/raid1/www/Hosts/bankrupt/TCRAP_Public/170427.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 27, 2017, Vol. 20, No. 83
Headlines
A U S T R A L I A
19 WICKHAM: Second Creditors' Meeting Set for May 4
BENE RACING: Second Creditors' Meeting Set for May 5
BUNDALL PANEL: First Creditors' Meeting Set for May 5
DIPLOMA GROUP: ASIC Seeks to Wind Up Group
LOOP CREATIVE: First Creditors' Meeting Set for May 3
WELLDOG PTY: Second Creditors' Meeting Set for May 5
C H I N A
CHINA: Hidden Debt Stirs Investor Angst as Defaults Rise
GOLDEN WHEEL: Fitch Affirms 'B' Long-Term IDR; Outlook Stable
H O N G K O N G
IMPERIAL PACIFIC: Fitch Withdraws B- Rating on Proposed US$ Notes
I N D I A
A B CONVENTION: CRISIL Lowers Rating on INR5MM Term Loan to 'B'
ABAN OFFSHORE: CARE Reaffirms 'D' Rating on INR642.86cr Loan
ARIHANT PACKWELL: CRISIL Reaffirms 'B' Rating on INR6.82MM Loan
ASIAN FOOTWEARS: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
AVARTANAH INFRASTRUCTURE: CARE Cuts INR9.75cr Loan Rating to B+
AYURSUNDRA HEALTH: CRISIL Cuts Rating on INR45.39MM Loan to B
BRACE IRON: CARE Downgrades Rating on INR810.04cr Loan to 'D'
CARE UTILITY: CARE Reaffirms B+ Rating on INR8.13cr Loan
CHAWLA INTERNATIONAL: CARE Assigns B+ Rating to INR0.5cr LT Loan
CITI CENTRE: CARE Lowers Rating on INR20cr LT Loan to 'D'
DASHMESH RICE: CARE Lowers Rating on INR6cr LT Loan to 'D'
DEV COTEX: CARE Issues 'D Issuer Not Cooperating' Rating
E-SHOPPE: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
GMC INTERNATIONAL: Ind-Ra Migrates 'D' Rating to Non-Cooperating
GURU NANAK: CARE Downgrades Rating on INR15cr LT Loan to 'D'
HARYANA LIQUORS: CARE Lowers Rating on INR68.84cr LT Loan to B+
HINDUSTAN CONSTRUCTION: CARE Cuts INR4,775.80cr Loan Rating to D
INNOVA CHILDRENS: CRISIL Reaffirms 'D' Rating on INR11.75MM Loan
ION HEALTHCARE: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
JAGATH TRANSPORT: CARE Assigns 'B' Rating to INR5.0cr LT Loan
JAS TOLL ROAD: CARE Downgrades Rating on INR140.78cr Loan to B+
KAYCEE INDUSTRIES: CRISIL Reaffirms 'B+' Rating on INR4.75MM Loan
PALM HEIGHTS: CARE Lowers Rating on INR15cr LT Loan to 'D'
PRITHVI EDIFICE: CARE Issues 'D Issuer Not Cooperating' Rating
RAMA RICE: CRISIL Assigns 'B+' Rating to INR6MM Cash Loan
RELIANCE DEFENCE: Gets Lenders' Approval to Exit CDR Package
SAHDEV JEWELLERS: CARE Issues 'D Issuer Not Cooperating' Rating
SHANMUKHA COTTON: CRISIL Reaffirms 'B' Rating on INR1.25MM Loan
SRI SAKTHI: CRISIL Cuts Rating on INR4.75MM Cash Loan to 'B'
SUDEEP EXIM: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
TAJSHREE CARS: CARE Lowers Rating on INR14.85cr LT Loan to D
UNI PROFILES: CRISIL Lowers Rating on INR5.06MM Loan to 'B'
VOLT-AGE INFRA: CARE Lowers Rating on INR9.50cr ST Loan to D
J A P A N
TOSHIBA CORP: Hitachi, UK Fund Partner to Bid for Landis+Gyr
TOSHIBA CORP: Plans to Replace Auditor PwC Over Differences
M A C A U
MELCO CROWN: S&P Affirms 'BB' CCR; Outlook Negative
STUDIO CITY: S&P Affirms 'BB-' CCR; Outlook Negative
T H A I L A N D
IRPC PUBLIC: S&P Affirms 'BB+' CCR on Improving Earnings Profile
V I E T N A M
* VIETNAM: Bankrupt Creditors May Be Aided to Refund Customers
- - - - -
=================
A U S T R A L I A
=================
19 WICKHAM: Second Creditors' Meeting Set for May 4
---------------------------------------------------
A second meeting of creditors in the proceedings of 19 Wickham
Street Pty Ltd has been set for May 4, 2017, at 11:00 a.m., at
the offices of Melsom Robson Chartered Accountants, 75A Brewer
Street, in Perth, WA.
The purpose of the meeting is (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 May 3, 2017, at 5:00 p.m.
George Aubrey Lopez and Evan Robert Verge of Melsom Robson
Chartered Accountants were appointed as administrators of 19
Wickham on March 21, 2017.
BENE RACING: Second Creditors' Meeting Set for May 5
----------------------------------------------------
A second meeting of creditors in the proceedings of Bene Racing &
Breeding Pty. Ltd. has been set for May 5, 2017, at 10:00 a.m.,
at the offices of PKF Melbourne, 13/440 Collins Street, in
Melbourne.
The purpose of the meeting is (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 24, 2017, at 4:00 p.m.
Petr Vrsecky at PKF Melbourne was appointed as administrator of
Bene Racing & Breeding Pty. Ltd. on March 22, 2017.
BUNDALL PANEL: First Creditors' Meeting Set for May 5
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Bundall
Panel & Paint Pty Ltd, trading as Bundall Smash Repairs, will be
held at Level 9, Corporate Centre One, 2 Corporate Court, in
Bundall, Queensland, on May 5, 2017, at 11:00 a.m.
Leon Lee of SM Solvency was appointed as administrator of Bundall
Panel on May 5, 2017.
DIPLOMA GROUP: ASIC Seeks to Wind Up Group
------------------------------------------
Peter Williams at The West Australian reports that the corporate
watchdog has applied to liquidate builder-developer Diploma Group
after its $60 million collapse, clouding efforts by the Di Latte
family to get creditors behind a revised rescue plan.
According to the report, the Australian Securities and
Investments Commission has sought a Federal Court order to wind
up Diploma and 20 associated companies on the ground it is "just
and equitable", or of insolvency.
The West Australian says the case is unlikely to be resolved
before creditors vote next month on either supporting a revival
of Diploma as a property developer or liquidating the three
companies that are in receivership.
The West Australian relates that ASIC wants the court to appoint
a provisional liquidator to report back on the state of the 21
companies' finances and any suspected contravention of corporate
laws by the firms or their directors and officers.
Diploma lawyer Kevin Dundo said the ASIC application would be
opposed, says The West Australian.
The West Australian says receivers and administrators were
appointed to Australian Securities Exchange-listed Diploma Group
and two construction subsidiaries in December, leaving more than
500 subcontractors, suppliers and former employees claiming $53
million in outstanding payments.
Executive chairman Nick Di Latte blamed difficult market
conditions and a further tightening of bank lending for the
collapse, the report says.
According to the report, the Di Latte family, which collectively
owns about half of Diploma Group, last week presented an altered
deed of company arrangement to administrators from Grant Thornton
that offered creditors a mix of shares and cash.
The report relates that the cash would have come from expected
proceeds of a lawsuit of up to $1 million, including an insurance
claim. However, Mr. Dundo said further changes would be made to
the proposal after talks with the administrators on April 21.
The proposal said Mr. Di Latte would not be a director of Diploma
Group, The West Australian says.
"His involvement in the management will be dependent upon the
reconstituted board determining that issue once they are
appointed," the Di Latte family proponent said in response to an
administrator's question, The West Australian relays.
Diploma Group director Jeff Hill would represent the family on
the board and there would be two independents, including a
chairman, notes the report.
A revived Diploma Group would be the parent of Diploma Properties
and a development vehicle for a proposed $180 million East Perth
commercial-residential project, adds The West Australian.
About Diploma Group
Diploma Group Limited (ASX:DGX) -- http://www.diploma.com.au/--
is a construction and property development company. The Company
is undertaking a portfolio of commercial, retail and residential
projects. The Company's projects include Capri Coastal
Apartments, Rockingham and QUEST East Perth. The Company's Capri
Coastal Apartments, Rockingham is located within the Rockingham
Beach Waterfront Village Precinct. The Company offers commercial
construction and residential apartments, including multi-level
residential, hotels, hospitality and tourism, commercial offices,
retail, industrial offices, health and aged care, and sports and
recreation. The Company offers a range of construction services,
including design, construction project management, site
management, construction management, construction supervision and
contracting services. Its property development services include
project identification, finance solutions, site acquisition and
sales, marketing and property management services.
Martin Jones and Andrew Smith of Ferrier Hodgson were appointed
as Joint and Several Receivers and Managers to the assets and
undertakings of Diploma Group Limited on December 21, 2016, by
Swiss Re International SE, pursuant to the power contained in the
General Security Agreement dated November 26, 2015.
The Receivers and Managers were also appointed over the following
wholly owned subsidiaries:
* Diploma Construction (WA) Pty Ltd (ACN 113 950 100); and
* DGX Construction Pty Ltd (ACN 147 094 335)
Following the appointment, David Mark Hodgson, Matthew James
Donnelley and Andrew Stewart Reed Hewitt of Grant Thornton were
appointed as Voluntary Administrators to the Companies on
December 22, 2016.
LOOP CREATIVE: First Creditors' Meeting Set for May 3
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Loop
Creative Australia Pty Ltd will be held at the offices of
Mackay Goodwin, Exchange House, Suite 2, Level 8, 10 Bridge
Street, in Sydney, NSW, on May 3, 2017, at 11:00 a.m.
Domenic Calabretta and Grahame Ward of Mackay Goodwin were
appointed as administrators of Loop Creative on April 20, 2017.
WELLDOG PTY: Second Creditors' Meeting Set for May 5
----------------------------------------------------
A second meeting of creditors in the proceedings of Welldog Pty
Ltd has been set for May 5, 2017, at 11:00 a.m., at the offices
of Ferrier Hodgson, Level 7, 145 Eagle Street, in Brisbane,
Queensland.
The purpose of the meeting is (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 24, 2017, at 4:00 p.m.
Will Colwell, Tim Michael, Martin Jones and Wayne Rushton of
Ferrier Hodgson were appointed as Voluntary Administrators of
Welldog Pty Ltd on March 20, 2017.
Pitcher Partners have been appointed as Receivers and Managers.
Welldog Pty Ltd is headquartered in Brisbane, Australia.
=========
C H I N A
=========
CHINA: Hidden Debt Stirs Investor Angst as Defaults Rise
-------------------------------------------------------
Bloomberg News reports that rising defaults in China are
unearthing hidden debt at companies across the country.
The report says small firms that can't get loans by themselves
have been winning banks over by getting other companies to
guarantee their borrowings. According to the report, the
companies making those pledges exclude them from their balance
sheets, leaving creditors in the dark. Borrowers often extend the
guarantees for each other, raising the risk that failures could
ricochet, at a time when increasing borrowing costs have already
added to strains.
China's banking regulator has ordered checks of such cross-
guaranteed loans, Caixin reported April 21, Bloomberg relays.
Scrutiny is mounting after a corn oil producer in the eastern
province of Shandong said last month it had guaranteed debt of a
neighboring aluminum product manufacturer which is now stuck in a
cash crunch. Just days before that, a local government financing
vehicle in China's southwest had to repay an auto parts maker's
loans it had guaranteed after the latter defaulted.
"Disclosure of such guarantees isn't timely," Bloomberg quotes
Qiu Xinhong, a Shenzhen-based money manager at First State Cinda
Fund Management Co, as saying. "Sometimes, it's like a buried
mine and you don't know when the risks will explode."
Bloomberg says this debt minefield could be big. The amount of
loan guarantees at privately held firms in China is equivalent to
11 percent of their equity, and at LGFVs is 18 percent, according
to Citic Securities Co, Bloomberg relays. The load is even
heavier at weaker borrowers. About 44 percent of issuers rated
lower than AA- have a ratio of more than 30 percent, according to
Everbright Securities Co. The phenomenon is less common in the
U.S. because banks don't require such guarantees to offer loans,
Bloomberg discloses citing Fitch Ratings.
"If companies in the same region offer a huge amount of
guarantees for each other's debt, it would form a guarantee web
and deepen interconnections among the companies," Bloomberg
quotes Gang Meng, director of rating at Golden Credit Rating
International Co. in Beijing, as saying. "If one company has to
repay debt for its guaranteed company, risks would quickly ripple
to other companies in the web, which will result in a butterfly
effect."
Investors dumped corporate bonds issued by borrowers in Zouping
County in Shandong after the corn oil producer, Xiwang Group,
said on March 29 that it has CNY2.9 billion ($421.2 million) of
outstanding guarantees, the equivalent of 17 percent of equity,
for debts of Qixing Group Co, Bloomberg discloses.
According to Bloomberg, guarantors don't mark the pledges on
their balance sheets and often disclose them only on an annual
basis. Such shadow debts pose rising risks after central bank
tightening pushed up onshore corporate bond yields to two-year
highs and defaults on local notes surged to a record.
As China opens up the world's third-biggest bond market, the
hidden debt also presents a challenge for international investors
grappling with what bond legend Bill Gross dubbed the "mystery
meat of emerging-market countries." Moody's Investors Service
received more inquiries from global investors about such
guarantees following the incident in Zouping, according to Ivan
Chung, head of Greater China credit research, adds Bloomberg.
"The cross debt guarantees definitely raise concerns," Bloomberg
quotes Ivy Thung, head of credit research in Singapore at Nikko
Asset Management Asia as saying. "Disclosure is definitely not in
a timely manner and generally companies will not talk about this
unless asked."
China Chengxin International Credit Rating Co. sometimes has to
resort to sources other than the company in question to obtain
guarantee data, Bloomberg notes.
"When we've done on-site due diligence on some rated firms, it
was hard to get comprehensive and reliable information about
their external guarantees," the report quotes Kong Lingqiang,
Beijing-based vice president at China Chengxin, as saying. The
central bank should allow rating assessors access to the national
financial credit system to get the latest information about
companies' pledges for loans, Kong, as cited by Bloomberg, said.
China Bond Rating Co. said guarantors should disclose guarantees
in quarterly reports and also release information about the firms
for which they provide the biggest pledges, reports Bloomberg.
GOLDEN WHEEL: Fitch Affirms 'B' Long-Term IDR; Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed China-based homebuilder Golden Wheel
Tiandi Holdings Company Limited's (GWTH) Long-Term Foreign and
Local Currency Issuer Default Ratings at 'B'. The Outlook is
Stable. Fitch has also affirmed GWTH's senior unsecured rating at
'B', with Recovery Rating at 'RR4'.
The rating affirmation is premised on GWTH's good quality metro-
linked property development portfolio, moderate leverage compared
with its 'B'-rated peers and healthy margins. Its small scale and
rising leverage mainly due to increasing demand for land
replenishment and rising development property exposure continue
to constrain its ratings.
Fitch has also assigned its USD200 million 8.25% senior unsecured
notes due 2019 a final 'B' rating and a Recovery Rating of 'RR4'.
This is a tap of an earlier issuance of USD100 million and
carries the same terms and conditions. The notes are rated at the
same level as GWTH's senior unsecured rating because they
constitute the company's direct and senior unsecured obligations.
The assignment of the final rating follows the receipt of
documents conforming to information already received. The final
rating is in line with the expected rating assigned on April 11,
2017.
KEY RATING DRIVERS
Niche Positioning: GWTH is focused on developing small commercial
and residential projects linked to metro stations. The company
had six projects under development as of end-March 2017,
including a 33%-owned project in Nanjing. Its projects usually
fetch higher average selling prices because of their convenient
locations and better foot traffic for the 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 one
to three years, due to faster land acquisitions. The company did
not acquire any land between February 2014 and October 2016,
resulting in land bank life dropping to around three years at
end-2016, from 11 years at end-2015. GWTH is starting a new phase
of expansion and Fitch estimates it will pay at least CNY1.2
billion for land in 2017, which will drive up leverage to above
35% in 2017. GWTH's leverage rose to 29% as at end-2016, from 27%
at end-2015, mainly due to high construction expenditure during
the year.
Margin Recovery: Fitch expects GWTH's margins to stay at around
25% in the medium term, supported by existing integrated projects
connected to metro stations, which have gross margins of around
40%, especially those in Nanjing. The company's margin recovered
to 28% in 2016, from -4% in 2015, with the completion and
delivery of three 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 properties coming into operation each
year, and the business of leasing out spaces in metro stations
contributing profit. These divisions will provide recurring
income for interest servicing, which will mitigate cash flow
volatility in the property development business. GWTH had
completed investment property with total gross floor area of
around 135,000 square metres as of end-2016. Most of its
investment properties enjoy prime locations with convenient
transportation access, translating into high average occupancy
rate of around 90% in past five years and stable annual recurring
income of around CNY100 million.
Metro Leasing Turned Profitable: 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. Fitch think
the company's metro leasing business will expand more slowly than
the company's initial plan to open four to five metro malls
annually, given limited supply of metro stations that are
suitable for malls and the slower-than-expected construction of
the metro stations where the company has secured leases to
operate malls. However, profitability will improve as the
existing malls mature and are able to achieve occupancy rate of
above 90% after two years of operation.
DERIVATION SUMMARY
GWTH's contracted sales of CNY2.3bn in 2016 was smaller than
those of most of its 'B' rated peers, such as Xinyuan Real Estate
Co., Ltd. (B/Stable), which generate around CNY10 billion in
contracted sales annually. GWTH's land bank of 0.4 million square
metres for development and sale as of end-2016 is also smaller
than that of peers.
However, GWTH's low leverage, healthy margin and substantial
interest coverage from recurring income supports its ratings at
'B'.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Annual contracted sales (excluding JVs and associates) of
around CNY1 billion-2 billion during 2017-2019;
- Construction expenditure accounts for 50% of contracted sales
in 2017, and around 20% in 2018-2019;
- Land replenishment ratio, measured by gross floor area acquired
to gross floor area presold in the same year, at 1.0x-1.7x during
2017-2019;
- Cash collection ratio at 85% during 2017-2019
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Negative Rating Action include:
- Net debt/ adjusted inventory rising above 40% on a sustained
basis (end-2016: 28.7%; end-2015: 26.8%)
- Deviation from the current focus on metro-linked projects
- EBITDA margin falling below 25% on a sustained basis (2016:
27.8%; 2015: -4%)
No positive rating action is expected over the next 12-18 months
given the company's current small scale. However, in the longer
term, positive rating action may result from:
- Investment properties' value exceeding CNY5 billion (2016: CNY5
billion; 2015: CNY4.6 billion) and annual development property
sales sustained above CNY3 billion (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).
LIQUIDITY
Adequate Liquidity: GWTH had CNY1.8 billion in cash on hand,
including restricted cash, as of end-2016, and unused bank
facilities of CNY1.2 billion, which are adequate to cover its
short-term debt of CNY1.8 billion.
FULL LIST OF RATING ACTIONS
- Long-Term Foreign-Currency IDR affirmed at 'B'; Outlook Stable
- Long-Term Local-Currency IDR affirmed at 'B'; Outlook Stable
- Senior unsecured rating affirmed at 'B' and Recovery Rating
at 'RR4'
- USD100m 9.5% senior unsecured notes due 2017 affirmed at 'B'
and Recovery Rating at 'RR4'
- USD100m 8.25% senior unsecured notes due 2019 affirmed at 'B'
and Recovery Rating at 'RR4'
- USD200m 8.25% senior unsecured notes due 2019 assigned final
rating of 'B' and Recovery Rating at 'RR4'
================
H O N G K O N G
================
IMPERIAL PACIFIC: Fitch Withdraws B- Rating on Proposed US$ Notes
-----------------------------------------------------------------
Fitch Ratings has withdrawn the 'B-(EXP)' expected rating
assigned to Hong Kong-based Imperial Pacific International
Holdings Limited's (IPI, CCC) proposed US dollar senior secured
notes. The rating has been withdrawn as the debt issuance is no
longer expected to convert to final ratings.
The notes were due to be issued by Imperial Pacific International
(CNMI), LLC.
RATING SENSITIVITIES
Not applicable as the rating has been withdrawn.
=========
I N D I A
=========
A B CONVENTION: CRISIL Lowers Rating on INR5MM Term Loan to 'B'
---------------------------------------------------------------
CRISIL has been consistently following up with A B Convention for
obtaining information through letters and emails dated January
19, 2017, and February 9, 2017, among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
BB-/Stable')
'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 A B Convention. 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 A B Convention 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 Downgrading the rating at CRISIL B/Stable.
A B Convention, incorporated in April 2014, is engaged in
hospitality services at Krishna (Andhra Pradesh). The company is
promoted by Mr. Aravpally Bose and is currently engaged in
setting up a Marriage cum community hall at Krishna Districts.
ABAN OFFSHORE: CARE Reaffirms 'D' Rating on INR642.86cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Aban Offshore Ltd (AOL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 642.86 CARE D Reaffirmed
Long term/Short 135.00 CARE D/CARE D
Term Bank Reaffirmed
Facilities
CRPS Issue Series I 105.00 CARE D (RPS) Reaffirmed
CRPS Issue Series II 156.00 CARE D (RPS) Reaffirmed
CRPS Issue Series III 20.00 CARE D (RPS) Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities and various
preference share issues of AOL factor in the instances of delays
in debt servicing on account of significant delays in realisation
of receivables and resultant tight liquidity position experienced
by AOL.
Detailed description of the key rating drivers
Key Rating Strengths
Experience of Promoters
AOL was promoted in 1986 by Aban Constructions Private Limited,
in collaboration with Chiles Offshore Inc. (COI), USA, an
offshore drilling company in the Gulf of Mexico. Late Mr. M A
Abraham, a first generation entrepreneur was the key promoter of
AOL. The day-to-day affairs of the company are managed by Mr.
Reji Abraham, the MD, who is the son of late Mr. M A Abraham. He
is assisted by Mr. C P Gopalakrishnan, (CFO& Deputy MD) and Mr. P
Venkateswaran Deputy MD (in charge of operations). AOL is the
largest private player in India in the offshore drilling industry
and is among the top players in the world. The company and its
wholly owned subsidiaries had a total of 18 assets by the end of
March 2016 including 15 Jack up rigs, two drill ships and one off
shore production unit.
Improved financial performance during FY16 and 9mFY17 of AOL
During FY16, income improved by 35% on account of improvement in
fleet utilisation. Similarly, the PBILDT margin improved from
51.92% in FY15 to 65.03% in FY16. With reduction in debt level
and improvement in networth, the overall gearing ratio improved
and stood at 0.34x as on March 31, 2016 as against 0.43x as on
March 31, 2015. During 9mFY17, the company reported PAT of INR216
crore on a total income of INR719 crore as against PAT of INR202
crore on a total income of INR747 crore during 9mFY16.
Key Rating Weaknesses
Moderate performance of subsidiaries and delays in realisation of
receivables
At the consolidated level, the company posted PAT of INR51 crore
(PY: INR545 crore) and recorded GCA of INR724 crore (PY: INR1,157
crore) in FY16. During 9MFY17 (Provisional) at a consolidated
level, the company registered after tax loss of INR704 crore on
total operating income of INR1,367 crore as against after tax
loss of INR41 crore on total operating income of INR2,705 crore
during 9mFY16. In addition to moderation in financial
performance, delays in realisation of receivables also impacted
cash flow position. Receivables at the consolidated level has
increased from INR1,594 crore as on March 31,2015 to INR2,320
crore as on March 31, 2016.
Aban Offshore Limited (AOL), the flagship company of Aban group,
provides offshore drilling services to companies engaged in
exploration and production of oil and gas. AOL is the largest
private player in India in the offshore drilling industry and is
one of the largest in the world. The company and its wholly owned
subsidiaries had a total of 18 assets by the end of March 2016
including 15 Jack up rigs, two drill ships and one off shore
production unit. Out of these 18 assets, AOL directly holds only
seven rigs and rest of the assets held by its step down
subsidiaries.
ARIHANT PACKWELL: CRISIL Reaffirms 'B' Rating on INR6.82MM Loan
---------------------------------------------------------------
CRISIL has been consistently following up with Arihant Packwell
(Arihant) for obtaining information through letters and emails
dated January 19, 2017 and February 9, 2017 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 6.82 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Term Loan 1.68 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 Arihant Packwell. 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 Arihant Packwell 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 co-
operation, CRISIL is reaffirming the rating at CRISIL B/Stable.
Arihant was set up as a partnership firm in 2006 by Mr. Ravi Jain
and Mr. Abhay Jain in Chandigarh. The firm manufactures packaging
material for pharmaceuticals and for writing pads and notebooks
for doctors. Its manufacturing facility is in the Baddi special
economic zone.
ASIAN FOOTWEARS: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Asian Footwears
Private Limited's (AFPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR102.5 mil. Term loan migrated to Non-Cooperating
Category; and
-- INR47.5 mil. Fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 18, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2008, AFPL is a manufacture of footwears. The
company sells its products under the brand name Wilto, Alaxia and
PU Gold. Its manufacturing units are located in Bahadurgarh
(Haryana).
AVARTANAH INFRASTRUCTURE: CARE Cuts INR9.75cr Loan Rating to B+
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Avartanah Infrastructure Private Limited (AIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.75 CARE B+; Revised from
Facilities CARE BB-; Issuer Not
Cooperating; on the basis
of best available
information
Short-term Bank 4.00 CARE A4; Issuer Not
Facilities Cooperating; on the basis of
Best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from AIPL to monitor the
rating(s) vide email communications/ letters dated February 10,
2017, March 18, 2017, and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with
the SEBI guidelines, CARE has reviewed the rating on the basis of
publicly available information which however, in CARE's opinion
is not sufficient to arrive at fair rating. Furthermore, AIPL has
not paid the surveillance fees for the rating exercise as agreed
to in its rating agreement. The ratings of AIPL has revised from
CARE BB-/ CARE A4 will now be denoted as CARE B+ /CARE A4; ISSUER
NOT COOPERATING.
Users of these ratings (including investors, lenders and the
public at large) are hence requested to exercise caution while
using the above rating(s).
Detailed description of the key rating drivers
At the time of last ratings in May 30, 2016, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Below Average financial risk profile
The scale of operations of the company continues to remain small
which limits the company's financial flexibility in times
of stress and deprives it from scale benefits. Profitability
profile has moderated in contrast to the previous financial year.
In FY16, PBILDT and PAT margin has declined to 8.46% and 1.61%,
respectively against 15.03% and 2.64% respectively in FY15 on
account of procurement of raw material at higher prices coupled
with increase in interest and finance cost due to increasing
reliance on external borrowings.
The capital structure of the company has deteriorated evident
from overall gearing of 2.38 times in FY16 against 1.94 times in
FY15 due to low net worth base against moderate debt levels. Debt
protection metrics has also deteriorated in FY16 on account of
decline in profitability.
During FY16, operating cycle of AIPL continued to remain working
capital intensive evident from operating cycle of 146 days
against 144 days in FY15. The company bills its customers on
monthly basis and average realization happens within four months.
The company maintains minimum inventory in the form of raw
materials and receives a credit period from its suppliers of
around a month.
Presence in highly competitive industry
The industry is abundant with a number of players both in
organized and unorganized sector. Furthermore, the switching
cost for the final consumer is not very high. The industry is
characterized as competitive nature as there are a large number
of players at the regional level. Furthermore, the award of
contracts is under bidding process and lowest bidder gets the
work.
Key Rating Strengths
Experienced and professional management team
AIPL is essentially controlled by directors who have considerable
experience in the civil construction industry. Mr. Nilanjan
Sen, Director is a graduate and has more than a decade of
experience in similar industry. Furthermore, the company is
empanelled with REC Power Distribution Company Limited, a wholly-
owned subsidiary of REC Limited and Central Electrical Authority,
Ministry of Power. Additionally, the company has an ISO 9001:
2008 certification.
AIP was incorporated in September 2008 under the name of
Avartanah IT Solutions Private Limited. The company got its
current name in June 2010. It is currently being managed by Mr. M
D Senapati and Mr. Nilanjan Sen. AIP is engaged in providing
Engineering Procurement and Construction (EPC) services and IT
solution services mainly for the power sector.
The company procures its raw material and semi-finished products
including cables, electrical equipment, etc from the designated
vendors of its customers and also from other domestic players.
AIP is an empanelled consultant for REC Power Distribution
Company Limited, a wholly-owned subsidiary of REC Limited and
Central Electrical Authority, Ministry of Power. Additionally,
the company has an ISO 9001: 2008 certification.
AYURSUNDRA HEALTH: CRISIL Cuts Rating on INR45.39MM Loan to B
-------------------------------------------------------------
CRISIL has been consistently following up with Ayursundra Health
Care Private Limited (AHPL) for obtaining information through
letters and emails dated January 20, 2017 and February 09, 2017
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.4 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
CRISIL B+/ Stable)
Proposed Long Term 0.21 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
CRISIL B+/ Stable)
Term Loan 45.39 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
CRISIL B+/ Stable)
'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 Ayursundra Health Care 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 Ayursundra Health Care 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
Downgrading the rating at CRISIL B/Stable.
AHPL, incorporated in 2007, commenced commercial operations in
October 2010. It manages a diagnostic centre that provides non-
invasive diagnostic and other healthcare services in Guwahati.
AHPL has also been operating a 12-bed cardiac unit with an
intensive care facility since April 2012. The company is setting
up a multi-specialty hospital and rejuvenation centre, which is
expected to become operational by January 2016. It is promoted by
Mr. Simanta Das and Dr. Abhijit Hazarika.
BRACE IRON: CARE Downgrades Rating on INR810.04cr Loan to 'D'
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Brace Iron & Steel Pvt. Ltd (BISPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 810.04 CARE D Revised from
CARE B (SO)
Detailed Rationale & Key Rating Drivers
CARE has revised the ratings for BISPL, to 'CARE D'. Instruments
with this rating are in default or are expected to be in default
soon. The revision in the ratings takes into account the delay in
the receipt of lease rentals resulting in delays in debt
servicing by the company. Going forward, the company's ability to
receive the lease rentals and service its debt obligations in a
timely manner shall be the key rating sensitivities.
Detailed description of the key rating drivers
Delay in debt servicing by the company
BISPL has reported delays in servicing of debt obligations on
account of delay in the receipt of lease rentals from its
offtaker BSL. The financial risk profile of BISPL's off-taker BSL
remained weak during FY16 (refers to the period April 1 to
March 31) and 9MFY17 (refers to period April 1 to December 31)
with the company reporting a net loss of INR2,840 crore and
INR2,371 crore respectively. Given the subdued market conditions
and muted demand, the realizations for BSL were under pressure
leading to lower operating profitability. Furthermore, the lower
operating profitability coupled with higher capital charge led to
losses at net level. Stretched liquidity profile of its off-taker
BSL resulted in delay in payment of lease rentals for oxygen
plants to BISPL resulting in delays in servicing of debt
obligations by BISPL.
BISPL is a company floated by SREI Alternate Investment Trust
(SAIT). BISPL had purchased four oxygen plants which are part of
Bhushan Steel Limited's (BSL, rated 'CARE D') integrated steel
facility at Odisha for a total consideration of INR1,000 crore
funded in the debt equity ratio of 85:15. BSL has simultaneously
entered into an arrangement with BISPL whereby BSL has taken the
oxygen plants on lease from BISPL so as not to affect the
existing operations at the Meramandali (Odisha) Plant. BISPL, as
a part of the arrangement, is receiving monthly lease rentals
from BSL on a fixed basis. The O&M expenses for operating the
Oxygen plants will be borne by BSL on actuals basis.
During FY16 (refers to the period April 1 to March 31), BISPL
reported a total operating income of INR128.80 crore with a
PBILDT and net loss of INR128.50 crore and INR21.82 crore,
respectively.
CARE UTILITY: CARE Reaffirms B+ Rating on INR8.13cr Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Care Utility Products Private Limited (CUP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.13 CARE B+; Stable Reaffirmed
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of CUP continues to be
constrained by its small scale of operations with low net worth
base and elongated operating cycle. The rating, however, derives
strength from the experienced promoters, moderate profitability
margins & debt coverage indicators and favorable outlook for
packaging industry.
Going forward, the ability of the company to increase its scale
of operations while improving its overall solvency position would
be the key rating sensitivities.
Detailed description of the key rating drivers
Strengths
Experienced promoters
The company was incorporated in March 2008 and is currently being
managed by Mr. Kabir Sachdeva and Mrs Shail Sachdeva. Both the
directors have more than one decade of industry experience.
Furthermore, the directors of the company are supported by a team
of experienced and qualified professionals having varied
experience in the technical, finance and marketing fields.
Moderate profitability margins
The PBILDT margins declined from 27.05% in FY14 (refers to the
period April 1 to March 31) to 24.48% in FY16 due to increase in
the operational expenses of the company like employee costs,
selling expenses etc. However, the PAT margins improved from
4.95% in FY14 to 6.03% in FY16 due to improvement in PBILDT in
absolute terms coupled with broadly stagnant interest and
depreciation expenses.
Favorable industry scenario
The packaging industry in India has been registering a constant
growth. The growth was mainly driven by the stable demand from
end use industry i.e. food products, retail, consumer durable
goods, auto ancillary, and pharmaceuticals. This growth is
fuelled by the growth of the middle class population and spending
power.
Moderate debt coverage indicators
The debt coverage indicators remained at moderate levels
characterized by interest coverage ratio of 2.86x in FY16 and
total debt to GCA of 5.26x for FY16.
Weaknesses
Small scale of operations with low net worth base
Despite being in operations for around a decade, the company's
scale of operations has remained low marked by TOI of INR11.91
crore in FY16 and tangible net worth of INR5.32 crore as on March
31, 2016. The small scale of operations limits the firm's
financial flexibility in times of stress and deprives it from
scale benefits.
Elongated operating cycle
The average operating cycle of the company stood elongated at 105
days for FY16. The average utilization of working capital limits
remained at ~95% for last 12 months period ended February, 2017.
Care Utility Products Private Limited was incorporated in March
2008. The business operations were taken over by CUP from Con
Advertisers Private Limited (engaged in manufacturing of tooth
brushes since 1988) in 2008. Currently, the company is being
managed by Mr. Kabir Sachdeva and Mrs Shail Sachdeva. The company
undertakes manufacturing and packaging of Gillete razors and also
packaging of Cadbury chocolates, on job work basis. Additionally,
the company commenced Operations & Maintenance of telecom
Infrastructure for Bharti Airtel Limited from January 2015 in the
states of Punjab, Haryana, Himachal Pradesh and Uttar Pradesh.
Also, the company started providing warehousing and logistic
solutions to Procter & Gamble and Modelez India Foods Private
Limited from July 2016, onwards. The manufacturing facilities of
the company are located in Solan (Himachal Pradesh) and Bhiwadi
(Rajasthan).
In FY16 (based on audited results), CUP has achieved a total
operating income (TOI) of INR11.91 crore with PAT of INR0.72
crore as against total operating income of INR8.95crore with PAT
of INR0.54 crore in FY15. In 11MFY17 (Provisional), the
company has achieved TOI of INR13.25 crore.
CHAWLA INTERNATIONAL: CARE Assigns B+ Rating to INR0.5cr LT Loan
----------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Chawla
International (CLI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 0.50 CARE B+; Stable Assigned
Short-term Bank
Facilities 7.25 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of CLI are primarily
constrained by its partnership nature of business, small scale of
operation with low profitability, volatile commodity prices (like
coal, rice, wheat maize etc.) with linkages to vagaries of the
monsoon and regulated nature of the industry and intensely
competitive nature of the industry with presence of many
unorganised players. The ratings, however, derive strength from
its experienced partners. Going forward, the ability of the firm
to improve its scale of operations along with profitability
margins and efficient management of working capital are the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Partnership nature of business: CLI, being a partnership firm, is
exposed to inherent risk of partners' capital being withdrawn at
the time of personal contingency. Furthermore, limited ability to
raise capital and poor succession planning may result in
dissolution of the firm.
Small scale of operation with low profitability: CLI is a
relatively small player in trading and export business with
revenue and PAT of INR33.77 crore and INR0.36 crore respectively
in FY16. Furthermore, the total capital employed was also modest
at INR5.15 crore as on March 31, 2016. This apart, the
profitability margin of the firm was low on account of trading
nature of business. During FY16 (refers to the period April 1 to
March 31), the firm ended up with a PBILDT margin of 1.96% and
PAT of 1.08%. The firm has achieved a gross turnover of about
INR42.07 crore in FY17 (provisional).
Volatile commodity prices (like coal, rice, wheat maize etc.)
with linkages to vagaries of the monsoon and regulated nature of
the industry: CLI is primarily engaged in trading and export of
products like coal, rice, wheat, maize etc. Wheat and rice being
an agricultural produce and staple food, its price is subject to
intervention by the government. In the past, the prices of the
same have remained volatile mainly on account of the government
policies in respect of Minimum Support Price (MSP) & controls on
its exports. The MSP of wheat for 2016-17 is INR1525/quintal
increased from INR1450/quintal in 2015-16. The MSP of paddy has
been increased to INR1,470/quintal in 2016-17 (as mentioned by
the Commission for Agricultural Costs and Prices, the apex body
to advice on MSP to the government) from INR1410/quintal in crop
year 2015-16. Further to be noted, the prices of both the
commodities are also sensitive to seasonality, which is highly
dependent on monsoon. Any volatility in the prices will have an
adverse impact on the performance of the same. This apart, coal
price is also volatile in the domestic market due to various
norms on coal mining. The MSP of maize for 2016-17 is
INR1365/quintal increased from INR1325/quintal in 2015-16.
Intensely competitive nature of the industry with presence of
many unorganised players: Commodity products trading is highly
fragmented and competitive due to presence of many players
operating in this sector owing to its low entry barriers, due to
low capital and technological requirements. West Bengal, Assam
and nearby states are a major paddy and wheat and other agro
commodities growing area with many processing unit operating in
the area. Besides, coal mines also are located in and around the
area. High competition restricts the pricing flexibility of the
industry participants and has a negative bearing on the
profitability.
Key Rating Strengths
Experienced partners: The firm is managed by JS Chawla, partner,
with the help of other three partners. The partners are having
over two decades of experience in trading and export operation.
Bongaigaon-Assam based Chawla International (CLI) was established
in 1994 as a partnership firm by one Mr. J S Chawla along with
his family members. The firm is in the business of trading and
exports of agro based commodities (viz, Maize, Wheat, Rice etc),
coal, Mill scale etc. The firm sells its products in domestic
market and exports (i.e. accounting about 67% of total sales
during FY16) to countries like Bangladesh, Bhutan etc.
During FY16, the firm reported a total operating income of
INR33.77 crore (FY15: INR33.96 crore) and a PAT of INR0.36
crore (in FY15: INR0.31 crore). The firm has achieved a gross
turnover of about INR42.07 crore in FY17 (provisional).
CITI CENTRE: CARE Lowers Rating on INR20cr LT Loan to 'D'
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Citi Centre Developers (CCD), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 20 CARE D Revised from
CARE B
Detailed Rationale and key rating drivers
The revision in the rating assigned to the bank facilities of
CCD takes into account the delays in debt servicing of the firm
owing to delay in completion of project and weak liquidity
position because of which the firm is unable to generate
sufficient funds in a timely manner.
Detailed description of the key rating drivers
On-going delays in debt servicing:
There are on-going delays in debt servicing of the firm. The
delays are on account of weak liquidity of the firm mainly
owing to extension of COD. However, the proposal for re-
schedulement of repayment of term loan is pending with the bank.
Citi Centre Developers (CCD) is a partnership concern established
in 2013 by Mr. Vijay Kumar Jindal, Mr. Deepak Aggarwal and Mr.
Tejpal Gupta as its partners having 30%, 35% and 35% share in
profit and loss, respectively. The firm is currently developing
its maiden commercial-cum-residential project named 'Chandigarh
Citi Centre' at Zirakpur, Punjab which was launched in November-
13. The project consists of a total of 1683 saleable units
including 1299 shops and 384 residential apartments. The firm
earlier proposed the construction of 1545 units (1437 shops and
108 residential apartments) in the form of 6 towers (A-F).
However, the project plan has been changed and the same now
includes construction of 1683 units. There is a cost overrun from
the past estimates of INR343.00 crore (provided at the time of
last review). The project is now expected to be completed at a
total project cost of INR382.39 crore due to change in scope of
project. The project is expected to be completed by December,
2017 and possession of the same would be given from November,
2017 onwards. (COD got extended from September 2015 to December
2017 due to change in scope of project).
DASHMESH RICE: CARE Lowers Rating on INR6cr LT Loan to 'D'
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Dashmesh Rice Mills (DRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6 CARE D Revised from
CARE B
The revision in the rating assigned to the bank facilities of
DRM, takes into account instances of over utilisation of the cash
credit limit due to weak liquidity of the firm.
Detailed description of the key rating drivers
Ongoing delays in debt servicing
There are instances of over utilization of cash credit limit. The
delays are on account of weak liquidity position as the firm is
unable to generate funds on timely manner.
Dashmesh Rice Mills (DRM) was established in 2001 as a
partnership firm and is currently being managed by Mr. Prem
Singh, Mr. Dalip Singh and Mr. Harjit Singh. The firm is engaged
in processing of paddy at its manufacturing facility located at
Tarn Taran, Punjab having an installed capacity of 7200 metric
ton per annum (MTPA) as on March 31, 2015. DRM procures paddy
directly from local grain markets through commission agents
located in Punjab. Furthermore, the firm sells its products i.e.
Basmati and Non-Basmati rice under the brand name of 'Dashmesh'
in all states of India through a network of commission agents.
DEV COTEX: CARE Issues 'D Issuer Not Cooperating' Rating
--------------------------------------------------------
CARE has been seeking information from Dev Cotex Pvt. Ltd. to
monitor the rating(s) vide e-mail communications/letters dated
November 10, 2016, November 15, 2016, December 31, 2016,
February 10, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with
the extant SEBI guidelines CARE's rating on Dev Cotex Pvt. Ltd.'s
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10 CARE D; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Delay in debt servicing
There are on-going delays in debt servicing.
Key Rating Weaknesses
Delay in debt servicing
The account of DCPL has been irregular in debt servicing owing to
weak liquidity position. This was mainly on account of lower
revenue generated from its business operations as against
envisaged earlier thereby leading to delay in debt servicing.
Gondal-based (Rajkot) Dev Cotex Private Limited (DCPL) is engaged
in the business of trading of cotton, cotton bales and cotton
seeds. It was established in 2010 by Mr. Anilkumar Selani and Mr.
Dhirajlal Selani and was taken over by Mr. Bharatkumar V Selani
and Mr. Chirag B Selani in October 2014. Present directors are
associated with Shiv Cotgin Private Limited of Gondal (Rajkot)
which is also into cotton and kapas trading business. DCPL
operates from its sole warehouse situated at new sardar market
yard, Gondal.
E-SHOPPE: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated E-Shoppe's Long-
Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using
these ratings. The rating will now appear as
'IND B+(ISSUER NOT COOPERATING)' on the agency's website.
Instrument-wise rating actions are:
-- INR1 mil. Fund-based working capital limit migrated to Non-
Cooperating Category;
-- INR50 mil. Non-fund-based working capital loan migrated to
Non-Cooperating Category;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 29, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in December 2014, E-Shoppe is engaged in the trading
of mobile phones and tablets. The entity was set up by Padam
Nagwani and Mukesh Mohanlal Ahuja with its office situated in
Kharghar, Maharashtra.
GMC INTERNATIONAL: Ind-Ra Migrates 'D' Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated GMC
International's (GMC) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR95 mil. Fund-based limit (long term) migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 11, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2011, GMC offers a range of fresh and packed
frozen meat products. The range covers frozen boneless buffalo,
sheep, goat meat and veal meat. Its registered office is in
Meerut, Uttar Pradesh.
GURU NANAK: CARE Downgrades Rating on INR15cr LT Loan to 'D'
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Guru Nanak Rice Mills (GRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15.00 CARE D Revised from CARE B+
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
GRM takes into account instances of over utilisation of the cash
credit limit due to weak liquidity position of the firm.
Detailed description of the key rating drivers
There are instances of over utilisation of the cash credit limit.
On an average, the firm clears the dues within two months. The
delays are on account of weak liquidity as the firm is unable to
generate sufficient funds in a timely manner.
Guru Nanak Rice Mills (GRM) is a Punjab based partnership firm
established in 2001 by Mr. Satpal Sohal, Mr. Raj Kumar Sohal and
Mr. Om Parkash Sohal, sharing profit and loss in the ratio of
31:34:35. GRM is engaged in processing and trading of paddy at
its manufacturing facility located in Nakodar, Punjab having an
installed capacity of 50,000 metric tonnes per annum (MTPA) as on
December 31, 2015. GRM procures paddy directly from local grain
markets through commission agents located in Punjab. The entity
sells its products i.e. Basmati and Non-Basmati rice through a
network of wholesalers and dealers throughout India. Punjab based
partnership firm, Ujagar Mill Satpal (UMS) is an associate
concern of GRM which is engaged in a similar business (since
1980).
HARYANA LIQUORS: CARE Lowers Rating on INR68.84cr LT Loan to B+
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Haryana Liquors Pvt Ltd (HLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 68.84 CARE B+; Stable Revised
From CARE BB
Long-term/Short- 1.00 CARE B+; Stable/CARE A4
term Bank Revised from
Facilities CARE BB/CARE A4
Detailed Rationale& Key Rating Drivers
The revision in the ratings assigned to bank facilities of HLPL
factors in the deterioration in the financial risk profile due to
sub-optimum capacity installation resulting in modest income and
profitability resulting in weak debt service coverage indicators.
The ratings also factor in the susceptibility of the company to
the changes in state policies regarding pricing and sales of
country liquor, volatility in raw material prices and working
capital intensive nature of operations.
However, the ratings continue to derive strength from experienced
promoter and management team, strategic location of the plant and
protective environment for existing players due to restrictive
licensing acting as a high entry barrier. Going forward, the
ability of the company to increase its scale of operations and
improve its profitability and capital structure shall remain the
key rating sensitivities. Furthermore, HLPL's ability to
sufficiently honor its contract manufacturing agreement with
United Spirits Ltd (USL) will be crucial.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak Financial Risk Profile due to suboptimal capacity
Installation
The company's financial risk profile is marked by moderate scale
of operations, low profitability, high overall gearing and
weak debt service coverage indicators.
HLPL's plant became fully operational only in May 2015 after the
initial phase of inferior quality production which resulted in
the company registering total operating income of INR13.46 crore
and net loss of INR5.46 crore during FY15. Against this, HLPL has
reported total income of INR125.11 crore and net loss of INR4.73
crore during FY16. During 9MFY17 (refers to the period April 1 to
December 31), the company has registered total income of
INR116.02 crore and PAT of INR0.80 crore. The company continues
to see low income and profitability due to sub-optimal capacity
of the plant at 75KLPD as against higher capacity installed for
the other plants operated by the group, thereby, resulting in
accrual of fixed costs over a lower volume and lower sales from
DDGS (a bi-product generated from the distillation process).
Consequently, HLPL is proposing to establish additional chambers
to increase the capacity of the plant from 75KLPD to 110KLPD at
an additional cost of INR11.5 crore which will be partly funded
using term loan of INR7 crore from bank and remaining from
promoter's contribution. This would be primarily used for higher
production of the high yielding DDGS (sold at INR21/Kg
approximately through distributors)and will also allow saving in
fuel costs due to economies of scale. Low profitability so far
has meant weak debt service coverage indicators with interest
coverage being 1.08 times during FY16 and total debt/gross cash
accruals being 129.74 times as on March 31, 2016 resulting in the
company relying on long term credit from grain suppliers
(Rs.13.50 crore o/s as on March 31, 2016) and support of the
group to service its debt obligations.
Working capital intensive nature of operation
HLPL's operations are working-capital intensive as the company
needs to maintain high inventory to ensure continuous
availability of raw material for bottling and distillery
operations. The average working capital utilisation for the
period FY16 was 77% for the 12 month period ended December 31,
2016.
Cyclicality in raw material prices mitigated by capability to use
multiple raw materials
The company procures raw materials (comprising around 60% of
total cost of production for FY16) through traders. The prices of
these raw materials (mainly molasses and grains) are governed by
various factors including the supply of the same which in turn is
dependent upon farm yield, government regulations, sugarcane
production etc. The prices of these raw materials are thus
volatile in nature. The margins of the company are highly
susceptible to the volatility in the prices of raw material.
However, the company has flexibility to shift its production
between grains and molasses when prices of one move in adverse
direction.
Highly regulated industry
Liquor industry is highly regulated in India with each state
controlling the production, sales and duty structure
independently. As a result, there are difficulties in transfer of
production from one state to another along with huge burden of
duties and taxes. The state controls the licenses for production,
distributorship and retailing also.
Key Rating Strengths
Experienced promoters and management team
HLPL was promoted mainly by Mr. Raghumit Singh Sodhi in June,
2010 as a private limited company. Mr. Sodhi has a rich
experience of around 18 years in various industries, viz. real
estate, Information technology, agro commodities, higher
education etc. and possesses strong government liaison skills. He
is well supported by a professional and experienced management
team.
Strategic location
HLPL's project site in Karnal district of Haryana is of strategic
locational advantage to the company in terms of availability of
raw materials (grains and molasses) in the state of Haryana as
well as in nearby states of Punjab and Uttar Pradesh.
Location near highway (3.50 km from Karnal-Asandh highway; 12 km
from NH-1) provides convenient movement and commutation. The
company plans to distribute country liquor and IMFL in state of
Haryana and other adjoining areas which are some of the biggest
consumers of liquor in northern region.
High entry barrier
Liquor policies governing its production and sale are entirely
controlled by respective State governments. With all the alcohol
consuming States/Union Territories having their own regulations
and entry-exit restrictions, it is very difficult for new
entrants to get licenses thus providing a competitive advantage
to existing players. However, the States have been reasonably
flexible in granting expansion of existing capacity to meet
demands. This acts in favor of incumbents as new players find it
difficult to start.
Tie up with United Spirits Limited
The company entered into contract with USL in the month of July,
2014 for bottling IMFL for bottling charges per case in the range
of INR40-45/case along with leasing of bottling facilities at
agreed rental of INR0.025 crore/month. However, due to initial
testing and quality requirements, bottling for USL could be
commenced from February end 2015 only. The initial contract is
for a period of 3 years. Thus, HLPL's ability to sufficiently
honor its contract manufacturing agreement with United Spirits
Ltd (USL) will be crucial.
Favourable industry prospects
Liquor industry in India has continued to grow over the years,
especially the spirits industry. Growth in middle class
households, favourable demographics, changing social attitude
towards liquor consumption, gradual shift towards IMFL
from country liquor and brand premium have been the main growth
drivers in Indian spirits industry.
Haryana Liquors Private Limited (HLPL) was incorporated in June,
2010 by Mr. Raghumit Singh Sodhi. The company has a bottling cum
distillation plant in Karnal (Haryana) with an installed capacity
of 24,750 kiloliters per annum (KLPD) of ENA, 40.0 lakh cases per
annum of country liquor and 20.0 lakh cases per annum of IMFL.
The distillery can operate on both molasses and grains.
Operations in its bottling plant were commenced in the month of
August 2014 while operations in distillation plant were commenced
in the month of October 2014. The company has also set up husk-
based captive power plant (2.34 MW) to meet the power needs of
the plant which became operational from October 2014.
During FY16 (refers to the period April 1 to March 31), HLPL
registered a total operating income of INR125.11 crore and
net loss of INR4.73 crore as against a total operating income of
INR13.76 crore with net loss of INR5.16 crore during FY15.
During 9MFY17 (provisional- refers to the period April 1 to
December 31), HLPL has registered a total income of INR116.02
crore with PBT of INR0.80 crore.
HINDUSTAN CONSTRUCTION: CARE Cuts INR4,775.80cr Loan Rating to D
-----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Hindustan Construction Company Limited (HCC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities-Term
Loan 1,067.53 CARE D Reaffirmed
Long-term Bank
Facilities-Cash
Credit 1,065.38 CARE D Reaffirmed
Long/Short-term
Bank Facilities-
Non-fund based 4,775.80 CARE D Revised from
CARE C; CARE A4
Non-Convertible
Debenture I 46.73 CARE D Reaffirmed
Non-Convertible
Debenture II 56.07 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities and instruments of
HCC have been reaffirmed and revised on account of the ongoing
delays in the servicing of debt obligations. The debt servicing
capability of the company is stressed on account of high debt
burden and resultant finance cost along-with stretched working
capital cycle on account of delayed receipt of dues and claims
settlement from customers. However, the recent implementation of
the Scheme for Sustainable Structuring of Stressed Assets (S4A)
has reduced the debt burden significantly and also expected
receipt of 75% of the arbitral award amount pursuant to the
directive of the NITI Aayog are expected to ease the liquidity
pressure to some extent in the near future.
HCC's ability to improve profitability margins, efficiently
manage working capital cycle, receipt of claim amounts awarded
and timely servicing of debt obligations remain the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in Debt Servicing: There are on-going delays in servicing
of term loans and there were instances of overdrawals and
devolvements in fund-based and non-fund based limits ranging
between 30 to less than 90 days during the six months ended
March 31, 2017.
Elongated working capital cycle: The working-capital cycle of the
company continues to be elongated during FY16 (refers to the
period April 1 to March 31) owing to delays in recoveries from
customers and high amount of inventory held due to delays in
commencement of projects.
HCC was promoted by the late Mr. Walchand Hirachand in 1926 and
is presently spearheaded by Mr. Ajit Gulabchand, Chairman and
Managing Director. HCC is one of the large construction companies
in India,
engaged in construction activities which include roads, bridges,
ports, power stations, water supply and irrigation projects. The
company's construction capabilities include solutions for
construction of projects in various complex industries including
hydel power, water solution systems, nuclear power and process
plants and transportation. The order book position of the company
stood at Rs 21,309 crore as on February 28, 2017.
HCC group of companies comprises mainly of HCC Infrastructure
Company Limited (HICL), HCC Real Estate Limited (HREL), Lavasa
Corporation Limited (LCL; rated 'CARE C (SO); Negative/CARE D'
for bank facilities and instruments), Steiner AG, Zurich (SAG),
and Highbar Technologies Limited (HTL; rated 'CARE D' for bank
facilities). HICL is engaged in construction and management of
assets in the areas of transportation. HREL develops and executes
high-value real estate projects including Integrated Urban
Development and Management, IT Parks and Commercial Offices,
Township Development, and Urban Renewal projects. LCL is
India's first planned hill city which includes integrated
development of five towns. SAG specializes in turnkey
development of new buildings and refurbishments, and offers
services in all facets of real estate development and
construction. HTL provides IT solutions to the infrastructure
industry.
On January 19, 2017 the S4A scheme was accepted by the lenders
and the debt of the company of INR5,091 crore was divided into
two parts; sustainable portion of INR2,673 crore and
unsustainable portion of INR2,418 crore, which was converted to
Optionally Convertible Debentures of INR1,441.49 crore and
balance to equity.
The Company has achieved Profit After Tax (PAT) of INR 85 crore
on Total Operating Income (TOI) of INR4,229 crore in FY16 against
PAT of INR 79 crore on TOI of INR4,269 crore in FY15.
INNOVA CHILDRENS: CRISIL Reaffirms 'D' Rating on INR11.75MM Loan
----------------------------------------------------------------
CRISIL has been consistently following up with Innova Childrens
Heart Hospital Private Limited (ICHPL) for obtaining information
through letters and emails dated January 20, 2017 and February
10, 2017 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.75 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 11.75 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 Innova Childrens Heart
Hospital 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 Innova
Childrens Heart Hospital Private Limited 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 co-
operation, CRISIL is reaffirming the rating at CRISIL D.
Incorporated in 2006, ICHPL operates a 100-bed multi-specialty
hospital in Hyderabad. The operations of the hospital are managed
by its promoter, Dr. KS Murthy and Dr. K Sujanee Murthy.
ION HEALTHCARE: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated ION Healthcare
Private Limited's (IHPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR32 mil. Term loan migrated to Non-Cooperating Category;
-- INR90 mil. Fund-based limit migrated to Non-Cooperating
Category;
-- INR20 mil. Non-fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 5, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
IHPL was incorporated in 2004 under the aegis of Mr. Rakesh Dutt;
it was taken over by Mr. Sanjeev Aggrawal and Mrs. Vaishali
Aggarwal in February 2015. IHPL manufactures tablets, capsules
and liquid syrups. The company's manufacturing units are located
in Solan (Himachal Pradesh).
JAGATH TRANSPORT: CARE Assigns 'B' Rating to INR5.0cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Jagath
Transport (JT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.00 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of JT is constrained
by small scale of operations, short track record of the firm,
thin profitability margins, leveraged capital structure and weak
debt coverage indicators. The rating is further constrained on
account of highly fragmented industry with intense competition
from other large number of players. The rating is, however,
underpinned by the experienced promoter with strong management
team, comfortable operating cycle days along with growth in the
total operating income during review period.
Going forward, the firm's ability to add new customers and
increase its scale of operations along with profit margins with
improvement in capital structure would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale and limited track record of operations
The firm was established in the year 2012 and started operations
from August 2013. Hence, it has a limited track record of
operations.
Furthermore, the firm has small scale of operations marked by
total operating income of INR33.33 crore in FY16 (refers to the
period April 01 to March 31) and networth of INR1.77 crore as on
March 31, 2016. However, JT's operations are increasing year on
year due to established clientele.
Leveraged capital structure and weak debt coverage indicators
The capital structure of the firm marked by overall gearing ratio
deteriorated from 1.67x as on March 31, 2014, to 3.43x as on
March 31, 2016, due to higher utilization of working capital loan
and lower net worth base of the firm.
The debt coverage indicators of the firm have been weak during
the review period. The total debt/GCA deteriorated from 18.23x in
FY14 to 70.58x in FY16 due to higher working capital balances as
on account closing date along with low cash accruals. The PBILDT
interest coverage also stood weak and deteriorated from1.40x in
FY14 to 1.15x in FY16.
Highly fragmented industry with intense competition from large
number of players
The transport and logistics industry in which the firm operates
is highly fragmented and competitive marked by the presence of
numerous players across India. Hence, the players in the industry
do not have any pricing power and are exposed to competition
induced pressures on profitability. Given that the firm is a
relatively small scale player, it has low bargaining power with
the fleet owners & is difficult for the firm to pass on rise in
input prices.
Constitution of entity as partnership firm
JT, being a partnership firm, is exposed to inherent risk of the
partner's capital being withdrawn at time of personal contingency
and firm being dissolved upon the death/retirement/insolvency of
the partners. Moreover, partnership firm business has restricted
avenues to raise capital which could prove a hindrance to its
growth.
Key Rating Strengths
Experienced partners
Both the partners have an overall experience of 20 years in
logistics and transportation industry gained through their
earlier experience in same line of business. The partners' are
also engaged with another sister concern, viz, Jagath Milk Dairy
(rated 'CARE B+; Stable') engaged in manufacturing of milk
products.
Increasing total operating income albeit thin profitability
margins
The total operating income of the firm has grown at CAGR of
27.48% from INR18.96 crore in FY14 to INR33.33 crore in FY16 due
to increase in repeat orders from existing customers and addition
of new customers. Furthermore, the firm achieved sales of INR30
crore during 10MFY17 (Provisional). The profit margins of the
firm have been thin during the review period due to low margins
associated with transportation and logistics business. The PBILDT
margin, though remained thin, has been increasing year-on-year
from 1.69% in FY14 to 2.85% in FY16 due to increase in scale of
operations resulting in absorption of fixed overheads. However,
the PAT margin is declining year-on-year from 0.49% in FY14 to
0.26% in FY16 due to increasing interest and finance charges
associated with utilisation of working capital facilities to
manage business operations.
Comfortable operating cycle days
The firm provides transportation services to cement companies by
taking truck hired from fleet owners. JT receives payment from
those cement manufacturing companies within 30 days and gives
payment to fleet owners within a week resulting in comfortable
operating cycle. Average utilization of overdraft facility for
the last 12 months ended January 31, 2017, was 90%.
Jagath Transport is a partnership firm established in November
2012 by Mr. Bhuma Nagi Reddy (Managing Partner) and Mr.
VenkataSesha Kumar Reddy (Partner). However, the operations were
started from 2013 onwards. Both the partners have an overall
experience of 20 years in logistics and transportation industry
which they gained through their earlier experience in same line
of business. Presently, Jagath Transport renders transportation
services mainly toviz. JSW Cement Limited (rated 'CRISIL BBB-
/CRISIL A3' assigned as on February 2, 2017) and Maha Cement.
Jagath Transport arranges trucks to transport cement from one
place to other and pricing is based on the tonnage of cement
transported and the distance of the destinations covered.
Payments are received within 30 days after the delivery of goods
to their respective destination. JT has agreements with its
customers for tenure of 3 months to 1 year where it allows a
credit period of 25 days to 30 days based on the tenure of the
agreement. The firm is insulated from the risk of loss/damage of
goods as the goods (transported by JT) are covered under
insurance by the fleet owners. JT does not own any trucks and it
hires trucks on trip basis from the lorry owners based on its
established contacts.
In FY16, the firm reported a total operating income of INR5.17
crore and a PAT of INR0.38 crore (as against a total operating
income of INR4.76 crore and a PAT of INR2.13 crore in FY15).
JAS TOLL ROAD: CARE Downgrades Rating on INR140.78cr Loan to B+
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Jas Toll Road Company Limited (JTRCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities-
Term Loan 140.78 CARE B+; Stable Revised
from CARE BB
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
JTRCL takes into account continuing losses at the net level,
erosion of net worth due to losses in FY16, weak credit profile
of the overall group, insufficient funds maintained in Debt
Service Reserve Account (DSRA) with the utilisation of the DSRA
funds towards major maintenance activity done in FY15 (refers to
the period April 1 to March 31).
The rating continues to factor in the inherent revenue risk
associated with the toll road projects characterized by
dependence on macro-economic factors and exposure to interest
rate risk. The rating, however, considers the long operational
status of the project corridor and its favourable location.
The fructification of traffic as envisaged without adverse
variations in the traffic-mix constitute the key rating
sensitivity.
Also, the ability of the company to replenish and maintain DSRA
and MMRA amidst limited cushion available between the future cash
flows and debt servicing is another key rating monitorable.
Detailed description of the key rating drivers
Key Rating Weaknesses
Stagnated traffic growth: The project road has been operational
since 2004, and the traffic has attained maturity over the years.
The toll collection in FY16 was INR68.67 crore (increased by 1%
y-o-y).The lower growth was due to moderate growth in commercial
vehicle traffic movement. Furthermore, the revision in user fee
is 100% linked to WPI, softening of WPI in the past one year has
resulted in decrease in toll rates.
Upkeep of major maintenance reserve and debt service reserve,
albeit not upto the required level: The company incurred INR33.52
crore towards maintenance in FY15. The next major maintenance is
scheduled in FY20 and the funds required would be close to INR45
crore. As on March 31, 2016, JTRCL has INR3.32 crore in DSRA
while as on December 31, 2016, JTRCL has INR3.52 crore. In the
next few years, ability of the company to build and maintain the
DSRA and MMRA amidst minimal financial support from group, whose
credit profile has witnessed significant deterioration, is a key
rating monitorable.
Penalties imposed by NHAI: NHAI has imposed penalties aggregating
INR5.93 crore on the company for noncompliance with certain
provisions of the concession agreement which are largely
associated with the MME activity. The company has already paid
penalty of INR1 crore during FY14 and has made provisions for the
balance. Currently, JTRCL has approached NHAI for waiver of the
balance penalty.
Diminution in value of investments and erosion of net-worth: In
FY16, the company made provision of INR75.18 crore (PY: INR20.53
crore) for diminution in value of investments and also incurred
loss on sale of investment INR34.26 crore in FY16 (Rs.9.40 crore
in FY15) which resulted in net loss. Consequently, networth of
the company has been eroded.
Inherent risks associated with the toll-based nature of road
projects: The toll road companies are characterized by dependence
on macro-economic factors which dictate traffic volumes and
consequently toll.
Key Rating Strengths
Locational advantage of the stretch: The stretch is an important
road in Tumkur district, which provides road accessibility
to the industrial towns of Tumkur, Neelamangala and Dobbaspeta
and forms a part of NH-4 connecting economically significant
cities viz. Mumbai and Chennai. Besides, the stretch has linkages
with NH-206, NH-207 and NH-48 with no immediate alternative route
threat.
JAS Toll Road Company Limited, is a special purpose vehicle
(SPV), promoted in 2001 by Abhijeet Group for strengthening and
widening of 32.5 km of Neelamangala-Tumkur section of NH-4
(connecting Mumbai with Chennai) on a Built-Operate-Transfer
(BOT) basis. The Concession Agreement (CA) was executed by JTRCL
with National Highways Authority of India (NHAI) in June, 2001
for the concession period of 19 years, 29 days ending on July, 21
2021. The project was completed at a cost of INR235 crore and the
company commenced tolling operations from February 2004.
During FY16, JTRCL reported a toll income of INR68.67 crore and
net loss of INR104.17 crore as compared to a toll income of
INR67.89 crore and net loss of INR20.37 crore during FY15.
KAYCEE INDUSTRIES: CRISIL Reaffirms 'B+' Rating on INR4.75MM Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Kaycee Industries at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.12 CRISIL A4 (Reaffirmed)
Cash Credit 4.75 CRISIL B+/Stable (Reaffirmed)
Inland/Import
Letter of Credit 1.0 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.63 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the Kaycee's modest scale of
operations and exposure to government restrictions relating to
the lead reclaiming industry. These rating weaknesses are
partially offset by the industry experience of the firm's
partners.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations
Modest scale (reflected in net sales of INR24.6 crore in fiscal
2016) restricts the ability to negotiate with customers or
suppliers in the highly fragmented lead reclaim industry.
* Exposure to government restrictions
The environmental hazards caused by the lead reclaim industry
results in Kaycee being constantly monitored by the government.
Strengths
* Experience of partners and strong business relations
The main partner, Mr. Tarun Dave, has over a decade of experience
in the lead reclamation business. Benefits from the partner's
experience and established relationship with major suppliers and
customers should continue to strengthen the market position.
Outlook: Stable
CRISIL believes Kaycee will continue to benefit over the medium
term from the partners' experience. The outlook may be revised to
'Positive' if scale of operations, profitability and cash accrual
increase substantially. Conversely, the outlook may be revised to
'Negative' if decline in cash accrual owing to significant
reduction in revenue or profitability, stretch in working capital
cycle or large, debt-funded capital expenditure weakens financial
risk profile, especially liquidity.
Kaycee was established in 2007 as a partnership firm by Mr.
Tarun Dave. The firm manufactures reclaim lead. It has a facility
in Saregam near Vapi, Gujarat with installed capacity of smelting
360 tonne per month.
Profit after tax was INR0.21 crore on net sales of INR24.6 crore
in fiscal 2016, vis-a-vis INR0.13 crore and INR15.0 crore,
respectively, in fiscal 2015.
PALM HEIGHTS: CARE Lowers Rating on INR15cr LT Loan to 'D'
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Palm Heights Private Limited (PHP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15 CARE D Revised from CARE B
Detailed Rationale and key rating drivers
The revision in the rating assigned to the bank facilities of PHP
takes into account the ongoing delays in debt servicing of the
company due to its weak liquidity position.
Detailed description of the key rating drivers
Ongoing delays in debt servicing
There are delays in servicing the interest amount for term loan.
The delays are on account of weak liquidity as the company is
unable to generate sufficient funds on timely manner.
Palm Heights Private Limited (PHP) was incorporated in 2013 and
is currently being managed by Mr. Daljit Dogra Singh, Mr.
Harjinder Singh Rangi and Mr. Ankit Sidana. The company is
currently developing its residential project named 'Palm Heights'
at Derabassi, Punjab, on a 2.94 acres of land. The project is
being developed in the form of seven towers with a total of 164
flats.
The group entities of PHP include DM Associates and Dogra
Property Consultants which are engaged in the real estate
industry and civil construction, respectively.
PRITHVI EDIFICE: CARE Issues 'D Issuer Not Cooperating' Rating
--------------------------------------------------------------
CARE has been seeking information from Prithvi Edifice Private
Limited (PEPL), to monitor the rating(s) vide e-mail
communications/letters dated November 9, 2016, January 18, 2017,
February 17, 2017 and February 20, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requisite information for monitoring the ratings. In
line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the publicly available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on PEPL's bank facilities and will now be
denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.67 CARE D; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating.
The ratings take into account feedback received from banker of
the company regarding conduct of the account of PEPL.
Detailed description of the key rating drivers
At the time of last rating in April 18, 2016 following were the
rating strengths and weaknesses:
Key Rating Weaknesses
Ongoing delays in debt servicing: The banker has confirmed that
there are ongoing delays in repayment of principal and interest
payment.
Established in the year 2010, Prithvi Edifice Private Limited
(PEPL) is a part of Pune based Prithvi Group and is promoted by
Mr. Abhay Kele. The company is primarily engaged in the real
estate development projects. The company has so far completed
four residential projects in Pune with a total saleable area of
1,07,800 square feet. The company has also bagged an award for
'Best Residential Development' from Business Excellence and
Research Group (BERG) at Singapore Real Estate Awards Ceremony in
2014.
Prithvi Group was established in the year 1994 and has presence
in a wide range of activities such as turnkey construction
contracts including construction of tunnel, roads, dams and
canals as well it is engaged in residential and commercial real
estate projects and has so far executed ten infrastructural
projects within the state of Maharashtra.
PEPL is currently developing a residential project named 'Prithvi
Presidio' at Hadapsar in Pune jointly with the Mr. Abhay Kele
(individual and owner of the land). The stated project will be
owned by PEPL and Mr. Abhay Kele in the ratio with a 60% and 40%
ratio.
The total saleable area of the project is 1,78,030 square feet.
The project features 1BHK designer duplexes which have been
copyrighted by PEPL along with 2 BHK, 3BHK, penthouses and such
other.
RAMA RICE: CRISIL Assigns 'B+' Rating to INR6MM Cash Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Rama Rice Mills (RRM).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable
The rating reflects RRM's modest scale of operations, average
financial risk, and large working capital requirement in the
fragmented rice industry.These weaknesses are partially offset by
the extensive experience of partners in the rice industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a highly fragmented industry:
Scale of operations is small as reflected in turnover of INR26.06
crore in fiscal 2017 and its modest capacity compared to other
large players. The rice industry is highly fragmented due to low
capital intensity and limited value addition, resulting in low
entry barriers.
* Working capital-intensive operations: Operations are working
capital intensive, with gross current assets of 180 days as on
March 31, 2017. Large working capital was mainly due to
considerable inventory. This is because paddy, the major raw
material for rice processors, is available in crop season only
from October to January-February.
* Average financial risk profile: Financial risk profile is
average, with high gearing of 4.71 times and moderate debt
protection metrics, with expected interest coverage ratio at 1.35
times and net cash accrual to total debt ratio at 0.03 time for
fiscal 2017.
Strengths
* Extensive experience of partners: The partners have an
extensive experience of over 40 years in the rice industry. This
has helped them in establishing a strong customer base as well as
setting up relations with local suppliers. Their experience has
also helped them gain a sound understanding of the market
dynamics.
Outlook: Stable
CRISIL believes that Rama Rice Mill (RRM) will continue to
benefit from its partners' extensive industry experience over the
medium term. The outlook maybe revised to 'Positive' in the event
of a substantial improvement in its financial risk profile driven
by higher-than-expected growth in revenues leading to high cash
accruals or capital infusion along with improved working capital
management. Conversely, the outlook maybe revised to 'Negative'
in case of lower-than-expected cash accruals or larger than
expected working capital requirements or large debt funded capex
exerting further pressure on the firm's liquidity.
Established as a partnership firm in 1990 by Gambhir and family,
RRM mills and processes basmati and non-basmati rice at its
facilities in Barara, Haryana.
RRM, reported a profit after tax (PAT) of INR0.11 crores on net
sales of INR22.49 crores for 2015-16 (refers to financial year,
April 1 to March 31), against a PAT of INR0.09 crores on net
sales of INR26.71 crores for 2014-15.
RELIANCE DEFENCE: Gets Lenders' Approval to Exit CDR Package
------------------------------------------------------------
LiveMint reports that Reliance Defence and Engineering Ltd has
secured nod from a consortium of lenders to exit its corporate
debt restructuring (CDR) package. The consortium of lenders, led
by IDBI Bank Ltd, has agreed to the exit plan of Reliance
Defence, a subsidiary of Reliance Infrastructure, with a longer
maturity period for loans worth about INR6,800 crore, people
aware of the matter said.
According to the report, the lenders have also given their go-
ahead to implementation of refinancing scheme of Reliance
Defence. Both the proposals were presented to the CDR Empowered
Group's (EG) meeting on March 29 and approved by the requisite
majority of CDR lenders, the report says. Reliance Infrastructure
refused to comment.
LiveMint says IDBI has confirmed to the Ministry of Defence the
approval granted by the EG to the CDR exit plan and refinancing
scheme. According to the people quoted above, the confirmation
from IDBI makes Reliance Defence eligible for participating in
all future contracts of the Navy, LiveMint relates. Now, Reliance
Defence and Larsen and Toubro Ltd are the only two private sector
shipyards that will compete with government-owned shipyards for
prestigious contracts for making submarines, landing platform
dock (LPD) and corvette.
As per the refinancing scheme approved by the Empowered Group,
about INR6,800 crore of Reliance Defence debt will be refinanced
with maturity of about 20 years and lower interest rate, the
report disclsoes. Exiting CDR is also expected to provide
increased financial manoeuvring to the company. Reliance
Infrastructure has increased its shareholding in Reliance Defence
to nearly 31%. LiveMint discloses that Reliance Defence's
current order stands at over INR5,300 crore from the Navy, the
Coast Guard and commercial vessels.
Reliance Infrastructure had acquired Pipavav Defence and Offshore
Engineering Co. Ltd in March 2015, which was later renamed as
Reliance Defence and Engineering, LiveMint discloses. Immediately
after the acquisition, Reliance Group had announced its plans to
exit CDR. The Reserve Bank of India (RBI) had also given its nod
to Reliance Defence to exit the CDR package.
LiveMint adds that Reliance Group companies have sued HT Media
Ltd, Mint's publisher, and nine others in the Bombay high court
over a 2 October 2014 front-page story that they have disputed.
HT Media is contesting the case, LiveMint reports.
Reliance Defence and Engineering Limited, formerly Pipavav
Defence and Offshore Engineering Company Limited, is a defense
company. The Company is engaged in shipbuilding and fabrication.
Its segments include Ship Building and Fabrication, and Trading.
The Ship Building and Fabrication segment includes shipbuilding,
block manufacturing, ship and rig repairs, fabrication at its
Special Economic Zone (SEZ) and Export Oriented Units (EOU)
situated at Pipavav, Gujarat. Its Trading segment includes steel
trading activities. The Company operates shipbuilding facility
with 662 meters x 65 meters dry dock. The shipbuilding facility
has modular shipbuilding facility with a capacity to build
fabricated and outfitted blocks. It fabrication facility is
spread over 2.1 million square feet. The Shipyard has a pre-
erection berth of over 80 meters length and approximately 40
meters width, and over two Goliath Cranes with combined lifting
capacity of approximately 1200 tons.
SAHDEV JEWELLERS: CARE Issues 'D Issuer Not Cooperating' Rating
---------------------------------------------------------------
CARE has been seeking information from Sahdev Jewellers to
monitor the ratings vide e-mail communications/ letters dated
March 21, 2017, and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of ratings, CARE is unable
to express opinion on the ratings. In line with the extant SEBI
guidelines CARE's ratings on Sahdev Jeweller's bank facilities
will now be denoted as CARE A4/ CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Short-term Bank 27.00 CARE A4; Issuer Not
Facilities Cooperating
Short-term Bank 14.40 CARE A4; Issuer Not
Facilities Cooperating
Short-term Bank 10.00 CARE D; Issuer Not
Facilities Cooperating
Users of these ratings (including investors, lenders and the
public at large) are hence requested to exercise caution
while using the above rating.
Detailed description of the key rating drivers
At the time of last rating on February 29, 2016, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
Small scale of operations
SJW is engaged in manufacturing and 100% export of 22 ct plain
gold jewellery. Despite long operational track record, the scale
of operations of the firm continues to remain small with total
partner's capital of INR10.83 crore and asset base of INR51.67
crore as on March 31, 2015. Furthermore, its total operating
income has marginally improved in FY15 (refers to the period
April 1 to March 31) to INR56.69 crore vis-a-vis INR52 crore in
FY14. However with stabilization of gold, the entity has recorded
revenue of INR163.08 crore for H1FY16.
Limited geographical presence with significant customer
concentration risk
SJW derives its major revenue from exports to Dubai market
thereby leading to high geographical concentration risk. The firm
had started exporting in UK market in FY14 (which contributed
around 10% in FY14 revenue), however the same was discontinued in
FY15 due to slow realisation of sales from the country.
Furthermore, SJW's customer base is also highly concentrated with
a single customer contributing around 25-30% to the total
operating income for the period FY14-FY15. However, this risk is
partially mitigated on account of long and established relations
with the firm.
Working capital intensive nature of operations
SJW's operations are working capital intensive in nature as
reflected by high receivable days (233 days in FY15). The same
was high in FY15 because of slowdown in overall demand and
decline in order book in the scenario of volatile gold and dollar
prices, as a result of which SJW had to give higher credit period
to its customers. However, the firm in turn availed higher credit
period from its suppliers on the back of its long-term
relationships resulting in operating cycle of 121 days in FY15.
Furthermore, the firm's working capital limits were almost fully
utilized throughout the year.
Weak financial risk profile
The financial risk profile of SJW is characterised by thin
profitability margins, leveraged capital structure and debt
protection indicators as on March 31, 2015. Firm's profitability
margins improved marginally in FY15 to 5.31% (2.20% in FY14)
owing to decline in certain operating expenses. Its overall
gearing (including acceptances) also increased to 2.47x as on
March 31, 2015 (1.48x as on March 31, 2014) mainly due to
increase in short term borrowings. SJW's main source of funding
is through LC's availed for procurement of gold, reflected as
sundry creditors on the balance sheet. Therefore, the high
working capital utilization and acceptances (considered as part
of debt) coupled with a low net worth base leads to high leverage
for the firm as on March 31, 2015. The debt coverage indicators
of the firm as indicated by interest coverage ratio (1.13x for
FY15) and total debt to GCA (78.76x as on March 31, 2015) are
also weak on account of high debt levels and low cash accruals
owing to low profitability.
Vulnerability of margins to foreign exchange and gold price
fluctuations
The firm is importing approximately 55-60% of its total gold
requirement. However, since SJW is a 100% export-oriented
unit, its entire sales are export sales thereby generating dollar
receipts. This provides the firm with a natural hedge to a large
extent. The prices of gold have experienced high volatility in
the past one year. Therefore, any adverse change in prices of the
same is likely to have a significant impact on margins of the
players in the G&J industry. However, the vast experience of the
promoters of SJW coupled with their policy of inventory
replenishment helps them in managing the gold price volatility to
some extent.
Key Rating Strengths
Experienced promoters and long operational track record
SJW was established in year 1998 thereby having a track record of
more than a decade in the jewellery business. The senior partner
of the firm, Mr. Vasdev Sahdev has a vast experience of almost 20
years in the jewellery industry. He had established a jewellery
export unit in name of 'Sahdev International' in 1991 in Noida
(however, not in operations currently). Mr. Ravi Sahdev, other
partner of the firm, is actively involved in each aspect of the
business including jewellery designing, business development and
manages the day-to-day operations of the firm. SJW is also the
holder of 'Gold Card' under the Gold Card Scheme for exporters by
RBI. In conformity with this, SJW has been sanctioned additional
20% of the computed fund based and non-fund-based limits.
SJW was established in 1998 as a partnership firm by Mr. Vasdev
Sahdev and Mr. Ravi Sahdev (son of Mr. Vasdev Sahdev) as
partners. The firm is a 100% export oriented unit and is engaged
in manufacturing and export of plain gold jewellery, mainly to
Dubai (UAE). The firm has a manufacturing unit at SEZ (Special
Economic Zone) in Noida, Uttar Pradesh.
SHANMUKHA COTTON: CRISIL Reaffirms 'B' Rating on INR1.25MM Loan
---------------------------------------------------------------
CRISIL has been consistently following up with Shanmukha Cotton
Products (SCP) for obtaining information through letters and
emails dated January 20, 2017 and February 10, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B/Stable (ISSUER
NOT COOPERATING; Rating
reaffirmed)
Proposed Cash 1.25 CRISIL B/Stable (ISSUER
Credit Limit NOT COOPERATING; Rating
reaffirmed)
SME Credit 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 Shanmukha Cotton Products.
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 Shanmukha Cotton Products 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 co-operation, CRISIL is reaffirming the rating at
CRISIL B/Stable.
Established in 2000, SCP is engaged in ginning and pressing of
raw cotton into cotton bales. The firm is based out of Guntur in
Andhra Pradesh and promoted by Mrs. Mannava Padma and her family.
The day to day operations of the firm are managed by Mr. Raja
Rao.
SRI SAKTHI: CRISIL Cuts Rating on INR4.75MM Cash Loan to 'B'
------------------------------------------------------------
CRISIL has been consistently following up with Sri Sakthi
Vinayaga Ginning Mills (SSV) for obtaining information through
letters and emails dated November 17, 2016 and December 19, 2016
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Negotiation 5 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 4.75 CRISIL B/Stable (Issuer
Not Cooperating; Downgraded
from CRISIL B+/Stable)
Overdraft 0.25 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Working 0.25 CRISIL B/Stable (Issuer
Capital Facility Not Cooperating; Downgraded
from CRISIL B+/Stable)
Term Loan 1.25 CRISIL B/Stable (Issuer
Not Cooperating; Downgraded
from CRISIL B+/Stable)
'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 Sri Sakthi Vinayaga Ginning
Mills. 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 Sri Sakthi Vinayaga Ginning Mills
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
downgrading the long term rating to CRISIL B/Stable and
reaffirming short term rating at CRISIL A4.
Set up as a partnership concern in 2009, SSV is engaged in
ginning and pressing of raw cotton and sells cotton lint and
cotton seeds. Promoted by Mr. M. Sekar and Mr. Jambulingam, the
firm is based in Krishnagiri District, Tamil Nadu.
SUDEEP EXIM: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sudeep Exim
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR85 mil. Fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 5, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Sudeep Exim was established in 2006 and trades steel. The
company procures 80%-85% of its products from JSW Steel Limited
('IND AA-'/Negative) and the remaining from local suppliers.
TAJSHREE CARS: CARE Lowers Rating on INR14.85cr LT Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Tajshree Cars Private Limited (TCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.85 CARE D Revised from
CARE BB-
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities of
TCPL factors in the delay in service of debt obligations by the
company. Establishing a clear track record of timely debt
servicing with improvement in liquidity position is the key
rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in servicing of debt obligations: As per interaction with
banker, there have been instances of delay in repayment of
principal and interest obligation of drop line overdraft facility
availed from State Bank of India, Hingna IND Branch, Nagpur. The
delays are on account of weak liquidity position owing to losses
registered by the company in FY16 (refers to the period April 1
to March 31).
Tajshree Cars Private Limited (TCPL) was established in the year
2013 by Mr. Avinash Bhute and his wife Mrs Sumita Bhute, who are
first-generation entrepreneurs. The company is an authorised
dealer for the four wheelers of Honda Cars India Limited (Honda)
in Nagpur region. The promoters have an experience of over one
decade in the auto dealer industry. Prior to the incorporation of
TCPL the promoters were engaged in the auto dealership for Honda
two wheelers and Chevrolet four wheelers. The commercial
operations of TCPL have commenced from February 2015 onwards.
TCPL has two other group concerns viz. 'Tajshree Autowheels
Private Limited' (rated; 'reaffirmed CARE BB-' in March 2017)
engaged in the auto dealership for two wheelers of Honda and
'Tajshree Motors Private Limited' (rated; 'reaffirmed CARE BB-'
in March 2017) engaged in the auto dealership for Chevrolet Sales
India Private Limited and auto dealership for two wheelers of
Yamaha and has both its showrooms located in Nagpur.
UNI PROFILES: CRISIL Lowers Rating on INR5.06MM Loan to 'B'
-----------------------------------------------------------
CRISIL has been consistently following up with Uni Profiles
Private Limited (UPPL) for obtaining information through letters
and emails dated January 19, 2017 and February 09, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.5 CRISIL A4 (Issuer Not
Cooperating; Downgraded
from CRISIL B+/ Stable)
Cash Credit 3.5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from CRISIL B+/ Stable)
Proposed Long Term 5.06 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded
from CRISIL B+/ Stable)
Term Loan 0.94 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from CRISIL B+/ Stable)
'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 Uni Profiles 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 Uni Profiles 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
downgrading long term rating to CRISIL B/Stable and reaffirming
short term rating at CRISIL A4.
UPPL, incorporated in 2010 and set up by Mr. Atul Agarwal,
manufactures heavy fabrication and machine components that find
application in the heavy engineering, power, steel, and
construction industries. Its manufacturing facility is in
Rourkela (Odisha).
VOLT-AGE INFRA: CARE Lowers Rating on INR9.50cr ST Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Volt-Age Infra Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.00 CARE D; ISSUER NOT
Facilities COOPERATING; Revised
from CARE B-
Short-term Bank 9.50 CARE D; ISSUER NOT
Facilities COOPERATING; Revised
from CARE A4 on the
basis of best available
Information
CARE has been seeking information from (VIPL) to monitor the
ratings vide e-mail communications/ letters dated October 20,
2016, November 21, 2016, February 1, 2017, February 3, 2017 and
March 21, 2017 and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating on Volt-
Age Infra Private Limited's bank facilities will now be denoted
as CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of ongoing delays in
repayment of its debt obligations.
Detailed description of the key rating drivers
Key rating weaknesses:
Delay in debt servicing: As per interaction with the banker,
there has been delay in debt servicing and account has been
classified as NPA.
Pune-based, Volt-age Infra Private Limited (VIPL) is engaged in
design, supply, erection, testing and commissioning of E.H.V.
(Extra High Voltage), Turnkey outdoor substation projects,
hydropower projects, switchyard station, power transmission lines
and industrial lines, testing of electrical equipments, live
line/hot line and offline maintenance on an Engineering,
Procurement and Constructin (EPC) basis. The company was
originally established as Voltage Infra & Power Projects Pvt.
Ltd. in May 2003. Later, the name of the company was changed to
Voltage Infra Pvt. Ltd w.e.f. 12th January, 2005. The company
started its operation since 2005-06. The firm undertakes projects
on tender basis for various customers including government, semi-
government and private industrial entities. It has executed
projects mainly in Maharashtra and Gujarat for the Maharashtra
State Electricity Transmission Co. Ltd. (MSETCL), Gujurat Energy
Transmission Corporation Limited (GETCO) and private industrial
clients like Volkwagen India Pvt. Ltd, Thermax Babcock & Wilcox
Energy Solutions Pvt. Ltd., NTPC Ltd. (National Thermal Power
Corporation Limited), Standard Industries Ltd., Sarsenapati
Santaji Ghorpade Sugar Factory Ltd.
=========
J A P A N
=========
TOSHIBA CORP: Hitachi, UK Fund Partner to Bid for Landis+Gyr
------------------------------------------------------------
Nikkei Asian Review reports that Hitachi has made an acquisition
proposal for Swiss smart meter maker Landis+Gyr, a Toshiba
subsidiary. The offer, put forth with U.K. private equity firm
CVC Capital Partners, is believed to be worth around JPY200
billion ($1.82 billion), the Nikkei says.
The Swiss company is likely to be a target for other suitors as
well, the report relates.
Toshiba, together with the Innovation Network Corporation of
Japan, purchased Landis in 2011 for $2.3 billion. Toshiba and the
public-private fund currently own 60% and 40% stakes,
respectively, according to the report.
Now, Toshiba is preparing to offload Landis+Gyr as it scurries to
weather massive losses from U.S. nuclear arm Westinghouse
Electric, the Nikkei relates.
According to the report, Hitachi and CVC formed a group for the
bidding, with Hitachi holding a 10% to 20% stake and CVC
controlling the majority. They have apparently proposed a plan in
which the INCJ would retain a certain interest in the Swiss
company.
Hitachi likely intends to capitalize on Landis' customer base in
the U.S. through the acquisition, the Nikkei notes.
Japan's Fuji Electric, which also produces smart meters, is
thinking about purchasing Landis as well, as part of its overseas
expansion. Smart meters help to optimize electricity use and are
a key facet of smart grids, says the Nikkei.
The Nikkei notes that Toshiba wants to sell Landis to help
mitigate risks to its overall overseas businesses. It has also
begun considering a write-down of Landis' book value.
A Toshiba official said earlier that the company is "considering
various strategic options [about Landis], including an IPO," adds
the Nikkei.
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.
TOSHIBA CORP: Plans to Replace Auditor PwC Over Differences
-----------------------------------------------------------
Taiga Uranaka and Taro Fuse at Reuters report that Toshiba Corp,
wants to replace auditor PricewaterhouseCoopers Aarata (PwC) to
resolve an impasse over full-year earnings and remain listed, two
sources briefed on the matter said.
PricewaterhouseCoopers was hired in June last year as part of
major changes at Toshiba following a $1.3 billion accounting
scandal, Reuters says. Ernst & Young ShinNihon LLC, its auditor
at the time, was fined for failing to spot irregularities.
Months later, Toshiba announced a separate $6.3 billion writedown
after dramatic cost overruns at its U.S. nuclear business,
according to Reuters. That has since prompted its Westinghouse
nuclear unit to file for bankruptcy, and Toshiba to put its
prized memory chip division on the block, Reuters notes.
According to Reuters, Toshiba and its auditor have been at odds
since the surprise writedown and earlier this month the company
filed twice-delayed business results without an endorsement from
PwC, putting its listing on the Tokyo Stock Exchange in jeopardy.
Reuters says Toshiba needs shareholder approval to sack its
auditor, but Japanese companies are allowed to hire auditors
temporarily if the incumbent quits.
The sources, who cannot be named as discussions are not public,
said Toshiba was planning to remove PwC but gave no details,
relates Reuters.
The report says Toshiba spokesman Yukihito Uchida said the
company was considering options, but nothing had been decided. A
PwC spokeswoman declined to comment.
Reuters, citing The Nikkei business daily, says Toshiba wanted to
hire a second-tier accounting firm, since the other two of the
big four, Deloitte Touche Tohmatsu and KPMG Azsa, have potential
conflicts of interest given past business deals.
At a news conference earlier this month, Chief Executive Satoshi
Tsunakawa had said there were irreconcilable differences with the
auditor over the validity of past reports, Reuter recalls.
The head of the audit committee, Ryoji Sato, had stopped short,
however, of announcing a change of auditor. There were, he said,
"various options," Reuters adds.
Reuters notes that Toshiba's auditors have questioned practices
at Westinghouse, where massive cost overruns at four nuclear
reactors under construction forced its Japanese parent to
estimate a $9 billion annual net loss. They continue to probe.
"Our investigation, which includes checking 600,000 e-mail
messages, did not find anything that would impact our accounting
reports. Even if we continue the investigation, the situation
won't change," CEO Tsunakawa said earlier this month, about the
decision to report without the auditor's approval, Reuters
relays.
Reuters says Toshiba is currently working on a financial
statement for the year ended in March. The TSE's filing deadline
is May 15 -- if Toshiba misses that, it could be delisted,
Reuters adds.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba
Corporation's corporate family rating (CFR) and senior unsecured
rating to 'Caa1' from 'B3'. Moody's has also downgraded
Toshiba's subordinated debt rating to 'Ca' from 'Caa3', and
affirmed its commercial paper rating of Not Prime. At the same
time, Moody's has placed Toshiba's 'Caa1' CFR and long-term
senior unsecured bond rating, as well as its 'Ca' subordinated
debt rating under review for further downgrade.
The TCR-AP reported on March 21, 2017, that S&P Global Ratings
has lowered its long-term corporate credit rating on Japan-based
capital goods and diversified electronics company Toshiba Corp.
two notches to 'CCC-' from 'CCC+' and lowered the senior
unsecured debt rating three notches to 'CCC-' from 'B-'.
Both ratings remain on CreditWatch with negative implications.
Also, S&P is keeping its 'C' short-term corporate credit and
commercial paper program ratings on the company on CreditWatch
negative. The long- and short-term ratings on Toshiba have
remained on CreditWatch with negative implications since December
2016, when S&P also lowered the long-term ratings because of the
likelihood that the company might recognize massive losses in its
U.S. nuclear power business; S&P kept them on CreditWatch
negative when it lowered the long- and short-term ratings in
January 2017.
=========
M A C A U
=========
MELCO CROWN: S&P Affirms 'BB' CCR; Outlook Negative
---------------------------------------------------
S&P Global Ratings said that it had affirmed its 'BB' long-term
corporate credit rating on Melco Crown (Macau) Ltd. The outlook
is negative. S&P also affirmed its 'cnBB+' long-term Greater
China regional scale rating on the Macau-based casino operator.
At the same time, S&P affirmed its 'BB-' long-term issue rating
and 'cnBB' long-term Greater China regional scale rating on the
senior unsecured notes that MCE Finance Ltd. issued. Melco Crown
guarantees the notes.
"We affirmed the ratings on Melco Crown because we expect strong
operating cash flow of the Melco International Development Ltd.
(Melco International) group will provide a buffer for the group's
potentially continuous high shareholder returns or capital
investments over the next 12 months," said S&P Global Ratings
credit analyst Sophie Lin.
When analyzing Melco Crown, S&P looks at the consolidated profile
of the group headed by Melco International. In S&P's view, Melco
Crown is the most important cash-generating asset of its
intermediate parent (Melco Resorts & Entertainment Ltd. (MLCO)
and ultimate parent company (Melco International), and it drives
the group's credit profile. S&P equalizes the stand-alone credit
profile of Melco Crown with the credit profile of MLCO, which
consolidates Studio City, a newly opened casino of the group in
Macau.
S&P expects MLCO to generate strong operating cash flow over the
next 12-24 months, driven by the accelerated ramp-up of Studio
City and City of Dreams (CoD) Manila, and steady growth and
profitability of CoD Macau. The rebound of the gaming industry
in Macau since the fourth quarter of 2016 underpins S&P's
anticipation. S&P's base case assumes MLCO's EBITDA margin will
increase to 21%-23% in 2017-2018, from about 21% in 2016.
The rating affirmation also reflects S&P's expectation that
MLCO's capital expenditure is likely to reduce over the next two
years. Other than the construction of the fifth hotel tower
(Morpheus) at CoD Macau, the company has limited development
projects in its pipeline, after the opening of Studio City. S&P
estimates MLCO's annual capital expenditure will drop to US$300
million-US$400 million in 2018, from S&P's estimate of US$700
million-US$750 million in 2017.
However, MLCO's stand-alone debt service capability could erode
if it adopts more shareholder-friendly cash distribution policies
than S&P expects over the next 12 months.
MLCO's credit profile could also be constrained by the
creditworthiness of the Melco International group if the recovery
prospect of the gaming industry in Macau deteriorates or if Melco
International's capital investment or shareholder return is more
aggressive than S&P expects. The consolidated credit metrics of
the group are weaker than the stand-alone figures of MLCO, mainly
due to Melco International's borrowing of additional
US$700 million to fund its purchase of MLCO shares in February
2017.
Nevertheless, S&P expects the Melco International group will
gradually improve its consolidated debt-to-EBITDA ratio to 3.6x-
3.8x in 2018, from S&P's estimate of 3.8x-4.0x in 2017, driven by
an improvement of free operating cash flow at MLCO.
"The negative outlook on Melco Crown for the next 12 months
reflects our view that Melco International group has limited
financial buffer at the current rating level over the next 12
months, given its high debt leverage," said Ms. Lin.
S&P believes that the group's debt service capability could
deteriorate over the next 12 months if it undertakes more capital
investments or shareholder returns than S&P expects, or if the
recovery prospect of the gaming industry in Macau deteriorates
significantly.
S&P could lower its ratings on Melco Crown if the consolidated
debt-to-EBITDA ratio of the Melco International group stays above
4.0x over the next 12 months with no sign of improvement. This
could happen if the group's consolidated operating cash flow is
weaker, or its capital investment or shareholder return is more
aggressive than S&P anticipates.
S&P could also lower its ratings on Melco Crown if MLCO's stand-
alone debt-to-EBITDA ratio exceeds 4.0x or EBITDA interest
coverage stays below 3.0x with no sign of improvement. This
could happen if: (1) MLCO's financial performance materially
weakens due to more challenging operating conditions in Macau's
gaming industry than S&P anticipates; or (2) MLCO undertakes more
aggressive shareholder-friendly cash distribution or significant
debt-funded acquisition or investment.
S&P could revise the outlook to stable if the consolidated debt-
to-EBITDA ratio of the Melco International group improves to
comfortably below 4.0x on a sustained basis. This could happen
if the group generates strong operating cash flow and
demonstrates good financial discipline with capital investment
and shareholder returns over the next 12 months.
STUDIO CITY: S&P Affirms 'BB-' CCR; Outlook Negative
----------------------------------------------------
S&P Global Ratings said that it had affirmed its 'BB-' long-term
corporate credit rating on Studio City Co. Ltd. The outlook is
negative. S&P also affirmed its 'BB-' long-term issue rating on
Studio City's senior secured notes and our 'B' long-term issue
rating on the senior unsecured notes that Studio City guarantees.
At the same time, S&P affirmed its 'cnBB' long-term Greater China
regional scale rating on the Macau-based casino operator and its
senior secured notes, and S&P's 'cnB+' long-term Greater China
regional scale rating on the senior unsecured notes.
"We affirmed the ratings on Studio City in tandem with our rating
action on its sister company Melco Crown (Macau) Ltd. (Melco
Crown) earlier today," said S&P Global Ratings credit analyst
Sophie Lin.
S&P take a consolidated view of Melco Resorts & Entertainment
Ltd. (MLCO) when evaluating the creditworthiness of Melco Crown.
S&P believes MLCO's strong operating cash flow will provide a
buffer for the group's potentially continuous high shareholder
returns or capital investment over the next 12 months.
S&P continues to assess Studio City as a strategically important
subsidiary of the MLCO group. Studio City's close linkage with
the MLCO group's brand image, common panel of management, and
operation under Melco Crown (Macau) Ltd.'s gaming subconcession
underpin S&P's assessment of the company's strategic importance
to the group. MLCO is the parent of Studio City (60% owned) and
Melco Crown (100% owned), the rated entities.
S&P believes a potential deterioration in the creditworthiness of
the MLCO group would pressure our ratings on Studio City. This
is because S&P has reflected potential support from the MLCO
group to Studio City under a credit stress scenario into S&P's
assessment of Studio City's credit profile. As such, the rating
on Studio City is three notches higher than its stand-alone
credit profile.
Studio City's stand-alone debt leverage is likely to remain high
over the next 12-24 months, given the company's weak operating
cash flow and high debt balance. S&P expects Studio City's debt-
to-EBITDA ratio to stay well above 5x and EBITDA interest
coverage to remain below 2.0x in 2017 and 2018, despite an
acceleration in gaming revenue growth and improvement in
profitability. This supports S&P's view that the company's
financial risk profile is at the weaker end of the highly
leveraged category.
"The negative outlook on Studio City reflects the negative
outlook on Melco Crown over the next 12 months," said Ms. Lin.
The ratings on Studio City move in tandem with those of Melco
Crown because S&P has reflected potential extraordinary support
from the MLCO group into Studio City's credit profile. S&P do
not expect material change of Studio City's stand-alone credit
profile over the next 12 months.
S&P could lower its ratings on Studio City if S&P lowers its
ratings on Melco Crown.
S&P could revise the outlook on Studio City to stable if S&P
revises the outlook on Melco Crown to stable.
In a less likely scenario, S&P could raise the rating if it
believes Studio City's profit contribution and strategic
importance to the MLCO group has increased substantially.
===============
T H A I L A N D
===============
IRPC PUBLIC: S&P Affirms 'BB+' CCR on Improving Earnings Profile
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' long-term corporate credit
rating on IRPC Public Co. Ltd. The outlook is stable. S&P also
affirmed its 'axBBB+' long-term ASEAN regional scale rating on
the Thailand-based refining and petrochemical company and S&P's
'BB+' long-term issue rating on the company's senior unsecured
notes.
S&P affirmed the ratings because it believes the company's
moderately improving earnings profile and pause in sustained
investing will not translate into a more solid capital structure
or liquidity profile before 2018 at the earliest.
IRPC completed most of its UHV (upstream project for hygiene and
value-added products) project in 2016, the last and final
component of the company's Phoenix project, with a total
investment of US$1.2 billion. UHV will allow the company,
through higher refinery complexity, to produce more propylene and
naphtha at the expense of lower value lube and fuel oil. IRPC
will complete the final project stages by end 2017 to maximize
its production of gasoline.
In parallel, the company will also complete its polypropylene
(PP) expansion and PP compounding projects, which together will
increase the company's PP capacity by 300,000 tons per year.
Close to 85% was completed as of Dec. 31, 2016.
"We believe the company is better positioned today to generate
higher and more sustainable earnings as it starts benefiting from
the ramp-up and full-year contribution of its initiatives to
optimize key processes, on top of industrial assets improvement,"
said S&P Global Ratings credit analyst Bertrand Jabouley. These
initiatives include the Everest project, which consolidates a
number of efficiency efforts, such as crude selection, product
blending, maintenance, and procurement. "While IRPC's ability to
meet its target of THB7 billion contribution to EBIT remains to
be seen, we believe the project paves the way for a structural
improvement in operating profitability."
Beyond 2017, the company will have implemented all the strategic
initiatives it has been deploying in the past few years, and S&P
anticipates that the period of elevated spending will be over. A
more frugal attitude to capital outlays should translate over
time into stronger credit ratios.
However, the company's debt remains sizable, with THB62.6 billion
in financial liabilities on Dec. 31, 2016. This means stronger
EBITDA generation, which S&P forecasts at THB35 billion-THB40
billion (excluding stock gains and losses) over the next two
years, could fail to translate into lower leverage, unless debt
reduces as well.
"The debt maturity profile of IRPC remains a credit constrain,
with minimal cash balances, sizable short-term maturities ahead,
and a weighted average maturity of debt of less than three years
at end-2016. We believe it would require a structural shift in
management's funding policy to sustainably lengthen its funding
profile, as the company has so far relied on its strong access to
debt capital and bank lending markets," Mr. Jabouley said.
The stable outlook on IRPC reflects S&P's view that the company's
operating performance will gradually improve as its main
efficiency programs are ramping up and fully contributing to
earnings.
S&P may downgrade IRPC if:
-- S&P lowers the company's 'b+' stand-alone credit profile
because of rising leverage. Lower-than-expected
contributions from the UHV and Everest projects, additional
investments in the asset portfolio, or overly challenging
market conditions for a prolonged time could push up debt.
The debt-to-EBITDA ratio materially above 4.5x for more
than 18 months could indicate such deterioration.
-- S&P assess IRPC's strategic importance to PTT Public Co.
Ltd. (BBB+/Stable/--; axA+/--) as having reduced. This
could materialize if PTT, and the Thai government, through
the Government Pension Fund, the Government Savings Bank,
and Thai NVDR Co. Ltd., significantly reduce their stakes
in IRPC, or the company's business integration with PTT
shifts considerably.
S&P may raise the rating if it assess IRPC's relationship with
its parent to have strengthened. This could happen if PTT
significantly raises its stake in IRPC or extends further
exceptional operational and financial support to IRPC.
S&P may also raise the rating if IRPC's cash flows sustainably
improve, with a track record of debt-to-EBITDA below 3.5x over
the next year. Any improvement depends on both incremental cash
flows from the company's efficiency projects and its willingness
and ability to reduce debt through more frugal capital
expenditure. S&P would also be looking at the company
strengthening permanently its funding profile, with less reliance
on short-term indebtedness.
=============
V I E T N A M
=============
* VIETNAM: Bankrupt Creditors May Be Aided to Refund Customers
--------------------------------------------------------------
VietNamNet Bridge reports that to-be-bankrupt financial and
credit institutions may have to refund their individual customers
using support loans from the State Bank of Viet Nam (SBV) and
other financial firms.
According to VietNamNet, the idea was proposed by SBV in the
draft law on the restructuring of credit institutions and bad
debt settlement to protect the benefits and rights of customers
at credit institutions that are going bankrupt due to its
inability of improving their performance or recovering from bad
conditions.
Part of the refund will be provided by SBV and other financial
institutions, such as the State-owned financial institution
Deposit Insurance of Viet Nam (DIV), VietNamNet says.
VietNamNet relates that the current maximum level of deposit
insurance that DIV can provide for a bankrupt creditor is VND50
million (US$2,200) for each individual customer. The Government
and other authorities are discussing the possibility of raising
the maximum level of insurance for each account to VND75 million.
With the current level of deposit insurance, individual customers
that have deposited less than VND50 million in bankrupt banks and
financial creditors do not have to worry about their assets,
according to VietNamNet.
For deposit accounts worth more than VND50 million, bankrupt
creditors must take loans at preferential rates from SBV and
other financial institutions to refund their customers, the
report says.
VietNamNet notes that the lending rate will be determined by the
Government on the request of the central bank. Individual
customers that may not be refunded are managers, directors, major
shareholders, founding shareholders and investors of the credit
institutions and those that are related to these subjects.
The report says bankruptcy of banks and creditors has attracted a
lot of attention from analysts in Viet Nam's financial market.
Bankruptcy should be the last solution when dealing with weak-
performing financial institutions and it would be a long and
complicated process but in line with international practices,
according to the economist Nguyen Tri Hieu, VietNamNet relays.
According to the report, lawyer Truong Thanh Duc said Viet Nam is
a market economy, therefore, weak-performing banks and financial
firms should go bankrupt to make the country's banking sector
secure and effective.
During the past four years of the banking system's restructuring,
SBV acquired three weak-performing banks -- Vietnam Construction
Bank, Ocean Bank and GP Bank -- compulsorily at zero dong,
reports VietNamNet.
*********
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 ***