to adverse fluctuations in prices of key raw materials and gas Competitive business environment due to the presence of large, established tile manufacturers as well as unorganised players * Partnership firm; any substantial withdrawal from capital accounts would impact the net worth and thereby the gearing levels Description of key rating drivers: Hem Ceramics manufactures glazed wall tiles of four sizes at its facility located at Morbi, Gujarat. HC's financial profile is characterised by stagnant revenue for the last four years and stretched liquidity position, arising from high inventory levels. The firm procures raw materials in anticipation of demand. Owing to its working capital intensive business, the firm funds its working capital requirements largely through borrowings from its creditors. However, the capital structure of the firm remains comfortable with low gearing levels because of accretion of reserves and moderate net worth, subsequently, improving the debt coverage indicators. The firm's presence in the highly fragmented ceramic industry, which is characterised by intense competition, limits its pricing flexibility and thereby its ability to effectively pass on the increase in raw material prices to customers. Furthermore, with increased focus on the export markets, the firm's margins would be vulnerable to volatility in foreign currency exchange rates. HC's promoters have a long experience in the ceramic industry and are involved with another trading firm namely Shree Prajapat Industries. Furthermore, the favourable location of the firm provides it easy accessibility to quality raw materials. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt-servicing track record of HC, its business risk profile, financial risk drivers and management profile. Hem Ceramics (HC) was established in 1997 as a partnership firm by Mr. Navneet and Mr. Ishwar. The firm is involved in manufacturing of digitally printed glazed wall tiles. The manufacturing facility of the firm is located in Morbi, Gujarat and is equipped with installed capacity of 37500 metric tonnes per annum (MTPA). HC is currently owned and managed by Mr. Ishwar and Mr. Ketu along with six other partners. It currently manufactures wall tiles of four sizes 300" X 300", 300" X 450", 245" X 375" and 250" X 600". JECRC UNIVERSITY: CARE Lowers Rating on INR105.23cr Loan to D ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of JECRC University (JU), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 105.23 CARE D Revised Facilities from CARE B+ Detailed Rationale & Key Rating Drivers The revision in the rating of JU takes into account delays in servicing of debt obligations on account of stretched liquidity position. Detailed description of the key rating drivers Ongoing delays in debt servicing JU has higher repayment obligations due to large-sized pre- dominantly debt-funded capital expenditure undertaken resulting to stretched liquidity and delay in servicing of debt obligations. Jaipur-based (Rajasthan) JU is a private university promulgated through an ordinance passed in May 2012 by the Governor of Rajasthan. JU is also approved by the University Grant Commission (UGC) u/s 2(f) of the UGC Act 1956, with the right to confer degree u/s 22(1) of the UGC Act. JU is sponsored by National Society for Engineering Research and Development (NSERD) which was formed in 1999 by Mr. Om Prakash Agrawal with a vision to offer degree courses (both graduation and post-graduation) in different streams such as Engineering, Management and Science. As per the Audited results for FY16 (refers to the period April 1 to March 31), JU reported a TOI of INR46.51 crore (FY15: INR35.08 crore) and net surplus of INR2.56 crore (FY15: net deficit of INR0.38 crore). Furthermore, as per the unaudited results for H1FY17, the university has reported a TOI of INR28.05 crore. JOSEPH LESLIE: Ind-Ra Raises Long-Term Issuer Rating to 'B+' ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has upgraded Joseph Leslie Dynamiks Manufacturing Private Limited's (JLDPL) Long-Term Issuer Rating to 'IND B+' from 'IND B'. The Outlook is Stable. The instrument-wise rating actions are: -- INR97 mil. Fund-based limits raised to 'IND B+/Stable' rating; and -- INR68.7 mil. Non-fund-based limits affirmed with 'IND A4' rating KEY RATING DRIVERS The upgrade reflects JLDPL's improvement in the scale of operations on account of a higher volume of order executions as evident from its revenue of INR263 million in FY16 (FY15: INR181 million). The ratings reflect an improvement in the overall financial profile. Operating EBITDA interest coverage (operating EBITDA/interest) was 1.6x in FY16 (FY15: negative 3.3x) and net leverage (net debt/operating EBITDA) was 4.6x (negative 2.0x). Operating EBITDA margins were 5.4% (negative 14.6%). Improvement in credit metrics and margins were mainly due to a positive EBITDA after continued EBITDA losses by the company in FY15 and FY14 as a result of its dissociation with the German-based Dragerwerk AG. The ratings benefit from its founders' experience of more than two decades in the safety rescue and fire related product manufacturing business. The ratings, however, are constrained by JLDPL's tight liquidity profile as the company reported instances of over utilization of the working capital limits for the 12 months ended February 2017, which were regularized within 1-2 days. Average fund-based utilization was at 99.78% during the same period. RATING SENSITIVITIES Positive: A positive rating action may result from increase in the scale of operations along with improvement in the credit metrics of the company. Negative: A negative rating action may result from decline in the scale of operations along with deterioration in the credit metrics of the company. COMPANY PROFILE JLDPL was incorporated in 1987 as Joseph Leslie Drager Manufacturing Pvt Ltd by the Mumbai-based Leslie family and Dragerwerks. In 2013, the company disassociated with Dragerwerks and commenced business under the present name. The company trades and manufactures equipment used in gas detection, fire safety and disaster management and has its manufacturing unit in Vasai (Maharashtra). K. VENKATA: ICRA Reaffirms 'B+' Rating on INR25cr Loan ------------------------------------------------------ ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ assigned to the INR9.00 crore1 fund based limits and INR25.00 crore non fund based limits of K. Venkata Raju Engineers & Contractors Private Limited (KVRECPL). The outlook on the long term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 9.00 [ICRA]B+ (Stable) Reaffirmed Non Fund Based Limits 25.00 [ICRA]B+ (Stable) Reaffirmed Rationale The reaffirmation of rating continues to be constrained by the tight liquidity position of the company as reflected by the full utilization of working capital limits over the past 15 months owing to stretched receivables position; small scale of operations with revenues of ~Rs. 45-50 crore over the past two years in the civil construction industry; and modest coverage metrics with interest coverage of 2.05 times, NCA/Debt of 10% and Debt/OPBITDA of 4.34 times for FY2016 due to high debt levels. The rating is further constrained by the high competitive intensity among civil contractors due to tender based nature of business. The rating, however, favourably factors in the nearly twenty five years of promoters' experience in executing civil contract works; healthy order book size of INR190 crore as on January 31, 2017 which provides revenue visibility in the medium term; and geographically diversified work order book spread across various states in the country. Going forward, the ability of the company to increase its scale of operation and manage efficiently its working capital requirements will be the key rating sensitivities from credit perspective. Key rating drivers Credit Strengths * More than 25 years of promoters' experience in undertaking civil contracts; established relationship with NHAI, Railways, etc. as reflected by repeat orders * Healthy order book size of INR190 crore as on January 31, 2017 (3.86 times of operating income of FY2016) provides revenue visibility for the medium term * Low geographic concentration risk with projects spread across states of Telangana, Andhra Pradesh, Tamil Nadu, Jharkhand, Karnataka, and Maharashtra Credit Weakness * Moderate scale of operations with revenues of INR45-50 crore over the past two years due to slow order execution due to delays from government departments * Tight liquidity position of the company as reflected by full utilization of working capital limits over the past 12 months on account of high debtors * High competitive intensity in the civil contracts industry due to tender based business keeps pressure on the margins Description of key rating drivers highlighted above: The promoters of KVRECPL have been involved in executing civil contract works since 1990. The firm's scale of operations was moderate at about INR60-65 crore between FY2010 and FY2014. However, the revenues decreased substantially in FY2015 on account of delay in number of work orders, especially the projects awarded by state government departments due to land acquisition issues. This also affected the company's ability to secure new orders due to unavailability of sufficient bank guarantee limits over the past two years. However, the company has withdrawn from such projects and has been able to improve its work order execution in FY2017 as most of the projects being executed currently are for Central government institutions such as Indian Railways and National Highways Authority of India (NHAI), etc as opposed to state government works in the past. The size of the order book is healthy at INR190 crore as on January 31, 2017 which provides revenues visibility for the medium term. Further, the projects are spread across various states across India which reduces the geographic concentration risk. However, the company continues to face liquidity issues due to high debtors from various departments and other private customers due to which the working capital borrowings are consistently high leading to stretched debt coverage metrics. Moreover, due to tender based nature of contracts, the firm is also exposed to high competition from other players which keep margins under check. Established in 1990, K. Venkata Raju Engineers & Contractors is an infrastructure construction company engaged in the construction of highways, runways, over-bridges, power transmission lines and more. In June 2014, the firm was incorporated as K Venkata Raju Engineers & Contractors Private Limited. The company has operations in several states such as Andhra Pradesh, Telangana, Maharashtra, Jharkhand, and Odisha. Recent Results: As per the recent audited financials for FY2016, the company reported profit after tax of INR1.56 crore on turnover of INR49.39 crore as against profit after tax of INR1.30 crore on turnover of INR46.47 crore during FY2015. As per the provisionals for 10mFY2017, the company reported a profit before tax of INR4.05 crore on a turnover of INR47.03 crore. KAMINENI HEALTH: CARE Withdraws 'D' Rating on INR18.28cr Loan ------------------------------------------------------------- CARE Ratings has withdrawn the rating assigned to the Bank facilities of Kamineni Health Care Private Limited with immediate effect, as the company has repaid the term loan in full and there is no amount outstanding under the loan as on date. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 18.28 CARE D Withdrawn Kamineni Health Care Private Limited (KHC), was incorporated in December 2007 and was promoted by Mr. Kamineni Shashidhar. KHC started its operations in August 2014 by setting up a super specialty hospital in Vijayawada, Andhra Pradesh. Currently the hospital is operating capacity of 300 beds capacity (20 beds in Intensive Care Unit (ICU), 100 for critical care treatment and 180 beds in General ward). The hospital is equipped with state of the art equipment and well qualified & experienced doctors/surgeons. KHC is a part of Hyderabad based Kamineni group which has presence in manufacturing of steel billets, steel pipes, healthcare and education sectors. KARAN RICE: CARE Assigns B- Rating to INR9.90cr LT Loan ------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Karan Rice Mills (KRM), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 9.90 CARE B-; Stable Assigned Detailed Rationale & Key Rating drivers The rating assigned to the bank facilities of KRM is constrained by its small scale of operations with low PAT margin, high gearing ratio, weak debt coverage indicators and elongated operating cycle. The rating is further constrained by susceptibility to fluctuation in raw material prices & monsoon dependent operations, the firm's presence in fragmented nature of industry and partnership nature of its constitution. The rating, however, derives strength from experienced partners and locational advantages. Going forward, the ability of the firm to scale up its operations while improving its solvency position and managing its working capital requirements efficiently would remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced partners: The partners have an experience of around three decades through their association with KRM and other group concerns namely Krishan Chand Hari Ram and KC Rice Mill. This has aided the firm in having established relationship with customers and suppliers. Location advantages The firm's processing facility is situated at Sangrur, Punjab which is one of the largest producers of paddy in India. Its presence in the region gives additional advantage over the competitors in terms of easy availability of the raw material as well as favorable pricing terms. Key Rating Weakness Small scale of operations with low PAT margin: Despite long track record, the firm's scale of operations has remained small marked by TOI of INR9.42 crore for FY16 (refers to the period April 01 to March 31). The PBILDT margin stood moderate at 7.62% in FY16. The PAT margin, however, stood low at 0.08% in FY16. High gearing and weak debt coverage indicators: KRM has leveraged capital structure with overall gearing ratio of 6.87x as on March 31, 2016 mainly on account of firm's high reliance on bank borrowings to fund various business requirements. Additionally, total debt to GCA stood weak at 53.63x for FY16 and the interest coverage ratio of KRM stood weak at 1.23x for FY16. Elongated operating cycle: The average operating cycle of the firm stood elongated at 186 days for FY16. Susceptibility to fluctuation in raw material prices and monsoon dependent operations: 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 price of rice moves 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 leads to volatility in raw material prices. Fragmented nature of industry coupled with high level of government regulation: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. Furthermore, the raw material (paddy) prices are regulated by the government to safeguard the interest of farmers, which in turn limits the bargaining power of the rice millers. Partnership nature of constitution: KRM's constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency and the firm being dissolved upon the death/retirement/insolvency of partners. Karan Rice Mills (KRM) was established in 1997 as a partnership firm and is currently being managed by MrHarmesh Kumar, Mr. Jiwal Lal, Mr. Raj Pal and Mr. Hari Ram as its partners sharing profit and loss equally. The firm is engaged in processing of paddy and milling of rice at its manufacturing facility located at Sangrur, Punjab having an installed capacity of 7200 metric tonne of paddy per annum as on March 31, 2016. The firm is also engaged in trading of rice [income from trading constituted around 20% of the total revenue in FY16. The firm sells basmati and non-basmati rice to wholesalers based in Maharashtra, Delhi, Gujarat, Haryana, Punjab and Chandigarh through a network of dealers and distributors. The firm majorly procures paddy directly from local grain markets located in Punjab. Besides KRM, the partners are also engaged in managing another group concerns namely Krishan Chand Hari Ram and KC Rice Mill. Krishan Chand Hari Ram is engaged in trading of paddy, wheat and other seasonal crops since 1986 in Sangrur, Punjab. KC Rice Mill is engaged in the processing of paddy since 1995 in Sangrur, Punjab. In FY16, KRM has achieved a total operating income of INR9.42 crore with PAT of INR0.01 crore, as against the total operating income of INR7.29 crore with PAT of INR0.01 crore in FY15. In 9MFY17 (Provisional), the firm has achieved total operating income of INR5 crore. KATARIA MOTORS: CARE Reaffirms B+ Rating on INR2.09cr Loan ---------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Kataria Motors Private Limited (KMPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 2.09 CARE B+; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of KMPL continues to remain constrained on account of its modest scale of operation, weak debt protection and liquidity indicators coupled with negative net-worth as on March 31, 2016, owing to net losses in past years. The rating further remained constrained by its presence in competitive automobile dealership industry and limited bargaining power against the principle automobile manufacturers. The rating, however, positively factors in wide experience of the promoters in the auto dealership business, the company being sole distributor of Bharat Benz Trucks manufactured by Daimler India Commercial Vehicles Private Limited (Daimler) for Ahmedabad, Vadodara, Surat and Vapi region, diversified income stream and growth in its Total Operating Income (TOI) as well as improvement in operating profitability during FY16 (refers to the period April 01 to March 31). The ability of KMPL to augment its net- worth base and improve its capital structure & liquidity indicators would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Negative net-worth base, week debt cover and liquidity indicators: Due to net losses in past years, net-worth base of KMPL eroded as against its total debt of around INR80 crore. High debt is a resultant of company's effort to increase its presence across the Gujarat state. Moreover, its debt cover indicators are week due to low cash profits while its liquidity marked by below unity current ratio remained week during FY16. Presence in competitive auto dealership business with limited bargaining power against principal automobile manufacturers: The automobile dealership market participant faces stiff competition from established dealers of other automobile manufacturers. This forces the dealers to attract customers by way of offering discounts and add on products on the vehicles which create margin pressure. Moreover, the dealers also have limited bargain power over the principal manufacturers thereby restricting the ability to earn incremental income. Key Rating Strength Vastly experienced promoters in Auto dealership and diversified income stream: KMPL's key promoter is associated with auto dealership business for over three decades through his association with other group entity. Kataria group has presence across the Gujarat state and is having dealership for two-wheeler bikes & scooters, passenger cars as well as for trucks and luxury car. Apart from auto dealership, KMPL also generates income from auto servicing (including spare parts sales) & commission from finance & insurance companies that forms 14% of TOI in FY16. Growth in scale of operation and improvement in operating profitability: KMPL has reported Y-o-Y growth of 27% in its TOI mainly due to its effort to increase presence across the Gujarat state. Moreover, its operating profit margins also improved owing to increase in income from trucking segment which has higher margins coupled with higher income from auto servicing and commission income during FY16. Ahmedabad-based (Gujarat) KMPL is a part of the Kataria group that has been in the automobile dealership business for over 3 decades. Automobile dealership business in the name of 'Kataria Transports' was incorporated by one of KMPL's current directors, Mr. Rajendra Kataria in 1983. Incorporated in 2002, KMPL is an authorized dealer for sale of trucks with Daimler, the makers of Bharat Benz trucks and an authorized dealer of TVS Motor Company Limited (TVS) for selling of two-wheeler vehicles. Income from Daimler's truck dealership contributed around 77% of KMPL's TOI during FY16. As per the audited result for FY16, KMPL has reported a PAT of INR1.26 crore [Net loss of INR0.66 crore in FY15] on a TOI of INR141.11 crore [Rs.110.97 crore in FY15]. LATHA RICE: CARE Reaffirms 'B' Rating on INR9.39cr LT Loan ---------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Latha Rice Industries (LRI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 9.39 CARE B; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of LRI are constrained by nascent stage of operations, the ability of the company to utilize the capacity installed, presence in highly fragmented and regulated rice milling industry and susceptibility of margins due to seasonal nature of operations and volatility in raw material (paddy) prices. The above weaknesses are partially offset by the promoter's extensive experience of over two decades in the rice milling industry with execution of project and commencement of operations. The ability of the firm to utilise the installed capacity and attain the projected revenue and profitability margins without deterioration in the capital structure is a key rating sensitivity. Detailed description of the key rating drivers Key Rating Strengths Experienced partners: The promoters of LRI, Mr. Nagayya Muppavarappu and Mr. Mahendra Muppavarappu have an experience of over two decades in trading of rice primarily in Maharashtra, Madhya Pradesh and Andhra Pradesh. LRI is likely to be benefited by the experience of the promoter in operating a rice industry. Key Rating Weaknesses Nascent stage of operations and project stabilization risk: The project has commenced operations from October 2016 and has completed five months of operations till February 2017 with average capacity utilization of around 50% in 5MFY17 (period from October 2016 to February 2017). The firm faces risk of stabilization in light of competition. Presence in highly fragmented and regulated rice milling industry: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. In the recent past, export of agro-based commodities have been subject to certain policy changes like lifting ban on export of non- basmati rice, frequent changes in minimum export price in respect of basmati rice and the quota imposed on quantity to be traded. Any adverse change in policies of government can affect business. Susceptible profit margins: 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 thereby leading to fluctuation of profit margins. Latha Rice Industries (LRI) was established as a partnership firm in the October 2015 by Mr. Mahendra Muppavarappu and Mr. Nagayya Muppavarappu. The firm was initially set up as a proprietorship by Mr. Mahendra Muppavarappu on May 01, 2015, and was reconstituted as a partnership by current partners on October 1, 2015. The firm is setting up a fully automated rice mill. The processing facilities are located at Nagpur, Maharashtra with rice milling capacity of 48000 tonnes per annum (TPA). The major raw material for the firm is paddy, which is partly procured from farmers and from the Vidarbha Region in Maharashtra, Chhattisgarh, Madhya Pradesh and Andhra Pradesh. The finished product of LRI is sold under the brand name Bahubali. The project has been successfully completed and the operations commenced from October 2016 with average capacity utilization of around 50% in 5MFY17 (period from October 2016 to February 2017). M.T. PATIL: Ind-Ra Affirms 'BB' Long-Term Issuer Rating ------------------------------------------------------- India Ratings has affirmed M.T. Patil Builders and Contractors Private Limited's Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR45 mil. Fund-based facilities affirmed with 'IND BB/Stable' rating; and -- INR67.50 mil. Non-fund-based facilities (increased from INR 65.00) affirmed with 'IND A4+' rating KEY RATING DRIVERS The affirmation reflects Patil's continued small scale of operations. According to unaudited 11MFY17 financials, revenue was INR430 million (FY16: INR407 million, FY15: INR775million). The ratings reflect Patil's moderate credit metrics. In FY16, net leverage (adjusted debt net of cash/EBITDA) was 2.6x (FY15: 1.7x) and EBITDA interest coverage (operating EBITDA/gross interest expense) was 4.1x in FY16 (FY15: 5.3x). Credit metrics deteriorated owing to a slowdown in the revenue growth and a shortfall in the order book in FY16. Ind-Ra expects Patil's credit metrics to improve in the short-term, considering the company does not have term debt in its books and a likely improvement in the scale of operation in FY18. The ratings are constrained by volatile EBITDA margin and continued tight liquidity position. EBITDA margin was between 8.4%-11.2% over FY13-FY16 as profitability is derived from execution of different projects. Patil's average peak use of fund-based working capital facilities was 90.2% during the 12 months ended February 2017. The ratings, however, continue to be supported by the promoters' two decades of experience in civil construction. Moreover, the ratings are supported by an improved order book, which provides moderate revenue visibility for the next one year. Patil has an outstanding order book of INR755.44 million (1.85x of FY16 revenue) as on March 2017. The management expects to complete the orders by FYE18. RATING SENSITIVITIES Negative: Any further decline profitability resulting in a sustained deterioration in credit profile of the company will lead to a negative rating action. Positive: Substantial growth in the top line continues like FY15 and an improvement in EBITDA margin leading to a sustained improvement in credit metrics will lead to a positive rating action. COMPANY PROFILE Incorporated in 1997, Patil is engaged in the business of civil construction, such as roads and bridges, in and around Nashik. MADHUSUDAN GARAI: ICRA Reaffirms 'B' Rating on INR3.50cr Loan ------------------------------------------------------------- ICRA Ratings has reaffirmed the long-term rating of [ICRA]B to the INR3.00 crore cash credit and INR3.50 crore bank guarantee facilities of Madhusudan Garai (MG). The outlook on the long-term rating is 'Stable'. Earlier, the rating was suspended in the month of December, 2016 in the absence of the requisite information from the concern, which currently stands revoked. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 3.00 [ICRA]B (Stable) reaffirmed; suspension revoked Non Fund Based Limits 3.50 [ICRA]B (Stable) reaffirmed; suspension revoked Rationale The reaffirmation of rating takes into account MG's relatively small scale of current operations and the weak financial profile as reflected by low profits and cash accruals, and subdued coverage indicators. The rating also takes note of high working capital intensity of the business on account of high receivables that exerts pressure on the liquidity position of the concern. The rating is also impacted by high geographic concentration risk, with operations limited in West Bengal, and highly fragmented and competitive nature of the industry, which coupled with tender based contract awarding system, keeps a check on the profitability. The concern remains exposed to the volatility in raw material prices, though presence of price variation clauses in some of the contracts reduces such risk to an extent. The rating further incorporates the risk associated with the entity's status as a proprietorship concern, including the risk of capital withdrawal by the proprietor. The rating, however, derives comfort from the promoter's long experience in the civil construction business, reputed clientele, which mitigates counterparty credit risk to a large extent, and a conservative capital structure. In ICRA's opinion, the ability of the concern to increase its scale of operations while maintaining its profitability and capital structure, improving coverage indicators and managing working capital requirements efficiently would remain key rating sensitivities, going forward. Key rating drivers Credit Strengths * Established track record of the promoter in the civil construction business, with an experience of around four decades * Reputed customer profile, which mitigates counterparty credit risk to a large extent * Relatively small scale of current operations * Fragmented and highly competitive nature of the industry, coupled with tender based contract awarding system, keeps profitability under check * High working capital intensity of the business exerts pressure on the liquidity position * Exposure to the volatility in raw material prices, though presence of price variation clauses in some of the contracts reduces such risk to an extent * High geographical concentration risks, with operations limited in West Bengal * Risk associated with the entity's status as a proprietorship concern, including the risk of capital withdrawal by the proprietor Description of key rating drivers highlighted above: MG was established in 1979 and undertakes construction and maintenance of roads, car sheds, buildings, bridges, subways, structural steel sheds etc. in West Bengal for various Government departments like Public Works Department (PWD), Central Public Works Department (CPWD), West Bengal State Rural Development Agency (WBSRDA), Eastern Railways etc. With around four decades of operations, the promoter has a proven track record in the civil construction industry and association with various Government departments reduces counterparty risk to a large extent. However, since the entire contractual work executed by the concern remains limited to West Bengal, it remains exposed to high geographic concentration risk. Moreover, in small and medium-sized Government civil construction projects, the qualification criteria is less stringent, which leads to low entry barriers, allowing a large number of players to enter in this sector, thus intensifying competition. Additionally, with contracts being awarded to the L1 bidder, margins in such contracts remain under pressure. However, the presence of the price escalation clause in some contracts reduces the vulnerability of the concern's profitability to variation in raw material prices to an extent. The concern's operating income decreased by ~43% from INR16.59 crore in FY2015 to INR9.42 crore in FY2016 due to low orders executed during the year on the back of delay in obtaining necessary regulatory approvals. Moreover, the concern did not undertake low profitable contracts, which also led to a decline in the top-line of the concern. The operating margin increased to 9.56% in FY2016 due to lower input material costs vis-Ö-vis realisations over the previous fiscal. However, the net profit margin declined, and remained subdued in FY2016, which is impacted by high interest and finance costs and decline in the non-operating income. The capital structure remained conservative. High debt level, coupled with low profitability has kept the debt coverage indicators weak. The concern's working capital intensity of operations has remained high due to high inventory holding, as reflected by net working capital relative to operating income (NWC/OI) of 29% in FY2016. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt servicing track record of MG, its business risk profile, financial risk drivers and the management profile. Established in 1979, Madhusudan Garai (MG) is promoted by the Nadia-based Mr. Madhusudan Garai. It is involved in construction and maintenance of roads, car sheds, buildings, bridges, subways, structural steel sheds etc. in West Bengal. Mr. Garai has an experience of around four decades in the civil construction business. MANI EXPORT: Ind-Ra Lowers Long-Term Issuer Rating to 'BB-' ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Mani Export Private Limited's (MEPL) Long-Term Issuer Rating to 'IND BB-' from 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR350 mil. (reduced from INR498) Fund based limits lowered to 'IND BB-/Stable' rating; and -- INR4 mil. (increased from INR2) Non-fund based limits affirmed with 'IND A4+' rating KEY RATING DRIVERS The downgrade reflects an overall deterioration in MEPL's credit profile due to lower realizations and sluggish export demand owing to unfavorable price movements. In FY16, revenue was INR1,266.8 million (FY15: INR1,815.6 million), net leverage (net adjusted debt/operating EBITDAR) was 10.72x (9.91x), interest coverage (operating EBITDA/gross interest expense) was 1.29x (2.25x) and EBITDA margin was 3.73% (4.62%). The ratings factor in a further elongation of the net working capital cycle to 223 days in FY16 (FY15: 161 days), driven by higher inventory days, and a moderate liquidity position. MEPL's average utilization of fund-based facilities over the 12 months ended February 2017 was 90%. The ratings, however, continue to derive strength from over four decades of experience of MEPL's promoters in diamond trading and processing. Also, the debt of the company comprises only working capital facilities. Hence, it does not have any repayment obligations. RATING SENSITIVITIES Negative: A decline in the profitability and/or elongation in the net working capital cycle leading to a deterioration in credit metrics would be negative for the ratings. Positive: Substantial revenue growth, while the profitability being maintained, leading to an improvement in credit metrics would be positive for the ratings. COMPANY PROFILE Incorporated in 1987, MEPL has a head office in Mumbai and factories in Gujarat. The firm cuts, processes and polishes rough diamonds and exports them to various countries such as Hong Kong, the US, the UAE and Belgium. The company also has two windmills with a capacity of 0.6MW each in Kutch, Gujarat. The windmills provide power to all factories. According to provisional results for 11MFY17, revenue was INR1.322 billion. MB POWER: CARE Lowers Rating on INR5,196cr LT Loan to 'D' --------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of MB Power (Madhya Pradesh) Limited (MBPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 5,196 CARE D Revised from Facilities (Fund CARE BB+ Based-Term Loans) Long-term Bank 758 CARE B; Stable Revised Facilities (Fund from CARE BB+ Based-ECBs) Long-term Bank 677 CARE B; Stable Revised Facilities (Fund from CARE BB+ Based-Cash Credit) Long-term Bank 888 CARE B; Stable Revised Facilities (Non- from CARE BB+ Fund Based) Short-term Bank 49 CARE A4 Revised from Facilities (Non- CARE A4+ Fund Based) Detailed Rationale & Key Rating Drivers The revision in the rating ([i] above) of MBPL takes into account the instances in delays in servicing of the debt obligations by the company. The revision in the ratings ([ii] to [v] above) takes into account the stretched liquidity position of the company following delay in commencement of operations from 600 MW Unit II. The revision also factors in MBPL's weakened financial risk profile marked by losses at the net level and the company's weak capital structure as well as debt coverage indicators. Furthermore, the ratings continue to remain constrained by below average financial risk profile of power off-takers. The ratings, however, continue to derive strength from the presence of Fuel Supply Agreement for the supply of coal and long term off-take arrangement through long term Power Purchase Agreement (PPA) for about 67% of total capacity. The ratings take cognizance of receipt of on account payment of INR199.81 crore from insurance company with respect to insurance claim post-accident in 600 MW Unit II. Going forward, the company's ability to service its debt obligations in a timely manner and register improvement in overall financial risk profile shall be the key rating sensitivities. Detailed description of the key rating drivers Delay in commencement of operations from 600 MW Unit II The company had achieved the COD of both the units of 600 MW on April 20, 2015 and March 30, 2016 respectively. While the Unit-I has been operating satisfactorily since commissioning, the operations of Unit-II are under shutdown since May 16, 2016 on account of an accident in the boiler. As per the reports, large quantity of clinker formation took place within the boiler which fell into the bottom of ash hopper leading to excess steam formation which eventually resulted in boiler explosion. The repair/restoration work is under process and the unit-II is likely to resume operation in June 2017. Lower than envisaged generation owing to shutdown of unit II coupled with committed debt repayment led to stretched liquidity position leading to delay in debt servicing. The company availed a corporate loan aggregating INR250 crore to meet the repair and maintenance cost for Unit-II and cash flow mismatch due to shut down of unit-II. Below average credit profile of power offtakers: MBPL is supplying power to UPPCL and MPPMCL, having a relatively weak financial profile as reflected by high AT&C losses, significant subsidy support from the government, and relatively long payable cycle. Long term power offtake arrangement: The company has entered into PPA with MPPMCL and GoMP. It is selling 420-MW power to MPPMCL and GoMP (5% capacity at variable cost for the life of the project to GoMP and 30% at tariff determined by CERC for 20 years to MPPPCL), with coal cost pass through clause. In addition to this, MBPL signed a PPA with PTC India Ltd for sale of 400 MW (361 MW net of Aux.) power with "Take or Pay" provision. With respect to back to back tie-up of this power by PTC India Ltd with discom, a PPA has been signed between PTC India Ltd and Uttar Pradesh Power Corporation Ltd (UPPCL) at a levelised tariff of INR5.73/unit (under case I bid). Fuel supply agreement with SECL MBPL has signed FSA with South Eastern Coalfields Limited (SECL) for supply of 4.99 MTPA of coal which mitigates the fuel risk for the project as the contracted quantity is sufficient to meet the entire coal requirement of the project for operating plant at 85% PLF. Update on insurance and flexible structuring under 5/25 scheme of RBI The company had filed the insurance claim for both material damage as well as loss of profit with respect to accident in Unit-II. Interim report for machinery damage and business interruption has been submitted and on account payment aggregating INR199.81 crore with respect to both the claims has been received till March 9, 2017. The company had initiated for refinancing of its project loan during November 2016 under the flexible structuring scheme of RBI (5/25 scheme) to align its cash flows with the repayment obligations. As confirmed by the lead lender State Bank of India, all the lenders have approved flexible structuring of long term project loans under 5:25 scheme with cutoff date as October 31, 2016. MB Power (Madhya Pradesh) Ltd (MBPL) is a subsidiary of Hindustan Thermal Projects Limited (HTPL, erstwhile Moser Baer Power & Infrastructures Limited) which is in turn a subsidiary of Hindustan Power Projects Private Limited (HPPL, erstwhile Moser Baer Projects Private Limited), the flagship entity of Hindustan Power group, promoted by Mr. Ratul Puri. MBPL is setting up a 2 x 600 MW coal-based sub-critical thermal power plant in District Anuppur, Madhya Pradesh, of which 600 MW (Unit I) has already become operational in May 2015. Synchronization of Unit II was done in March 2016, however currently the unit-II is temporarily shut down on account of an accident in the boiler on May 16, 2016. The project was originally appraised at a cost of INR6,240 crore which was revised to INR8,000 crore funded in the debt to equity of 2.83:1. The company has tied up about 67% of the total capacity, i.e. 1200 MW, under long-term Power Purchase Agreements (PPA) with MP Power Management Company Ltd (MPPMCL, erstwhile MP Power Trading Company Ltd) and PTC India Ltd (PTC has done back to back tie-up with Uttar Pradesh Power Corporation Ltd (UPPCL)). Remaining capacity is tied up through a PPA of 125 MW with Manikaran Power Limited (MPL) and 225 MW with Mittal Processors Private Limited (MPPL). Both the PPAs are valid from June 1, 2016 to May 31, 2019 which can be extended further with mutually agreed terms and conditions. During FY16 (refers to the period April 1 to March 31), MBPL reported a total operating income of INR1,262.08 crore with a PBILDT and net loss of INR370.99 crore and INR306.76 crore, respectively. MODERN MACHINERY: CARE Assigns B+ Rating to INR9.30cr LT Loan ------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Modern Machinery Store (MMS), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 9.30 CARE B+; Stable Assigned Long-term/Short- 0.30 CARE B+; Stable/CARE A4 term Bank Assigned Facilities Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of MMS are constrained due to its modest scale of operation, thin operating profit margin inherent to automobile dealership business, relatively high leverage due to its dependence on external borrowings to fund the trading inventory and weak debt coverage indicators. The ratings also take into account the firm's presence in a highly competitive automobile dealership business, limited bargaining power against the principal automobile manufacturers and partnership constitution which exposes it to withdrawal of capital by partners. The ratings, however, positively factor the vast experience of partner in the auto dealership business, the firm being sole distributor of Hyundai Motor India Limited's (HMIL) vehicles for Alwar region resulting in healthy growth reported in sales of passenger vehicles during the period FY14 to FY16 (refers to the period April 1 to March 31) and diversified income stream. MMS's ability to increase scale of operations coupled with improvement in operating profit margin is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations, thin operating profit margin and weak debt coverage: MMS's TOI has remained modest during FY16 with compound annual growth of 14% during the period FY14 to FY16 owing to growth in HMIL's Passenger car segment. Firm's PBILDT margin is thin mainly due to inherently thin margins in auto dealership business. MMS overall gearing has improved as on March 31, 2016 after subordination of unsecured loans to bank debt, albeit is relatively high mainly due to the firm's reliance on bank borrowing to fund for building of inventory of automobiles. The debt coverage indicators for the firm have remained weak mainly due to thin operating profit margins coupled with high dependence on external working capital debt resulting in high Interest/ finance cost. Presence in competitive automobile dealership business with limited bargaining power against principal automobile manufacturers: The automobile dealership market participant faces stiff competition from established dealers of other automobile manufacturers. This forces the dealers to attract customers by way of offering discounts and add on products on the vehicles which create margin pressure on the firms. Moreover, the dealers also have limited bargaining power over the principal manufacturers thereby restricting the ability to earn incremental income. Key Rating Strength Experienced partner in Auto dealership, long track record and diversified income stream: MMS key partner is associated with the firm since it started its auto dealership business in 1987. Until transfer of its Car segment to its group entity in July 2016, MMS was the sole dealer for HMIL in the Alwar region. Apart from auto dealership of HMCL's 2W and HMIL's cars, the firm also generates income from sale of John Deere's tractors and spare parts & auto servicing. Incorporated as a partnership firm in 1954 by Gupta family, Alwar-based (Rajasthan) MMS is engaged in auto dealership business. MMS is an authorized dealer for two wheelers (2W) of Hero Moto Corp Limited (HMCL). Besides, it also operates dealership of John Deere India Private Limited (JDIPL). The firm has a 3S (sales, service and spares) facility in Alwar. Until July 2016, MMS was also the sole authorized dealer for passenger cars of HMIL in Alwar region; however, the business pertaining to HMIL has now been shifted by the promoters in newly incorporated Modern Autocar Private Limited (MAPL). As per the audited result for FY16, MMS reported a PAT of INR0.10 crore [INR0.09 crore in FY15] on a TOI of INR116.71 crore [INR103.13 crore in FY15]. NAGAPATTINAM MUNICIPALITY: Ind-Ra Assigns 'BB' Issuer Rating ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has assigned Nagapattinam Municipality a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. KEY RATING DRIVERS The rating reflects Nagapattinam's inadequate civic infrastructure including lack of proper water supply services, sewerage and storm water drainage network, thus impacting the city's economic growth. Ind-Ra believes Nagapattinam Municipality will require huge investments for upgrading the infrastructure in the city to provide proper civic services. Nagapattinam has a high level of dependence on the state government (compensation in lieu of stamp duty, and revenue grants and contributions). The municipality depends on property tax and other taxes for revenue. With the introduction of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) projects, Nagapattinam Municipality is expected to receive INR4.2 billion as grant from the government of India and INR1.68 billion from the state government for development of parks and green space, sewage, water supply and storm water drainage. Nagapattinam Municipality's revenue grew at a CAGR of 7.82% to INR63.52 million during FY12-FY16 (FY15: INR60.48 million). The municipality's major own source of revenue comprises property tax, which contributes an average 62.95% to the total revenue. Non-tax revenue was INR10.53 million in FY16 (FY15: INR10.02 million), majorly driven by water charges. However, it reported negative operating margin during FY15-FY16 due to high employee costs and administrative expenses. Nagapattinam is a tourist attraction with the presence of heritage and historic points such as Nagore, Velankanni, among others. The city has limited industrial activities; major industries are household, tailoring, embroidery, plastic wire and metal manufacturing. Nagapattinam's main occupation is fishing and has a number of ice factories for preserving fishes. RATING SENSITIVITIES Positive: A significant improvement in Nagapattinam Municipality's operating performance and rolling out of the AMRUT reforms within the stipulated time frame would positively impact the rating. Negative: A financial burden in the form of debt obligations and withdrawal of revenue support without a suitable compensatory plan would trigger a negative rating action. COMPANY PROFILE Nagapattinam Municipality was constituted on Oct. 24, 1866, and was upgraded to Selection Grade Municipality effective May 22, 1998. Beginning Oct. 19, 1991, the coverage area of the municipality spreads over Nagapattinam and Nagore towns. Nagapattinam is the administrative headquarters of Nagapattinam district. According to Census of India, the population of the town increased to 1.62 million in 2011 from 1.49 million in 2001. PANKAJ ISPAT: CARE Denotes Rating as B-/Issuer Not Cooperating -------------------------------------------------------------- CARE Ratings has been seeking information from Pankaj Ispat Ltd to monitor the rating(s) vide e-mail communications dated Feb. 1, 2017 and letter dated Feb. 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 the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. Further, Pankaj Ispat Ltd has not paid the surveillance fees for the rating exercise as agreed to in its Rating Agreement. In line with the extant SEBI guidelines CARE's rating on Pankaj Ispat Ltd's bank facilities will now be denoted as CARE B-; 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 Facilities 15.00 CARE B-; ISSUER NOT COOPERATING Detailed description of the key rating drivers At the time of last rating in March 29, 2016, the following were the rating strengths and weakness: Key Rating Strengths Long track record of the company PIL, belonging to Agrawal family of Chhattisgarh, is promoted by Mr. Lalit Agrawal and Mr. Pankaj Agrawal. The promoters of the company have an experience of a decade as a manufacturer of steel products. Mr. Lalit Agrawal earlier was into trading of steel products and has an overall experience of more than three decades in the steel industry. Strategic location of manufacturing unit The company's unit is located at mineral rich state of Raipur, Chhattisgarh. The company avails operational advantages from its strategic location due to proximity to source of raw-materials (sponge iron, coal). Sponge Iron and coal are procured from local players. Further, its customers are also located in and around Raipur. Therefore, proximity to the raw materials and customers leads to substantial savings in the freight cost. Key Rating Weaknesses Moderate Capacity Utilization Capacity utilization of the company though remained moderate, deteriorated in FY14 vis-a-vis FY13. The deterioration was mainly on account of closure of the operations in the factory since June 2013 due to raid conducted by Steel Authority of India (SAIL) along with the local police in April 2013. However in FY15, the capacity utilisation improved. The effective capacity utilisation of TMT Bars and M S Ingots stood at 79.33% and 96.10% respectively in FY15 vis-a-vis 57.98% & 69.26% in FY14. Lack of backward integration vis-a-vis volatility in prices Raw material cost is the single largest cost component for PIL. With company lacking backward integration for its primary raw materials (such as coal, sponge iron), it has to resort to open market purchases at the prevailing market prices. Hence, any adverse movement in raw material price without any corresponding movement in finished good price might affect the performance of the company. Though, the prices of finished goods generally move in tandem with that of raw materials; but with a time lag which exposes the company to risk arising on account of volatility in the raw material prices. Further, the company does not have the captive power plant resulting in dependence on the grid so as to meet its power requirement. Fragmented industry leading to intense competition PIL is engaged in the manufacturing of TMT bars and ingots, the industry of which is characterized by high fragmentation mainly due to presence of a large number of unorganized players. The company markets its products in Central India, which is a hub of steel plants, on account of proximity to the mineral rich states of Chhattisgarh. Low level of product differentiation further intensifies the competition, leading to lower bargaining power vis-a-vis the customers. Moderate financial performance The total operating income of the company maintained an erratic trend in the period FY13-FY15. In FY14, the total operating income of the company declined and stood at INR 73.11 crore vis-a-vis INR 114.90 crore in FY13. The decline was mainly on account of closure of the operations in the factory since June 2013 due to raid conducted by Steel Authority of India (SAIL) along with the local police in April 2013. The plant commenced its operations from the month of October 2013. The total operating income of the company increased in FY15 vis-a-vis FY14 and stood at INR 104.65 crore in FY15 vis-a-vis Rs. 73.11 crore in FY14. The PBILDT level and margin of the company deteriorated in FY15 vis-a-vis FY14 on account of higher material cost. Further, the PAT level and margin of the company also deteriorated in FY15 on account of higher depreciation cost. The leverage ratios of the company continuously improved in the period FY13-FY15 (on exclusion of the share application money in FY13 & FY14). The improvement was mainly on account of repayment of term loan and accretion of profit to reserves. The interest coverage ratio of the company though deteriorated in FY15 vis-a-vis FY14 stood moderate at 1.60x in FY15. As per the provisional 9MFY16 results, the company reported a PBT of INR 0.84 crore on a total operating income of INR 85.15 crore. Working capital intensive nature of operations PIL operation is working capital intensive in nature as it has to hold inventory of more than one month of raw materials so as to ensure uninterrupted production and also stocks finished goods inventory which is used for trading. Further as a result of intense competition in the industry, the company has to provide extended credit days to its customers. On the other hand creditors have to be paid within a very short span of time as a result of which the liquidity remains stretched. Hence, the company has to rely upon the bank borrowings to fund its working capital requirement. This is evident from high utilization of working capital borrowings, which stood at about 92% during the last 12 months period ended January, 2016. Cyclicality associated with 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. Apart from the demand side fluctuations, the highly capital intensive nature of steel projects along-with the inordinate delays in the completion impact the responsiveness of supply side to demand movements. This results in several steel projects bunching-up and coming on stream simultaneously leading to demand supply mismatch. Furthermore, the producers of steel products are essentially price-takers in the market, which directly expose their cash flows and profitability to volatility of the steel industry. PIL was originally set up in 2006 as a Private Limited company (Pankaj Ispat Private Limited) which was reconstituted as a public limited company on October 05, 2011. PIL commenced its production in 2007-08. The company has a capacity of 24,000 MTPA each of MS ingots and TMT Bar. The manufacturing facility of the company is located in Gogaon Industrial Area, Raipur. PIL's day to day operations are handled by Mr. Lalit Agrawal and Mr. Pankaj Agrawal (son of Mr. Lalit Agrawal). Mr. Lalit Kumar Agrawal & Mr. Pankaj Agrawal are having an experience of more than three decades and more than a decade respectively in iron and steel industry. They are well supported by a team of experienced professionals. PB LIFESTYLE: Ind-Ra Migrates 'B' Rating to Non-Cooperating ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated PB Lifestyle Limited's (PBL) 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: -- INR5 mil. Fund-based working capital limit with 'B' rating migrated to Non-Cooperating Category; and -- INR145 mil. Long-term loans with 'B' rating migrated to Non- Cooperating Category Note: ISSUER NOT COOPERATING: The ratings were last reviewed on April 7, 2015. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE PBL, incorporated in April 2012 by Parag Sanghavi, is the master and exclusive license-holder for the Playboy brand in India. The licensing agreement of PBL extends over a period of 30 years. The company plans to launch Playboy-branded clubs, restaurants/lounges and across India and also retail Playboy merchandise including clothing, perfumes, accessories, etc. PRAGATI ENGINEERING: ICRA Assigns B- Rating to INR3.28cr LT Loan ---------------------------------------------------------------- ICRA Ratings has assigned the long term rating of [ICRA]B- to the INR0.28 crore term loan facilities, INR2.72 crore unallocated limits, and INR3.00 crore cash credit facilities of Pragati Engineering Belgaum Private Limited. The outlook on long term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term: Fund based limits 3.28 [ICRA]B- (Stable) Assigned Long term: Unallocated Limits 2.72 [ICRA]B- (Stable) Assigned Rationale The assigned rating takes into account the established track record of the promoter group in the manufacture of precision machine tools as also their continued support in the form of interest free unsecured loans. The rating, however factors in the decline in the operating income on depressed order flow from the group company as also the decline in operating margins which although remain high on account of presence in precision machine parts manufacture. Further, the rating factors in the modest scale of operations with considerable dependence on a single client, its group company for sales. The rating also factors in the stretched inventory levels and payables mainly on year end purchases of raw material stock. Going forward, maintaining optimal profitability levels as far as the debt servicing is concerned as also managing inventory and payables remain key sensitivities going forward. Key rating drivers Credit Strengths * Established track record in manufacturing of precision machine components and reputed client base in machine tool manufacturing industry. * Sizeable revenue growth in H1'FY2017. * Continuous support from promoters in the form of interest free unsecured loans Credit Weakness * Decline in operating income in FY'2016 on depressed order flow from its major customer, Pragati Automation Private Limited which contributes close to 90% of the topline. * Decline in operating margins in FY'2016 although they still remain high. * Stretched capital structure on account of low net worth base and high debt levels, although sizeable portion of debt consists of unsecured loans * Stretched liquidity position due to high receivables pending from associate company. * Modest scale of operations. Description of key rating drivers highlighted above: The company's customer base has been skewed in favor of group company, PAPL. PEBPL procures 90% of the orders from PAPL with rest from Atlas Copco Limited Pune. Thus the company's growth has in the past fiscals being the function of order inflow from PAPL. The company after witnessing a significant OI growth in FY'2015 has shown a decline in the same in FY'2016. OI declined to INR12.9 crore in FY'2016 from INR16.9 crore in FY'2015 given the muted order inflow from the principal customer, PAPL. The company expects no major change in the operating margins in the next fiscal with product portfolio remaining almost constant.NPM remained negative in FY'2016 although the company recorded profits at PBT levels. The networth remained weak in past fiscals mainly due to impact of accumulated losses resulting in adverse capital structure. The adjusted gearing, however remained low as the debt profile remained dominated by interest free unsecured loans from the promoters. Working Capital Intensity remained comfortable at 7% in FY'2016 as compared to 14% in FY'2015 mainly due to stretched payables. The inventory remained stretched in FY'2016 in line with FY'2015 mainly due to raw material stock and work in progress. Pragati Engineering Belgaum Private Limited (PEBPL) incorporated in 1996 is promoted by Mr. Suresh Bhirangi, his son Mr. Mahesh S Bhirangi and his associates/friends. The Belgaum (Karnataka) based Pragati Engineering Belgaum Private Limited is involved in manufacture of sub assemblies, precision components among others. These components primarily find application in machine tool industry among others. The founders also have promoted entities like Pragati Automation Private Limited (PAPL), Pragati Transmission Private Limited among others. PRATHAMESH: CARE Denotes Rating as B+/Issuer Not Cooperating ------------------------------------------------------------ CARE Ratings has been seeking information from Prathamesh Constructions to monitor the rating(s) vide e-mail communications dated November 29, 2016, January 11, 2017, January 24, 2017 and February 23, 2017 and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the ratings. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. Furthermore, Prathamesh Constructions has not paid the surveillance fees for the rating exercise as agreed to in its Rating Agreement. In line with the extant SEBI guidelines, CARE's rating on Prathamesh Constructions's bank facilities will now be denoted as CARE B+; ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 13.40 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 on March 9, 2016, the following were the rating strengths and weaknesses: Key Rating Strengths Experienced of promoter group in real estate development The Prathamesh group over its presence of the past 14 years in the business has completed around 41 residential and commercial projects with an area of 9.00 lakh square feet (lsf). Receipt of approvals and clearances for the projects PC has received all the necessary clearances and approvals for the project related to land acquisition and construction. Strategic location of the project PC is currently developing three projects, namely, Novellus (Dhanukar Colony, Pune), Sylvetica (Baner, Pune) and Gallardo (Mukund Nagar, Pune). All the three projects are located in close proximity of banks, schools, malls and hospitals. Key Rating Weaknesses Project execution risk The ability of the entity to complete the projects as per schedule within the envisaged cost and achieve the project sales at the assumed price as well as debt sanction would be critical from the credit perspective. Cyclical nature of the real estate industry The firm is exposed to the cyclicality associated with the real estate sector which has direct linkage with the general macroeconomic scenario, interest rates and level of disposable income available with individuals. Presence in a competitive environment PC faces competition from other real estate developers who are coming up with residential projects in Pune such as The Leaf, Mantra Moments, Rachana Bella Casa, Pharande Pune Ville, Kolte Patil 24K Opula and other such projects in close vicinity. Established in the year 2002, Prathamesh Constructions (PCS) is the part of Prathamesh Group (PGP), Pune. PGP is in the business of real estate development since last fourteen years. At present the group is managing five entities including PCS viz. Atmaja Constructions (ACS), Utkarsha Buildcon (UBN), Jupiter Builders (JBS) and Shubham Realtors (SRS). PCS is also engaged in the business of real estate development. Currently the firm is developing three residential projects namely Novellus, Sylvetica and Gallardo. PROVOGUE INDIA: CARE Denotes Rating as D/Issuer Not Cooperating --------------------------------------------------------------- CARE Ratings has been seeking information from Provogue India Limited to monitor the rating(s) vide e-mail communications dated February 21, 2017, February 20, 2017; February 17, 2017; February 2, 2017; December 30, 2016; October 13, 2016; July 5, 2016 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 ratings on the basis of the publicly available information, which however, in CARE's opinion is not sufficient to arrive at a fair rating. The ratings on Provogue India Limited's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 218.68 CARE D; ISSUER NOT COOPERATING; Based on best available information Short-term Bank Facilities 30.47 CARE D; ISSUER NOT COOPERATING; Based on best available information Users of this ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings takes into account delay in servicing of Bank loans by the company due to liquidity issues faced by it, subsequest invocation of SDR (strategic debt restructuring) by Joint Lender Forum under extant RBI guidelines, further decline in total operating income and deterioration in profitability paramters and further increase in net loss. Detailed description of the key rating drivers At the time of last ratings on October 30, 2015, the following were the rating strengths and weaknesses (updated for the information available from stock exchange): Ongoing liquidity stress: There are ongoing delays in servicing of debt obligations by the company on the back of substantial deterioration in operational and financial performance of the company, which has impacted the liquidity position of the company. Deterioration in financial performance The total operating income of the company continued to decline in FY16 (refers to the period April1 to March31) to INR423.43 crore as against INR545.45 crore in FY15. The company's profitability further deteriorated and the gross margin of the company came at -22.27% in FY16 as against 3.87% in FY15. Provogue (India) Limited (PIL), founded in 1997, is engaged in the manufacture, sale and retail of the fashion apparel products and accessories for men and women under its well-known brand 'Provogue'. PIL operates in the lifestyle retail segment through more than 150 stores spread across 80 locations across India. Furthermore, the company has garment manufacturing plants at two locations, namely, Daman (Gujarat) and Baddi (Himachal Pradesh). Also, the company is engaged in the export of fabrics and garments to African countries. PIL reported a total operating income of INR423.43 crore and net loss of INR195.67 crore, respectively, in FY16 compared with total operating income of INR545.45 crore and a PAT of INR74.56 crore, respectively, in FY15. PUREWAL STONE: ICRA Reaffirms 'B' Rating on INR8.60cr Loan ---------------------------------------------------------- ICRA Ratings has re-affirmed its long-term rating of [ICRA]B on the INR8.60 crore1 fund-based bank facilities and the INR0.40 crore unallocated limits of Purewal Stone Crushers. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based-Long-term 8.60 [ICRA]B (Stable); re-affirmed Unallocated-Long-term 0.40 [ICRA]B (Stable); re-affirmed Detailed rationale The ratings re-affirmation continues to favorably factor in the longstanding experience of the promoters in the stone crushing industry. ICRA notes the favorable location of the firm's plant near the river bed, ensuring ready raw material availability and lower logistics cost. Despite the project being in its stabilisation phase, ICRA also notes that the firm has recorded healthy growth in revenues, leading to healthy accruals. The ratings are, however, constrained by the high level of competitive intensity due to the presence of a large number of crushers in the vicinity, as well as by the high regulatory risks associated with changes in government policies in the mining and quarrying industry. The rating also factors in the firm's high working capital intensity of operations on account of high inventory holding. ICRA also takes into account the vulnerability of Purewal's profitability to a slowdown in the real estate and construction sectors, which are its key off takers. ICRA also notes the risk of capital withdrawal the firm is exposed to, being a partnership firm. Going forward, the ability of the firm to increase its turnover and margins and generate enough cash accruals to meet the repayment of term loans are the key rating sensitivities. Key rating drivers Credit Strengths * Long experience of the management in the stone crushing industry * Locational advantages in terms of raw material availability and lower freight expenses Credit Weaknesses * Operations exposed to the regulatory risks associated with changes in Government policies in the mining and quarrying industry * Intense competition in a fragmented industry structure, amid low product differentiation restricts pricing flexibility. * Seasonality in the business and changes in Government regulations impart high volatility to cash flows and may impact working capital requirements * Partnership firm, any substantial withdrawal from capital accounts would impact the net-worth and thereby the gearing levels. Description of key rating drivers: Purewal Stone Crushers commenced operations from March 2015 and in the interim period during April to August 2015, the firm had stopped its production due to legal issues related to stock disclosures and pollution control certificate. Purewal is at a nascent stage of operations and maintaining high capacity utilisation levels will be a key to increase the scale of operations from the current levels. Furthermore, the operations remain highly vulnerable to regulatory risks associated with changes in government policies in the mining and quarrying industry. High degree of fragmentation due to a large number of unorganised players and limited product differentiation have led to high competitive intensity in the stone crushing industry, thereby limiting the pricing power of the players and affecting the margins. The rating also factors in the firm's high working capital because of high inventory holding requirements, also due to the debt funded nature of capex involved, the capital structure is leveraged. Thus, the ability of the firm to improve the capital structure and manage working capital effectively, while ensuring timely debt servicing will remain the key rating sensitivities. The manufacturing unit is located in proximity to the river bed, which ensures uninterrupted supply of raw material, along with savings in freight cost and reduction in lead time. Moreover, the firm benefits from the longstanding experience of its promoters in the industry. Purewal Stone Crushers (Purewal) was established in 2013 as a partnership firm. The promoters have experience in running similar companies. The firm crushes and processes river bed material (RBD), boulders into stone chips, stone grits and sand stone that find usage in the construction and infrastructure industry. The primary raw materials required are river bed materials that are sourced from river beds in the Kashipur region of Uttarakhand. The firm's manufacturing facility is in the village Veerpur, Lachhi, Ramnagar (Uttarakhand) in an area of 12 acres with an installed annual crushing capacity of 300 metric tons (MT) per day. REGEN POWERTECH: ICRA Hikes Rating on INR1530cr Loan to 'D' ----------------------------------------------------------- ICRA Ratings has upgraded the long term rating assigned to the INR25 crore term loan limits, INR350 crore fund based limits and US$ 10 million external commercial borrowings of Regen Powertech Private Limited (RPPL) from [ICRA]D to [ICRA]BB. The short term rating assigned to the INR50 crore fund based limits and INR1530 crore non-fund based bank limits of the company has been upgraded from [ICRA]D to [ICRA]A4. The outlook on the long-term rating is Stable. Facilities Amount Ratings ---------- --------- ------- Term Loans (Long-term) INR25.00cr Upgraded from [ICRA]D to [ICRA]BB (Stable) External Commercial US$10 Mil Upgraded from [ICRA]D Borrowings (Long-term) to [ICRA]BB (Stable) Fund Based Bank Limits INR350.00cr Upgraded from [ICRA]D (Long-term) to [ICRA]BB (Stable) Fund Based Bank Limits INR50.00cr Upgraded from [ICRA]D (Short-term) to [ICRA]A4 Non-Fund Based Bank INR1530.00cr Upgraded from [ICRA]D Limits (Short-term) to [ICRA]A4 The rating action is based on the best available information. As part of its process and in accordance with its rating agreement with RPPL, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings, but despite repeated requests by ICRA, the company's management has remained non-cooperative. In the absence of requisite information, ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the company's rating is now denoted as: "[ICRA]BB (Stable)/ [ICRA]A4 ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Analytical approach: For arriving at the ratings, ICRA has taken a consolidated view of RPPL along with its subsidiary company- Regen Infrastructure and Services Private Limited- since both operate in the same line of business, have operational linkages and share a common management. RPPL incorporated in December 2006 is a manufacturer of Wind Turbine Generators (WTGs) and end-to-end service provider including consulting, supply, erection, commissioning, and O&M of WTGs. The company has been promoted by Mr. Madhusudan Khemka, Mr. R Sundaresh and Mr. M Prabhakar Rao through the holding company NSL Power Equipment Trading Private Limited. Private equity has also been infused in the company by Indivision India Partners (IIP) and TVS Shriram Growth Fund. SAHARA INDUSTRIES: ICRA Reaffirms 'B' Rating on INR11.63cr Loan --------------------------------------------------------------- ICRA Ratings has reaffirmed the long term rating of [ICRA]B for the INR11.00 crore cash credit facility, INR0.63 crore term loan and INR1.30 crore unallocated limit of Sahara Industries (SI). The outlook on the long term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 11.63 [ICRA]B Reaffirmed; Stable outlook Unallocated Limits 1.30 [ICRA]B Reaffirmed; Stable outlook Rationale The rating reaffirmation continues to factor in the weak financial profile of Sahara Industries, characterised by low profitability margins, stretched capital structure and weak coverage indicators. The rating also continues to take into account the commoditised nature of products, the adverse movements in cotton price and government regulations pertaining to exports and minimum support price (MSP). Furthermore, the rating also considers the highly fragmented nature of the industry which coupled with low-entry barriers, has led to high competition and consequently limited margins. Furthermore, the rating considers the potential adverse impact on net worth and gearing levels in case of any substantial withdrawal from capital accounts. The rating, however, continues to derive comfort from the long experience of its partners in the cotton industry and the proximity of the firm's manufacturing unit to raw materials, easing procurement. Key rating drivers Credit Strengths * Extensive experience of the partners in the cotton industry * Locational advantage by virtue of proximity to raw materials Credit Weakness * Weak financial profile characterised by low profit margins, stretched capital structure and weak coverage indicators * Highly fragmented industry structure due to the presence of a large number of manufacturers and traders; low-entry barriers result in high competition * Operations exposed to regulatory restrictions on cotton export and minimum support price (MSP) * Risks inherent in partnership firms, wherein any substantial capital withdrawal could impact the net-worth and gearing levels Description of key rating drivers highlighted: The firm reported a growth of 6% in operating income in FY2016 owing to increase in sales volume. The profitability remains low due to limited value additive nature of the business and the vulnerability of the firm's profitability to adverse movements in cotton price as well as highly fragmented and competitive nature of the industry with numerous organized and unorganized players. The capital structure of the firm improved in FY2016 with significant term loan repayments; however it remains stretched with gearing of 3.41 times due to high working capital borrowings. Going forward, the scale of the firm is expected to remain modest. Further, the ability of the firm to manage the impact of raw material price fluctuations on its profitability in a highly competitive business environment and improve its capital structure with scheduled debt repayment as well as efficient management of working capital requirements will remain the key rating sensitivity. Established in 1997 as a partnership firm, Sahara Industries (SI) is involved in the business of ginning and pressing raw cotton to product cotton bales and cottonseeds. Its manufacturing facility, located at Wankaner in Gujarat, is equipped with 46 ginning machines and 1 pressing machine with an installed input capacity of 23,040 MT of raw cotton per annum. The partners of the firm have more than decade of experience in the cotton industry. SI recorded a net profit of INR0.18 crore on an operating income of INR59.86 crore for the year ending March 31, 2016. SAHU KHAN: ICRA Reaffirms 'B+' Rating on INR12cr LT Loan -------------------------------------------------------- ICRA Ratings has reaffirmed (suspension revoked) the long term rating at [ICRA]B+ for the INR12.00 crore (enhanced from INR9.00 crore) fund based limits of Sahu Khan Chand Foods. The outlook on the long term rating is assigned at 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term, Fund 12.00 [ICRA] B+(Stable); reaffirmed; Based Limits suspension revoked Rationale The rating reaffirmation factors in the highly competitive nature of the industry in which SKCF operates, characterized by a few larger players and a number of small players. The rating is further constrained by vulnerability of the firm's profitability to agro climatic risks as witnessed by decline in realization of frozen green peas affecting margins of the firm which declined from 10.03% in FY2015 to 7.81% in FY2016. The rating also factors in the firm's elongated working capital cycle on account of high inventory levels; below average coverage indicators and weak capitalization indicator as reflected by gearing of 3.11 times as on 31st March 2016. ICRA also takes note of the partnership constitution of the firm which exposes it to risks of withdrawal, dissolution etc. However, the rating derives comfort from the long experience of the firm's management in a similar line of business. Going forward, the firm's ability to ramp up its scale of operations while bringing about a sustained improvement in its profitability will remain the key rating sensitivity. Key rating drivers Credit Strengths * Established track record of promoters in similar line of business * Robust capacity utilization in the past Credit Weakness * Modest scale of operations * High competitive intensity in the industry characterized by few large players and a number of small players * Declines in the profitability margins due to decline in demand of frozen green peas as price of raw green peas declined in FY2016. * Weak capitalization indicators with gearing of 3.11 times as on March 31, 2016 as against 1.97 times as on March 31, 2015. However, debt comprises of working capital borrowings and unsecured loans with no long term borrowing. Description of key rating drivers highlighted above: Promoters of the firm are having more than two decades of experience in frozen food industry. Long track record in similar line of business provides better management. The frozen food industry is highly competitive characterized by a few larger players and a number of small players. Realization for frozen green peas declined in FY2016 affecting margins of the firm which declined from 1.97 times as on March 31, 2015 to 3.11 times as on March 31, 2016. Total debt majorly comprises of working capital borrowing and interest bearing unsecured loans. Incorporated in 1986, SKCF is promoted by Ms. Bhagwati Devi, Mr. Mausam Gupta, Ms Neeru chaudhary, Mr. Nirmal Gupta, Mr. Rakesh Chandra and Mr. Tejendra Chaudhary. The company is involved in the processing and trading of frozen fruits and vegetables (majorly frozen green peas) at two of its manufacturing units located in Sambhal, Uttar Pradesh. The company has a capacity to process 5400 MT of vegetables annually. SKCF has a storage capacity of 5400 MT annually. These food products are supplied by the company to clients in domestic markets. Frozen green peas are sold under the brand name of Sahu Fresh. SANGAM STEELS: CARE Denotes Rating as B/Issuer Not Cooperating ------------------------------------------------------------- CARE Ratings has been seeking information from Sangam Steels to monitor the rating(s) vide e-mail communications/ letters dated February 28, 2017 and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the ratings. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. In line with the extant SEBI guidelines CARE's rating on Sangam Steels's bank facilities will now be denoted as CARE B; ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7 CARE B; 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). Detailed description of the key rating drivers At the time of last rating in February 26, 2016, the following were the rating strengths and weaknesses. Key Rating Strengths Experienced proprietor and established track record of operations: The proprietor has an experience of nearly 25 years in the industry. Furthermore, over 3 decades of operations of the firm has facilitated the establishment of long-term relationships with its clientele leading to repeat orders. Association with reputed suppliers: Sangam Steels is an authorized dealer of JSW Steel Limited since 1999 for hot rolled sheets and, rounds, etc. The firm also deals with trading of products like wires, coils and rods for the Steel Authority of India since 2010. Sangam Steels procures ~90% of its traded from JSW Steel Limited and SAIL. Key rating Weaknesses Declining scale of operations: The operating income of the firm has declined consistently in the FY13-15 period and stood at INR75.04 crore in FY15 (refers to the period April 1 to March 31). Low profitability margins: The firm's profitability margins have remained low with the PBILDT and PAT margins of 2.18% and 0.16%, respectively, in FY15. Leveraged capital structure: The capital structure of the firm remained highly leveraged marked by long term debt to equity ratio and overall gearing ratio of 1.06x and 5.17x as on March 31, 2015. Weak debt coverage indicators: The debt coverage indicators remained weak with total debt to GCA at 84.68x for FY15 Working capital intensive nature of operations: The working capital cycle stood at 58 days for FY15. The average utilization of the working capital limits stood around 80%. Proprietorship nature of its constitution: SS's constitution as a proprietorship firm has the inherent risk of possibility of withdrawal of the proprietor's capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of proprietor. Cyclicality inherent in the steel industry: The performance of steel industry is linked to the fortune of sectors like infrastructure, real estate and automobiles, which, in turn, are dependent on the macro-economic condition, thereby making steel trading activity highly dependent on the growth of economy. Sangam Steels (SS) was established in 1983 by Mr. Sandeep Gupta as a proprietorship firm. The firm is an authorized dealer of JSW Steel Limited, since 1999, and is engaged in the distribution of steel products (HR Sheets, rounds, etc), for the company. The firm is also engaged in the distribution of steel products like wires, coils rods, bars, etc. for Steel Authority of India Limited (SAIL), with whom it is associated since 2010. These products, primarily sold in the Punjab region, find application in bicycle parts, automobiles components, etc. SATHYAM GREEN: Ind-Ra Migrates BB- Rating on INR358.4MM Bank Loan ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Sathyam Green Power Private Limited's (SGPPL) INR358.4 million long-term senior bank loans and INR97.5 million fund-based working capital limit 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: -- INR358.4 mil. Senior bank loans with 'BB-' rating migrated to Non-Cooperating Category; and -- INR97.5 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. 3, 2016. Ind-Ra is unable to provide an update as the agency does not have adequate information to review the ratings. COMPANY PROFILE SGPPL operates a 10MW biomass power plant in the Merta district of Rajasthan. The plant commenced commercial operations in April 2011. SGPPL is majorly held by Focal Biomass Holdings Limited. SHARVI RICE: Ind-Ra Assigns 'BB' Long-Term Issuer Rating -------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Sharvi Rice Mill Private Limited (SRMPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR40 mil. Fund-based limits assigned with 'IND BB/Stable' rating; and -- INR65.39 mil. Term Loan assigned with 'IND BB/Stable' rating KEY RATING DRIVERS The ratings reflect SBAPL's short operating track record as it started commercial operations only in June 2014. The ratings also factor in the company's moderate credit profile as it reported interest coverage (operating EBITDA/gross interest expense) of 1.83x in FY16 (FY15: 1.83x) and net leverage (adjusted net debt/operating EBITDAR) of 3.73x (7.32x). However, the ratings are supported by SBAPL's healthy growth of 150% yoy in revenue during FY16 to INR501 million on account of an increase of the total production volume during the year. The ratings are also supported by the strong liquidity profile of the company as reflected by its average 54% working capital utilization during the 12 months ended February 2017. RATING SENSITIVITIES Positive: A substantial improvement in the revenue along with an improvement in the credit profile will be positive for the ratings. Negative: Deterioration in the overall credit metrics could be negative for the ratings. COMPANY PROFILE Incorporated in 2011, SRMPL is engaged in processing and milling of paddy into rice, rice ban, husk etc. Its plant is located in Nagri, Ranchi and has an install capacity of 48000 metric tonnes per annum. The promoter-director Praveen Gupta, Praveen Kedia, and Shubham Gopalka manage the operations. SHRI PRABHULINGESHWAR: ICRA Ups Rating on INR74.69cr Loan to B --------------------------------------------------------------- ICRA Ratings has upgraded the long term rating assigned to INR25.31 crore (revised from INR69.24 crore) term loan and INR74.69 crore fund based limits of Shri Prabhulingeshwar Sugars and Chemicals Limited (SPSCL) from [ICRA]C+ to [ICRA]B. The outlook on the long term rating is Stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Term Loan 25.31 [ICRA]B(Stable)/upgraded from [ICRA]C+ Proposed Fund Based Limits 74.69 [ICRA]B(Stable)/upgraded from [ICRA]C+ Rationale The rating revision takes into consideration the improved performance of SPSCL in FY2016 aided by increase in sugar realizations during H2 FY2016. Further, the company is expected to report significant gains on about 88,323 MT of sugar inventory held as on March 31, 2016 owing to improved average sugar realizations during FY2017. In addition, the rating continues to positively factor in the extensive experience of the promoters in the sugar industry, forward integration of the plant into co- generation and assured sales of molasses produced to a group company which results in partial de-risking from the volatilities of sugar industry. The rating, however, continues to remain constrained by the levereged capital structure and modest debt protection metrics of the company. ICRA also notes that sizeable debt repayment obligations of SPSCL will continue to exert pressure on the financial risk profile of the company in the medium term. Further, the rating remains constrained by the exposure of the company's business to agro-climatic risks, which determine sugarcane availability as well as pricing and regulated nature of the industry with respect to cane pricing and exports. In addition, the rating also remains tempered by the high working capital requirements of the industry due to stock holding requirements; and the substantially high competitive intensity in the region for cane procurement, which could result in additional pressure on the margins. Going forward, the ability of the company to generate commensurate accruals to cater to its debt repayment obligations while effectively managing working capital requirements remain the key rating sensitivities. Key Rating Drivers Credit Strengths * Experience of the promoters in the sugar industry and presence of the group in allied and related industries with good local standing * Favourable location of the sugar unit in a relatively high cane intense and high recovery area in Bagalkot district of North- Karnataka * Integration of the plant into cogeneration and assured sales of the molasses to a group company results in partial de-risking from the volatilities of the sugar cycle * SPSCL is expected to report significant gains on the sugar inventory of ~88,323 MT as on March 31, 2016 owing to improvement in average sugar realizations during FY2017 Credit Weakness * Relatively weak financial profile with stretched capital structure and modest coverage indicators; however, the same has improved in FY2016 as against FY2015 * Substantially high competitive intensity for the cane procurement in the region between various sugar companies * Relatively large exposure to agro-climatic risks which determine cane availability * High regulatory intensity of the sugar industry in terms of cane pricing and export policy Description of key rating drivers highlighted above: SPSCL operates its sugar unit in relatively high cane intense area in Bagalkot district of North-Karnataka, where cane is one of the main crops. In addition to the sugar unit, the company's operations are partially forward integrated with presence of a 38.5 MW co-generation division. Further, the company also sells molasses to an associate entity Siddapur Distilleries Limited. This provides a cushion to the company's cashflows in case of a sugar downturn. During SY2016, the cane crushed by SPSCL reduced to 10.31 lakh MT from 12.56 lakh MT in SY2015 owing to lower rainfall during the year. However, improved sugar realizations during H2FY2016 resulted in improvement of revenue and profitability for the company during FY2016. Further, the company is expected to benefit from 88,323 MT of sugar inventory held as on March 31, 2016 due to improvement in sugar realizations during FY2017. The company's capital structure, however, remains relatively stretched owing to debt-funded capex undertaken coupled with high working capital requirements. Further, sizeable debt repayment obligations are also expected to exert pressure on the cashflows of the company going forward. Hence, firmness of the sugar realizations along with performance of the by-product divisions will remain crucial for the company to generate commensurate accruals to cater to its repayment obligations. Shri Prabhulingeshwar Sugars and Chemicals Limited (SPSCL) was incorporated in 1995 and started crushing cane in the year 1999. The cane crushing capacity was gradually increased from 2,500 TCD earlier to 10,000 TCD. SPSCL increased its cogeneration capacity from 28.5 MW in sugar year (SY) 2012 to 38.5 MW in SY 2013 by commissioning a 27 MW steam turbine in April 2013 and disposing the rented condensation and extraction turbines. The plant is located in Siddapur village in Bagalkot District of North Karnataka and is promoted by Mr. Jagadeesh S Gudagunti, who apart from managing SPSCL, has extensive experience as a consultant and machinery supplier for sugar and allied industries SHRI VARU: Ind-Ra Assigns 'B' Long-Term Issuer Rating ----------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Shri Varu Polytex Private Limited (SVP) a Long-Term Issuer Rating of 'IND B'. The Outlook is Stable. The instrument-wise rating actions are: -- INR115 mil. Term loan assigned with 'IND B/Stable' rating; and -- INR50 mil. Fund-based working capital limit assigned with 'IND B/Stable/IND A4' rating KEY RATING DRIVERS The ratings reflect the construction stage of SVP's project as it is setting up a manufacturing unit for production of woven sacks. The project is scheduled to be completed by August 2017 and the commercial operation is likely to start from September 2017. The total cost of the project is estimated at INR195.97 million out of which promoter's contribution (share capital and unsecured loan) is INR104.31 million and term loan is INR87.50 million; the remaining is through government subsidies. The ratings further reflect the risk of raw material price fluctuations. The ratings are constrained by the industry's fragmented nature of operations. The ratings, however, are supported by SVP's locational advantage due to easy availability of skilled and unskilled labor. The ratings are further supported by the management's experience of more than two decades in various industries such as coal trading, flour mills and cement trading. RATING SENSITIVITIES Positive: Successful commencement of commercial operations and the company's ability to ramp up the operations/productions in a timely manner along with achieving stable business operations will be positive for the ratings. Negative: Company's inability to ramp up the operations/production in a timely fashion and/or any additional debt led capex impacting the debt servicing capability of the company would be negative for the ratings. COMPANY PROFILE SVP was originally incorporated as R R Dal Mills Private Limited on Feb. 11, 1982. Subsequently, in September 2016, the name of the company was changed to Shri Varu Polytex Private Limited. The company is currently managed by Mr. Anmol Jain and Mr. Ajit Jain. The company is setting up a HDPE woven sack manufacturing unit in Jeevnathpur, Industrial Area Ramnagar (Uttar Pradesh) with an annual installed capacity to manufacture 5400TPA of woven sacks. SMS9 AGRO: ICRA Assigns 'B' Rating to INR10cr Fund Based Loan ------------------------------------------------------------- ICRA Ratings has assigned the long-term rating of [ICRA]B to the INR10.00 crore1 fund based limits of SMS9 Agro Oils LLP. The outlook on the long term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 10.00 [ICRA]B (Stable) Assigned Rationale The assigned rating is constrained by the execution risk with rice bran oil extraction unit to be operational from April 2017; low operating profitability in the edible oil solvent extraction business; and expected stretched capital structure and coverage metrics in the initial years of operation due to low operating profitability and high interest expenses. The rating is further affected by the high competitive nature of the industry from cheaper oil substitutes such as imported palm oil; susceptibility of raw material availability to agro-climatic conditions; and price fluctuations due to demand and supply factors in the global market. ICRA also notes the risks associated with partnership nature of the firm. The rating, however, positively factors in the promoter's vast experience in the rice milling and rice bran oil extraction business through group concerns; limited project implementation risk with the firm having already incurred nearly 90% of the project cost; and easy availability of raw material i.e. rice bran, due to the plant's location in a major paddy growing region in Telangana. Further, the prospects of Rice Bran Oil due to its health benefits and rising consumer preference for healthy foods and diet augurs well for the firm's sustenance. Going forward, the ability of the firm to stabilize its operations and manage its working capital requirements efficiently will be the key rating sensitivities from credit perspective. Key rating drivers Credit Strengths * Easy availability of raw material - rice bran flakes, by virtue of its presence in a major paddy growing region in Telangana as well as easy procurement from rice mills associated with the partners * Longstanding experience of the promoters in rice milling and rice bran oil solvent extraction through associate concerns * Favorable prospects of Rice Bran Oil due to its health benefits and rising consumer preference for healthy foods and diet Credit Weakness * Stretched capital structure with high gearing levels and low DSCR in the initial years of operation due to low operating profitability and high interest expenses * Low operating profitability in edible oil solvent extraction business due to limited value addition * High degree of competition from other edible oils, especially palm oil imported from the South East Asian countries * Susceptibility to agro-climatic conditions can affect the raw material availability as well as the prices * Risks arising from partnership nature of firm Description of key rating drivers highlighted above: SMS9 is setting up crude rice bran oil solvent extraction unit near Miryalaguda in Telangana with a plant capacity of 250 tons per day. The promoters have significant experience in rice milling and edible oil solvent extraction business through group concerns. The cost of the project is INR12 crore of which nearly 90% of the cost has been incurred as on March 15, 2017 thereby limiting the project execution risks. The project location is favourable due to its location in Mirayalaguda region in Telangana where paddy is a majorly cultivated crop and has a number of rice mills in the vicinity. Further, the prospects of rice bran oil are favourable due to its proven health benefits relative to other edible oils along with rising consumer health consciousness. The edible oil industry is characterized by high degree of competition from other cheaper edible oils such as palm oil which is mostly imported from South East Asian countries and the movement of all the edible oil prices are mostly linked to palm oil supply and demand factors. Further, the thin profitability in the industry leads to stretched coverage metrics in the initial years of operation due to high interest charges. The raw material availability is also vulnerable to agro climatic risks. Established on February 10, 2016 as a partnership firm, SMS9 Agro Oils LLP (SMS9) is setting up a rice bran oil solvent extraction unit with a plant capacity of 250 TPD. The proposed manufacturing unit would be located in Yadgarpally village in Miryalaguda mandal of Nalgonda district in Telangana on a total area of 6.10 acres. The firm is promoted by Mr. S. Satyanarayana and his family members. The promoters have more than 20 years of experience in edible oil and rice milling businesses. The total cost of the project is INR12 crore to be funded by INR7 crore debt and INR5 crore equity and unsecured loans. SRI SAI: CARE Denotes Rating as D/Issuer Not Cooperating -------------------------------------------------------- CARE Ratings has been seeking information from Sri Sai Durga Infratech India Private Limited to monitor the rating(s) vide e- mail communications dated August 1, 2016, October 20, 2016, November 1, 2016, December 1, 2016, December 9, 2016, December 27, 2016 and February 21, 2017 and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the ratings. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. In line with the extant SEBI guidelines CARE's ratings on Sri Sai Durga Infratech India Private Limited's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 5.00 CARE D; ISSUER NOT Facilities COOPERATING; Revised from CARE BB on the basis of best available information Long-term/Short- 23.00 CARE D; ISSUER NOT Term bank facilities COOPERATING; Revised from CARE BB/CARE A4 on the basis of best available information Short-term Bank 5.00 CARE D; Issuer not Facilities cooperating; Revised from CARE A4 on the basis of best available information Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The revision in the ratings assigned to the bank facilities of Sri Sai Durga Infratech India Private Limited takes into account the delays in debt servicing on account of stressed liquidity position. Ability of the company to improve its liquidity and regularize its debt servicing will be the key rating sensitivity. Detailed description of the key rating drivers The revision in the ratings assigned to the bank facilities of Sri Sai Durga Infratech India Private Limited takes into account the delays in debt servicing on account of stressed liquidity position. Key Rating weakness Stressed liquidity position Due to stressed liquidity position, there have been delays in honoring the debt service obligations on time. Lower asset base leading to higher reliance on sub-contracting As on March 31, 2015 (Provisional), SPL had gross block of about INR1.21 crore of which plants and machinery contribute about INR0.21 crore which is very low considering the orders on hand that are to be executed within next two years. The small asset base has also resulted in higher reliance on sub-contracting and equipment leasing. Lower asset base with diversification present challenges of executing the projects without time and cost over-run but is also expected to increase reliance on sub-contracting, thereby, keeping check on the profitability given certain percentage of contract value is retained by the client as margin. Moderate industry prospects The growth prospects of construction players including SSDIL are closely linked to the economic growth, political stability and Government monetary & fiscal policies. The construction industry plays an important role in the development of a country's infrastructure, which is a key engine of economic growth. The industry requires bidding for the projects based on tenders, resulting in intense competition. Currently, the demand for affordable housing, rapid growth in Information Technology and financial services in Tier II and Tier III cities, investments in key infrastructure segments including roads, railways, and power are expected to surge with expected rise in growth. Furthermore, many steps have been taken by the government to improve funding avenues in infrastructure sector which include easing of FDI norms for construction, railways, defence and providing incentives to promote Real Estate Investment Trusts. Key rating strengths Satisfactory experience of promoters SSDIL is promoted by Mr. Chandra Ranga Rao and Mrs Chandra Satvika in September 2010. Although, the company was incorporated in 2010, its promoter; Mr. Chandra Ranga Rao has 11 years of experience in the field of construction industry. He started his business by promoting Chandra Constructions, Khammam in 2002. Later in 2008, he established Sri Sai Durga Constructions as a partnership firm and in 2010, the firm was taken over by Sri Sai Durga Infratech India Private Limited (SSDIL). The promoters have been supporting the operation of the company through infusion of unsecured loans in the past. Furthermore, the promoters have infused additional equity of INR 4.78 crore during FY15 (refers to the period April 1 to March 31) to support the increasing scale of operations. Significant improvement in revenue with satisfactory profitability margins Gross billing of the company has witnessed CAGR growth of about 42% during FY13-FY15 with y-o-y growth of about 105% (Rs.56.75 crore in FY15 from INR27.74 crore in FY14) on account of faster execution of projects in hand. During FY15, SSDIL is also engaged in trading activity (trading of steel, DI pipes, aluminum wires, PVC pipes, MS sheets) from which the contribution to revenue has been around 36%. PBILDT margin of the company has declined marginally during the year by 37 bps (from 7.58% in FY14 to 7.21% in FY15) on account of high sub contracting expenses as the company mostly sub contracts the works wherein the client retains a certain percentage of contract value as margins. Collection period of the company has improved from 244 days in FY14 to 171 days in FY15 on account of faster realization of bills pending; majorly from RKI Builders Private Limited and VSA Infra Projects Private Limited for which the company has executed projects. Total debtors outstanding as on March 31, 2015 comprises about 48% of the gross billings of which the company has recovered INR5.23 crore (i.e. about 9.22%) as on June 31, 2015. Given the high collection period, the company also extended payments to its sub-contractors (as the company majorly gets the work executed through further sub-contracting) resulting in high creditors period in FY15. The company enters into an agreement with the subcontractors for payment towards the work done once the project is completed and been tested on account of which it was able to manage its working capital despite significant increase in its turnover. Operating cycle of SSDIL improved from 65 days in FY14 to 26 days in FY15 on account of significant improvement in collection period. However, reliance on bank borrowings has been high resulting in almost full utilization of bank borrowings. Significant improvement in financial risk profile of the company Overall gearing ratio of the company improved to 0.53x as on March 31, 2015 from 1.55x as on March 31, 2014 on account of gradual repayment of term loans and accretion of profits to networth. The promoters also infused equity to the tune of INR 4.78 crore during the year FY15 resulting in increase in networth. The other coverage indicators viz. interest coverage ratio (improved from 2.92x in FY14 to 3.19x in FY15), total debt/GCA (improved from 5.64x as on March 31, 2014 to 2.82x as on March 31, 2015) also improved significantly and remained satisfactory as on March 31, 2015. Moderate but concentrated order book position SSDIL had an outstanding order book position of INR249.78 crore as on May 31, 2015 as against INR209.06 crore as on December 31, 2014. The said order book provides revenue visibility for the medium term. The order book is concentrated majorly of 3-4 clients [viz. VNR Infrastructure Ltd. (VNRIL), RKI Builders P. Ltd., VSA Infra Projects Pvt. Ltd., Prathyusha Resource & Infra Pvt. Ltd]. The order book is spread across projects in the electrical works and construction of roads and buildings segments. Most of the orders are sub-contracted works in view of limited track record of the company. However, the company has got Class-I certificate which enables the company to directly participate in bidding process of large value projects up to INR 35.00 crore. Sri Sai Durga Infratech India Private Limited (SSDIL) was incorporated in September 2010 to take over the business of Sri Sai Durga Constructions, a partnership firm started in 2008 by Mr. Chandra Rangarao and Mrs Chandra Satvika. The company is engaged in the civil construction segment with work orders spanning across construction of building works, water supply works, electrical works and irrigation works etc. SRI SATNAM: CARE Assigns B+ Rating to INR12cr LT Bank Loan ---------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Sri Satnam Jewells Pvt. Ltd. (SJPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12 CARE B+; Stable Rating Rationale The rating assigned to the bank facilities of SJPL is constrained by its short track record of operations, risk of non-renewal of franchisee agreement from Senco Gold Limited, susceptibility to volatility in traded material price and geographical concentration risk coup-led with dependence on a single retail outlet, working capital intensive nature of business resulting in leveraged capital structure and exposure to volatility in gold/silver prices and presence in a highly fragmented industry leading to intense competition coupled with regulated nature of the industry. The rating, however, derives strength from its experienced promoters and authorized franchisee agreement with Senco Gold Limited. Going forward, ability to increase in scale of operations and profitability margins and ability to manage working capital effectively will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record of operations SJPL commenced operation since October, 2016 and accordingly has a short track record of operation of around four months. During 4MFY17, the management is stated to have achieved net operating income of INR10 crore. Risk of non-renewal of franchisee agreement from Senco Gold Limited SJPL has entered into a franchisee agreement with Senco Gold Limited (SGL) since July, 2016. The franchisee agreements is valid till July, 2019 and the operation of SJPL depends on the renewal of the existing agreement, completely at the discretion of SGL and which is guided by terms and conditions from SGL. Furthermore, the agreement may get terminated at any time on violation of certain clauses. Susceptibility to volatility in traded material price The prices of gold/silver have experienced high volatility in the past two years. In case of any sharp fall in gold prices for a considerable period of time, the level of inventory holding may suffer diminution in value. This risk to an extent is mitigated as the company replenishes its gold/ jewellery stock as soon as some sale of jewellery happens, either on the same day or the next day. Geographical concentration risk coup-led with dependence on a single retail outlet SJPL is in the business of retailing of gold, silver and diamond studded jewellery through its sole retail outlet located at a prime location on Berhampur, Odisha. So, the entire operation of SJPL is restricted to Odisha and that too from a single retail outlet. Working capital intensive nature of business Being a jewellery retailer, SJPL has to hold high inventory level of finished goods for display at the showrooms to ensure ready availability of stock and to offer a wide product range across different categories, while the retail sales are generally made on cash basis. Thus, the business depends heavily on working capital borrowings. Furthermore, the entity started using cash credit limit since October, 2016. Accordingly, the average fund based working capital utilisation remained high at about 90% during the last 4 months ended January, 2017. Presence in a highly fragmented industry leading to intense competition coupled with regulated nature of the industry. The company operates in the Gems & Jewellery (G&J) industry which is fragmented with a high level of competition from both the organized and largely unorganized sector players. Low entry barrier and surging gold price limits the pricing flexibility. Moreover, the global and domestic macroeconomic environment continues to remain uncertain and poses a major challenge for the companies operating in the G&J industry. Key Rating Strengths Experienced promoters The main promoter of SJPL, Mr. Narayan Khurana (Graduate) aged about 52 years has an experience of around five years in gold retailing business albeit having around three decades of experience in the textile industry. He looks after the day-to- day affairs of the company with the assistance of other directors and a team of experienced personnel. Authorized franchisee agreement with Senco Gold Limited SJPL has entered into an authorized franchisee agreement with Senco Gold Limited (SGL) for retailing of gold, silver and diamond studded jewellery. Senco Gold Limited is the largest integrated gold and diamond jewellery house having the largest retail chain in Eastern India. Sri Satnam Jewells Pvt. Ltd. (SJPL) was incorporated in June 1, 2016, by Khurana family of Berhampur, Odisha with Shri Narayan Khurana being the main promoter. SJPL is engaged in retailing of gold and silver jewellery and precious & semiprecious stones studded gold jewellery, through its sole retail outlet located in Berhampur, Odisha. SJPL has entered into an authorized franchisee agreement with Senco Gold Limited (SGL) since July, 2016. During 4MFY17 (October, 2016 to January, 2017) the management is stated to have achieved net operating income of INR10 crore. SUNLAND CERAMIC: ICRA Reaffirms B+ Rating on INR6.74cr Loan ----------------------------------------------------------- ICRA Ratings has reaffirmed the long-term rating assigned to the INR6.74-crore fund-based limit of Sunland Ceramic Private Limited at [ICRA]B+ . ICRA has also re-affirmed the short-term rating at [ICRA]A4 for the INR1.50-crore non-fund based limits of the company. The outlook on the long-term remains 'Stable'. ICRA has also reaffirmed the [ICRA]B+ (stable)/[ICRA]A4 rating to the INR1.19-crore unallocated limits of the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Limit 6.74 [ICRA]B+ (Stable) Reaffirmed Non-fund Based Limit 1.50 [ICRA]A4 Reaffirmed Unallocated Limit 1.19 [ICRA]B+ (Stable)/[ICRA]A4 Reaffirmed Rationale The ratings reaffirmation takes into account the company's modest scale of operations as well as the highly competitive nature of the ceramic tile industry with the presence of a large established, organised and unorganised tiles manufacturers. The ratings also factor in SCPL's modest scale of operations, net loss incurred in FY2016, modest debt servicing indicators and high working capital intensity of its operations. The ratings also take note of the vulnerability of SCPL's profitability to adverse movements in prices of key raw materials, which account for a majority of the manufacturing costs. The ratings, however, favourably takes into consideration the experience of the key promoters of SCPL in the ceramic industry as well as its advantageous location, which entails easy availability of raw material by virtue of being situated in Morbi (Gujarat). Key Rating Drivers Credit strengths * Experience of key promoters in the ceramic industry * Company's location in Morbi, India's ceramic hub, provides easy access to raw material sources Credit weaknesses * Financial profile characterised by modest scale of operations, losses at net level and modest debt servicing indicators * Higher working capital intensity due to stretched receivables position in FY2016 * Intense competitive business environment owing to presence of established tile manufacturers as well as unorganised players Description of key rating drivers: SCPL's financial profile in FY2016 is characterised by the revenue growth along with rising profitability and modest coverage indicators during the year. The operating income increased by 6% in FY2016 backed by rising volumes and realisations during the year. Operating margins improved in FY2016 to 14.3% on account of lower raw material prices along with declining employee expenses incurred during the year. Gearing declined from 1.6x to 1.1x as a result of lower YoY debt levels. With higher profitability and lower debt, coverage metrics improved in FY2016 with TD/OPBDITA of 3.1x, TOL/TNW of 1.6x and NCA/Debt of 21%. The company's presence in the highly fragmented ceramic industry, which is characterised by intense competition, limits its pricing flexibility and thereby its ability to effectively pass on the increase in raw material prices to customers. However, installation of digital printing in the current fiscal is expected to improve the margins and alleviate cost pressures. The liquidity position of the company is likely to remain stretched in the current fiscal owing to the closure of the plant for around two months for the installation of digital printing machine and new kiln. SCPL's promoters have a long experience in the ceramic industry and are involved with other associate companies in similar lines of business. Furthermore, the favourable location of the company provides it easy accessibility to quality raw materials. Analytical approach: For arriving at the ratings, ICRA has taken into account the debt servicing track record of SCPL, its business risk profile, financial risk drivers and management profile. Sunland Ceramic Pvt Ltd (SCPL) is a wall tiles manufacturer with its plant situated at Morbi, Gujarat. The company was incorporated in December 2010 and it commenced its operations in January 2012. SCPL is promoted and managed by Mr. Kishor Kundariya who is the current Managing Director of the company. The plant has an installed capacity of ~40,000 Metric Tonnes Per Annum (MTPA) to manufacture wall tiles. SCPL currently manufactures wall tiles of two sizes 8" X 12" and 12"X 18" with the current set of machineries at its production facilities. TRISHUL TREAD: Ind-Ra Assigns 'BB' Long-Term Issuer Rating ---------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Trishul Tread Private Limited (TTPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR170 mil. Fund-based limits assigned with 'IND BB/Stable' rating; -- INR40 mil. *Proposed fund-based limits assigned with 'Provisional IND BB/Stable rating' KEY RATING DRIVERS The ratings reflect TTPL's moderate credit profile. During FY16, revenue was INR930 million (FY15: INR735 million), operating EBITDAR margin was 2.43% (3.71%), net financial leverage (net debt/EBITDA) was 8.1x (7.1x) and gross interest coverage (EBITDA/gross interest) was 1.6x (1.3x). The liquidity position of the entity is also moderate with 98.6% average utilization of its fund-based limit during 12 months ended February 2016. The ratings are supported TTPL's association with Tata Hitachi Construction Machinery Company Pvt. Ltd. for the distribution of its construction equipment and spare parts and also providing after sales service, in the entire state of Odisha. The ratings are also supported by the company's director's more than two decades experience in the automobile segment. RATING SENSITIVITIES Negative: Any deterioration in the credit metrics will be negative for the ratings. Positive: A sustained improvement in credit metrics could lead to a positive rating action. COMPANY PROFILE TTPL was set up in 1998, in Bhubaneswar, Odisha as a private limited company by Mr. Kabir Taneja who is also the company director. The company operates in the broader segments of heavy earth moving machines, construction machinery ranging from excavators, loaders, backhoe loaders, compactor, cranes and other multi- utility machines. It is one of the exclusive authorized dealers for the Tata Hitachi Construction Machinery Co for the State of Odisha, with 19 branches focusing on 2-S activities i.e. selling of equipment and as a service provider. TULIP TELECOM: ICRA Reaffirms 'D' Rating on INR150cr Loan --------------------------------------------------------- ICRA Ratings has reaffirmed the long term rating assigned to the INR150 crore Non Convertible Debenture programme of Tulip Telecom Limited (TTL) at [ICRA]D . Amount Facilities (INR crore) Ratings ---------- ----------- ------- NCD 150.0 Reaffirmed at [ICRA]D The rating action is based on the continued delays in the company's debt servicing. As part of its process and in accordance with its rating agreement with TTL, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings, but despite repeated requests by ICRA, the company's management has remained non-cooperative. In the absence of requisite information, ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 01, 2016, the company's rating is now denoted as: "[ICRA] D ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Incorporated in 1992, by Retd .Lt. Col. H.S. Bedi, as a private limited company involved in trading of software, Tulip Telecom Limited (Tulip), formerly Tulip IT Services Limited has since diversified its operations to other related areas such as selling of hardware products, network integration, VPN data connectivity and managed services. The company became a public limited company and was renamed to Tulip Software Ltd.; the name was further changed to Tulip IT Services Ltd. in 2002 and to Tulip Telecom Limited in 2008. VARDHMAN WIRES: Ind-Ra Assigns 'B+' Long-Term Issuer Rating ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Vardhman Wires & Cables (VWC) a Long-Term Issuer Rating of 'IND B+'. The Outlook is Stable. Instrument-wise rating action is: -- INR28.95 mil. Fund-based facilities assigned with 'IND B+/Stable/IND A4' rating KEY RATING DRIVERS The ratings reflect VWC's small scale of operations and weak credit metrics, despite an improvement in the financial profile. Revenue surged to INR529 million in FY16 (FY15: INR300 million) on account of enhancement in customer portfolio. The firm booked revenue of INR350 million in 10MFY17 and has an order book of INR63 million, which will be executed by end-April 2017. Net leverage improved to 3.5x in FY16 (FY15: 4.2x) and EBITDA interest coverage to 1.4x (0.9x) owing to an increase in operating EBITDA. However, EBITDA margin was thin and volatile in the range of 1.4%-2.2% over the four years ended FY16 due to the trading nature of the business. The ratings also factor in the firm's tight liquidity position with average utilization of fund-based limits of 98.5% during the 12 months ended January 2017. However, the ratings draw support from the promoter's more than a decade-long experience in the cables and conductors trading business. RATING SENSITIVITIES Positive: Any substantial growth in the top line along with an improvement in the EBITDA margin, leading to a sustained improvement in the credit metrics could be positive for the ratings. Negative: Any deterioration in the EBITDA margin leading to a sustained deterioration in the credit metrics could be negative for the ratings. COMPANY PROFILE Established in 2009, VWC is engaged in trading of cables and conductors, mainly polyvinyl chloride cables, aerial bunched cable, flame retardant low smoke cable, aluminum alloy conductor and aluminum conductor steel reinforced. WINWIND POWER: ICRA Reaffirms 'D' Rating on INR288.22cr Loan ------------------------------------------------------------ ICRA Ratings has re-affirmed the rating assigned to the INR608.16 crore1 term loans, fund based and non-fund based working capital facilities of Winwind Power Energy Private Limited at [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term, Fund based facilities 150.00 [ICRA]D; re-affirmed Long term, Term Loans 288.22 [ICRA]D; re-affirmed Short term, Non fund based facilities 169.94 [ICRA]D; re-affirmed Rationale The rating re-affirmation takes into account the continued delays in debt servicing. The rating action is based on the best available information. As part of its process and in accordance with its rating agreement with WPEPL, ICRA has been trying to seek information from the company so as to undertake a surveillance of the ratings, and had sent reminders to the company for the same and for the payment of surveillance fee that became overdue; however despite multiple requests; the company's management has remained non-cooperative. ICRA's Rating Committee has taken a rating view based on best available information. In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the company's rating is now denoted as: "[ICRA]D ISSUER NOT COOPERATING". The lenders, investors and other market participants may exercise appropriate caution while using this rating, given that it is based on limited or no updated information on the company's performance since the time it was last rated. Winwind Power Energy Private Limited (WPEPL) was incorporated in India in July 2007 as a 100% subsidiary of Winwind OY (WWO) - a Finland based wind turbine manufacturer, established in the year 2000. WWO, a relatively recent entrant in the European Wind Energy market, offers two WTG models - WWD1 with a 1 MW capacity and WWD3 with a 3 MW capacity. It has supplied approximately 328 MW of wind power capacity in markets such as Finland, Sweden, Estonia, Portugal, France, and Czech Republic. WPEPL commissioned its manufacturing and assembly plant in Vengal, Tamil Nadu in June 2009 for producing the WWD1 model and currently possesses a production capacity of 4 WWD1 WTGs per day. WWO was acquired by the Chennai based Siva Ventures Ltd. (SVL) in October 2006. SVL is a wholly owned subsidiary of Siva Industries and Holdings Ltd. (SIHL, erstwhile Sterling Infotech Limited), which was promoted by Mr. C. Sivasankaran in 1994. SVL is the principal investment arm of The Siva Group (SG). SG has successful track record of acquiring/promoting company ies and later divesting its stake in these ventures at a significant premium. Some of the notable examples include Barista, Dishnet DSL, Sahara's Aamby Valley and Aircel. Apart from WWO, the current investments of the group are mainly in Shipping & Logistics, Palm Oil manufacturing, Realty and Food & Beverages businesses. ================= I N D O N E S I A ================= INDIKA ENERGY: Fitch Hikes Long-Term Issuer Default Rating to B- ----------------------------------------------------------------- Fitch Ratings has upgraded Indonesia-based PT Indika Energy Tbk's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to 'B-' from 'CCC'. The agency has also upgraded Indika's outstanding senior notes due 2018 and 2023 to 'B-' from 'CCC' with a Recovery Rating of 'RR4'. Simultaneously, all ratings have been removed from Rating Watch Positive and a Stable Outlook has been assigned to the Long-Term IDRs. The agency has assigned a final rating of 'B-/RR4' to Indika Energy Capital II Pte Ltd's USD265 million senior notes, which are guaranteed by Indika. The upgrade follows the successful issue of the USD265 million senior notes to refinance Indika's 2018 USD note maturities. Fitch believes the note issue has improved Indika's liquidity, which is in addition to Fitch expected cash flow improvement due to higher thermal coal prices. Fitch expects Indika to manage its debt repayments over the medium term comfortably within forecast cash generation at the Indika level (holding company on a standalone basis) and maintain a sufficiently large cash balance at the Indika-level to support overall liquidity. However, the company now faces a lumpy refinancing in 2022-2023, which is factored in Fitch 'B-' rating. Indika has time to address this risk and its long-term capital structure, given these maturities are five years away. The assignment of the final rating to the USD265 million notes follows a review of the final documentation, which conforms to the draft documentation previously received. The final rating is the same as the expected rating assigned on March 26, 2017. KEY RATING DRIVERS Successful Refinancing Improves Liquidity: Fitch believes Indika's liquidity has improved substantially with the issuance of the new US dollar notes to refinance its 2018 notes, which have USD171 million remaining. Fitch expects the cost and extended debt maturity profile to be accommodated within the company's forecast cash generation and provide the company with adequate time to address its capital structure. Indika's cash flow generation should improve along with higher coal prices. Revised Coal Price Assumptions: Fitch increased Fitch prices assumptions for 2017 thermal coal - Newcastle 6,000 kcal - to USD70 per metric tonne (mt), from USD57/mt in March 2017, and assume the price to be USD65/mt thereafter, compared with USD60 previously. Prices have come off the peak reached in late 2016, but Fitch increased mid-cycle assumptions reflect China's policies, which aim to manage coal production and prices. Fitch expects some production uptick in Australia, China and Indonesia in response to higher prices, which should lead to some price moderation as reflected in the updated price assumptions. Higher Kideco Dividends: The improvement in coal prices will drive higher cash generation at PT Kideco Jaya Abung, Indika's key coal mining asset, and consequently lead to higher dividend flows to Indika, which owns 46% of Kideco and heavily relies on Kideco's dividends. Fitch now assume dividend receipts from Kideco to be around USD40 million in 2017 (including dividend of USD16 million received during 4Q16), and to rise in 2018 to around US$70 million based on Fitch coal-price assumptions. Kideco's high production flexibility and capacity, which requires little capex, low cash operating costs and absence of debt support its profitability and pre-dividend free cash generation. Kideco trimmed costs and maintained a low strip ratio during 2016, but Fitch expects rising oil prices to drive up costs during 2017. Notwithstanding this, Kideco retains its ability to generate stronger cash flow under higher coal prices. Cash Flow Recovery: Fitch expects higher dividends from Kideco to support recovery in Indika's cash flow. Fitch estimates Indika's (entity level) cash flow to be neutral in 2017 and to cover its operating expenses and interest costs without the need to dip into its cash reserves of US$146 million at end-2016. Fitch further expects cash flow to turn positive from 2018 and remain so over the medium-term based on Fitch revised coal assumptions and in the absence of any significant debt maturities over this period post refinancing. This should eliminate any reliance on short-term debt over the medium term. Subsidiaries' Cash Generation Muted: Fitch do not expects dividends in 2017 from Indika's key subsidiaries - 70%-owned PT Petrosea Tbk (a mining contractor) and 51%-owned PT Mitrabahtera Segara Sejati Tbk (MBSS, coal barging and handling) - given their losses during 2016. Fitch anticipates the higher commodity prices to result in modest improvement in the subsidiaries' trading performance and cash generation in 2017, with a more sustained recovery from 2018. Fitch believes these subsidiaries will be able to fund their own investment needs and will not require financial support from Indika. Revenue of fully owned Tripatra, an engineering, procurement and construction company, declined during 2016, but Fitch expects its order book to benefit from an increase in infrastructure investments in Indonesia, including in the oil and gas sector. Lumpy Debt Maturities: The new bond has significantly improved near- to medium-term liquidity for Indika, but has also resulted in lumpy debt maturities, with its new US$265 million notes maturing in 2022 and its US$500 million notes due in 2023. DERIVATION SUMMARY Indika's rating reflects its improved liquidity, which is supported by the successful refinancing of its 2018 debt maturities and improved cash flow from higher coal prices. Fitch expects Indika's (entity level) FCF to turn positive from 2018. Indika has better liquidity compared with MIE Holdings Corporation (CCC), which faces a significant challenge in refinancing its outstanding notes due February 2018 and April 2019, made more difficult by the company's depleted asset base relative to its high indebtedness. Yanzhou Coal Mining Company Limited's 'B/Negative' rating reflects its high financial leverage and weak liquidity. The rating however also incorporates ongoing adequate access to banking and domestic capital markets as a provincial state-owned enterprise. This explains the one notch difference to Indika. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the company include: - Coal prices in line with Fitch's mid-cycle commodity price assumptions, adjusted for difference in calorific value (average Newcastle 6000 kcal free-on-board (FOB): US$70/mt in 2017 and US$65/mt thereafter). See Updating Fitch's Mid-Cycle Commodity Price Assumptions, dated March 2, 2017. - Kideco coal volumes of around 32mt in 2017 and increasing to around 36mt by 2019. Capex remaining low at around US$3 million in 2017 and US$5 million in 2018 and 2019. - Dividend payout ratio for Kideco remaining high at around 95%- 98%. - No dividend from MBSS or Petrosea in 2017, with dividends of around US$5 million from Petrosea in 2018. Dividends from associate PT Cirebon Electric Power of about US$7 million per year through to 2019. - Low capex at Tripatra and MBSS, and marginally higher capex at Petrosea, to support new mining contracts, resulting in capex of around US$80 million in 2017, declining to around US$50 million a year thereafter. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Meaningful improvement in Indika's medium- to long-term financial flexibility, such that Indika can comfortably address large and lumpy debt maturities in 2022-2023. Developments that May, Individually or Collectively, Lead to Negative Rating Action - Weakening of liquidity, which may arise from weaker-than- expected coal prices and dividend, and lower access to credit facilities. LIQUIDITY Indika's near- to medium-term liquidity has improved with the issuance of the new US dollar notes to refinance its existing 2018 debt maturities. PT TOWER: S&P Affirms BB- CCR on Resilient Operating Performance ---------------------------------------------------------------- S&P Global Ratings said that it had affirmed its 'BB-' long-term corporate credit rating on PT Tower Bersama Infrastructure Tbk. (TBIG). The outlook is stable. S&P also affirmed its 'BB-' long-term issue rating on the company's guaranteed senior unsecured notes. At the same time, S&P affirmed its 'axBB+' long-term ASEAN regional scale rating on the Indonesia-based telecom tower operator. "We affirmed the rating because we believe TBIG's resilient operating performance over the next 12 months will cushion the credit impact of the company's high leverage and a slowdown in the telecom tower market in Indonesia," said S&P Global Ratings credit analyst Annabelle Teo. S&P believes 4G network rollout in Indonesia will continue to be limited and restrict growth in the tower industry in the next 12 months at least. This is due to the lack of spectrum availability and uncertainty in network sharing. However, S&P believes that TBIG's close relationship with PT Telekomunikasi Selular (Telkomsel) will support its organic growth and market position. This relationship underpins S&P's expectation that the company should add around 1,000 new tower builds and 500 colocations in the next year, as Telkomsel continues to upgrade its network for fourth-generation (4G) services. Tenancy ratios should remain stable at around 1.62x. TBIG's long-term contracts (with annual inflation-related escalations) with other major Indonesian telecom operators also support its business profile and profitability. S&P anticipates that TBIG will maintain high shareholder payouts, such that its debt-to-EBITDA ratio stays around 5.25x. However, S&P expects the company to withstand its higher leverage levels given its solid operational stability and good market position. TBIG's financial profile has somewhat weakened since the company revised its shareholder returns policy in November 2015, with the debt-to-EBITDA ratio increasing to 5.6x in fiscal 2015, from 4.9x in the previous year. While this has moderated somewhat in fiscal 2016 to 5.3x, S&P no longer expects the ratio to fall below 5.0x. However, S&P expects TBIG to prioritize capital expenditure and any spending on acquisitions over shareholder remuneration, adjusting distributions downward if required to maintain leverage within the company's target of 5.25x. In the context of rising absolute EBITDA, our projections therefore factor in growing absolute reported debt over the next 24 months at least and mostly stable cash flow adequacy. As such, S&P expects that EBITDA interest coverage will remain close to 2.0x through 2018. "The stable outlook on TBIG reflects our expectation that the company's solid market position and good client relationships will help it withstand higher leverage over the next 12-24 months," said Ms. Teo. S&P may downgrade TBIG if the company's market position significantly deteriorates, possibly due to key clients winding up their operations or selling them to weaker telecom operators. S&P may also lower the rating if TBIG's appetite for debt-funded acquisitions, capital expenditure, or shareholder returns increases beyond S&P's expectations. EBITDA interest coverage below 1.75x with no prospect of recovery would indicate such deterioration. An upgrade is unlikely over the next 12 months, given TBIG's shareholder return policy. However, S&P' may raise the rating if the company commits to a more conservative financial policy. The debt-to-EBITDA ratio sustainably below 5.0x and EBITDA interest coverage consistently above 2.5x would indicate such improvement. ========= J A P A N ========= SHARP CORP: Egan-Jones Downgrades Commercial Paper Rating to C -------------------------------------------------------------- Egan-Jones Ratings Company, on February 28, 2017, lowered rating on commercial paper issued by Sharp Corp. Japan to C from B. Sharp Corporation is a Japanese multinational corporation that designs and manufactures electronic products. SHOWA SHELL: Egan-Jones Cuts Unsecured Debt Rating to BB -------------------------------------------------------- Egan-Jones Ratings, on Feb. 28, 2016, raised the senior unsecured rating on debt issued by Showa Shell Sekiyu KK to BB from B+. Showa Shell Sekiyu Kabushiki Kaisha is the base of Royal Dutch Shell group in Japan. It was formed by the merger of Showa Oil Company and Shell Sekiyu which was begun around 1876 in Yokohama by Samuel Samuel & Co, the predecessor of Shell Group today. Showa Shell Sekiyu provides oil and energy solution business in Japan and worldwide. TOSHIBA CORP: Trust Banks File Lawsuit Over Accounting Scandal -------------------------------------------------------------- Nikkei Asian Review reports that 11 trust banks have filed suit together against Toshiba Corp, seeking roughly JPY14 billion ($126 million) in compensation for losses they claim were inflicted on investors by its book-padding scandal. The complaint filed with the Tokyo District Court names four banks as plaintiffs to represent the group, Nikkei says. These include Japan Trustee Services Bank and Master Trust Bank of Japan, which manage assets for such other plaintiffs as Sumitomo Mitsui Trust Bank and Mitsubishi UFJ Trust and Banking. The institutions will argue that false statements in Toshiba's securities reports caused the conglomerate's stock to drop, eroding the value of assets under management, Nikkei relates citing a person familiar with the lawsuit. According to Nikkei, Toshiba now faces at least 16 lawsuits from domestic and foreign institutional and retail investors over the 2015 scandal. The latest action brings total damages sought to about JPY46 billion, Nikkei notes. Nikkei says trust banks rarely go to court in situations like this where no criminal charges are involved. Also notable is the presence of Toshiba lenders on the plaintiffs' side, such as the Sumitomo Mitsui Trust Holdings subsidiary. With pension funds and other institutional clients demanding greater accountability regarding where their money goes, these banks likely felt obliged to seek damages. Toshiba said it has not received the complaint and declined to comment further, Nikkei notes. Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba Corporation's corporate family rating (CFR) and senior unsecured rating to 'Caa1' from 'B3'. Moody's has also downgraded Toshiba's subordinated debt rating to 'Ca' from 'Caa3', and affirmed its commercial paper rating of Not Prime. At the same time, Moody's has placed Toshiba's 'Caa1' CFR and long-term senior unsecured bond rating, as well as its 'Ca' subordinated debt rating under review for further downgrade. The TCR-AP reported on March 21, 2017, that S&P Global Ratings said it has lowered its long-term corporate credit rating on Japan-based capital goods and diversified electronics company Toshiba Corp. two notches to 'CCC-' from 'CCC+' and lowered the senior unsecured debt rating three notches to 'CCC-' from 'B-'. Both ratings remain on CreditWatch with negative implications. Also, S&P is keeping its 'C' short-term corporate credit and commercial paper program ratings on the company on CreditWatch negative. The long- and short-term ratings on Toshiba have remained on CreditWatch with negative implications since December 2016, when S&P also lowered the long-term ratings because of the likelihood that the company might recognize massive losses in its U.S. nuclear power business; S&P kept them on CreditWatch negative when it lowered the long- and short-term ratings in January 2017. ==================== N E W Z E A L A N D ==================== PROPERTY VENTURES: ALF May Emerge as Beneficiary of Litigation -------------------------------------------------------------- Paul McBeth at BusinessDesk reports that Allied Farmers said it could be in the money if litigation against former bankrupt Dave Henderson's Property Ventures group is successful. In 2013, the Hawera-based rural services firm sold various loans that it had written down to zero for NZ$100,000, with the possibility of that rising to NZ$500,000, BusinessDesk recalls. At the time, it declined to name the buyer or the outcomes that would trigger a top-up payment. Allied Farmer said on April 5 the deal was with a unit of litigation funder LPF Group, which is backing liquidator Robert Walker's suit against Property Ventures directors and auditor PwC. "If the company's litigation is successful, ALF is entitled under the terms of the deed of assignment to a proportion of any net proceeds of that litigation (that proportion being confidential)," the report quotes Allied chairman Garry Bluett as saying. "Highlighting the difficulties of predicting the outcome or the final quantum and the inherently risky nature of litigation, the liquidator has advised that, if successful, the final quantum will be higher than that predicted in 2013, and accordingly that ALF may be entitled to a substantially greater amount than NZ$500,000." According to BusinessDesk, the suit reached the Supreme Court last month, with Property Ventures' auditor PwC seeking to have the proceedings stayed until the court was satisfied it wasn't an abuse of process. The claim for between NZ$240 million and NZ$320 million made in 2014 was accruing a 20 percent interest compounding monthly, and PwC's counsel Bruce Gray QC told the Supreme Court it could top NZ$1 billion by the time the trial starts next year, BusinessDesk discloses. BusinessDesk says Allied Farmers took on the loans in its ill- fated 2009 acquisition of the Hanover and United finance group's loan book that wasn't worth as much as initially thought. Allied Farmers has largely sold the residual assets of those loans and is focusing on its livestock business, the report says. Property Ventures (PVL), the central company of the David Henderson property development ventures, was put into receivership in March 2010, and then into liquidation in July the same year. SOLID ENERGY: Finalizes Sale of Ohai and New Vale Mines ------------------------------------------------------- Amber-Leigh Woolf at Stuff.co.nz reports that settlement has been reached in the sale of Solid Energy's Ohai and New Vale mines to Greenbriar. Stuff says the transaction means all of the mines' current employees and operations will be transferred to the new owner, as of April 8. According to the report, Solid Energy chief executive Tony King said the settlement was an extremely pleasing outcome. Both the New Vale mine and Ohai mine were "really important" to the Southland economy, Mr. King said. "[They're] really important in terms of being local businesses in their own right, and we want to support local business," the report quotes Mr. King as saying. Additionally, both had developed working with many Southland businesses for goods and services, he said. "They've been part of the Southland economy for many years and to have them carry on, uninterrupted, it's just a good continuation of business relationships," Mr. King, as cited by Stuff, said. "It is the best possible result for our people, our customers, the local communities and the Southland economy." Stuff relates that Mr. King said the mines were transferring into very capable hands and an "experienced and dedicated" workforce would be retained. "As of tomorrow [Saturday], they will be employees of Greenbriar." The signing of a sale and purchase agreement for the two Southland mines was announced in October last year. The announcement came at the conclusion of an extensive sales programme encompassing all of Solid Energy's mining assets across the country. The announcement marked the first of the company's major mining assets to change hands, Stuff relays. Greenbriar, owned by the Palmer MH Group, is a privately-owned South Island resources group with interests in mining and quarrying operations. Earlier last week, Solid Energy announced settlement of West Coast assets purchased by Birchfield Coal Mines Limited would be expected mid-April and with Moore Mining Ltd in May or June, Stuff recalls. Stuff notes that settlement with BT Mining for the Stockton export coal operation, and the two Waikato mines, Rotowaro and Maramarua is expected in June or July. According to Stuff, Mr. King said staff and customers would be kept informed as much as possible throughout the sales process. Solid Energy had "significant focus" through the asset sales programme to secure a path forward for the assets and facilitating employment opportunities for staff, Mr. King said, Stuff adds. About Solid Energy Solid Energy New Zealand Ltd is New Zealand's largest coal mining company and an investor in research and commercialisation of sustainable forms of energy that use coal, coal seam gas, biomass, biodiesel and solar. Solid Energy's core mining business includes hard coking coal, primarily for export to steel mills throughout Asia, and thermal coal for the Huntly power station and other domestic customers in the steel, dairy and cement industries. As reported in the Troubled Company Reporter-Asia Pacific on Aug. 13, 2015, the Board of Solid Energy New Zealand Limited (SENZ) has placed the company and all associated companies into voluntary administration, a process which allows the company to continue trading while creditors consider the best way forward. KordaMentha partners, Brendon Gibson and Grant Graham have been appointed Administrators. Creditors of the Solid Energy Group on September 17 approved a Deed of Company Arrangement (DOCA) with the Group. ================= S I N G A P O R E ================= EZRA HOLDINGS: To Meet Noteholders on April 17 ---------------------------------------------- Jamie Lee at The Business Times reports that Ezra Holdings on April 3 said it would meet noteholders on April 17, 2017 to update the investors following its filing of voluntary petitions for reorganisation under Chapter 11 of the United States Bankruptcy Code. The management of the oil-and-gas firm will be present at the meeting, the report says. Representatives from the Securities Investors Association (Singapore) have also been invited to the informal meeting as moderators for the dialogue session, according to the report. Noteholders who wish to attend the informal meeting are requested to contact the company at informalmeeting_apr2017@emas.com with their full name, NRIC number, the aggregate value of the notes held, and contact particulars, by 5:00 p.m. on April 10, 2017. On March 18, 2017, Ezra, together with its wholly-owned subsidiaries, EMAS IT Solutions Pte Ltd and Ezra Marine Services Pte. Ltd., filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York in order to facilitate a financial restructuring. About Ezra Ezra is incorporated in Singapore with its registered office at 15 Hoe Chiang Road #28-01 Tower Fifteen Singapore 089316. Its shares were listed on the SGX Sesdaq on Aug. 8, 2003, and moved to the Mainboard of the Singapore Exchange since Dec. 8, 2005. It also issued certain notes (S$150,000,000 4.875% Notes due 2018 comprised in Series 003) which have been listed on the Singapore Exchange since 2013. Ezra established and maintains an office in the United States located at 75 South Broadway, Fourth Floor, Office Number 489, White Plains, NY 10601. Ezra also has a wholly owned New York subsidiary, Ezra Holdings (NY) Inc., which was incorporated in the United States of America with 200 shares at a nominal issue price per share. Founded in 1992, Ezra Holdings Limited -- http://www.ezraholdings.com/-- is an offshore contractor and provider of integrated offshore solutions to the global oil and gas industry. The Group has three main business divisions, namely Subsea Services, Offshore Support and Production Services, and Marine Services offering a full range of seabed-to-surface engineering, construction, marine and production services globally. Under the EMAS branding, the Group operates in more than 16 locations across six continents spanning Africa, the Americas Asia, Australia and Europe. EMITS, a wholly owned subsidiary of Ezra, provides supporting services to each of the Ezra Group's business divisions. The services provided are information technology services including procuring data center services, Microsoft licenses, network connectivity, computing support, shared IT equipment and service support, email service, project management IT services support, software applications and support and servers from various service providers. Ezra Marine is also a wholly owned subsidiary of Ezra. It has a leasehold interest in the marine base in Singapore located at 51 Shipyard Road, Singapore 628139 and leases out the base's facilities and provides various support services in connection with the marine base to the Ezra Group's operating entities. These support services in connection with the marine base include provision of power and potable water, various rental equipment, manpower and management services, storage space and supplies. The Ezra Group's joint venture ECS, and certain of its affiliate companies filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas on Feb. 27, 2017. ECS' wholly- owned subsidiary, EMAS-AMC AS, has also been placed under members' voluntary liquidation in Norway. As Ezra has guaranteed substantial charter hire liabilities of the ECS Group, as well as certain loans owed by the ECS Group to financial institutions, Ezra faces potentially significant contingent liability if the creditors call on the guarantees. Ezra received statutory demands from Svenska Handelsbanken AB (Publ), Singapore Branch and Forland Subsea AS on Jan. 24, 2017, and Feb. 6, 2017, respectively. These statutory demands have since expired under Singapore law and these two creditors are at liberty to commence winding up applications against Ezra. Ezra also received a statutory demand from VT Halter Marine, Inc. on March 9, 2017. For fiscal year ended Aug. 31, 2016, the Ezra Group, on a consolidated basis, realized revenue of approximately $525 million, with corresponding cost of sales of approximately $540 million, for a gross loss of approximately $15 million. The Ezra Group also incurred other expenses, including administrative expenses, in excess of $835 million, for a net loss from continuing business operations of approximately $850 million. Ezra's books and records reflect, as of Aug. 31, 2016, long-term assets valued at approximately $515 million, and current assets valued at approximately $220 million. On a consolidated basis, for the same time period, the Ezra Group reflected long-term assets valued at approximately $1.3 billion, and current assets valued at approximately $623 million. ==================== S O U T H K O R E A ==================== SAMSUNG HEAVY: Halt Wage Talks to Focus on Work ----------------------------------------------- Pulse reports that the union and management at Samsung Heavy Industries Co. agreed on March 31 to halt wage negotiations to concentrate better on their work and join forces to combat current troubles from protracted slump in global demand. Pulse relates that the two sides have not finalized wage terms last year due to conflict over the company's self-rescue program in return for debt relief from creditors, but decide to put the talks on hold to focus more on their field jobs. All three shipbuilding majors had to seek debt relief last year amid dearth of orders from lengthy slowdown in global demand and oil prices, according to Pulse. Samsung Heavy in July last year pledged to cut workforce and non-core assets to raise new capital and save cost, the report recalls. Union members went on strike last year. Wage negotiations demand presence of dock chief and other senior union members. Other employees also must attend weekly meetings to hear progress in the talks. According to the report, the two agreed to put off wage bargaining as the builder must focus entirely on making meticulous final touches to major orders - an offshore central processing facility (CPF) for the Ichthys LNG Project in Australia, Prelude, the world`s first floating liquefied natural gas (FLNG) project, commissioned by Royal Dutch Shell, Egina floating production storage and offloading (FPSO) - before their deliveries. Pulse relates that the union chief also would accompany the management when meeting ship owners or new clients to assure them of strike-free work. As of the end of 2016, Samsung Heavy reported $28 billion in order backlog. The company set its target for this year at $6 billion, while receiving $1.5 billion worth new orders until February, Pulse discloses. Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries. The Company also produces steel and bridge structures, and material handling equipment. In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services. Samsung Heavy reported a net loss of KRW139 billion in 2016, compared to a loss of KRW1.21 trillion in 2015. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2017. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. *** End of Transmission ***