/raid1/www/Hosts/bankrupt/TCRAP_Public/170413.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, April 13, 2017, Vol. 20, No. 74
Headlines
A U S T R A L I A
A.C.M. PRINTING: First Creditors' Meeting Set for April 24
BEAN TEMPLE: First Creditors' Meeting Set for April 26
DD&D SECURITIES: ASIC Cancels License for Failure to File Reports
GUVERA EMPLOYMENT: Goes Into Administration
HAMILTON TILING: Second Creditors' Meeting Set for April 26
K CARE: In Receivership; More Than 100 Jobs at Risk
LATITUDE AUSTRALIA: DBRS Finalizes BB Ratings on Class E Debt
MESOBLAST LIMITED: To Use $40MM Proceeds for Clinical Programs
PALERMO 9: Second Creditors' Meeting Set for April 20
C H I N A
CANADIAN SOLAR: Fitch Withdraws BB- Issuer Default Rating
CHINA HUISHAN: Court Freezes Assets on US$200MM Loan Default
GOLDEN WHEEL: Fitch Rates Proposed US Dollar Sr. Notes 'B'
GOLDEN WHEEL: Tap Bond Offer No Impact on Moody's B2 CFR
SUNSHINE 100: Fitch Cuts $215MM Sr. Unsec. Notes Rating to CCC
YANZHOU COAL: Fitch Alters Outlook to Stable & Affirms B IDR
YIDA CHINA: S&P Assigns 'B' Corp. Credit Rating, Outlook Stable
* Fitch: China Retail Recovery Encouraging, Uncertainty Remains
I N D I A
AJANTA SPINTEX: CRISIL Lowers Rating on INR27.5MM Loan to D
ARCHEESH HEALTH: CRISIL Assigns 'B' Rating to INR10MM LT Loan
ASHISH TIMBER: CRISIL Reaffirms B+ Rating on INR0.5MM Cash Loan
BALRAJ KUMAR: CRISIL Assigns B+ Rating to INR7MM Cash Loan
DHARESHWAR COTTON: ICRA Reaffirms 'B' Rating on INR7.02cr Loan
DMR HOSPITALS: CRISIL Lowers Rating on INR8.9MM Term Loan to D
H M STEELS: CRISIL Reaffirms 'D' Rating on INR26MM Cash Loan
HIMAGIRI HOSPITALS: ICRA Reaffirms B+ Rating on INR6cr Term Loan
HYDROMET INDIA: CRISIL Assigns B- Rating to INR10MM Cash Loan
KANISHK METALLOYS: ICRA Lowers Rating on INR8.50cr Loan to B+
L.C. FOODS: ICRA Assigns B+ Rating to INR19cr Loan
M MADHAVARAYA: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
MADHAV METCAST: ICRA Reaffirms 'B' Rating on INR4.56cr Loan
MAHARSHI RICE: ICRA Reaffirms B+ Rating on INR13cr Loan
MALLIKARJUN CONSTRUCTION: CRISIL Reaffirms C Cash Credit Rating
MARUTI INTERNATIONAL: CRISIL Assigns B+ Rating to INR5MM Loan
NIZAM DECCAN: CRISIL Reaffirms D Rating on INR103.3MM Cash Loan
PATEL COTTON: ICRA Reaffirms B+ Rating on INR17.80cr Loan
PILANIA INDUSTRIES: CRISIL Reaffirms B+ Rating on INR10MM Loan
RAJAVE TEXTILES: CRISIL Reaffirms D Rating on INR50MM Cash Loan
REGEN INFRASTRUCTURE: ICRA Ups Rating on INR20cr LT Loan to B-
SAI SWADHIN: ICRA Assigns B- Rating to INR5cr Cash Loan
SARATHY COFFEE: CRISIL Reaffirms 'B' Rating on INR2.33MM Loan
SAVFAB DEVELOPERS: ICRA Hikes Rating on INR35cr LOA to C+
SHANTINIKETAN ASHRAYA: CRISIL Assigns B+ Rating to INR10MM Loan
SHARP TANKS: CRISIL Lowers Rating on INR7MM Bank Loan to B+
SHRI SANT: CRISIL Reaffirms B- Rating on INR12.5MM LT Loan
SHRI SODE: ICRA Assigns 'D' Rating to INR21cr Term Loan
SPECIALITY SILICA: CRISIL Reaffirms B+ Rating on INR9.50cr Loan
SURGICARE CENTRE: CRISIL Reaffirms B+ Rating on INR0.25MM Loan
TIRUPATI COTTON: ICRA Reaffirms B+ Rating on INR24cr Loan
TRIMURTI FLOUR: CRISIL Reaffirms C Rating on INR4.5MM Cash Loan
UPL ENVIRONMENTAL: CRISIL Cuts Rating on INR14MM Cash Loan to B
WHITEGOLD CERAMICS: ICRA Reaffirms B- Rating on INR3cr Loan
I N D O N E S I A
INDIKA ENERGY: Moody's Hikes CFR to B2 After Successful Raising
J A P A N
TOSHIBA CORP: Sees Long Odds for Hon Hai's JPY3 Trillion Chip Bid
N E W Z E A L A N D
LITTLE CRATE: IRD Applies to Liquidate Business Over Unpaid Tax
S O U T H K O R E A
DAEWOO SHIPBUILDING: Banks Reject Call for Bond Payment Extension
KUMHO TIRE: Kumho Asiana Chief Won't Exercise Buyback Option
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A U S T R A L I A
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A.C.M. PRINTING: First Creditors' Meeting Set for April 24
----------------------------------------------------------
A first meeting of the creditors in the proceedings of A.C.M.
Printing & Publishing Pty. Limited, formerly trading as "DCP
Multimedia" and "DCP Group", will be held at the offices of
RSM Australia Partners, at Level 21, 55 Collins Street, in
Melbourne, Victoria, on April 24, 2017, at 1:00 p.m.
Timothy Gumbleton and Andrew Bowcher of RSM Australia were
appointed as administrators of A.C.M. Printing on April 10, 2017.
BEAN TEMPLE: First Creditors' Meeting Set for April 26
------------------------------------------------------
A first meeting of the creditors in the proceedings of Bean
Temple Pty Ltd, trading as Bean Temple Pty Ltd, will be held at
Suite 508, Ashington Court, 147 King Street, in Sydney, NSW, on
April 26, 2017, at 10:00 a.m.
William James Hamilton of WJ Hamilton was appointed as
administrator of Bean Temple on April 11, 2017.
DD&D SECURITIES: ASIC Cancels License for Failure to File Reports
-----------------------------------------------------------------
The Australian Securities and Investments Commission has
cancelled the Australian financial services (AFS) license of DD&D
Securities Ltd for failing to comply with a number of its key
obligations as a financial services licensee.
In particular, ASIC found that DD&D Securities failed to:
-- maintain membership with an external dispute resolution
scheme approved by ASIC;
-- lodge its financial reports within the required timeframe;
-- lodge compliance plan audits for the managed investment
scheme it operates within the required timeframe; and
-- notify ASIC of significant breaches within the required
timeframe.
ASIC Commissioner John Price said, "A responsible entity needs to
ensure a managed investment scheme is operated in accordance with
the Corporations Act.
"As this matter demonstrates, ASIC will act where a responsible
entity fails to lawfully perform this gatekeeper role and to
comply with its obligations and licence conditions," Mr Price
said.
DD&D Securities has the right to appeal to the Administrative
Appeals Tribunal for a review of ASIC's decision.
Background
DD&D Securities' AFS license was cancelled with effect from
April 5, 2017.
DD&D Securities is the responsible entity for Dwyers Managed
Investments a mortgage scheme that operated in regional Victoria.
GUVERA EMPLOYMENT: Goes Into Administration
-------------------------------------------
Lucy Battersby at The Sydney Morning Herald reports that another
Australian subsidiary of failed music streaming app Guvera has
gone into administration, with the company now focused entirely
overseas.
It has also recently changed its business model from being a
music-oriented app to an advertising tracking tool, SMH says.
Originally Guvera claimed it would "dominate music globally"
through an app streaming free music that was supported by in-app
advertising. But the Queensland-based company has been stumbling
and trying to re-invent itself ever since its application to list
on the Australian Securities Exchange (ASX) was blocked in
mid-2016, according to SMH.
In January, it successfully defeated a winding up application
from an investor owed AUD1.8 million, SMH recalls.
But more recently, on March 31, sole director of Guvera
Employment, Warwick Burman, called in administrators, SMH
discloses. Up to 25 jobs are at risk, taking the total Guvera job
losses in the past year to over 100, the report discloses.
"As this stage, we have been advised that there is an intention
to put forward a proposal for a Deed of Company Arrangement,"
Stephen Hundy of Worrells Solvency told Fairfax Media, SMH
relays. "We have commenced our investigations and will provide
our report to creditors in relation to these investigations and
any proposed Deed of Company Arrangement prior to the second
meeting of the company's creditors."
According to SMH, a shareholder update from March 21, 2017,
reveals Guvera is now focused on India and Indonesia. It has
partnered with WPP/Data Alliance in Indonesia and India, and
Dentsu Aegis in India, according to chief executive Claes
Loberg's note to investors.
SMH relates that Guvera has launched a new app call DragonFli
that allows advertisers to track what a customer does on Guvera
and sent out push notifications.
"Together with this new app, we have create a new model," Mr
Loberg wrote, SMH relays. "Rather than us maintaining the
expense we once had providing a full music streaming platform, we
are outsourcing this to third party providers. All content will
now be delivered only inside brand channels, and only at the
request and expense of the brands using the content in separate
deals with content owners."
SMH notes that after the ASX float collapsed, Guvera closed
several offices around the world and removed its app in
Australia, the United States, Latin America and Russia and
Europe. Former employees in North and South America were left
thousands of dollars out of pocket from unpaid severance or
entitlements, the report says.
In Australia, Guvera Limited placed Guvera Australia and Guv
Services into administration and 80 staff were sacked, SMH
relays. These two companies are currently subject to a Deed of
Company Arrangement [DOCA] administered by Deloitte. Under the
DOCA, Guvera Limited pays creditors of Guvera Australia
AUD150,000 every month until August 2017, and AUD30,000 per month
to creditors of Guv Services, according to SMH.
SMH adds that controversially, Guvera Limited had raised nearly
AUD200 million from private investors and after the float was
blocked these investors had no way of getting their money back.
It was burning through cash but generating little revenue.
Also, former chief executive Darren Herft was also head of AMMA
Private Equity, which raised much of the money from investors.
Guvera Employment's Mr Burman also has links to AMMA Private
Equity, the report discloses.
Mr. Herft, Mr. Loberg and Steven Porch are still listed as
directors of Guvera Limited, SMH notes. However, former Guvera
Limited chairman Phil Quartararo -- a US music industry veteran
-- quietly left the company in December 2016 and has since taken
up a role overseas as vice chairman of Loton Corp subsidiary
LiveXLive, SMH says.
Stephen John Hundy and Simon Cathro of Worrells Solvency &
Forensic Accountants were appointed as administrators of Guvera
Employment Pty Ltd on March 31, 2017.
Australian-based Guvera is an online music and entertainment
streaming service.
HAMILTON TILING: Second Creditors' Meeting Set for April 26
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Hamilton
Tiling Pty Ltd has been set for April 26, 2017, at 10:30 a.m., at
the offices of Worrells Solvency & Forensic Accountants, at 8th
Floor, 102 Adelaide St, 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 25, at 5:00 p.m.
Lee Crosthwaite and Michael Griffin of Worrells Solvency were
appointed as administrators of Hamilton Tiling on March 22, 2017.
K CARE: In Receivership; More Than 100 Jobs at Risk
---------------------------------------------------
ABC News reports that more than 100 workers at a healthcare
equipment factory in Perth are set to lose their jobs after the
company K Care went into receivership.
ABC relates that workers from the Malaga warehouse in Perth's
north said they received a text message on April 8 telling them
to attend a 5:00 a.m. meeting with receivers on April 10 to
discuss entitlement arrangements.
Employees told ABC News they were met by a representative from
Hayes Advisory, who informed them they were suspended immediately
from their employment and there would be no further work to be
carried out at these premises.
Locks at the factory had already been changed and workers were
instructed to collect their personal items, ABC News says.
K Care chief executive Grant Clark confirmed there had been a
receiver appointed but would not comment further, according to
the report.
ABC News understands K Care could no longer afford to meet its
payroll commitments.
In February 2013, the business was acquired by private equity
enterprise Anacacia Capital, ABC states. Anacacia Capital
website states "K Care was exited in 2017" but provides no
further details, according to the report.
Team leader Richard Robertson, who has worked for the company for
13 years, said he believed there were two interested buyers
recently, but the rent for the Malaga warehouse (which is
currently listed for sale) is prohibitive at about AUD1 million a
year, the report says.
ABC News says employee Brett Gerrity claims Anacacia Capital
managed the business poorly.
"When they first took it over in 2013, they raised the prices 17
per cent. And of course, we didn't get as many orders," ABC News
quotes Mr. Gerrity as saying.
A first meeting of the creditors will be held at EY Centre, Level
34, 200 George Street, in Sydney, NSW, on April 24, 2017, at
11:00 a.m.
On April 10, 2017, Trevor Pogroske and Philip Campbell-Wilson of
Ernst & Young were appointed as administrators of:
-- K Care Pty Ltd;
-- White Cell Rx Holdings Pty Ltd;
-- Emolior Industries Pty Limited; and
-- Oxford-Eme (Aust) Pty Limited.
Alan Hayes of Hayes Advisory was appointed Receiver and Manager
to the company on April 7, 2017 and is conducting a sale of the
business.
Established in 1976, K Care -- http://www.kcare.com.au/--
manufactures and distributes hospital, residential aged care and
community care equipment for local and international markets.
The company employs about 100 people in Perth and 30 people
across Sydney, Melbourne and Brisbane.
LATITUDE AUSTRALIA: DBRS Finalizes BB Ratings on Class E Debt
-------------------------------------------------------------
DBRS Ratings Limited on April 6, 2017, finalized provisional
ratings assigned to the Series 2017-1 Notes issued by Latitude
Australia Credit Card Loan Note Trust as follows:
-- Class A1 at AAA (sf)
-- Class A2 at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (sf)
-- Class D at BBB (sf)
-- Class E at BB (sf)
The transaction represents the issuance of Notes backed by credit
card receivables related to credit agreements originated or
acquired by Latitude Finance Australia (Latitude) to customers in
Australia and assigned to the Latitude Australia Credit Card
Master Trust.
The credit card accounts within the portfolio substantially
include those that were originated by GE Capital Australia prior
to its acquisition by a consortium comprising Deutsche Bank AG
and funds managed by VÑrde Management L.P. and KKR & Co. L.P. in
November 2015, at which point the business was renamed Latitude,
and accounts subsequently originated by Latitude.
The Class A1 notes benefit from a minimum credit support of
34.50%, which includes subordination of the Class A2 Notes, the
Class B Notes, the Class C Notes, the Class D Notes and the Class
E Notes (collectively 30.00%) and the series-specific Originator
VFN (4.50%). Upon closing, part of the initial balance of the
Series Originator VFN subordination, equal to 1% of the rated
Notes, is used to fund a specific ledger that provides liquidity
support to the transaction. This liquidity support would only be
available as credit enhancement if not utilised for liquidity
purposes.
MESOBLAST LIMITED: To Use $40MM Proceeds for Clinical Programs
--------------------------------------------------------------
Mesoblast Limited announced that it has successfully completed a
fully underwritten institutional placement of 26.25 million new
shares (approx. 6% of issued capital) and has raised
approximately US$40 million. The placement price of A$2.00 per
share represents a 4.8% discount to the 15-day VWAP of A$2.10.
Existing global institutional investors, together with new
institutional and sophisticated investors, have strongly
supported and participated in the placement.
The proceeds will be used for Mesoblast's ongoing Phase 3
clinical programs including chronic heart failure, as well as for
manufacturing requirements associated with product
commercialization.
The Company expects to report during CY2017 multiple clinical and
regulatory outcomes related to its Tier 1 product candidates,
which may facilitate strategic alliances with partners who share
its corporate vision.
Bell Potter Securities Limited acted as lead manager and
underwriter to the placement.
The shares have not been and will not be registered under the US
Securities Act of 1933, as amended (US Securities Act) or the
securities laws of any state or other jurisdiction of the United
States. They may not be offered or sold, directly or indirectly,
in the United States or to, or for the account or benefit of, any
US Person (as such term is defined in Regulation S of the US
Securities Act), unless an exemption from such registration
applies. Any offer, sale or resale of the shares within the
United States by any dealer (whether or not participating in the
offer) may violate the registration requirements of the US
Securities Act if made prior to 40 days after the completion of
the offer or if purchased by a dealer in the offer. This
announcement does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities in the United
States or to, or for the account or benefit of, any US Person.
About Mesoblast Ltd.
Melbourne, Australia-based Mesoblast Limited (ASX:MSB;
Nasdaq:MESO) develops cell-based medicines. The Company has
leveraged its proprietary technology platform, which is based on
specialized cells known as mesenchymal lineage adult stem cells,
to establish a broad portfolio of late-stage product candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular diseases, immune-mediated and
inflammatory disorders, orthopedic disorders, and
oncologic/hematologic conditions.
As of Dec. 31, 2016, Mesoblast had $660.88 million in total
assets, $150.36 million in total liabilities and $510.51 million
in total equity.
Mesoblast reported a loss before income tax of $90.82 million for
the year ended June 30, 2016, compared to a loss before income
tax of $96.24 million for the year ended June 30, 2015.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2016, citing that the Company has
suffered recurring losses from operations that raise substantial
doubt about its ability to continue as a going concern.
PALERMO 9: Second Creditors' Meeting Set for April 20
-----------------------------------------------------
A second meeting of creditors in the proceedings of Palermo
(9 Hill Road NSW) Pty Limited has been set for April 20, 2017, at
10:00 a.m., at the offices of Hayes Advisory Pty Ltd, at Level
16, 55 Clarence 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 19, at 5:00 p.m.
Alan Hayes of Hayes Advisory was appointed as administrator of
Palermo (9 Hill Road NSW) on Feb. 22, 2017.
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C H I N A
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CANADIAN SOLAR: Fitch Withdraws BB- Issuer Default Rating
---------------------------------------------------------
Fitch Ratings has withdrawn the Long-Term Foreign-Currency Issuer
Default Rating (IDR) of 'BB-' (with a Negative Outlook) and
senior unsecured rating of 'BB-' of China-based electric-
corporate group Canadian Solar Inc.
The withdrawal follows the issuer's decision to stop
participating in the rating process. As a result, Fitch will no
longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage of Canadian Solar's debt-servicing activities.
RATING SENSITIVITIES
Not applicable.
CHINA HUISHAN: Court Freezes Assets on US$200MM Loan Default
------------------------------------------------------------
The South China Morning Post reports that China Huishan Dairy
Holding said a Shanghai court has frozen assets of the company
and its chairman as requested by a mainland wealth management
firm, and that HSBC alleges it has defaulted on a US$200 million
loan.
The report relates that Huishan, China's largest dairy farm
operator, said in a filing to the Hong Kong stock exchange late
on April 10 that it had received a letter on April 7 from HSBC
alleging "non-compliance with certain of the covenants" and "has
therefore called events of default under the Facility Agreement".
HSBC acted on behalf of six creditor banks, including China CITIC
Bank International.
"The company is taking legal advice," the report quotes Huishan
as saying in the filing.
According to SCMP, the dairy farm operator is facing a major
challenge from creditors, which range from peer-to-peer lending
platforms, wealth management firms to 23 banks, amid an unfolding
debt crisis that has erupted following a mysterious collapse in
its stock price and the disappearance of its treasury chief.
SCMP relates that Huishan also said that a Shanghai court ordered
last week that cash or equivalent assets worth CNY546.1 million
(US$79 million) be frozen, after an application was filed by
Gopher Asset Management. The asset freeze applies to the dairy,
its chairman Yang Kai, and his wife, the report notes.
The company, based in Shenyang, in the northeast Liaoning
province, requested that its shares be halted from trading in
Hong Kong after they fell 85% in morning trade on March 24, SCMP
recalls. The shares, which tumbled from HK$2.80 to HK$0.42, wiped
out US$4.1 billion in market value. The shares remain suspended
in Hong Kong.
Gopher is the first among Huishan's scores of creditors to have
resorted to legal action to preserve its interest, SCMP says.
"Big banks may not be in a rush for now, but smaller creditors
like Gopher would have bigger incentives to get their money back
at any costs," the report quotes Shen Meng, an executive director
with boutique investment bank Chanson & Co., as saying. "Defaults
by Huishan can result in tremendous losses for Gopher, and other
asset managers and peer-to-peer lending platforms."
SCMP says the dramatic sell-off in Huishan's shares took place
less than four months after short-seller Muddy Waters said the
company was "worth close to zero" and a day after it was called
into a meeting with anxious lenders in Shenyang.
In the meeting, Yang, who collateralised 71% of the company's
shares for loans, confirmed he had lost contact with Huishan's
treasury chief Ge Kun and admitted that the dairy giant was
facing a "cash shortage" that could result in a default, the
report relates.
Dragged into the Huishan financial woes are top Asian lenders
such as Bank of China, ICBC, Bank of Communications and HSBC.
Huishan has CNY1.38 billion in loans due in 2018, SCMP discloses
citing Bloomberg data.
SCMP relates that in a post-earnings briefing, ICBC revealed it
had a CNY2 billion credit line issued to Huishan, which, however,
accounted for a marginal 5% of the dairy's debt.
"A grave concern is that nobody knows exactly how much money
Huishan has borrowed through a wide range of channels over the
years, and how much cash it is able to set aside now," the report
quotes Shen as saying.
Local government called on banks to "give Huishan more time" and
not to file related lawsuits, SCMP adds citing mainland media
outlet Caixin. The dairy giant is one of the largest taxpayers
in the northeastern rust belt province of Liaoning. It hires an
estimated 40,000 workers in the region grappling with high
unemployment, the report says.
While creditors are taking steps in due course to safeguard its
interest, Huishan is also struggling with a massive boardroom
exodus.
Last week alone, five of the 10 of its board members have
resigned, while its finance chief Ge remains missing, adds SCMP.
About China Huishan
China Huishan Dairy Holdings Co Ltd (HKG:6863) is principally
engaged in the production and sales of raw milk, liquid milk
products and milk powder products. The Company operates its
business through three segments. The Dairy Farming segment is
engaged in planting, growing and harvesting alfalfa grass and
other feed crops, processing feeds and breeding dairy cows. The
Liquid Milk Products Production segment is engaged in the
production and sales of pasteurized milk, ultra-high temperature
(UHT) milk, yoghurt and milk beverages. The Milk Powders
Production segment is engaged in the production and sales of
infant milk formula products, adult milk powder products and
dairy ingredient products.
GOLDEN WHEEL: Fitch Rates Proposed US Dollar Sr. Notes 'B'
----------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Golden Wheel
Tiandi Holdings Company Limited's (GWTH; B/Stable) proposed US
dollar senior notes a 'B(EXP)' expected rating and a Recovery
Rating of 'RR4'.
The notes are rated at the same level as GWTH's senior unsecured
rating because they constitute its direct and senior unsecured
obligations. The final rating is subject to the receipt of final
documentation conforming to information already received.
GWTH intends to use the net proceeds from the proposed US dollar
senior notes to refinance its existing debt, fund new property
projects and for general corporate purposes.
KEY RATING DRIVERS
Niche Positioning: GWTH is focused on developing small commercial
and residential projects linked to metro stations. The company
had seven projects under development as of end-March 2017. Its
projects usually fetch higher average selling prices because of
their convenient location and better foot traffic for commercial
property components. Potential competition from large national
developers for metro-linked projects may squeeze GWTH's margin
over the longer-term, although volume-driven developers are less
likely to participate in small niche projects.
Leverage to Rise: Fitch expects GWTH's leverage, as measured by
net debt/adjusted inventory, to trend towards 40% in the next
year or two, due to faster land acquisitions. The company
replenished little land in past two years, which accounted for
around 1/3 of GFA it presold. Landbank life hence dropped to
around six years at end-2016, from 12 years at end-2015. The
company also has to spend 40%-50% of its contracted sales on
development to increase its saleable resources in the next year
or two, which will also drive up leverage. GWTH's leverage
dropped to 16.7% as at end-2016, from 23.8% at end-2015, due to
its stronger-than-management-expected contracted sales and
controlled land acquisition pace.
Recovering Margin: Fitch expects GWTH's margins to recover to
around 25% in the next year or two, supported by existing
integrated projects connected to metro stations, which have
historical gross margins of around 40%. The company's margin rose
to around 23% in 2016, from -4% in 2015, with the delivery of
projects during the year. GWTH may face margin pressure from 2019
as well-located metro-linked land sites are usually expensive.
Rising Recurring Income: Fitch expects GWTH's investment property
and metro-leasing divisions to expand steadily over the medium-
term, with new investment property assets opening from 2017 and
the business of leasing out shops in metro stations starting to
contribute to profit from 2018. These divisions will provide
recurring income for interest servicing, which will mitigate cash
flow volatility in the property development business.
Expansion in Metro Leasing: The metro-leasing division's gross
profit margin rose to 14% in 2016 (2015: -19%; 2014: 27%; 2013:
44%), beating Fitch's expectation of breakeven. The company is
expanding its metro-leasing business and plans to open four to
five metro malls a year for the next two years. Fitch believes
the average breakeven period for a new mall is around nine to
twelve months. The metro-leasing business is likely to contribute
a stable portion of profit from 2018 as more malls mature. A
failure to turn in profit for this segment could negatively
affect GWTH's ratings, as the company has already signed the
long-term master lease contract with local government.
DERIVATION SUMMARY
GWTH's contracted sales are smaller than most of its 'B' rated
peers, who generate around CNY10 billion in contracted sales
annually; for example, Xinyuan Real Estate Co., Ltd. (B/Stable).
Its landbank of 0.6 million square metres for development
property as of end-2016 is also smaller than that of peers.
However, GWTH's low leverage and wide interest coverage from
recurring income supports its 'B' rating.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
- annual contracted sales value, excluding joint ventures, to
remain above CNY1 billion;
- substantial sales from the second to third year after land is
acquired; and
- only investment properties that are completed or under
development and existing metro-leasing businesses to
contribute to recurring gross profit.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Negative Rating Action include:
- net debt/adjusted inventory rising above 40% for a sustained
period (2016: 16.7%; 2015: 23.8%);
- deviation from the current focus on metro-linked projects;
- EBITDA margin falling below 25% for a sustained period (2016:
23%; 2015: -4%); and
- metro-leasing business suffering losses for a sustained period
(2016:14%; 2015: -19%).
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
No positive rating action is expected over the next 12-18 months
due to the company's small scale. However, over the long-term,
positive rating action may result from:
- investment property value exceeding CNY5.0 billion (2016:
CNY5.0 billion; 2015: CNY4.6 billion) and annual development
property sales sustained above CNY3.0 billion on an
attributable basis (2016: CNY2.3 billion; 2015: CNY923
million); and
- recurring gross profit/interest coverage rising over 1.0x on a
sustained basis (2016: 0.5x; 2015: 0.6x).
GOLDEN WHEEL: Tap Bond Offer No Impact on Moody's B2 CFR
--------------------------------------------------------
Moody's Investors Service says that Golden Wheel Tiandi Holdings
Company Limited's B2 corporate family rating and senior unsecured
debt rating are unaffected by the company's announcement of a tap
bond offering on its existing USD100 million 8.25% senior notes
due November 2019.
The company plans to use the proceeds from the proposed USD bond
to refinance existing debt, fund new property projects and for
other general corporate purposes.
The ratings outlook remains stable.
"The tap issuance will support Golden Wheel's liquidity profile
and will not otherwise materially affect its credit metrics, as
it will use the proceeds mainly to refinance existing debt," says
Anthony Lee, a Moody's Analyst.
Following robust 156% growth in contracted sales to RMB2.4
billion in 2016, Moody's expects Golden Wheel's adjusted
EBIT/interest and revenue/adjusted debt will improve to above
2.5x and above 40% over the next 12-18 months, respectively, from
1.8x and 30% in 2016.
Golden Wheel's B2 corporate family rating continues to reflect
its diversified product offering, stable recurring income from
investment properties, as well as proven track record in Nanjing.
But the company's credit profile is constrained by its small
operating scale and weak and volatile credit metrics as a result
of its uneven contracted sales performance.
The company's stable recurring rental income partly mitigates its
volatile financial performance. Golden Wheel reported annual net
rental income of RMB100 million in 2016, covering 0.5x of its
gross interest.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Listed on the Hong Kong Stock Exchange in January 2013, Golden
Wheel Tiandi Holdings Company Limited is an integrated commercial
and residential property developer, owner and operator, focused
on projects in Jiangsu and Hunan provinces. Its projects are
either connected or close to metro stations or other
transportation hubs.
The company also engages in the leasing and operational
management of shopping malls owned by third parties.
At December 31, 2016, the company's land bank totaled 976,108
square meters in GFA, situated in Nanjing, Yangzhou, Changsha,
Wuxi and Zhuzhou.
SUNSHINE 100: Fitch Cuts $215MM Sr. Unsec. Notes Rating to CCC
--------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured rating and the
rating on the outstanding US$215 million senior notes due in 2017
of China-based homebuilder Sunshine 100 China Holdings Ltd
(Sunshine 100) to 'CCC' from 'CCC+'. The Recovery Rating is now
'RR6', from 'RR5'. Fitch has affirmed the Long-Term Foreign-
Currency Issuer Default Rating (IDR) at 'B-', and maintains Fitch
Negative Outlook.
The one-notch downgrade of the senior unsecured rating reflects
Fitch's expectations that recovery prospects in the event of a
default had deteriorated further because Sunshine's onshore debt
-- which ranks ahead of its US dollar senior notes -- had
increased by CNY5.5 billion in 2016, which exceeded its adjusted
inventory increase of CNY1.5 billion. Its higher onshore debt
therefore eats into the liquidation value that would otherwise
have been available for its US dollar senior notes.
The IDR was affirmed at 'B-' because the company has no imminent
liquidity shortage, and it has been strengthening its business
profile by rising exposure to projects in the Yangtze River Delta
and Pearl River Delta areas and refocusing on residential
projects. The Outlook remains Negative because Fitch believes the
company's persistent negative operational cash flow - given the
high development expenditure, selling expenses and borrowing
costs - may continue to add to its indebtedness and push its
credit metrics beyond the negative rating thresholds.
KEY RATING DRIVERS
Leverage to Remain High: Sunshine 100's leverage remained high at
around 69% as of end-2016, rising from 63% at end-2015 and 53% at
end-2014. This is due mainly to large construction expenditure
for saleable residential resources and also for the commercial
projects. Fitch expects leverage to stay at around 65%-70% in the
next 12-18 months - given the inevitable high development
expenditure following its refocusing on residential products, and
its plan to launch sales in cities such as Wenzhou, Changzhou and
Qingyuan, where its inventory level is low.
Persistent High Development Expenditure: Fitch feels that
Sunshine 100's high development expenditure during 2015 and 2016
has increased its cash needs and hurt its financial profile.
Construction scale was large, with 3.3 million square metres
(sqm) of total gross floor area (GFA) under construction at end-
2016, among which 1.6 million sqm were newly started in 2016.
Fitch estimates annual development expenditure to remain high at
around 50%-60% of contracted sales in the next one to two years,
due to the expansion in the Yangtze River Delta area.
EBITDA Margin Bottoming: Fitch expects Sunshine's EBITDA margin
to have bottomed out in 2016, and will be at 14%-16% in the next
one to two years. The margin dropped to around 9.8% in 2016 from
12% in 2015, after the company recognised the low-margin projects
presold in 2014 and 2015, and spent large selling expenses
following the rising sales activities during the year. However,
Fitch believes the selling expenses would not increase as fast as
in the past two years (26%-27% yoy), as the company has built up
a sales team to support its current sales scale. Selling expenses
would remain flat in the next one to two years, which would help
to boost profitability. The improving profitability is also
supported by the delivery of higher-margin projects that the
company presold in 2015 and 2016, where Fitch estimates the gross
profit margin to be around 25%.
Sales Beat 2016 Target: Contracted sales reached CNY10.4 billion
in 2016, surpassing management's target of CNY8.5 billion for the
year. This was attributed to strong residential sales from the
three satellite Tier 3/4 cities of Qingyuan, Wuxi and Wenzhou and
one Tier 2 city of Wuhan. The stronger-than-expected sales helped
to improve liquidity. Fitch expects Sunshine 100's sales scale to
be at around CNY10 billion-11 billion for the next one to two
years - considering the strong markets in the satellite Tier 3/4
cities, and the company's improved project portfolio.
Asset Quality Improving Gradually: Sunshine 100 is refocusing its
resources on better-located projects to boost its sales
performance from 2015, especially in the Yangtze River Delta
which accounted for around 82% of newly acquired land by GFA in
the last two years; 38% of attributable land reserves is located
in the more developed Yangtze River and Pearl River Delta, up
from 34% at end-2014. Sunshine had an attributable land bank of
9.7 million sqm as of end-2016, larger than most of its peers in
the low- to middle 'B' category.
Adequate Liquidity: Cash, including restricted cash, amounted to
CNY6.8 billion as of end-2016, covering 79% of the company's
short-term debt of CNY8.6 billion. Fitch believes Sunshine 100's
liquidity is sustainable in the next 12-months because it had an
undrawn bank facility of CNY7.6 billion as of end-2016, and it is
capable of refinance in both onshore and offshore markets.
DERIVATION SUMMARY
Sunshine 100 has higher leverage than its closest peer, Jingrui
Holdings Limited (B-/Negative), due to a slower turnover rate.
Its scale is also smaller than Jingrui in terms of contracted
sales and EBITDA. However, its land bank is larger than that of
Jingrui, and profitability is also higher.
Suneshine 100's business profile is better than its 'CCC' rated
peer, Wuzhou International Holdings Limited and a trade centre
developer in Tier 3/4 cities, given its focus on residential
projects in Tier 2 and satellite Tier 3/4 cities.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Total contracted sales to be around CNY10 billion-11 billion
during 2017-2019;
- Cash collection ratio at 92%-95% during 2017-2019;
- Construction expenditure accounts for 50%-60% of contracted
sales during 2017-2018 each year;
- Land premium payment accounts for around 7%-14% of contracted
sales during 2017-2018 each year.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action include:
- Net debt/adjusted inventory sustained above 70% (2016: 68.9%;
2015: 63.3%)
- Contracted sales/total debt sustained below 0.5x (2016: 0.39x;
2015: 0.38x)
- EBITDA margin sustained below 10% (2016: 9.8%; 2015: 12%)
- A deterioration in Sunshine 100's liquidity position, such
as a failure to refinance its existing offshore bond, in the
next 12-18 months.
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- The current rating is on Negative Outlook. Fitch does not
anticipate developments with a substantial likelihood,
individually or collectively, of leading to a rating upgrade.
However, then the Outlook may revert to Stable if the above
factors do not materialise.
YANZHOU COAL: Fitch Alters Outlook to Stable & Affirms B IDR
------------------------------------------------------------
Fitch Ratings has revised the Outlook on Yanzhou Coal Mining
Company Limited's Long-Term Foreign-Currency Issuer Default
Rating (IDR) to Stable from Negative, and affirmed the rating at
'B'.
Fitch has also affirmed the 'B' rating on the US$1 billion dual-
tranche notes issued by Yancoal International Resources
Development Co., Limited and guaranteed by Yanzhou Coal, with a
Recovery Rating of 'RR4'.
Fitch believes the significant improvement in the operating
environment from higher coal prices has reduced the overall risks
for Yanzhou, resulting in the revision of the rating Outlook. The
'B' rating reflects stronger operation cash flow as a result of
coal prices rebounding in 2H16, as well as an improvement in its
production costs. These positive factors are despite continuing
weaknesses of its debt structure and liquidity arising largely
from its high reliance on short-term debt at end-2016. Fitch
expects capex to remain high, with the company's construction of
coal chemicals projects and coal mining-related investments
limiting its ability to improve its credit metrics significantly.
Furthermore, the company has started investing in certain
financial services operations.
KEY RATING DRIVERS
Revised Coal-Price Assumptions: Fitch increased its thermal coal-
price assumptions in March 2017. Average Newcastle 6,000
kilocalories (kcal) is raised from US$57 per metric ton (mt) to
US$70/mt for 2017; and for 2018 and afterwards from US$60/mt to
US$65/mt. The sharp coal-price rebound in 2H16 helped Yanzhou
Coal's overall liquidity and credit metrics to improve - FFO
fixed-charge coverage at 2.3x in 2016 (FY15: 2.0x) and leverage
(as measured by FFO-adjusted net leverage) at 7.7x (FYE15:
10.2x). Seasonal and temporary factors, like low inventory and
low hydropower generation, may have played their role in
continued coal-price strength in 1Q17, but Fitch think the
Chinese government's strong stance on "supply side reform" should
help coal prices average higher in 2017 than in 2016.
Organic Volume Growth Ahead: Yanzhou's substantial investments in
greenfield coal mines in recent years will contribute to an
increase in its coal production. Fitch expects five major new
mines in Inner Mongolia, Shandong Province and Australia,
including Silawusu, Zhuanlongwan, Yingpanhao, Wanfu and Moolarben
phase II, to be commissioned collectively in the period from 2H16
to 2018. These mines, with a combined raw coal capacity of
41.8mtpa or around 60% of Yanzhou's production in 2016, will
considerably increase Yanzhou's production over the medium term.
Improvement in Cost Position: After years of effective cost
control, Fitch estimates Yanzhou delivered unit gross profit of
CNY134/mt in 2016, ahead of Shenhua Energy's CNY83/ton, and
became a leading cost producer. However, Fitch believes room for
further cost rationalisation is limited.
High Investments Slow Deleveraging: Yanzhou's capex on greenfield
coal mines may have plateaued in 2017, given that its major new
mines have either started operations or are nearing completion.
However, Fitch expects around CNY12 billion to be invested in two
large-size coal chemicals projects in Inner Mongolia and Shaanxi
Provinces by 2020, which will keep total annual capex in a range
of CNY6 billion-9 billion in the next few years - which is still
high. In addition, Yanzhou has injected nearly CNY10 billion into
four investment/financial leasing subsidiaries to implement a
strategy of diversifying into the financial sector. Fitch is
uncertain at this stage about the scale and quality of future
investments in this area.
C&A Acquisition Broadly Neutral: The impact of Yancoal
Australia's (Yanzhou's listed subsidiary) announced US$24.5
billion acquisition of Coal & Allied (C&A), an Australian coal
producer, will depend largely on how it is funded. Yancoal
Australia plans a pro-rata entitlement offer of ordinary shares,
and Yanzhou Coal has pledged to subscribe US$10 billion of it.
Yanzhou Coal's credit profile would be enhanced if it chooses to
conduct a share placement to fund the US$1 billion subscription.
If not, FFO-adjusted net leverage will not change much on a
consolidated basis, and would also raise the leverage of Yanzhou
Coal on an unconsolidated basis. Fitch estimates that Yancoal's
existing operations managed to break even at the net profit level
in 1Q17 thanks to high coal prices; but their overall economics
still remain relatively weak. However, the C&A acquisition, if it
proceeds, would improve the overall profitability of Yancoal
Australia.
Liquidity and FCF are Key: At end-2016, CNY30.7 billion, or 38.3%
of total debt, was short-term. It is not uncommon for Chinese
companies to rely more on short-term debt for cost reasons, while
such a large reliance on short-term debt instruments for a
company in a cyclical sector does raise the overall financial
risks for Yangzhou Coal. Fitch believes the company can start to
generate neutral to positive free cash flows under Fitch coal-
price assumptions, but only provided it does not significantly
increase its capex, and other investments. There is little
clarity on the future direction or the company's commitment to
achieve positive FCF or address its high debt, given the
company's ambition to further diversify its operations.
DERIVATION SUMMARY
Yanzhou Coal has a competitive cost position and leading unit
coal-mining profit in the industry, benefiting from years of cost
rationing and an advantageous geographical location close to coal
demand and sea transportation. Its IDR of 'B/Stable' is largely a
reflection of consistent high leverage and weak liquidity.
Ambitious planned investment in coal chemical projects as well as
expansion into the finance sector could largely offset its lower
capex in coal mines in future years, stalling deleveraging
despite the bright prospects in coal production growth. Yanzhou's
has similar high leverage to PT Indika Energy Tbk (B-/Stable);
Indika's 'B-' rating, however, reflects the large bunched-up debt
maturities in 2022-2023 following the recent debt refinancing.
Yangzhou's ratings reflect its generally good access to domestic
debt market as a large provincial state-owned enterprise.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
- QHD 5500Kcal coal price averages at CNY503/467 per ton in
2017/2018 and flat afterwards
- Unit coal production cost rebounded 3% in 2017 and stays flat
thereafter
- Capex stays high - in the range of CNY6.3 billion-7.8 billion
in 2017-2020
- Major new coal mines starting operation in 2017-2018
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- FFO-adjusted net leverage below 5.0x (end-2016: 7.7x) on a
sustained basis
- FFO interest coverage above 3.0x (end-2016: 2.3x) on a
sustained basis
- An improvement in the company's liquidity position, including
maintenance of a strong cash position together with a
reduction in the reliance on short-term debt
- Neutral to positive FCF
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Weakening of liquidity
- Significant softening of coal prices
- FFO fixed-charge coverage sustained below 2x (end-2016: 2.3x)
LIQUIDITY
Yanzhou Coal's total debt maturing within one year had increased
further to CNY30.7 billion by end-2016 (CNY23.9 billion at end-
2015) and readily available cash had fallen to CNY16.4 billion
(CNY20.2 billion at end-2015). Total undrawn bank credit
facilities had shrunk to CNY40.6 billion from CNY70.0 billion a
year ago. However, FFO fixed-charge coverage improved to 2.3x in
2016 (2.0x in 2015) with stronger operating cash flow as a result
of the coal-price rebound. Fitch expects the company to continue
to benefit from state ownership in accessing domestic funding
sources.
YIDA CHINA: S&P Assigns 'B' Corp. Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings said that it had assigned its 'B' long-term
corporate credit rating to Yida China Holding Ltd. The outlook
is stable. S&P also assigned its 'cnBB-' long-term Greater China
regional scale rating to the China-based property developer.
S&P also assigned its 'B-' long-term issue rating and 'cnB+'
long-term Greater China regional scale rating to Yida's proposed
U.S.-dollar-denominated senior unsecured notes. The rating on
the proposed notes is subject to S&P's review of the final
issuance documentation.
"The ratings reflect Yida's limited geographical diversity, and
the company's high leverage and tight liquidity given its large
capital spending to develop new business parks," said S&P Global
Ratings credit analyst Brian Huang. "Yida's good market position
in business park development in China and its good execution
record temper these weaknesses. In addition, the company's
business parks benefit from the favorable outlook for China's
information technology (IT) outsourcing and biotech industries,
to which most of Yida's tenants belong."
Yida's proven execution track record over the past 19 years
supports its market position. The company is among the three
largest business park developers in China, and has developed more
than 6 million square meters (sqm) gross floor area (GFA).
Currently, Yida owns six business parks and manages 22 others on
behalf of various owners in China. In 2016, the company's sales
rose 12.9% to Chinese renminbi (RMB) 8.3 billion. S&P expects
the company to maintain steady sales growth of 10%-12% in 2017.
In S&P's view, China's business park development business has
some entry barriers, considering the requirement of specialized
industry know-how and local government relationships. Yida has
acquired considerable industry expertise owing to its first-mover
advantage. The company has also established a good brand
reputation through its key project, the Dalian Software Park,
which contributed about one-tenth of the GDP of Dalian city.
However, Yida's income remains highly concentrated in Dalian,
which subjects it to the economic cycles and policy changes in
the city. Five of the company's six business parks (or 85% of its
total land bank) are in Dalian.
Yida's financial leverage is likely to remain high in 2017, given
the company's large capital requirement to establish new business
parks. The company has some borrowings to support primary land
development for its business parks, which will be reimbursed by
the government (RMB2.2 billion at the end of 2016). However,
these amounts will reduce in 2017 following a decline in Yida's
primary land development activities. Over the next five years,
Yida plans to increase its number of business parks to 10 from
six. That said, the company is likely to continue its financial
discipline during the expansion, given its track record. S&P's
base-case forecast is that Yida's debt-to-EBITDA ratio will
improve slightly to 8.5x-9.0x in 2017, from 9.3x in 2016.
The rating on Yida has not factored in any uplift from majority
ownership by China Minsheng Investment Corp. Ltd. (CMI).
The issue rating is one notch lower than the long-term corporate
credit rating on Yida to reflect structural subordination risk.
Yida intends to use the net proceeds for property projects and
corporate working capital.
"The stable outlook reflects our expectation that Yida will
maintain stable sales and steadily increase rental income over
the next 12 months," said Mr. Huang. "The company will likely
manage the pace of its expansion such that its high leverage and
tight liquidity do not significantly deteriorate. We also expect
Yida to operate largely independently from CMI in the next 12-18
months."
S&P could downgrade Yida if its liquidity risks heighten, as
reflected by a material increase in the company's proportion of
short-term debt, or its EBITDA interest coverage falls below 1x.
S&P may also lower the rating if Yida's sales materially fall
below S&P's base-case estimate of about RMB9 billion due to
slower business park development, resulting in a significant
increase in the debt-to-EBITDA ratio.
An upgrade is less likely in the next 12 months given Yida's high
financial leverage and strained liquidity. However, S&P could
raise the rating on Yida over the medium term if the company
significantly expands its operating scale, improves its
diversity, or materially increases its profitability as new
business parks mature.
* Fitch: China Retail Recovery Encouraging, Uncertainty Remains
---------------------------------------------------------------
The initial signs of a recovery in consumer spending for
traditional Chinese retailers are encouraging, but the
sustainability and degree of the turnaround remains uncertain,
says Fitch Ratings.
Retailers such as Golden Eagle Retail Group Limited (BB-
/Negative) and Parkson Retail Group Limited (B-/Negative) have
observed better sales after years of decline due to China's
challenging department store environment since 2014, which was
brought about by changing consumer shopping channel preferences
and a lack of store differentiation. Same store sales growth for
Parkson turned positive in 4Q16 at +1.4%, after reporting a
decline of 9.0% in 9M16 and a consecutive decline since 2013.
Same store sales for Golden Eagle only declined by 4% for full-
year 2016, compared with a 9% decline in 1H16.
Fitch believes the recovery is partly driven by consumers
bringing back some overseas spending. Cosmetics, sportswear and
outdoor as well as children's wear and toys product categories
have performed well, while the outlook for apparel remains
challenging. A pick-up in luxury spending has also been observed,
with watch retailer Hengdeli Holdings Limited (B+/Rating Watch
Negative) benefiting from its China retail segment turning
positive in 2H16, compared with a decline of 8.9% in 1H16
following declines since 2013.
The improvement also follows retailer efforts to transform their
offerings over the previous few years to stay relevant for
consumers. Golden Eagle, for instance, increased the number of
its lifestyle centre format stores in 2016 to 12 out of its 31
stores in operation to represent more than 60% of its gross floor
area, up from only seven lifestyle stores in 2013. The lifestyle
centres includes offerings like exclusive brands, supermarkets,
food and beverage concepts and other retail formats and services
to complement the traditional department store format.
However, most retailers have only noted a more meaningful
recovery since 4Q16 after facing declining sales over the past
two to three years, which has hurt profitability. The Negative
Outlook on Golden Eagle reflects its high leverage, which will
remain until it is able to generate cash from residential
property sales or sees a sustainable turnaround in the core
business. The Outlook is also Negative for Parkson, reflecting
uncertainty over its ability to refinance or repay its US$500
million (CNY3.2 billion) bonds maturing in May 2018.
=========
I N D I A
=========
AJANTA SPINTEX: CRISIL Lowers Rating on INR27.5MM Loan to D
-----------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facilities of Ajanta Spintex Limited (ASL) to 'CRISIL D' from
'CRISIL B-/Stable.'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 14 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Long Term Loan 27.5 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The rating downgrade reflects the recent instances of delay by
ASL, in servicing its term debt. The delay has been on account of
weak liquidity, as reflected in fully utilised cash credit
facility, low current ratio and tightly matched cash accrual
vis-a-vis maturing debt in the medium term.
The ratings also reflect the small scale of operations and
moderate working capital intensity, exposure to intense
competition, and the weak financial risk profile, marked by high
gearing and weak debt protection metrics. These weaknesses are
partially offset by the extensive experience of the promoters in
the cotton yarn industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Delays in servicing debt obligations: Quarterly instalments,
pertaining to term debt, have been serviced with a delay of
around 7-10 days, owing to weak liquidity.
* Small scale of operations and moderate working capital
intensity amidst intense competition: Intense competition from
large players and several small entities, has kept the scale of
operations small, as reflected in revenue of INR52.91 crore in
fiscal 2016. The scale is likely to improve, aided by capacity
expansion and diversification in the customer base but I expected
to remain moderate over the medium term. Operations are
moderately working capital intensive, as reflected in gross
current assets of 151 days, expected as on March 31 2017.
Operations are expected to remain working capital intensive over
the medium term.
* Weak financial risk profile: Financial risk profile is marked
by high gearing and weak debt protection metrics. Gearing should
improve, aided by increasing scale of operations, and hence,
accretion to reserves and absence of any major debt-funded
capital expenditure, but may remain high over the medium term.
Debt protection metrics remain weak owing to the small cash
accrual.
Strength
* Extensive experience of promoters in the cotton yarn industry:
Benefits from the extensive experience of the promoters, and
established relationships with customers and suppliers, ensuring
steady supply of raw material, and repeat orders, will continue.
ASL, which was set up in 2010, by the promoter, Mr. I Dhana Reddy
and his family members, manufactures cotton yarn. The
manufacturing facility, near Guntur (Andhra Pradesh), has a
capacity of around 25,000 spindles.
ASL reported a net loss of INR3.01 crore on revenue of INR52.91
crore in fiscal 2016, vis-a-vis profit after tax of INR2.40 crore
and INR50.52 crore, respectively, in fiscal 2015.
ARCHEESH HEALTH: CRISIL Assigns 'B' Rating to INR10MM LT Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' ratings to the
long-term bank facilities of Archeesh Health Care Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 10 CRISIL B/Stable
Proposed Fund-Based
Bank Limits 1 CRISIL B/Stable
The rating reflects AHCPL's weak financial risk profile and
customer concentration risk. These rating weaknesses are
partially offset by AHCPL's off take arrangement with Himalaya
Drug Company (Himalaya).
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Small net worth and high gearing:
The net worth of AHCPL is estimated to be low as on March 31,
2018. The gearing of the company is estimated to remain high over
the medium term.
* Weak debt protection metrics but expected to improve: The
interest coverage and net cash accruals to total debt (NCATD) of
the company are expected to remain weak over the medium term.
* Stabilisation risk during initial stages of operations: The
commercial operation of the company is expected to commence from
July 2017. On account of the initial stages of operations, AHCPL
is exposed to ,stabilisation risk for its manufacturing
operations. CRISIL believes that ramp up of its manufacturing
operations and scaling up of accruals will be a key determinant
in its term debt repayment. Due to the initial stages of
operations, AHCPL needs to train its labourers to achieve the
desired output while maintaining the product quality
Strength
* Offtake arrangement with Himalaya Drug Company (Himalaya):
AHCPL is a contract manufacturer of personal care products like
shampoos, gels, beauty creams and others for Himalaya. It has a
five-year contract with Himalaya for manufacturing the products.
The raw material requirements of AHCPL are directly made
available by Himalaya and the company is not required to make
payment for the same; therefore any fluctuation in the raw
material prices does not impact AHCPL's profitability. As per the
contract entered with Himalaya, AHCPL receives fixed conversion
cost for the personal care products manufactured by them.
Outlook: Stable
CRISIL believes that AHCPL will continue to benefit over the
medium term from its contract manufacturing agreement with
Himalaya. The outlook may be revised to 'Positive' in case AHCPL
reports improvement in its capital structure or higher-than-
expected accruals, resulting in significant improvement in its
financial risk profile. Conversely, the outlook may be revised to
'Negative' in case AHCPL's plant takes more-than-expected time to
stabilise its operations, or if the company reports lower
profitability or undertakes any large, debt-funded capital
expenditure programme, leading to deterioration in its financial
risk profile.
Incorporated in October 2015 as a private limited company,
Archeesh Health Care Private Limited (AHCPL) is setting up a
manufacturing unit for cosmetic and Ayurveda product. Based in
Hyderabad, Telangana it is a manufacturer of Herbal Skin Care,
Personal Care Products and Baby Care products, and permanent
supplier of 'The Himalaya Drug Company'. The company is promoted
by Mr. Santosh Kumar Kokku who has 10 years of extensive industry
experience.
AHCPL is expected to report a profit after tax PAT of Rs.0.13
crore on expected net sales of Rs.7.93 crore for fiscal 2018.
ASHISH TIMBER: CRISIL Reaffirms B+ Rating on INR0.5MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Ashish
Timber Depot (ATD) for obtaining information through letters and
emails dated November 11, 2016, December 14, 2016 and March 16,
2017, among others, apart from telephonic communication. However,
the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.5 CRISIL B+/Stable (Issuer
Not Cooperating; Rating
Reaffirmed)
Letter of Credit 14.0 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Ashish Timber Depot. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for Ashish Timber Depot is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with Crisil B Rating category or lower.'
Therefore, on account of inadequate information and lack of
management cooperation CRISIL is reaffirming the rating to CRISIL
B+/Stable/CRISIL A4.
ATD was set up in 1990 as a proprietorship firm of Mr. Ashish
Goyal and trades in timber logs. At present, all its sales are
generated from selling timber wood to group companies, Vizag
Impex Pvt Ltd and BD Plywood Pvt Ltd, which, in turn, sell
plywood and veneer across the country.
BALRAJ KUMAR: CRISIL Assigns B+ Rating to INR7MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL BB-/Stable' rating to the
bank facilities of Balraj Kumar Vinod Kumar (BKVK).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Cash
Credit Limit 7 CRISIL B+/Stable
The ratings reflect the extensive experience of the promoters and
efficient working capital management. These strengths are
partially offset by average financial risk profile and
susceptibility to volatile commodity prices and foreign exchange
(forex) rates.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of Balraj Kumar and Vinod Kumar (BKVK)
and Maruti International (MI). This is because these firms,
collectively referred to as the Balraj group, are under the same
management and in a similar line of business. However, the
financial fungibility is limited.
Key Rating Drivers & Detailed Description
Weakness
* Average financial risk profile: Financial risk profile is
average with total outside liabilities to tangible networth
(TOLTNW) ratio of 3.2 times as of March 2016, and interest
coverage ratio of 2.9 times in fiscal 2016.
* Susceptibility to volatile commodity prices and forex rates:
Operating margin is susceptible to forex fluctuation risks since
the group has significant imports. It mainly imports almonds and
pistachio from the US, Australia, Iran and Turkey, all of which
are billed in USD.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' experience of over three decades and their healthy
relationships with customers should continue to support business
risk profile.
* Efficient working capital management: Working capital cycle
has been managed efficiently, as reflected in low gross current
assets of 23 days as on March 31, 2016, and 40 days over the last
three years.
Outlook: Stable
CRISIL believes the Balraj Group will continue to benefit from
the extensive experience of the promoters. The outlook may be
revised to 'Positive' if higher than expected operating margin
results in significant improvement in debt protection indicators
and net cash accrual. Conversely, the outlook may be revised to
'Negative' if financial risk profile deteriorates on account of
low profitability or revenue, stretch in working capital cycle,
or any large capital expenditure.
BKVK is a proprietorship firm set up in 1986 by Mr Vinod Kumar
and family. Based in Delhi, the firm trades in dry fruits.
Operations are managed by Mr Vinod Kumar and his son, Mr Harish
Goel.
Net profit was INR0.34 crore on net sales of INR96.89 crore in
fiscal 2016, against net profit of INR0.34 crore on net sales of
INR119.84 crore in fiscal 2015.
DHARESHWAR COTTON: ICRA Reaffirms 'B' Rating on INR7.02cr Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR7.00-crore working capital facility and the INR0.02-crore
term loan facility of Dhareshwar Cotton Private Limited (DCPL).
ICRA has also reaffirmed the long-term rating of [ICRA]B on the
INR1.88-crore unallocated limits of DCPL. The outlook assigned on
the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 7.02 [ICRA]B (Stable); Reaffirmed
Long-term Unallocated
Limits 1.88 [ICRA]B (Stable); Reaffirmed
Rationale
The rating reaffirmation continues to remain constrained by the
modest scale of operations and the decline in revenue in FY2016
owing to lower realisations. The rating also takes into account
the company's weak financial profile as reflected in the net
losses, stretched capital structure and weak coverage indicators.
Furthermore, the working capital intensity remains high due to
high inventory holding. The ratings are further constrained by
the low value-added operations and the intense competition
witnessed by the company because of the highly fragmented
industry structure due to low-entry barriers and low product
differentiation. The rating also takes into account the
vulnerability of the company's profit margins to raw material
(cotton) prices, which are subject to seasonality, crop harvest
and regulatory risks.
The rating, however, continues to favorably factor in the
proximity of the company's manufacturing unit to raw material
source, thereby easing procurement. The rating also draws comfort
from the long experience of the partners in the cotton ginning
industry.
Going forward, the company's ability to increase its scale of
operation, maintain adequate profitability and improve its
capital structure, given the seasonality in the business,
volatility in prices of cotton bales, intense competition and
high working capital requirement will remain crucial for the
credit metrics.
Key rating drivers
Credit strengths
* Long experience of the promoters in cotton ginning industry;
* Proximity of the manufacturing unit to the cotton producing
belt of Gujarat provides regular and easy access to raw
materials.
Credit weaknesses
* Modest scale of operations, decline in revenue in FY2016 owing
to lower volume sales;
* Financial profile characterised by losses at net levels,
stretched capital structure as well as weak debt coverage
metrics;
* Limited value addition; highly competitive and fragmented
industry structure due to low-entry barriers, restricting
pricing flexibility.
Description of key rating drivers:
DCPL gins and presses raw cotton to produce cotton bales and
cotton seeds and crushes cotton seeds to produce cotton seed oil
and oil cake. The company's financial profile is characterised by
losses at net levels, resulting from high finance cost and
depreciation charges, though, the operating profitability
improved in FY2016. Significantly higher inventory holdings in
FY2016 weakened the liquidity position, resulting in high working
capital requirement, which further impacted the capital structure
as most of the working capital was funded through bank
borrowings.
The company procures Shankar-6 quality of raw cotton either
directly from local farmers or from agriculture marketing yards.
Raw cotton is procured between September and April, when the
supply is generally high. DCPL's sales proceeds are made in the
domestic market. The company's revenue is largely dependent on
the sales of cotton bales. Sales of cotton bales are channeled
through brokers/agents.
The cotton ginning industry is highly fragmented due to the
presence of numerous players operating in Gujarat, leading to
high competition. The industry is also exposed to regulatory
risks with the Government imposing MSP on the purchase of raw
cotton during over-supply in the market and restricting export of
cotton bales in order to support the domestic cotton textile
industry.
Analytical approach:
For arriving at the ratings, ICRA has taken into account the debt
servicing track record of DCPL, its business risk profile,
financial risk drivers and management profile.
Incorporated in 2011, Dhareshwar Cotton Pvt Ltd. is involved in
cotton ginning, pressing and seed crushing business. The
manufacturing facility of the company is located in Tankara
District Rajkot, Gujarat and is currently equipped with 28
ginning machines and one fully automatic pressing machine, with a
capacity to manufacture 280 bales per day (24 hours operations).
The company also has four expellers for cotton seeds crushing
with capacity of manufacturing 4 MT of oil per day (24 hours
operation).
DMR HOSPITALS: CRISIL Lowers Rating on INR8.9MM Term Loan to D
--------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of DMR Hospitals Private Limited (DMR) to 'CRISIL D/CRISIL D'
from 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 1 CRISIL D (Downgraded from
'CRISIL A4')
Proposed Long Term 2.6 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B/Stable')
Rupee Term Loan 8.9 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delays in servicing of term loan on
account of stretched liquidity, with full utilisation of bank
limit. The stretched liquidity was due to sluggish operating
performance caused by initial stage of operations of the hospital
and lower occupancy. This along with high overhead expenses
resulted in operating losses during fiscal 2016. The scale of
operations will remain suppressed over the medium term thus
adversely impacting cash accrual and thereby debt servicing
ability.
The rating reflects the company's small scale of operations due
to initial stage and a weak financial risk profile because of
small networth, high gearing and subdued debt protection metrics.
These weaknesses are partially offset by the extensive experience
of the promoters in the healthcare industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations due to initial stage: The small scale
of business is reflected in a turnover of INR2 crore for fiscal
2016 due to initial stage of operations, which has led to lower
occupancy in the hospital.
* Weak financial risk profile: Financial risk profile is weak
marked by small networth, high gearing and subdued debt
protection metrics. The networth was INR2.07 crore and gearing
high at 4.71 times as on March 31, 2016. Further, operating
losses have led to subdued debt protection metrics.
Strength
* Extensive experience of promoters in the healthcare industry:
The promoter, Dr Subhash Khanna, has three decades of experience
in the healthcare industry, which is expected to benefit business
risk profile over the medium term.
DMR, incorporated in 2011, runs a multi-speciality hospital in
Karnal (Haryana). The company is promoted by Dr Subhash Khanna,
Mr Dalip Singh, Mr Saurabh Juneja, and Mr Tarun Chawla.
For fiscal 2016, its first year of operation, DMR incurred a net
loss of INR2.90 crore on sales of INR2.00 crore.
H M STEELS: CRISIL Reaffirms 'D' Rating on INR26MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with H M Steels
Limited (HMSL) for obtaining information through letters and
emails dated November 11, 2016, December 14, 2016, and March 16,
2017 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 26 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Funded Interest 5.51 CRISIL D (Issuer Not
Term Loan Cooperating; Rating
Reaffirmed)
Letter Of Guarantee 2.00 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Working Capital 40.00 CRISIL D (Issuer Not
Term Loan Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of H M Steels Limited. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for H M Steels Limited is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL B Rating category or lower.'
Therefore, on account of inadequate information and lack of
management co-operation, CRISIL is reaffirming the rating at
'CRISIL D/CRISIL D'.
HMSL, incorporated in 1999, manufactures ingots, ERW pipes, MS
bars, and galvanised iron pipes at its plant in Sirmour (Himachal
Pradesh); it sells in the domestic market. It is managed by Mr.
Megh Raj Garg, Mr. Rajnish Bansal, Mr. Pankaj Bansal, and Mr.
Ashok Kumar Singla.
HIMAGIRI HOSPITALS: ICRA Reaffirms B+ Rating on INR6cr Term Loan
----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ to
the INR6.00 crore term loans, INR2.25 crore cash credit limits
and INR1.75 crore unallocated limits of Himagiri Hospitals
Private Limited. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 2.25 [ICRA]B+ (Stable) Reaffirmed
Term Loan 6.00 [ICRA]B+ (Stable) Reaffirmed
Unallocated 1.75 [ICRA]B+ (Stable) Reaffirmed
Rationale
The rating is constrained by small scale of operations of the
hospital with operating income of INR13.52 crore in FY2016, and
weak financial profile characterized by low profitability and
highly leveraged capital structure with gearing of 332.98 times
as on March 31, 2016 on account of erosion of net worth with net
losses incurred in the nascent stage of operations. The rating is
also constrained by high competition with presence of large
number of established players in the vicinity of the hospital and
also from other major hospitals in Hyderabad; retaining doctors
given high competition in the healthcare industry is very
crucial. ICRA notes the revenue concentration risk owing to its
presence in the single location. The rating continues to be
constrained with the low occupancy during FY2016 and the current
year on account of delay in ESI and Arogyashree empanelment. The
rating, however positively factors in the experienced and reputed
team of doctors and also central location of the hospital with a
number of IT companies surrounding the hospitals.
Key rating drivers
Credit Strengths
* Experienced and reputed team of doctors and favorable location
of the hospital
Credit Weakness
* Small scale of operations
* Occupancy continues to remain low limited revenue growth
* High competition with presence of large number of established
players in the vicinity of and competition from other major
hospitals in Hyderabad
* Retaining doctors given high competition in the healthcare
industry and ramp up of operations at same time to remain key
challenges for the company
* Leveraged capital structure with gearing of 322.98 times as
on March 31, 2016
* Revenue concentration risk owing to single location presence
Description of key rating drivers highlighted above:
Himagiri Hospitals Private Limited (PHSPL) operates 117-bed
multispecialty in Gachibowli, Hyderabad with major focus on
neurology, orthopedics and pulmonology. The company has reputed
team of doctors and central location of the hospital is ensuring
good patient footfall. The scale of operations has been small and
revenues remained stagnant during FY2016 on account of lower
occupancy of 26.83% as the hospital has not received ESI and
Arogyashree empanelment, and increased competition from other
hospitals in the vicinity The company is also exposed to high
competition with presence of large number of established players
in the vicinity of the hospital and also from other major
hospitals in Hyderabad and high revenue concentration risk owing
to its presence in the single location. The hospital has
empanelled with ESI in January 2017, which is expected to support
revenue growth going forward.
Going forward, ability of the company to improve its occupancy
and profitability, thereby improving its capital structure and
retaining the doctors given high competition would be major
challenges for the company from credit perspective.
Himagiri Hospitals Private Limited (HHPL) was incorporated in
2011 and the directors of the company are Mr. P.Shankar Reddy and
his wife Mrs. Andalu and Mr. P. Rajeshwar Reddy and Dr. M. Swathi
Reddy. HHPL operates 117 bed hospital (20 Intensive Care Unit
(ICU) beds and remaining Non-ICU beds) in Gachibowli, Hyderabad.
The hospital provides services across specializations like
Gynecology, Orthopedics, Neuro Surgery, Gastroenterology,
Nephrology, Neurology, Pulmonology, Opthalmology etc.
HYDROMET INDIA: CRISIL Assigns B- Rating to INR10MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has revoked the suspension of its rating on the
long term bank facilities of Hydromet India Limited (HIL) and has
assigned its 'CRISIL B-/Stable' rating to the facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B-/Stable (Assigned;
Suspension Revoked)
CRISIL had suspended the ratings on November 28, 2016, as HIL had
not provided necessary information required to maintain a valid
rating. HIL has now shared the requisite information, enabling
CRISIL to assign ratings to its bank facilities.
The rating reflects the modest scale of, and working-capital-
intensive, operations of the company. These rating weaknesses are
partially offset by the promoters' extensive experience in the
copper products manufacturing industry.
Key Rating Drivers & Detailed Description
Weakness
* Working capital intensive operations: HIL's operations have
been working capital intensive as reflected by its high Gross
Current Asset (GCA) of around 379 days as on March 31, 2016. The
high GCA days are primarily driven by the high inventory holding
of 318 days during the period. The company holds high inventory
on account of its large procurement and manufacturing lead time.
CRISIL believes that the company's operations would remain
working capital intensive over the medium term on account of high
inventory holding requirement.
Strengths
* Extensive experience of the promoters in copper manufacturing
and trading business: The business risk profile of HIL benefits
from the extensive experience of its promoters in the copper
manufacturing and trading business and its established
relationship with suppliers and customers. Prior to setting up of
HIL, the promoters were involved in trading of non-ferrous metals
like copper and zinc for around 30 years. CRISIL believes that
HIL would continue to benefit over the medium term from the
experience of its promoters in the manufacturing and trading
segment.
Outlook: Stable
CRISIL believes that HIL will continue to benefit over the medium
term from the extensive experience of its promoters in the copper
products manufacturing industry. The outlook may be revised to
'Positive' if the company significantly scales up its operations,
while maintaining its operating profitability, or improves its
working capital management, resulting in improvement in its
financial risk profile. Conversely, the outlook may be revised to
'Negative' if HIL undertakes a considerably large debt-funded
capital expenditure programme, leading to weakening in its
capital structure, or if its volumes or margins decline steeply.
Incorporated in 1994, Chennai-based HIL manufactures copper
cathode, copper sulphate, and zinc sulphate. The company also
trades in copper and zinc scrap. HIL is promoted by Mr. Venkat
Subramanyam.
For fiscal 2016, HIL reported a negative profit after tax (PAT)
of INR.11 crore on an operating income of INR28 crores as against
a PAT of INR0.4 crore on an operating income of INR28.2 crores in
fiscal 2015.
KANISHK METALLOYS: ICRA Lowers Rating on INR8.50cr Loan to B+
-------------------------------------------------------------
ICRA Ratings has revised its long-term rating earlier assigned to
the INR8.50-crore fund-based limits of Kanishk Metalloys (KMA) to
[ICRA]B+ from [ICRA]BB- (Stable). The outlook on long-term
rating is "Stable".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 8.50 [ICRA]B+(Stable); revised
from [ICRA] BB-(Stable)
Rationale
ICRA's rating revision takes into account the decline in the
firm's operating income on account of muted demand; and its
stretched liquidity position due to elongation of its receivable
cycle, resulting in sharp increase in working capital intensity
from NWC/OI of 32% in FY2015 to 67% in 11 months FY2017. ICRA's
rating continues to factor in the firm's vulnerability to adverse
movements in foreign exchange rates, in the absence of a hedging
mechanism. However, the rating favorably factors in the
experience of the promoters in the non-ferrous metals trading
business and their established client relationship, resulting in
repeat business. Going forward, the firm's ability to revive its
revenue growth profitably and improve its liquidity position will
remain the key rating sensitivity.
Key rating drivers
Credit strengths
* Long standing experience of the promoters in the business
of non-ferrous metals trading
* Established relationships with customers results in repeat
Business
Credit weaknesses
* Continuous decline in operating scale due to weak market
Scenario
* Elongated working capital cycle, more so in the current year
with high receivables
* Exposure to price risk and foreign currency fluctuation as
majority of the firm's purchase is made through import
Description of key rating drivers:
Kanishk Metalloys trades non-ferrous metals. The firm purchases
non-ferrous metals such as Zinc from domestic markets and also
imports them from countries such as Hong Kong, the UAE, and
Korea. The promoter's presence in the business for many years
have enabled strong relationship with a wide set of customers,
which offers comfort from the credit perspective. Over the last
three years, the firm has faced market slowdown, which along with
currency movements, has resulted in continuous decline in its
operating income. In order to keep pace, the firm started
providing elongated credit period, which has resulted in high
debtors in FY2016 and 11 months of FY2017 and deteriorated
working capital intensity to 67% in 11 Months FY2017. The firm
remains dependent on working capital borrowing as evident in its
leveraged capital structure ,with gearing of 2.40 times as on
March 31, 2016. Thus, the working capital limit continues to
remain highly utilised even on a lower operating scale.
The firm does not hedge its foreign exchange transactions and
hence remains exposed to foreign currency fluctuation risk.
However, the firm's operating margin witnessed some improvement
in the current year with benign prices, which was offset by
higher interest costs. Going forward, the firm's ability to
revive its revenue growth profitably and improve its liquidity
position will remain the key rating sensitivity.
Kanishk Metalloys is a sole proprietorship firm incorporated in
2008 by Mr. Nand Nandan Agrawal to carry out trading of non-
ferrous metals. The firm's operating office is in Mathura, Uttar
Pradesh. The firm purchases non-ferrous metals in the domestic
markets as well as imports them from countries such as Hong Kong,
the UAE, and Korea. The firm sells the non-ferrous metals to the
domestic clients.
KMA recorded a net profit of INR0.26 crore on an operating income
of INR29.49 crore in the year ending March 31, 2016. Also, as per
provisional numbers for 11 months FY2017, KMA recorded a net
profit of INR0.22 crore on an operating income of INR18.61 crore.
L.C. FOODS: ICRA Assigns B+ Rating to INR19cr Loan
--------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]B+ and
the short-term rating of [ICRA]A4 to the INR21.00-crore fund-
based and non-fund based limits of L.C. foods Limited. The rating
has been assigned a 'Stable' outlook.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 19.00 [ICRA]B+(Stable) ;assigned
Non-fund based limits 2.00 [ICRA]A4 ;assigned
Rationale
The rating is constrained by LCF's presence in the intensely
competitive flour milling industry due to the presence of
numerous organised and unorganised players. The rating is also
constrained by the company's weak financial risk profile as
reflected in the moderate scale of operations, high gearing
levels, modest return indicators and weak debt protection metrics
coupled with huge debt repayment going forward. The rating also
factors in the working capital intensive operation, which has
resulted in high limit utilisation over the last one year, given
the seasonal nature of business. Furthermore, the company remains
exposed to regulatory changes and volatility in wheat prices.
The rating, however, favourably takes into account the long
experience of the promoters in the flour milling business and the
company's relationship with reputed customers such as ITC Limited
and Parle Agro. Furthermore, ICRA also takes note of the
proximity of the mill to major wheat growing area, resulting in
easy availability of wheat.
Going forward, the company's ability to increase its scale of
operations in a profitable manner, maintain healthy capital
structure and optimal working capital intensity, resulting in
improved liquidity, will be the key rating sensitivity.
Key rating drivers
Credit strengths
* Experienced promoters with long presence in the agro
commodities business
* Presence in a major wheat growing area results in easy
Availability
Credit weaknesses
* Weak financial profile characterised by low profitability,
high gearing and moderate coverage indicators
* Profitability subject to movement of wheat prices
* Intensely competitive industry characterised by the presence
of a number of small players
* Agro climatic risks can affect wheat availability in adverse
weather conditions
Description of key rating drivers:
The promoters and their family members have more than a decade
experience in flour milling business, which has helped the
company to add customers, providing an edge over its competitors.
Maida is sold broadly under two segments in India i.e. un-branded
segment, wherein consumers source their purchases largely from
'kirana' stores or local vendors in tier II and tier III markets,
and the upcoming branded segment that comprises packs of
different weights sold through supermarkets and hypermarkets.
Establishing brand loyalty in the traditional segment remains
difficult given the price sensitive nature of consumers and the
intense competition due to the presence of large number of
unorganised and local players. The branded market, however, holds
huge potential given the low penetration levels and the rise in
demand fuelled by changing life styles; the increase in number of
nuclear families and working women and the rising per capita
income and enhanced health awareness. These factors exert
pressure on margins of players such as LCF.
LC Foods Limited is currently focusing only on domestic sales,
with sales to different states such as M.P, Nagpur, Maharashtra
and U.P. The company also supplies 'maida' to reputed players
such as Parle and ITC Ltd's food division, resulting in low
counter party credit risk.
The company mainly procures wheat to manufacture Maida. The
procurement is done through Aadhti firms, from different mandis
located nearby and Food Corporation of India. Thus, the location
of the manufacturing facility ensures easy access to wheat.
Given that the company operates in the agro-based industry, it
remains exposed to the inherent cyclicality, volatility in
prices, and changes in government regulations.
L.C. Foods Private Limited (LCF) was originally incorporated as a
private limited company in 2003 by Mr. Shobhit Kesarwani and his
family members. In 2006, it was reconstituted to public limited
and the company's name was changed to L.C. Foods Limited. The
company is engaged in processing wheat and mainly manufactures
maida. The company has an installed capacity of 72000 tonnes per
annum. Its milling unit is in Allahabad, U.P.'
In FY2016, the company reported a profit after tax (PAT) of
INR0.09 crore on an operating income of INR71.21 crore as against
a PAT of INR0.10 crore on an operating income of INR51.03 crore
in FY2015.
M MADHAVARAYA: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facility of M Madhavaraya Prabhu (MMP).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average
financial risk profile because of high gearing, subdued debt
protection metrics, and continuous capital withdrawal by its
proprietor. The rating also factors the firm's modest scale of
operations and susceptibility of its operating profitability to
volatility in raw material prices and foreign exchange rates.
These weaknesses are partially offset by its proprietor's
extensive experience in the cashew industry, and its established
clientele.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility of profitability to volatility in raw material
prices: MMP's operating margin is constrained by the commodity
nature of its products, and was low, at 2.7-4.0% in the four
fiscals through 2016. The low margin limits the firm's ability to
absorb unanticipated adverse price movements. Presence in a
segment with limited value addition and negligible
differentiation in products of different players also constrains
the margin.
* Highly leveraged capital structure: MMP's gearing was high, at
4.5 times as on March 31, 2016. Incremental working capital debt
has pushed the gearing higher (expected over 5 times as on March
31, 2017). The gearing is expected to remain at a similar level
over the medium term due to large working capital debt.
* Withdrawal of capital by proprietor: MMP's financial
flexibility is constrained by capital withdrawal by the
proprietor (Rs 1.7 crore over the three fiscals through 2016).
The rating factors in the restricted financial flexibility of the
proprietorship model, and MMP's dependence on its proprietor to
maintain its financial risk profile.
* Working capital-intensive operations: The firm had gross
current assets of 93 days as on March 31, 2016, primarily due to
large inventory. As a result, its bank limit utilisation was
high, at 96% over the 12 months through January 2017. The firm
depends on working capital debt because of low accrual.
Strength
* Extensive industry experience of proprietor, and established
customer relationships: MMP's proprietor, Mr Tukaram Prabhu, has
experience of over 15 years in the cashew processing industry,
which has helped the firm establish a strong distribution network
and market its product in several states across India. It has
also helped the firm survive adverse business conditions and
build relationships with major customers and suppliers, resulting
in consistent order flow and raw material supply at favourable
prices.
Outlook: Stable
CRISIL believes MMP will continue to benefit from its strong
track record in the cashew industry. The outlook may be revised
to 'Positive' if there is an increase in cash accrual leading to
an improvement in capital structure and liquidity. The outlook
may be revised to 'Negative' if revenue and profitability are
substantially low, of if the firm undertakes sizeable debt-funded
capital expenditure, or if the proprietor withdraws considerable
capital.
MMP, a proprietorship firm set up in 1983, processes raw cashew
nuts of various grades into cashew kernels. The firm also trades
in raw cashew nuts and cashew kernels. Its processing unit is in
Muduperar village in Dakshina Kannada, Karnataka, and has
installed capacity of 4.8 tonne per day. The firm is managed by
Mr Tukaram Prabhu.
In fiscal 2016, MMP had net sales of INR45.45 crore and profit
after tax of INR0.35 crore against INR38.82 crore and INR0.72
crore, respectively, for fiscal 2015.
MADHAV METCAST: ICRA Reaffirms 'B' Rating on INR4.56cr Loan
-----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR3.00-crore cash credit facility and the INR1.56-crore term
loans of Madhav Metcast Private Limited. ICRA has also reaffirmed
the short-term rating of [ICRA]A4 on the INR3.50-crore non-fund
based letter of credit facility (sub-limit within cash credit
limit) of MMPL. ICRA has also reaffirmed the rating of
[ICRA]B/[ICRA]A4 on the unallocated amount of INR3.94 crore. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 4.56 [ICRA]B (stable); reaffirmed
Non-fund based Limits (3.00) [ICRA]A4; reaffirmed
Unallocated Limits 3.94 [ICRA]B/[ICRA]A4; reaffirmed
Detailed rationale
The rating reaffirmation favorably takes into account the long
standing experience of the promoters in the steel industry
through group concerns and the proximity of the plant to raw
material sources. ICRA also considers the advantage of backward
integration through group concerns, which are engaged in ship
breaking activity, which ensures timely availability of scrap.
The ratings, however, continue to remain constrained by MMPL's
modest scale of operations, decline in revenue in FY2016 owing to
slowdown in the steel industry as well as losses at the net level
since the past three fiscals. ICRA also takes into account the
company's leveraged capital structure because of high debt
availed by the company and low net worth base due to continuous
losses.. The ratings also factors in the intense competition
faced by the company in manufacturing M.S. Ingots, leading to
pricing pressure and ultimately low profitability as well as
vulnerability towards profitability amid fluctuations in steel
and ferrous metal scrap prices, which is further accentuated by
high inventory holding.
Going forward, considering the competitive intensity in the M.S.
Ingots business, the ability of the company to scale up business
and improve profitability, while improving capital structure
either through deleveraging or through strengthening of net
worth, remains important from a credit perspective.
Key rating drivers
Credit strengths
* Long standing experience of the promoters in the steel
industry
* Access to raw materials from group companies ensures timely
availability of scrap; proximity to the raw material source
results in freight savings and provides backward integration
Credit weaknesses
* Modest scale of operations, decline in revenue in FY2016
* Financial profile characterised by leveraged capital structure
due to high amount of external debt and low net worth base and
weak coverage indicators
* High competition results in pricing pressures and leads to low
Profitability
* Margins remain exposed to volatility in steel and ferrous
scrap prices; risks accentuated further by high inventory
holding
Detailed description of key rating drivers highlighted above:
Madhav Metcast Private Limited manufactures M.S. ingots. The
manufacturing facility of the company is located in Bhavnagar. It
has an installed capacity of processing 18000 MTPA of M.S. scrap.
MMPL procures raw material in the form of scrap and waste from
group concerns and suppliers located in Gujarat. The product
portfolio of MMPL consists of M.S. ingots and used moulds.
Products are sold to Gujarat-based customers based on the daily
spot prices prevailing in the market. Mild Steel Ingot
manufacturing industry is characterised by high fragmentation
with presence of large number of unorganised players. There are
several players in Bhavnagar region operating in the same line of
business, leading to lower bargaining power. In FY2016, MMPL
witnessed 24% decline in sales revenue on account of sluggish
market conditions for steel scrap. Debt-to-equity ratio of 7.1
times as on March 31, 2016 has pressurised capital structure of
the company.
Analytical approach:
For arriving at the ratings, ICRA has taken into account the
standalone financial of SBPPL, along with its business risk
profile and the management profile. The company operates as a
standalone entity and doesn't have any subsidiary at present.
Incorporated in 2012, Madhav Metcast Private Limited (MMPL)
manufactures Mild Steel (M.S.) Ingots. Waste and scrap iron and
steel are major raw materials for the company and hence its plant
location in Bhavnagar (Gujarat) provides easy access to raw
material from Alang ship breaking yard. MMPL is promoted by Mr.
Odhav Patel, Mr. Arvind Patel, Mr. Nilesh Patel and Mr. Talshi
Patel along with their family members. The promoters are also
engaged in the business of ship breaking through group concerns
namely Madhav Industrial Corporation and Madhav Steels. They also
run steel rerolling business, through a firm called Madhav Ispat
Rolling Mill.
MAHARSHI RICE: ICRA Reaffirms B+ Rating on INR13cr Loan
-------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating of [ICRA]B+
assigned to INR13.00 crore fund based limits, [ICRA]A4 for
INR0.35 crore non fund based limits of Maharshi Rice Mills
Private Limited. ICRA has also reaffirmed the ratings of [ICRA]B+
to INR3.05 crore (enhanced from 2.80) unallocated limits of
MRMPL. The outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 13.00 [ICRA]B+(Stable) re-affirmed
Non fund Based Limits 0.35 [ICRA]A4 re-affirmed
Unallocated limits 3.05 [ICRA]B+(Stable) re-affirmed
Rationale
The ratings continue to be constrained by MRMPL's small scale of
operations in the rice milling industry, its weak financial
profile characterized by low profitability and high gearing of
3.27 times as on March 31, 2016, moderate coverage indicators
with interest coverage ratio of 2.04 times and NCA/total debt at
7% as on March 31, 2016. The rating is also constrained by low
capacity utilization of about 20% in FY 2016 leading to about 18%
revenue de-growth. The ratings are further constrained by
intensive competitive nature of the rice milling industry
restricting operating margins and agro climatic risks, which can
affect the availability of the paddy in adverse weather
conditions. The ratings are however supported by the long track
record of the promoters in the rice mill business. Further,
favorable demand prospects of the industry with India being the
second largest producer and consumer of rice internationally
augurs well for the firm.
Going forward, the company's ability to improve its capacity
utilization, scale of operations and profitability while manage
its working capital requirements will be key rating
sensitivities.
Key rating drivers
Credit Strengths
* Experienced management with more than 10 years of experience
in the rice industry.
* Rice being a staple food grain and the position of India as
world's second largest producer and consumer, demand prospects
for the industry are expected to remain good.
Credit Weakness
* Small scale of operations in rice mill industry.
* Decline in capacity utilization in FY2016 leading to ~18%
revenue de-growth
* Financial profile of the Company is characterized by low
profitability, high gearing of 3.27 times, modest coverage
indicators with interest coverage ratio of 2.04 times and
NCA/total debt of 7% as on March 31, FY2016
* Agro climatic risks, which can affect the availability of the
paddy in adverse weather conditions.
* Highly competitive nature of the industry with presence of
large number of organized and unorganized players put pressure
on margins.
Description of key rating drivers highlighted above:
The operating income of the company has declined by 18% to
INR39.77 crore in FY 2016 from INR48.53 crore in FY 2015 due to
reduction in capacity utilization levels on account of lower
export sales. ICRA also notes the rice milling industry highly
competitive in nature with presence of large number of organized
and unorganized players and the competition has increased post
abolition of levy system, which resulted in higher supply in the
open market. ICRA notes the company has weak financial profile
characterized by thin margins high gearing of 3.27 times, and
modest coverage indicators with interest coverage ratio of 2.04
times and NCA/total debt of 7% as on March 31, 2016. The revenue
growth and profitability are susceptible to agro climatic risks,
which can affect the availability of the paddy in adverse weather
conditions. ICRA has taken note of promoters long experience in
rice milling industry and favorable demand prospectus of rice
being a staple food grain.
Analytical approach: To arrive at the ratings, ICRA has performed
a detailed evaluation of the issuer's business and financial
risks.
Incorporated in the year 2005, Maharshi Rice Mills Private
Limited (MRML) is engaged in milling of paddy and produces raw
rice and boiled rice. The rice mill is located at Settipalem
village of Nalgonda district, Andhra Pradesh. The installed
production capacity of the rice mill is 16 tons per hour. The
company is promoted by Mr. G. Srinivas and his wife Mrs. G.
Anitha who have more than 13 years experience in rice milling
business.
MRML has reported an operating income of INR39.77 crore and net
profit of INR0.08 crore in FY2016 as against an operating income
of INR48.53 crore and net loss of INR0.01 crore in FY2015.
MALLIKARJUN CONSTRUCTION: CRISIL Reaffirms C Cash Credit Rating
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with
Mallikarjun Construction Co. (MCC) for obtaining information
through letters and emails dated November 11, 2016, December 14,
2016, and March 16, 2017 among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 3 CRISIL C (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 0.5 CRISIL C (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Proposed Short Term 0.5 CRISIL A4 (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Mallikarjun Construction Co.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Mallikarjun Construction Co. is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessin Consistency of Information with Crisil BB Rating
category or lower.' Therefore, on account of inadequate
information and lack of management co-operation, CRISIL is
reaffirming the rating at CRISIL C/CRISIL A4.
MCC was set up as a proprietorship firm in 1985 by Mr. Nelatury
Chuinchu Reddy. It constructs roads and bridges. In December
2004, it was reconstituted as a partnership firm, with Mr.
Reddy's sons, Mr. Malleshwar Reddy and Mr. Mallikarjun Reddy, as
partners.
MARUTI INTERNATIONAL: CRISIL Assigns B+ Rating to INR5MM Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
bank facilities of Maruti International - New Delhi (MI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Cash
Credit Limit 5 CRISIL B+/Stable
The ratings reflect the extensive experience of the promoters and
efficient working capital management. These strengths are
partially offset by moderate financial risk profile and
susceptibility to volatile commodity prices and foreign exchange
(forex) rates.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of Balraj Kumar and Vinod Kumar (BKVK)
and Maruti International (MI). This is because these firms,
collectively referred to as the Balraj group, are under the same
management and in a similar line of business. However, the
financial fungibility is limited.
Key Rating Drivers & Detailed Description
Weakness
* Average financial risk profile: Financial risk profile is
average with total outside liabilities to tangible networth
(TOLTNW) ratio of 3.2 times as of March 2016, and interest
coverage ratio of 2.9 times in fiscal 2016.
* Susceptibility to volatile commodity prices and forex rates:
Operating margin is susceptible to forex fluctuation risks since
the group has significant imports. It mainly imports almonds and
pistachio from the US, Australia, Iran and Turkey, all of which
are billed in USD.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' experience of over three decades and their healthy
relationships with customers should continue to support business
risk profile.
* Efficient working capital management: Working capital cycle
has been managed efficiently, as reflected in low gross current
assets of 23 days as on March 31, 2016, and 40 days over the last
three years.
Outlook: Stable
CRISIL believes the Balraj Group will continue to benefit from
the extensive experience of the promoters. The outlook may be
revised to 'Positive' if higher than expected operating margin
results in significant improvement in debt protection indicators
and net cash accrual. Conversely, the outlook may be revised to
'Negative' if financial risk profile deteriorates on account of
low profitability or revenue, stretch in working capital cycle,
or any large capital expenditure.
MI was set up as a proprietorship firm in April 2006 by Mrs Meenu
Goel, wife of Mr. Vinod Kumar. MI trades in dry fruits.
Net profit was INR0.22 crore on net sales of INR14.39 crore in
fiscal 2016, against net profit of INR0.22 crore on net sales of
INR22.38 crore in fiscal 2015.
NIZAM DECCAN: CRISIL Reaffirms D Rating on INR103.3MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Nizam
Deccan Sugars Limited (NDSL) for obtaining information through
letters and emails dated October 18, 2016, November 21, 2016, and
March 16, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 103.3 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of credit & 0.5 CRISIL D (Issuer Not
Bank Guarantee Cooperating; Rating
Reaffirmed)
Proposed Long Term 48.09 CRISIL D (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Term Loan 33.34 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Nizam Deccan Sugars Limited.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Nizam Deccan Sugars Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with Crisil B Rating
category or lower.' Therefore, on account of inadequate
information and lack of management co-operation, CRISIL is
reaffirming the rating at 'CRISIL D/CRISIL D'.
NDSL, incorporated in 2002, manufactures sugar and extra neutral
alcohol, and generates power. NDSL has three sugar plants in
Telangana. The company also has a distillery unit, and a 20-
megawatt biomass-based power generation plant. Dr. G Ganga Raju
and family (promoters of the Laila group of companies) hold a 51
per cent stake in NDSL; the balance 49 per cent stake is held by
Nizam Sugars Ltd. The Laila group is engaged in diverse
businesses including sugar, paper, nutraceuticals, and education.
PATEL COTTON: ICRA Reaffirms B+ Rating on INR17.80cr Loan
---------------------------------------------------------
ICRA Ratings reaffirms the long-term rating of [ICRA]B+ assigned
to the INR16.00 crore cash credit facility and INR1.80 crore term
loan facility of Patel Cotton. The outlook on long term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 17.80 [ICRA]B+ (Stable)
reaffirmed
Rationale
The reaffirmation of the rating continues to factor in the firm's
weak financial profile marked by modest scale of operation with
de-growth in operations during FY2016, leveraged capital
structure and high working capital intensity. The rating also
factors in the vulnerability of the firm's profitability to agro-
climatic risks and its exposure to stiff competition.
The rating, however, continues to draw comfort from the vast
experience of the promoters in the industry and the logistical
advantage enjoyed by the firm.
Key rating drivers
Credit Strengths
* Promoters' vast experience in the cotton industry
* Favorable location of the plant in the cotton producing belt
of India giving it easy access to raw cotton and cotton seeds
Credit Weakness
* Modest scale of operations with de-growth reported in FY2016
* Weak financial profile of the firm characterised by moderate
profitability, weak capital structure, modest debt protection
metrics and high working capital intensity
* High competitive intensity on account of fragmented nature of
the industry
* Profitability vulnerable to movements of agricultural produce
prices, subject to seasonality and regulatory risk with regard
to MSP
* Risks associated with partnership form of business in terms of
continuity, capital infusions and withdrawals
Description of key rating drivers highlighted above:
The rating reaffirmation continues to take into consideration
PC's modest scale of operation with the de-growth of ~54% in
operations reported during FY2016 resulting from fall in the
sales volumes (from 20,678 MT during FY2015 to 8,626 MT during
FY2016), moderate profitability of 5.71% at operating level in
FY2016 due to limited value-added nature of operations, coupled
with the highly competitive and fragmented industry structure,
adverse capital structure with gearing level of 1.74 times as on
March 31, 2016 and below average coverage indicators as indicated
by the interest coverage of 1.34 times (as against 1.49 times for
FY2015) and NCA/ Total debt of 4% (as against 5% for FY2015) for
FY2016. The rating continues to remain constrained by the
vulnerability of the firm's profitability to the adverse
movements in raw cotton prices, which are subject to seasonality
and crop harvest and the firm's exposure to regulatory risks,
with regard to MSP for raw cotton and imposition of any
restriction on cotton exports. ICRA also notes that with PC being
a partnership firm, any substantial withdrawal from the capital
account by the partners would adversely impact the net worth and
thereby the firm's capital structure.
The rating, however, continue to favorably consider the vast
experience of the promoters in the cotton industry and the
locational advantage of the firm by virtue of its location in the
cotton-producing belts of Gujarat.
ICRA expects PC's revenue growth will be subject to the better
monsoon and output of cotton going forward. The profitability is
expected to remain subdued in the coming years on account of low
value addition of operations and the competitive intensity
present in the industry. Further, the ability of the firm to
scale up its operations while managing working capital
requirements and withstand any adverse changes in the cotton
price would remain key rating sensitivities.
Established in 2006 as a partnership firm, Patel Cotton is in the
business of ginning and pressing of raw cotton. PC's
manufacturing facility is located at Rajkot in Gujarat and is
equipped with 50 double rolling ginning machines and 1 pressing
machine with total production capacity to manufacture ~11,700
metric tonne of ginned cotton per year. The firm is promoted and
currently managed by Mr. Vasant Goti, Mr. Rameshchandra Patel and
Mr. Savji Bhut, who have nearly two decade long experience in the
cotton industry.
During FY2016, PC reported an operating income of INR41.96 crore
and profit after tax of INR0.25 crore as against the operating
income of INR91.86 crore and profit after tax of INR0.44 crore in
FY2015.
PILANIA INDUSTRIES: CRISIL Reaffirms B+ Rating on INR10MM Loan
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Pilania
Industries (India) Pvt Ltd (PIIPL) for obtaining information
through letters and emails dated November 11, 2016, December 14,
2016, and March 16, 2017 among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 10 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Pilania Industries (India) Pvt
Ltd. This restricts CRISIL's ability to take a forward looking
view on the credit quality of the entity. CRISIL believes that
the information available for Pilania Industries (India) Pvt Ltd
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with Crisil B Rating
category or lower.' Therefore, on account of inadequate
information and lack of management cooperation, CRISIL is
reaffirming the rating to CRISIL B+/Stable.
PIIPL, incorporated in 2006, manufactures thermo-mechanically
treated (TMT) bars. The company commenced its commercial
operations from May 2010 onwards. Mr. Manish Agrawal, Mr. Kailash
Chand Agrawal, Mr. Ram Bhagat Agarwal, and Mr. Sanjay Agarwal are
the directors of the company. PIIPL was initially manufacturing
TMT bars under the Prime Gold' brand. From 2013 onwards, it has
been manufacturing TMT bars for Jindal Saw Ltd.
RAJAVE TEXTILES: CRISIL Reaffirms D Rating on INR50MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Rajave
Textiles Private Limited (RTPL) for obtaining information through
letters and emails dated November 21, 2016, December 22, 2016 and
March 16, 2017, among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.05 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 50.00 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of Credit 8.00 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Long Term Loan 12.29 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 10.10 CRISIL D (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Rajave Textiles Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Rajave Textiles Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with Crisil B
Rating category or lower.' Therefore, on account of inadequate
information and lack of management co-operation, CRISIL is
reaffirming the rating at CRISIL D/CRISIL D.
Incorporated in 1995 and promoted by Mr. S Ravindran, RTPL
manufactures cotton yarn of counts ranging from 18s to 40s. The
company's spinning mill is in Coimbatore (Tamil Nadu).
REGEN INFRASTRUCTURE: ICRA Ups Rating on INR20cr LT Loan to B-
--------------------------------------------------------------
ICRA Ratings has upgraded the long term rating assigned to the
INR20 crore fund based limit and INR20 crore non-fund based limit
of Regen Infrastructure and Services Private Limited (RISPL
erstwhile Renewable Energy Generation Private Limited) from
[ICRA]B- to [ICRA]BB-. The short term rating assigned to the
INR20 crore non-fund based limit (interchangeable with long term
non-fund based limit) has been reaffirmed at [ICRA]A4. The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Bank
Limits (Long-term) 20.00 Upgraded from [ICRA]B-
to [ICRA]BB- (Stable)
Non-Fund Based Bank
Limits (Long-term/
Short-term) 20.00 Upgraded from [ICRA]B-
to [ICRA]BB- (Stable);
reaffirmed at [ICRA]A4
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with RISPL, 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 RISPL along with its holding company - Regen Powertech Private
Limited (rated [ICRA]BB (Stable)/ [ICRA]A4) - since both operate
in the same line of business, have operational linkages and share
a common management.
RISPL, incorporated in January 2008, is a wholly owned subsidiary
of Regen Powertech Private Limited (RPPL). This company primarily
handles the infrastructure requirements in commissioning a WTG,
including facilitation of land acquisition, and the civil works
w.r.t. erection and commissioning of WTGs supplied by RPPL.
SAI SWADHIN: ICRA Assigns B- Rating to INR5cr Cash Loan
-------------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]B- to the
INR3.75 crore term loan facilities and INR5.00 crore cash credit
facility of Sai Swadhin Commercials Private Limited. The outlook
on the long-term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund-
based: Term Loans 3.75 [ICRA]B- (Stable)/assigned
Long term: Fund-
based: Cash Credit 5.00 [ICRA]B- (Stable)/assigned
Rationale
The assigned ratings take into account SSCPL's small scale of
current operations with limited track record of the entity,
exposure to stabilization risk given the capacity utilization of
its units remains low, weak financial profile as reflected in low
profitability indicators, adverse capital structure and weak debt
coverage indicators, and exposure to risk related to availability
and price as the raw materials are essentially an agricultural
produce.
The rating, however, favorably takes into account long experience
of the promoters in oil extraction business through its group
entities, and locational advantage due to its proximity to key
rice bran and cashew nut producing regions, thus ensuring
availability as well as save on freight expenses.
Going forward, the ability of the company to improve the
utilisation of its facilities, profitability along with effective
management of working capital will be the key rating
sensitivities.
Key rating drivers
Credit strengths
* Experience of the promoters in oil extraction business through
the group entities
* Locational advantage due to its proximity to key rice bran and
cashew nut producing regions, thus ensuring availability as
well as save on freight expenses
Credit weaknesses
* Weak financial profile as reflected by low profitability,
adverse capital structure and weak debt coverage indicators
* Small scale of current operations with limited track record of
the entity
* Exposure to stabilization risk given the low capacity
utilization of its units
* Exposed to risk related to availability and price of raw
materials, which are essentially an agricultural produce.
Description of Key Rating Drivers:
Incorporated in 2008, SSCPL is engaged in the extraction of crude
rice bran oil and cashew nut shell liquid. The company commenced
operations from April 2015 onwards from its facilities based out
of Ganjam district in Odisha. The company has an installed
capacity of 37,500 metric tons per annum (mtpa) each for rice
bran oil and cashew nut shell liquid. The capacity utilization
remained low during FY2016 and H1 FY2017. The key raw materials
required are rice bran and cashew outer shell which are easily
available in Odisha.
Sai Swadhin Commercials Private Limited (SSCPL) was incorporated
in 2008 and is engaged in the extraction of crude rice bran oil
and cashew nut shell liquid. The company commenced operations
from April 2015 from its facilities located in Ganjam district of
Odisha.
SARATHY COFFEE: CRISIL Reaffirms 'B' Rating on INR2.33MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Sarathy
Coffee Curing Works (SCCW) for obtaining information through
letters and emails dated November 11, 2016, December 14, 2016,
and March 16, 2017 among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B/Stable (Issuer
Not Cooperating; Rating
Reaffirmed)
Export Packing 1.7 CRISIL A4 (Issuer Not
Credit Cooperating; Rating
Reaffirmed)
Foreign Bill 1.0 CRISIL A4 (Issuer Not
Discounting Cooperating; Rating
Reaffirmed)
Proposed Long Term 2.33 CRISIL B/Stable (Issuer
Bank Loan Facility Not Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Sarathy Coffee Curing Works.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Sarathy Coffee Curing Works is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with Crisil B Rating
category or lower.' Therefore, on account of inadequate
information and lack of management co-operation, CRISIL is
reaffirming the rating at 'CRISIL B/Stable/CRISIL A4'.
Set up in 1996 and based in Chikmagalur (Karnataka), SCCW is a
proprietorship firm promoted by Mr. A N Devraj. The firm is
engaged in curing and processing of raw coffee into coffee beans.
SAVFAB DEVELOPERS: ICRA Hikes Rating on INR35cr LOA to C+
---------------------------------------------------------
ICRA Ratings has upgraded the long-term rating from [ICRA]D to
[ICRA]C+ for the INR35.00-crore fund-based facility of Savfab
Developers Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 35.00 [ICRA]C+; revised
from [ICRA]D
Rationale
The rating upgrade takes into account the improvement in the
company's debt servicing from November 2016. The ratings,
however, continue to be constrained by the company's exposure to
execution risk as the project is in the intermediate stages of
construction. The ratings further take into account the large
repayment starting from July 2017, which may lead to cash flow
mismatches and dependence on promoter funds in the event of weak
incremental sales. Sales velocity has remained modest across the
company's project. The company has to undertake sales of residual
inventory to bridge the gap between committed receivables and
payables. ICRA, however, notes the extensive experience of the
promoters. Going forward, the ability of the company to refinance
its debt obligations or arrange funds to support liquidity and
cashflow management will be the key rating sensitivity.
Key rating drivers
Credit strengths
* Part of Saviour group which has been in the real estate
business in NCR; extensive experience of promoters
* Low approval risks for SBPL's ongoing project
* Improved debt servicing since November 2016
Credit weaknesses
* Exposure to execution risk as one out of three towers is in
the intermediate stages of construction and the other two
at final stages of construction
* Large repayment obligation in FY2018 may lead to cash flow
mismatches and dependence on promoter funds in the event of
weak incremental sales and collections; the company also plans
to refinance the loan
* Like other real estate players, the company is exposed to the
risk of demand slowdown and market risk as sizeable area,
largely in the recently launched projects, is yet to be booked
Description of key rating drivers:
SDPL is developing a residential project called "Jasmine Grove"
at Village Mehrauli, NH-24, Ghaziabad, which has 370 residential
flats of differing dimensions - 2BHK, 3BHK and 4BHK. Construction
of the project started in Nov'13 at a cost of INR163.23 crore.
The company is facing funding pressures due to weak sales and
limited moratorium available on debt. Sales velocity of the
company has remained modest, with 41% bookings till 11M FY2017;
two out of three towers are in the possession stage. The company
has to spend INR52.31 crore for execution, in addition to
repaying the outstanding debt of INR31 crore. The cash accrual of
the company seems insufficient to pay the large repayments in
FY2018, which may lead to cash flow mismatches and dependence on
promoter funds in the event of weak incremental sales. The debt
repayment would commence from July 2017, with INR5 crore due for
the next seven quarters. Going forward, the ability of the
company to refinance its debt obligations or arrange funds to
support liquidity and cash flow management will be the key rating
sensitivity.
Incorporated in 2012, SDPL is developing a residential project
called "Jasmine Grove" at Village Mehrauli, on NH-24, Ghaziabad,
Uttar Pradesh. In the last year, the company increased the scope
of the project to 517 flats from the originally envisaged 370
flats. The company is part of the Saviour group, which is
promoted by Mr. Dhanesh Goel and Mr. Vineet Goel, who have been
executing projects in NCR for many years.
SHANTINIKETAN ASHRAYA: CRISIL Assigns B+ Rating to INR10MM Loan
---------------------------------------------------------------
CRISIL Ratings has assigned 'CRISIL B+/Stable' rating to the bank
loan facility of Shantiniketan Ashraya (SA).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 10 CRISIL B+/Stable
The ratings reflect exposure to implementation, funding and
demand risks, susceptibility to intense competition and
cyclicality inherent in the real estate industry. These
weaknesses are partially offset by the extensive experience of
partners and healthy sales of past projects.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to implementation, funding, and demand risks for
ongoing project: The firm is constructing a new project at a
total cost of INR27 crore. Its timely completion and sale of
apartments will determine the liquidity.
* Susceptibility to intense competition and cyclicality inherent
in real estate industry: Real estate industry is highly
fragmented and the firm is susceptible to intense competition and
will remain vulnerable to economic cycles.
Strengths
* Partners' extensive experience and healthy sales of past
projects: Partners have close to 4 decades of experience in real
estate development. The past projects have seen healthy sales.
Outlook: Stable
CRISIL believes SA will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of higher-than-anticipated cash accrual,
leading to better liquidity. The outlook may be revised to
'Negative' in case of lower-than-expected cash accrual, or
larger-than-expected debt-funded capital expenditure, resulting
in weakening of the financial risk profile, particularly
liquidity.
Set up in 2010, SA is engaged in real estate development. The
operations are managed by Mr. Anil Kumar Seth.
SA reported a profit after tax was INR21.39 lakh on revenue of
INR17.71 crore for fiscal 2016, vis-a-vis a profit after tax of
INR17.49 lakh on revenue of INR26.53 crore for fiscal 2015.
SHARP TANKS: CRISIL Lowers Rating on INR7MM Bank Loan to B+
-----------------------------------------------------------
CRISIL Ratings has been consistently following up with Sharp
Tanks and Structurals Private Limited (STSPL) for obtaining
information through letters and emails dated November 9, 2016,
December 15, 2016 and March 16, 2017, among others, apart from
telephonic communication. However, the issuer has remained
non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 26 CRISIL A4 (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+)
Cash Credit 7 CRISIL B+/Stable (Issuer
Not Cooperating; Downgraded
from 'CRISIL BB/Stable')
Letter of Credit 5 CRISIL A4 (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Sharp Tanks and Structurals
Private Limited. This restricts CRISIL's ability to take a
forward looking view on the credit quality of the entity. CRISIL
believes that the information available for Sharp Tanks and
Structurals Private Limited is inconsistent with "CRISIL BB
rating category' and is more consistent with 'Scenario 1'
outlined in 'Framework for Assessing Consistency of Information
with 'CRISIL B rating category or lower.' Therefore, on account
of inadequate information and lack of management cooperation,
CRISIL is downgrading the rating to "CRISIL B+/Stable/CRISIL A4"
Incorporated in 1987, STSPL designs, fabricates, and erects high-
pressure and stainless steel storage tanks, spheres and heat
exchangers. The company mainly caters to oil & gas,
petrochemical, chemical, fertiliser and pharmaceutical sectors.
The company generates a substantial portion of its revenue from
field work, wherein raw materials are usually supplied by
clients. The company also manufactures medium-to-heavy storage
tanks from its fabrication facility at Tarapur in Maharashtra.
The company is promoted by Mr. VV Nair.
SHRI SANT: CRISIL Reaffirms B- Rating on INR12.5MM LT Loan
----------------------------------------------------------
CRISIL Ratings has been consistently following up with Shri Sant
Damaji Sahakari Sakhar Karkhana Limited (SSDSSK) for obtaining
information through letters and emails dated November 11, 2016,
December 14, 2016, and March 16, 2017 among others, apart from
telephonic communication. However, the issuer has remained
non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 12.5 CRISIL B-/Stable (Issuer
Not Cooperating; Rating
Reaffirmed)
Proposed Long Term 0.5 CRISIL B-/Stable (Issuer
Bank Loan Facility Not Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Shri Sant Damaji Sahakari
Sakhar Karkhana Limited. This restricts CRISIL's ability to take
a forward looking view on the credit quality of the entity.
CRISIL believes that the information available for Shri Sant
Damaji Sahakari Sakhar Karkhana Limited consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with Crisil B Rating category or lower.'
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL is reaffirming the rating at
'CRISIL B-/Stable'.
SSDSSK, set up in 1989, is a cooperative sugar mill situated at
Mangalveda in Solapur (Maharashtra). It manufactures sugar and
allied products. The day-to-day operations of the society are
managed by its chairman, Mr. Shivajirao Kalunge, along with
support from other functional personnel.
SHRI SODE: ICRA Assigns 'D' Rating to INR21cr Term Loan
-------------------------------------------------------
ICRA Ratings has assigned a rating of [ICRA]D to the INR21 crore
term loan facilities of Shri Sode Vadiraja Mutt Education Trust.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund
Based-Term Loan 21.0 [ICRA]D assigned
Rationale
The assigned rating factors in the delays in meeting interest and
principal repayment obligations by the Trust on account of low
cash accruals due to nascent stage of operations and tight
liquidity conditions owing to lumpiness in cash flows which lead
to short-term liquidity mismatches. The rating is also
constrained by the Trust's weak financial profile which is
characterized by accumulated losses, highly stretched capital
structure and weak coverage indicators. Further in the backdrop
of weak accruals, trust's reliance on unsecured loans also
increased steadily over the last three years which coupled with
accumulated net losses, have translated into a weak financial
profile characterized by high levels of leverage as evident by
total debt of INR46.4 crore as on March 31, 2016 against revenue
receipts of INR13.0 crore and negative cash accruals of INR0.11
crore for FY2016. The rating also considers the intense
competition prevalent in the industry which impacts the Trust's
ability to hire and retain experienced faculty.
The rating factors in the significant experience of trust in the
education sector, the favorable demand outlook for higher
education in India and the healthy occupancy levels in the last
three fiscals indicating the development of SMVITM as a good
brand which is expected to drive revenue growth going forward.
Notwithstanding the improvement in occupancy levels of the trust
in AY2016 & AY2017, the extent of improvement in accruals remains
to be seen given that 80% of the seats are surrendered to the
State government entrance quota, wherein the fees charges are
relatively lower than the management quota. Going forward,
ability of the Trust to maintain its occupancy levels, whilst
pushing up its management quota would be critical to support cash
flows to meet the high debt repayment (~INR3.5 - INR5.5 crore
p.a.) obligations over the medium term. In the event that the
Trust is unable to scale up operations, timely equity infusion in
the form of corpus fund or unsecured loans would be imperative to
ensure prompt debt servicing and improving the credit profile of
the Trust.
Key rating drivers
Credit Strengths
* Significant experience of the trust in the education sector
* All the courses have witnessed good occupancy levels
indicating the development of SMVITM as a good brand
* Favorable demographics likely to drive demand for higher
education sector in India
Credit Weakness
* Delays in servicing principal repayment obligations owing to
lumpiness in cash flows which led to short-term liquidity
mismatches
* Financial profile characterized by accumulated losses and
highly stretched debt indicators;
* Pressure to attract and retain experienced faculty due to
intense competition
Description of key rating drivers:
SSVMET is currently running one engineering college, Shri Madhwa
Vadiraja Institute of Technology and Management (SMVITM) in
Bantakal, Udupi. Established in the year 2011, only two B Tech
batches have graduated till 2016. However the fact that the mutt
has been running several educational institutes in the region
lends the trustees reasonable experience in the field of
education. The college has witnessed healthy occupancy as
indicated by robust growth in student intake which increased from
122 in the first batch (AY2011) to 390 in the current batch
(AY2017) buoyed by healthy demand for higher education from rural
populace in the villages in and around Udupi district. The trust
recognizes revenue from five main sources which are tuition fees,
special fees, hostel fees, mess fee and transportation fees. It
derives majority of its revenues from tuition fees collected from
the students, which contributes to around 58% of the total
receipts collected by trust during the last three fiscals.
Over the medium term, the demand for higher education in India is
expected to remain healthy given the favorable demographic
profile, rising income levels of the middle class, urbanization
and availability of better financing options. However, the
ability of the college to attract and retain quality talent would
be critical in maintaining its occupancy levels in the highly
competitive education sector.
Shri Sode Vadiraja Mutt Education Trust was incorporated in the
year 2009 and manages an engineering college named by Shri Madhwa
Vadiraja Institute of Technology and Management (SMVITM), in
Udupi district, Karnataka. The college started functioning from
July 2011 and is affiliated to Visvesvaraya Technological
University (VTU) and is also AICTE approved (All India Council
for Technical Education) and recognized by Government of
Karnataka. The trust was formed by Shree Vishwa Vallabha Theertha
Swamiji for undertaking educational and research activities. The
members of the trust are Shree Vishwa Vallabha Theertha Swamiji,
Shri P. Srinivas Tantry and Shri Rathna Kumar. The main objective
of the trust is to set up and operate government aided and
private courses/programs in the field of technical education,
training and research in engineering and technology.
For the financial year 2015-16, the trust reported a net deficit
of INR3.7 crore on operating receipts of INR13.0 crore.
SPECIALITY SILICA: CRISIL Reaffirms B+ Rating on INR9.50cr Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating to the long-term bank
facilities of Speciality Silica Private Limited at 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.75 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3.00 CRISIL B+/Stable (Reaffirmed)
Term Loan 9.50 CRISIL B+/Stable (Reaffirmed)
The business risk profile benefits from healthy demand from the
medium and heavy commercial vehicle segment, in which key
customers such as J K Tyre & Industries Ltd and Apollo Tyre Ltd
are the market leaders. The operating margin has been declining
on account of increasing overhead costs and volatile chemical
prices. Any further increase in these would remain a key
sensitive factor.
Liquidity is moderate. The bank limit was utilised at an average
of around 90% during the 12 months through December 2016. Cash
accrual is expected to be sufficient to meet repayment
obligation. In case of any mismatch, need-based fund support from
the promoters is likely for meeting the shortfall.
Analytical Approach
CRISIL has treated unsecured loans as neither debt nor equity as
they are interest-free, and the management has indicated that the
loans will remain in the company to support the business.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations in the intensely competitive and
commoditised precipitated silica industry: The domestic market
for precipitated silica comprises rubber-grade segments, such as
tyres, rice rollers, and footwear. There are a few large players,
such as Insilco Ltd, Madhu Silica Pvt Ltd, and Gujarat Multi Gas
Base Chemicals Pvt Ltd. There are also a large number of medium
to small players that cater to the requirement of specific
segments.
SSPL, with an installed capacity of 6000 tonne per annum (tpa),
is one of the smaller players. Moreover, unlike larger players
that have a diversified product profile, the company manufactures
rubber-grade speciality silica and caters primarily to tyre
manufacturers. The demand for silica is linked to demand in this
industry. The intensely competitive and commodity-like nature of
the industry will constrain the company's business risk profile
over the medium term because of its small scale of operations.
* Large working capital requirement: Debtor realisation is 75-85
days and average inventory holding is 50 days. The credit period
offered by suppliers is, however, one month. Thus, there's high
dependence on the bank line to meet working capital requirement,
as reflected in average bank limit utilisation of 90% during the
12 months through December 2016.
Strengths
* Established position of the promoters in the chemicals
business: The promoter family has been associated with the
chemical business for the past 60 years. Apart from SSPL, the
promoters operate two proprietorship firms, Unitex Dyechem and
Ravi Enterprises. Both entities manufacture various organic and
inorganic chemicals, dyes, and pigments, primarily for the tyre
and paint industries. The group has a reputed clientele,
including major tyre manufacturers, such as JK Tyre Ltd,
Bridgestone India Ltd, Birla Tyres Ltd, and Apollo Tyres Ltd
(rated 'CRISIL AA+/Stable/CRISIL A1+'), from which the company
gets regular business. Around 80% of the revenue is generated
through sales to tyre manufacturers. The extensive industry
experience of the promoters should aid revenue growth, over the
medium term.
* Moderate financial risk profile: The financial risk profile
has continuously improved driven by ramp-up in operations, and
continuous unsecured loans from the management. The total outside
liabilities to adjusted networth ratio was healthy of 3.4 times
as on March 31, 2016, and is expected to improve over the medium
term supported by unsecured loans. These loans are treated as
neither debt nor equity as they are interest-free, and the
management has indicated that the loans will remain in the
company to support working capital requirement.
The financial risk profile is expected to remain constrained by a
modest networth due to annual net losses driven by significant
interest cost following high cash credit utilisation. However,
unsecured loans committed by the promoters should support the
financial risk profile over the medium term.
Outlook: Stable
CRISIL believes SSPL will continue to benefit from the extensive
industry experience of the promoters and their funding support.
The outlook may be revised to 'Positive' if the financial risk
profile improves, most likely because of a more-than-expected
increase in the scale of operations and improvement in
profitability, along with continued funding support from the
promoters. The outlook may be revised to 'Negative' if the
financial risk profile, particularly liquidity, deteriorates,
most likely because of lower-than-expected cash accrual or a
stretch in the working capital cycle.
Set up in 2004, SSPL is promoted by Mr. Ravi Soni, who has been
associated with the chemicals industry for around three decades.
The company produces precipitated silica with capacity of 6000
tpa. Currently, it primarily manufactures rubber-grade silica and
silica for dental care. The company commenced production in
fiscal 2009.
Net loss and net sales were INR3 lakh and INR20.10 crore,
respectively, in fiscal 2016, against INR34 lakh and INR18.62
crore, respectively, in the previous fiscal.
SURGICARE CENTRE: CRISIL Reaffirms B+ Rating on INR0.25MM Loan
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Surgicare
Centre & Hospital (SCH) for obtaining information through letters
and emails dated November 11, 2016, December 14, 2016, and March
16, 2017 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 0.25 CRISIL B+/Stable (Issuer
Not Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Surgicare Centre & Hospital.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Surgicare Centre & Hospital is
consistent with 'Scenario 1 outlined in 'Framework for Assessing
Consistency of Information with Crisil B Rating category or
lower.' Therefore, on account of inadequate information and lack
of management Cooperation, CRISIL is reaffirming the rating to
'CRISIL B+/Stable
Set up in 1994, Kerala-based SCH operates a hospital in Kanhangad
with 80 beds; LMG also operates an 80 bed hospital in Kanhangad.
The day-to-day operations of the group are managed by the
partners Dr. M V Sasidharan his wife, Dr. C M Sathidevi and his
daughter, Dr. Sheetal.
TIRUPATI COTTON: ICRA Reaffirms B+ Rating on INR24cr Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ on
the INR24.00-crore working capital facility of Tirupati Cotton
(TC). ICRA has also reaffirmed the short-term rating of [ICRA]A4
on the INR1.25-crore forward contract limit of TC. The outlook
assigned on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 24.00 [ICRA]B+ (Stable); Reaffirmed
Non-fund Based Limits 1.25 [ICRA]A4; Reaffirmed
Rationale
The rating reaffirmation is constrained by the intense
competition witnessed by the firm because of the highly
fragmented industry structure due to low-entry barriers and low
product differentiation. The ratings also take into account the
decline in revenue in FY2016 owing to drop in realisations, low
profitability, stretched capital structure and weak debt coverage
indicators. The rating also takes note of the vulnerability of
the firm's profit margins to raw material (cotton) prices, which
are subject to seasonality, crop harvest and regulatory risks.
The rating, however, continues to favorably factor in the
proximity of the firm's manufacturing unit to raw material
source, easing procurement. The rating also draws comfort from
the long experience of the partners in the cotton ginning
industry.
The firm's ability to increase its scale of operation, maintain
adequate profitability and improve its capital structure, given
the seasonality in the business, volatility in prices of cotton
bales, intense competition and high working capital requirement
will remain crucial for the credit metrics. ICRA also notes that
TC is a partnership concern and any substantial withdrawal from
the capital account in future could adversely impact the credit
profile of the firm.
Key rating drivers
Credit strengths
* Long experience of the partners in the cotton ginning industry
* Proximity of the manufacturing unit to the cotton producing
belt of Gujarat provides regular and easy access to raw
materials
Credit weaknesses
* Decline in FY2016 revenue by 11.6% owing to lower realizations
* Financial profile characterised by low profitability,
stretched capital structure as well as weak debt coverage
metrics
* Limited value addition, highly competitive and fragmented
industry structure due to low-entry barriers restricting
pricing flexibility
* Risk of capital withdrawal inherent in partnership nature of
the firm.
Description of key rating drivers highlighted above:
TC gins and presses raw cotton to produce cotton bales and cotton
seeds. The firm's financial profile is characterised by low
profitability on account of lower sales realisations. Higher
inventory holdings in FY2016 weakened the liquidity position,
resulting in high working capital requirement, which further
impacted the capital structure as most of the working capital was
funded through bank borrowings.
The firm procures Shankar-6 quality of raw cotton either directly
from local farmers or from agriculture marketing yards. Raw
cotton is procured between September and April, when the supply
is generally high. TC's sales proceeds are made in the domestic
as well as exports markets. The firm's revenue is largely
dependent on the sales of cotton bales. Sales of cotton bales are
channeled through brokers/agents.
The cotton ginning industry is highly fragmented due to the
presence of numerous players operating in Gujarat, leading to
high competition. The industry is also exposed to regulatory
risks with the Government imposing MSP for the purchase of raw
cotton during over-supply in the market and restricting export of
cotton bales in order to support the domestic cotton textile
industry.
Analytical approach:
For arriving at the ratings, ICRA has taken into account the debt
servicing track record of TC, its business risk profile,
financial risk drivers and management profile.
Established in 2007, Tirupati Cotton (TC) is a partnership firm
and is owned and managed by Mr. Chandrakant Kasundra, Mr. Ramesh
Makadia and Mr. Natvar Makadia along with five other partners. TC
currently gins and presses raw cotton to produce cotton bales and
cotton seeds. The manufacturing unit is located in Shapar, Rajkot
district of Gujarat and is currently equipped with 30 ginning
machines and one pressing machine, with an installed capacity to
produce 325 cotton bales per day (24 hours operation).
TRIMURTI FLOUR: CRISIL Reaffirms C Rating on INR4.5MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Trimurti
Flour Mill Private Limited (TFMPL) for obtaining information
through letters and emails dated November 21, 2016, December 22,
2016 and March 16, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit-Book 1.5 CRISIL C (Issuer Not
Debt Cooperating; Rating
Reaffirmed)
Cash Credit-Stock 4.5 CRISIL C (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 3 CRISIL C (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Trimurti Flour Mill Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Trimurti Flour Mill Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with Crisil B
Rating category or lower.' Therefore, on account of inadequate
information and lack of management co-operation, CRISIL is
reaffirming the rating at 'CRISIL C'.
Incorporated in 2010, TFMPL started commercial operations in
February 2014. The company is engaged in processing of wheat at
its facility in Patna. The day-to-day operations of the company
are managed by Mr. Abhishek Sinha.
UPL ENVIRONMENTAL: CRISIL Cuts Rating on INR14MM Cash Loan to B
---------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of UPL Environmental Engineers Limited (UPL) to 'CRISIL
B/Stable' from 'CRISIL B+/Stable', and reaffirmed the short-term
rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 30 CRISIL A4 (Reaffirmed)
Cash Credit 14 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects deterioration in liquidity due to stretch
in working capital cycle following delay in realisation of
receivables; reflected in gross current assets (GCAs) of 453 days
as on March 2016. Working capital cycle is expected to remain
stretched as on March 31, 2017. The downgrade also reflects
further weakening of business performance on account of decline
in revenue in fiscal 2017 because of slowdown in execution of
projects.
The ratings reflect UPL's large working capital requirement, and
susceptibility of revenue and profitability to tender-based
operations and capital spending pattern in end-user industries.
These weaknesses are partially offset by established market
position and track record of successful implementation of waste
management project.
Key Rating Drivers & Detailed Description
Weakness
* Large working capital requirement: Receivables were 380 days
as on March 31, 2016 (over 300 days in the past four years),
leading to large GCAs of 453 days.
* Susceptibility of revenue and profitability to tender-based
operations and capital spending pattern in end-user industries:
Orders are awarded by government undertakings based on tenders
submitted by bidders, which limits UPL's bargaining power.
Strengths
* Established market position and track record of successful
implementation of waste management project: UPL is a subsidiary
of Tatva Global Water Technologies Pvt Ltd (TGWT) and a part of
the UPL group. The company executes solid and liquid waste
management projects that it gets directly from government
undertakings or through associate companies. It has experience of
more than 15 years in solid and liquid waste management.
Outlook: Stable
CRISIL believes UPL will continue to benefit over the medium term
from its established market position and promoters' funding
support. The outlook may be revised to 'Positive' if improvement
in working capital cycle because of faster collection of
receivables leads to better liquidity. The outlook may be revised
to 'Negative' if stretched receivables, pressure on revenue or
profitability, or large debt-funded capital expenditure weakens
financial risk profile, particularly liquidity.
Incorporated in 1994, UPL is a subsidiary of TGWT and undertakes
turnkey projects for waste water management, solid/liquid waste
management, and operations and maintenance of waste management
facilities.
Profit after tax (PAT) was INR3.34 crore on net sales of INR81.96
crore in fiscal 2016, against a PAT of INR6.36 crore on net sales
of INR91.43 crore in fiscal 2015.
WHITEGOLD CERAMICS: ICRA Reaffirms B- Rating on INR3cr Loan
-----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B- on
the INR1.89-crore term loan facility and the INR3.00-crore cash
credit facility of Whitegold Ceramics Private Limited. ICRA has
also reaffirmed the short-term rating of [ICRA]A4 on the INR1.85-
crore non-fund based bank guarantee facility of WCPL. The outlook
assigned on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Term
Loan 1.89 [ICRA]B- (Stable) reaffirmed
Fund-based Cash
Credit 3.00 [ICRA]B- (Stable) reaffirmed
Non-fund based
Bank Guarantee 1.85 [ICRA]A4 reaffirmed
Rationale
The rating reaffirmation continues to be constrained by WCPL's
modest operating scale and revenue decline in FY2016 primarily on
account of diminishing volume and realisations due to low
domestic demand. The ratings are further constrained by the
company's weak financial profile, evident from losses at net
levels as the operating profit was offset by high interest and
depreciation expenses, high gearing level, high Total Outside
Liabilities to Tangible Net Worth ratio (TOL/TNW) and weak
interest coverage indicators. The ratings also take into account
stretched working capital intensity, resulting from significantly
higher year-end inventory level and elongated revenue cycle.
However, higher payables give comfort to its working capital
cycle to some extent. Further, the ratings 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 the vulnerability of the company's performance of its
key consuming sector - the real estate industry. The ratings also
factors in company's vulnerability to adverse movements in prices
of key input materials and gas.
The ratings, however, favourably takes into consideration the
experience of the key promoters of Whitegold Ceramics Private
Limited (WCPL) in the ceramic industry as well as the locational
advantage, which entails easy availability of raw material by
virtue of being situated in Morbi (Gujarat).
ICRA expects WCPL's operating income to grow in anticipation of
increase in export volumes. Furthermore, the operating
profitability would remain healthy due to savings in fuel costs
because of increase in usage of coal-generated gas. The
profitability at net levels is expected to improve, resulting
from lower depreciation and reduce finance costs on account of
term loan repayments. However, any delay in realisation from
debtors and inventory pile up to support the growing scale of
operations would impact the company's working capital intensity;
these factors would also be the key rating sensitivity.
Key rating drivers
Credit strengths
* Extensive 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
* Modest scale of operations; decline in revenues in FY2016
* Weak financial profile characterized by losses at net level,
leverage capital structure, weak coverage indicators and high
working capital intensity
* Stretched liquidity on account of high inventory accumulations
and slowdown in debtor realization
Description of key rating drivers highlighted above:
WCPL's financial profile is characterised by high working capital
intensity as reflected by NWC/OI ratio of 30.26% as on March 31,
2016, arising from high inventory level and elongated revenue
cycle. The company maintains high raw material inventory of two
to three months in anticipation of demand. Procurement is done
against a credit period of around 120 days; however, it remained
high on year-end due to sluggish market demand and delay in
realisations from debtors. Due to working capital-intensive
business, the company funds its working capital requirements
largely through borrowings from bank and its creditors. The
capital structure of the company is moderately high because of
high borrowings and deterioration of net worth, resulting from
losses at net levels. Furthermore, the company's subdued
profitability has led to weak interest coverage indicators as
reflected in the OPBDITA/Interest and Finance Charges ratio of
1.56 times in FY2016 compared to 2.06 times in FY2015.
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, the
application of coal-based gasifier for meeting the fuel
requirements is expected to alleviate cost pressures and increase
the margins.
WCPL's promoters have a long experience in the ceramic industry.
Furthermore, the favourable location of the company provides it
easy access to quality raw materials.
Analytical approach:
For arriving at the ratings, ICRA has taken into account the debt
servicing track record of WCPL, its business risk profile,
financial risk drivers and management profile.
Whitegold Ceramics Private Limited (WCPL), established in
September 2010, is a private limited company promoted by Mr. Jay
Bhatt and Mr. Niral Patel. Later in 2013, WCPL was taken over by
Mr. Kishor Detorja and Mr. Alpesh Patel and their relatives and
friends. The company started manufacturing digitally printed
ceramic wall tiles from May 2011. It's manufacturing plant is
located at Morbi, Gujarat and has an installed capacity to
produce 24,52,800 boxes of ceramic wall tiles per annum in sizes
12"X18" and 12"X24".
=================
I N D O N E S I A
=================
INDIKA ENERGY: Moody's Hikes CFR to B2 After Successful Raising
---------------------------------------------------------------
Moody's Investors Service has upgraded the corporate family
rating (CFR) of Indika Energy Tbk (P.T.) (Indika) to B2 from Caa1
following the successful raising of $265 million of new notes to
refinance outstanding notes of $171 million, which mature in
May 2018.
At the same time, Moody's also upgraded the ratings on the
$171 million senior secured notes issued by Indo Energy Finance
B.V., the $500 million senior secured notes issued by Indo Energy
Finance II B.V., and the $265 million senior secured notes issued
by Indika Energy Capital II Pte Ltd to B2 from Caa1. All notes
are unconditionally and irrevocably guaranteed by Indika and rank
pari passu.
The outlook on the ratings is stable.
This action concludes the review for upgrade initiated on
March 27, 2017.
RATINGS RATIONALE
"The upgrade of Indika's ratings reflects the significant
improvement in the company's liquidity profile and debt maturity
profile following the successful refinancing of its 2018 notes,"
says Rachel Chua, a Moody's Assistant Vice President.
On April 10, 2017, Indika issued $265 million of new senior
secured notes due 2022, the net proceeds of which will be used to
fully redeem the current outstanding notes of $171 million
maturing in May 2018 as well as repay bank debt held under its
key subsidiaries. On April 11, 2017, Indika issued a notice of
redemption for its 2018 notes and will repay the notes on 10 May
2017. The rating on the 2018 notes will be withdrawn once they
are fully repaid.
The transaction is leverage neutral, with incremental debt of
about $20 million, and has materially extended Indika's debt
maturity profile, with the next major maturity in 2022.
"The upgrade also reflects Moody's expectations that Indika's
financial profile for 2017-18 will improve on the back of
meaningful contract wins at subsidiaries Tripatra and Petrosea
which will largely offset lower dividends from Kideco. Moody's
expects that Indika's consolidated leverage will be 4.5x-5.0x
over the next two years," adds Chua, who is also Moody's Lead
Analyst for Indika.
The B2 CFR also takes into account Indika's commitment to
conservative financial policies, particularly around liquidity at
the holding company level, which balances its risk profile during
periods of volatility in thermal coal prices.
A near-term upgrade of the ratings is unlikely, given Indika's
projected high level of leverage. Nevertheless, upward momentum
in the ratings could develop over time if financial leverage, as
measured by adjusted debt / EBITDA falls below 4.0x while
maintaining a strong liquidity profile at the holding company.
Downward ratings pressure could arise if Indika's liquidity
levels deteriorate, or if coal prices fall, such that leverage
increases and registers in excess of 5.5x for an extended period.
A deterioration in liquidity, such that the holding company's
cash balance falls below $100 million, could also lead to a
downgrade.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Indika Energy Tbk (P.T.) is an Indonesian integrated energy group
listed on Indonesia's Stock Exchange. Its principal investment
for its energy resources group is a 46% stake in Kideco Jaya
Agung (P.T.), Indonesia's third-largest domestic coal producer
and one of the world's lowest-cost producers and exporters of
coal.
=========
J A P A N
=========
TOSHIBA CORP: Sees Long Odds for Hon Hai's JPY3 Trillion Chip Bid
-----------------------------------------------------------------
Takahiko Hyuga, Takako Taniguchi and Peter Elstrom at Bloomberg
News report that Toshiba Corp. may forgo the highest bid for its
semiconductor business, from Hon Hai Precision Industry Co.,
because of likely opposition from the Japanese and American
governments, according to people familiar with the matter.
Taiwan's Hon Hai, which has indicated its willingness to pay as
much as JPY3 trillion (US$27 billion) for the chip unit, would
face resistance because of its ties to China, said the people,
asking not to be identified because the matter is private,
Bloomberg relates. That could drag out regulatory approvals and
delay badly needed cash payments to Toshiba, raising the risks of
such a deal, the people said. Hon Hai, the primary iPhone
assembler for Apple Inc., has most of its factories in mainland
China.
As a result, Toshiba is giving serious consideration to lower
bids, including a potential offer of about JPY2 trillion from
U.S. chipmaker Broadcom Ltd., the people said, Bloomberg relays.
The Japan government is organizing an alternative offer from
Japanese companies that aims to inject JPY500 billion into the
chips unit in exchange for a minority stake, one person said.
Current bids are non-binding and could change. The deadline for
the next round of bidding is mid-May, one of the people said,
Bloomberg reports.
On April 11, two senior officials, Chief Cabinet Secretary
Yoshihide Suga and Industry Minister Hiroshige Seko, said Japan
would protect its interests in any sale, reports Bloomberg. "We
are keeping a close eye on the process," Bloomberg quotes Suga as
saying. "As a general principle, there would be a requirement to
examine any deal under the foreign exchange law."
According to Bloomberg, Toshiba's board has signaled its
preference for keeping the business within Japan. "If you ask
whether we really should let go of a technology that's important
by an order of magnitude, the answer is no," Yoshimitsu
Kobayashi, an outside director, said late last month, Bloomberg
recalls. He added that, if the business was sold to a foreign
company, a U.S. buyer would make most sense.
Bloomberg says the stance sets up a clash with Hon Hai's strong-
willed Chairman Terry Gou. Bloomberg relates that the Taiwanese
billionaire is fresh off winning a similar battle against
Japanese officials for control of Sharp Corp., which makes panels
for the iPhone and other devices. In that auction, Gou employed a
parallel strategy of offering much more than any other bidders,
pressuring a resistant management into talks. He then solicited
directors, shareholders and government officials to win approval
for the acquisition -- only to lower his bid later before closing
the deal.
The acquisition has been a success for Hon Hai. Sharp shares have
surged four fold from their low in August. That helped push the
stock of Hon Hai, which with affiliates owns more than half of
Sharp, to a decade high this month, according to Bloomberg.
Bloomberg says Toshiba is well aware of Gou's history and is
reluctant to be drawn into such a volatile, unpredictable
negotiation. That has led the Tokyo-based company to give closer
attention to rival offers, like Broadcom's, even though it is
only two thirds of the Hon Hai bid, according to Bloomberg. South
Korea's SK Hynix Inc. has also submitted an bid and is in talks
with Japanese investors about participating, in part to overcome
political hurdles, a person familiar with the matter said this
week, Bloomberg relays.
Broadcom, which has considered joining with private equity
investor Silver Lake on a bid, has emphasized it is a newcomer to
the flash memory business so it won't face the antitrust scrutiny
that Hynix will, the person, as cited by Bloomberg, said. Still,
Broadcom thinks it will gain synergies from combining Toshiba
memory operations with its own chips business.
Bloomberg says Toshiba shareholders may well resist any
management move to approve an offer $9 billion less than Hon
Hai's. The company needs cash to plug a gaping hole in its
balance sheet and warned April 11 that it may not be able to
continue as a going concern because of losses from its
Westinghouse nuclear business. Toshiba also said losses last year
had left it with negative shareholders equity of JPY225.6 billion
at the end of December, jeopardizing its listing on the Tokyo
Stock Exchange, adds Bloomberg.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba
Corporation's corporate family rating (CFR) and senior unsecured
rating to 'Caa1' from 'B3'. Moody's has also downgraded
Toshiba's subordinated debt rating to 'Ca' from 'Caa3', and
affirmed its commercial paper rating of Not Prime. At the same
time, Moody's has placed Toshiba's 'Caa1' CFR and long-term
senior unsecured bond rating, as well as its 'Ca' subordinated
debt rating under review for further downgrade.
The TCR-AP reported on March 21, 2017, that S&P Global Ratings
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
====================
LITTLE CRATE: IRD Applies to Liquidate Business Over Unpaid Tax
---------------------------------------------------------------
Stuff.co.nz reports that New Zealand's tax department has applied
to put two Taranaki companies into liquidation.
According to Stuff, the Inland Revenue Department (IRD) have
filed proceedings in the High Court at New Plymouth against
Little Crate Limited and Salvus Systems Limited after both
companies failed to pay GST, PAYE and other employment related
taxes.
Stuff says that on February 15, an application was lodged by IRD
against Little Crate Limited, which runs a cafe at the Countdown
supermarket complex on Hori St in New Plymouth.
Stuff relates that the IRD said the company owed NZ$45,562.50,
with court documents stating the majority of debt related to
non-payment of PAYE, but other tax contributions including GST,
student loan and Kiwisaver deductions and Kiwisaver contributions
had also not been paid.
The Companies Offices website stated the sole director of Little
Crate Limited was Grace McCullough.
A statutory demand was served on Little Crate Limited by IRD on
December 2 but no payment had been forthcoming, Stuff discloses.
According to the report, the other company facing court action is
Salvus Solutions Ltd, which is believed to be a security company.
The sole director of the business is Roelf Weideman.
Stuff relates that in the IRD's statement of claim, which was
filed on March 1, it said the company owed NZ$33,396.81. Of this
total, NZ$20,792.06 related to unpaid GST while NZ$12,604.75 was
for outstanding PAYE payments.
A statutory demand was served on the company on January 23, Stuff
notes.
Stuff says the court documents stated no objection or challenge
had been made by either company regarding the debt so IRD
presumed they were either insolvent or unable to pay.
Both matters will be heard in the High Court at New Plymouth on
May 16, Stuff adds.
====================
S O U T H K O R E A
====================
DAEWOO SHIPBUILDING: Banks Reject Call for Bond Payment Extension
-----------------------------------------------------------------
Yonhap News Agency reports that the Korea Development Bank (KDB)
and Export-Import Bank of Korea (EXIM Bank) -- the two main
creditors of troubled Daewoo Shipbuilding & Marine Engineering
Co. -- on April 12 rejected calls from a key bondholder to allow
a three-month extension for the repayment of bonds that mature
this month, and allow it to conduct due diligence on the world's
largest shipyard by order backlog.
Earlier, the state-run National Pension Services (NPS) demanded
that under its proposal, it and other corporate bondholders be
allowed to review the shipyard's restructuring program, the
report relates.
According to Yonhap, Daewoo Shipbuilding should pay off
KRW440 billion in corporate debts that mature next week, some
KRW200 billion of which are held by the NPS.
"The NPS' view is totally wrong from the start," Yonhap quotoes
Choi Jong-ku, the head of the EXIM Bank, as saying. "Daewoo
Shipbuilding has been already in technical default, and we cannot
accept the NPS' demand."
Yonhap relates that the banker said it is inevitable for Daewoo
Shipbuilding to be put under a new form of court receivership,
called a prepackaged plan, unless bondholders of the shipbuilder
agree on a debt-for-equity swap plan.
The National Pension Service (NPS), which holds about 30% of
bonds sold by Daewoo Shipbuilding, earlier even demanded that KDB
cover the debts of Daewoo Shipbuilding maturing this month,
although it withdrew it later, the report says.
Yonhap says the NPS held a meeting earlier this week over whether
to accept the debt-for-equity swap plan, but it made no decision,
citing "doubts" over Daewoo Shipbuilding's financial situation.
Of KRW1.35 trillion worth of corporate bonds sold by Daewoo
Shipbuilding, the NPS holds KRW388.7 billion, Yonhap relates.
Yonhap says policymakers in South Korea are increasingly nervous
about the possibility of Daewoo Shipbuilding facing the
prepackaged plan, which will undermine 50,000 jobs and trigger
massive cancellation of ships under construction.
Next week, bondholders of Daewoo Shipbuilding will gather on
April 17-18. If they don't accept the debt rescheduling, the
shipbuilder will be placed under the prepackaged plan, Yonhap
adds.
The Troubled Company Reporter-Asia Pacific, citing Yonhap News
Agency, reported on March 24, 2017, that South Korea's state-run
creditors of Daewoo Shipbuilding & Marine Engineering Co. said it
will provide a fresh rescue package worth KRW6.7 trillion
(AUD5.98 billion) to the ailing shipbuilder, but only if all
stakeholders agree to a painful debt-for-equity swap plan. The
huge rescue measures, proposed by the state-run Korea Development
Bank and Export-Import Bank of Korea, are the second round of
bailout for the shipbuilder that has been suffering severe
liquidity problems over heavy losses from offshore projects.
Under the rescue packages, Daewoo Shipbuilding will receive new
loans worth KRW2.9 trillion, if lenders and bondholders agree to
swap KRW2.9 trillion of debts for new shares in the shipbuilder,
according to Yonhap. The rescue package also included a three-
to-five year grace period for unsecured loans worth KRW900
billion.
About Daewoo Shipbuilding
Headquartered in Seoul, South Korea, Daewoo Shipbuilding &
Marine Engineering Co. -- http://www.dsme.co.kr/-- is engaged in
building ships and offshore structures. Its product portfolio
includes commercial ships, such as liquefied natural gas (LNG)
carriers, oil tankers, containerships, liquefied petroleum gas
(LPG) carriers, pure car carriers; offshore structures, such as
FPSO vessels, drilling rigs, drillships and fixed platforms, and
naval vessels, including submarines, destroyers, rescue ships and
patrol boats.
The shipyard, along with two other major South Korean
shipbuilders, are currently undergoing self-created debt-
restructuring plans in the face of a decrease in new orders
caused by the protracted global economic slump, according to
Yonhap News.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(USAUD1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
KUMHO TIRE: Kumho Asiana Chief Won't Exercise Buyback Option
------------------------------------------------------------
Yonhap News Agency reports that the chief of Kumho Asiana Group
will not exercise his right to buy back the logistics
conglomerate's tiremaking affiliate currently under creditors'
control, unless its main creditor, the state-run Korea
Development Bank, allows him to form a consortium for the
potential takeover, the group said Wednesday.
Yonhap relates that the creditors, led by the KDB, said earlier
they would review whether to allow Park Sam-koo, chairman of the
logistics conglomerate, to exercise his right to buy back Kumho
Tire Co. after receiving the plan, which they have requested.
Park is required to show his intention if he wants to take over
Kumho Tire and submit the financing plan by an April 19 deadline,
according to Yonhap.
"We sent a notice to the KDB asking to give an answer to our
inquiries by April 17, including the formation of a consortium,"
the group said, Yonhap relays. The group said chairman Park would
not exercise his buyback rights "this time," unless the lender
gives an answer by the deadline.
Yonhap says the head of Kumho Asiana Group has been urging
creditors to allow him and the special purpose company he created
to buy the tiremaker. But the creditors have been reluctant to
do so because they believe that Park may face difficulties
getting the necessary funding.
Yonhap relates that Mr. Park countered that he would take legal
action against the creditors of Kumho Tire for denying its right
to buy back the former affiliate. Kumho Asiana said earlier that
the legal measures will likely include a court injunction against
the proposed sale of Kumho Tire to a consortium led by a Chinese
firm.
The KDB-led creditors have said they will move forward with the
sale of Kumho Tire to Chinese tiremaker Doublestar, unless the
Kumho Asiana chairman formally expresses his takeover intentions,
Yonhap says.
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
At that time, Park was given a priority option to buy back the
country's tiremaker should the creditors of Kumho Tire decide to
sell the company.
The creditors signed a deal earlier this month to sell their
combined 42.01% stake in the tiremaker to Doublestar for
KRW955 billion (US$831 million), adds Yonhap.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, 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 ***