/raid1/www/Hosts/bankrupt/TCRAP_Public/170522.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, May 22, 2017, Vol. 20, No. 100
Headlines
A U S T R A L I A
B & T CONSTRUCTIONS: First Creditors' Meeting Set for May 30
LIBERTY FUNDING 2017-2: Moody's Rates Class F Notes at B2sf
JUST BRICK: First Creditors' Meeting Set for May 26
M.J. HARRIS: Second Creditors' Meeting Set for May 30
MAHALA NOMINEES: First Creditors' Meeting Set for May 26
P & K ALOMES: Second Creditors' Meeting Set for May 30
SI POWDERS: First Creditors' Meeting Set for May 29
C H I N A
CHINA EVERGRANDE: S&P Raises CCR to 'B' on Improved Liquidity
UNITED PHOTOVOLTAICS: Moody's Reviews Ba3 CFR for Downgrade
XINHU (BVI): Moody's Rates USD700MM Notes B3; Outlook Stable
XINYUAN REAL: Fitch Affirms 'B' Long-Term Issuer Default Rating
I N D I A
3B FILMS: ICRA Assigns 'B' Rating to INR39.50cr Loan
ADIE BROSWON: ICRA Reaffirms B+ Rating on INR81.14cr LT Loan
AMBRISH KUMAR: Ind-Ra Migrates B+ Rating to Non-Cooperating
ARCHIT PLYWOOD: ICRA Reaffirms 'B' Rating on INR4.0cr Loan
ASSOCIATED ENGINEERING: Ind-Ra Assigns B+ Long-Term Issuer Rating
CHANDRALOK TEXTILE: ICRA Reaffirms B- Rating on INR9.32cr Loan
D AND M CABLES: Ind-Ra Migrates B+ Rating to Non-Cooperating
HARSHA STONE: ICRA Withdraws 'B' Rating on INR4.5cr Loan
INTERNATIONAL FRESH: ICRA Cuts Rating on INR17cr Term Loan to D
JAI BHARAT: Ind-Ra Migrates B+ Rating to Non-Cooperating
JAI SHIV: ICRA Reaffirms 'B' Rating on INR15.50cr LT Loan
JAL EXPORTS: ICRA Revises Rating on INR6.50cr Loan to B-/A4
KAMAKSHYA AGRO: Ind-Ra Migrates BB Rating to Non-Cooperating
KAYA KNITS: ICRA Reaffirms 'B' Rating on INR9.90cr Loan
KONERU CONSTRUCTIONS: ICRA Assigns B+ Rating to INR5.12cr Loan
LIMTEX INDIA: ICRA Reaffirms 'D' Rating on INR43cr Loan
M/S MANMADE: Ind-Ra Migrates BB- Rating to Non-Cooperating
MACHHALANDAPUR SIMLON: Ind-Ra Issues B+ Not Cooperating Rating
MADHUCON AGRA: ICRA Withdraws 'D' Rating on INR230cr Loan
MAKSON NUTRITION: Ind-Ra Raises Long-Term Issuer Rating to BB
OMKAR FERTILISERS: ICRA Reaffirms 'B' Rating on INR4.30cr Loan
PERTH CERAMIC: ICRA Upgrades Rating on INR18.94cr Loan to BB-
POLESTAR TRADERS: ICRA Lowers Rating on INR8.0cr Loan to 'D'
RAJGANGPUR ISPAT: ICRA Reaffirms B- Rating on INR3.0cr Loan
ROLEX LANOLIN: ICRA Lowers Rating on INR10.51cr Loan to B
RUKMINI EDUCATIONAL: ICRA Raises Rating on INR125cr Loan to BB
SADASAT CORN: ICRA Withdraws B+ Rating on INR3.50cr Cash Loan
SAI INTERNATIONAL: ICRA Reaffirms B+ Rating on INR8.25cr Loan
SAI KRISHNA: ICRA Downgrades Rating on INR15cr LT Loan to D
SHANTHILAL & SONS: Ind-Ra Assigns BB- Long-Term Issuer Rating
SHREE COTEX: ICRA Reaffirms 'B' Rating on INR7.0cr Cash Loan
SOHAM MANNAPITLU: ICRA Reaffirms B+(SO) Rating on INR54.40cr Loan
SPEEDAGE TRADE: ICRA Withdraws 'B' Rating on INR60cr Loan
SUBHAMASTHU SHOPPING: ICRA Reaffirms 'B+' Rating on INR6.5cr Loan
T.K. INTERNATIONAL: ICRA Reaffirms B- Rating on INR12cr Loan
VISHNU RICE: Ind-Ra Migrates B+ Rating to Non-Cooperating
WESTERN HILL: ICRA Assigns 'D' Rating to INR23.81cr Loan
WILLIAM INDUSTRIES: ICRA Reaffirms 'B' Rating on INR7cr Loan
J A P A N
SHOES OTTO: Court Declares Shoe Shop Bankrupt
TAKATA CORP: 4 Automakers Settle Suit Over Air Bags
TOSHIBA CORP: SK Hynix Joins Final Bid for Memory Chip Unit
M A C A U
MELCO RESORTS: S&P Assigns 'BB-' Rating to Proposed Sr. Notes
N E W Z E A L A N D
RAKON LIMITED: Annual Loss Widens to NZ$13.6MM on Sales Drop
P H I L I P P I N E S
GIFT GATE: Last Store in Philippines to Close on May 31
S I N G A P O R E
STATS CHIPPAC: Fitch Affirms B+ IDR; Removes from RWN
TRANSPORTATION PARTNERS: Moody's Assigns B2 CFR; Outlook Stable
V I E T N A M
VIETNAM: Fitch Affirms BB- IDR; Revises Outlook to Positive
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A U S T R A L I A
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B & T CONSTRUCTIONS: First Creditors' Meeting Set for May 30
------------------------------------------------------------
A first meeting of the creditors in the proceedings of B & T
Constructions (ACT) Pty Limited will be held at the Equinox
Building 4, Level 2, 70 Kent Street, in Deakin, ACT, on May 30,
2017, at 11:30 a.m.
Jonathon Colbran and Frank Lo Pilato of RSM Australia Partners
were appointed as administrators of B & T Constructions on May
18, 2017.
LIBERTY FUNDING 2017-2: Moody's Rates Class F Notes at B2sf
------------------------------------------------------------
Moody's Investors Service has assigned the following definitive
ratings to notes to be issued by Liberty Funding Pty Ltd:
Issuer: Liberty Funding Pty Ltd in respect of the Liberty Series
2017-2 Trust
-- AUD196.0 million Class A1 Notes, Assigned Aaa (sf)
-- AUD106.0 million Class A2 Notes, Assigned Aaa (sf)
-- AUD15.8 million Class B Notes, Assigned Aa2 (sf)
-- AUD10.1 million Class C Notes, Assigned A2 (sf)
-- AUD5.3 million Class D Notes, Assigned Baa2 (sf)
-- AUD6.2 million Class E Notes, Assigned Ba2 (sf)
-- AUD3.2 million Class F Notes, Assigned B2 (sf)
The AUD7.4 million Class G Notes are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity.
RATINGS RATIONALE
The transaction is an Australian prime and non-conforming RMBS
secured by a portfolio of residential mortgage loans. A portion
of the portfolio consists of loans extended to borrowers with
impaired credit histories (5.8%) or made on a limited
documentation basis (4.1%).
This is the 22nd non-conforming RMBS transaction sponsored by
Liberty Financial Pty Limited.
The ratings take account of, among other factors:
- Class A1 and Class A2 Notes benefit from 44.0% and 13.7% credit
enhancement (CE), while Moody's MILAN CE assumption, the loss
Moody's expects the portfolio to suffer in the event of a severe
recession scenario, is at 13.3%. Moody's expected loss for this
transaction is 1.5%. The subordination strengthens ratings
stability, should the pool experience losses above expectations.
- The guarantee fee reserve account. The AUD 800,000 reserve
account is funded at closing and will be replenished if required
from the bottom of the interest waterfall prior to interest paid
to the Class G noteholders. The reserve account will firstly be
available to meet losses on the loans and charge-offs against the
notes. Secondly, it can be used to cover any liquidity shortfalls
that remain uncovered after drawing on the liquidity reserve
account and principal.
- The experience of Liberty in servicing residential mortgage
portfolios. This is Liberty's 22nd non-conforming securitisation,
which highlights the lender's experience as a manager and
servicer of securitised transactions.
The key transactional and pool features are:
- The notes will initially be repaid on a sequential basis until,
among other stepdown conditions, the payment date falls on or
after the payment date in May 2018 and absence of charge offs on
any notes. Upon satisfaction of all stepdown conditions Class A1,
Class A2, Class B, Class C, Class D, Class E, and Class F Notes
will receive a pro-rata share of principal payments (subject to
additional conditions). The Class G Notes do not step down and
will only receive principal payments once all other notes have
been repaid.
- The principal pay-down switches back to sequential pay across
all notes, once the aggregate loan amount falls below 20.0% of
the aggregate loan amount at closing, or following the payment
date in May 2021.
- The weighted average scheduled loan to value ratio of the pool
of 75.4%.
- The portfolio is geographically well diversified due to
Liberty's wide distribution network.
- The portfolio contains 5.7% exposure with respect to borrowers
with prior credit impairment (default, judgement or bankruptcy).
Moody's assesses these borrowers as having a significantly higher
default probability.
- 4.1% of loans were extended on an alternative documentation
basis. For the alternative documentation loans Liberty performs
additional verification checks over and above the typical checks
for low documentation products. These checks include a
declaration of financial position and six months of bank
statements, two quarters of Business Accounting Statements or GST
returns. Liberty's alternative documentation loans have stronger
arrears performance when compared to traditional low
documentation loans. Given the additional verification checks and
the stronger arrears performance, these alternative documentation
loans have been assessed to have a lower default frequency than
standard low documentation loans.
- Investment and interest only loans: Investment and interest
only loans represent 50.8% and 51.2% of the pool respectively.
Both the proportion of investor and interest only loans is above
the Australian mortgage market average. Moody's assesses that
investor buyers have a higher probability of default compared to
borrowers who live in the property that serves as security for
that loan. Similarly, Moody's MILAN analysis has factored in a
higher default probability for loans with interest-only periods
than loans amortising from loan origination without interest-only
periods.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2016.
On the March 22, 2017, Moody's released a Request for Comment, in
which it requested market feedback on potential revisions to its
Approach to Assessing Counterparty Risks in Structured Finance.
If the revised Methodology is implemented as proposed, the credit
ratings on Liberty Series 2017-2 Trust are not expected to be
affected. Please refer to Moody's Request for Comment, titled
"Moody's Proposes Revisions to Its Approach to Assessing
Counterparty Risks in Structured Finance" for further details
regarding the implications of the proposed Methodology revisions
on certain Credit Ratings.
Factors that would lead to an upgrade or downgrade of the
ratings:
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could lead
to an upgrade of the rating. Moody's current expectations of loss
could be better than its original expectations because of fewer
defaults by underlying obligors or higher recoveries on defaulted
loans. The Australian job market and the housing market are
primary drivers of performance.
A factor that could lead to a downgrade of the notes is worse-
than-expected collateral performance. Other reasons for
performance worse than Moody's expects include poor servicing,
error on the part of transaction parties, a deterioration in
credit quality of transaction counterparties, fraud and lack of
transactional governance.
Moody's Parameter Sensitivities:
Parameter Sensitivities are designed to provide a quantitative
calculation of how the initial rating might change if key input
parameters used in the initial rating process - here the MILAN CE
and mean expected loss - differed. The analysis assumes that the
deal has not aged. Parameter Sensitivities only reflect the
ratings impact of each scenario from a quantitative/model-
indicated standpoint.
Based on the current structure, if the MILAN CE losses were to
increase to 20.0% from 13.7%, and the mean expected loss were to
increase to 2.0% from 1.5%, the model-indicated rating for the
Class A2 Notes would drop one notch to Aa1. Using these same
assumptions, the ratings on the Class B, Class C and Class D will
drop two notches, three notches and two notches respectively. The
Class A1 Notes are not sensitive to any rating migration using
these same assumptions.
Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors. Moody's
ratings are subject to revision, suspension or withdrawal at any
time at Moody's absolute discretion. The ratings are expressions
of opinion and not recommendations to purchase, sell or hold
securities.
JUST BRICK: First Creditors' Meeting Set for May 26
---------------------------------------------------
A first meeting of the creditors in the proceedings of Just Brick
Fences Pty Ltd will be held at the offices of Hall Chadwick
Chartered Accountants, Level 14, 440 Collins Street, in
Melbourne, Victoria, on May 26, 2017, at 12:00 p.m.
David Ingram and David Ross of Hall Chadwick were appointed as
administrators of Just Brick on May 16, 2017.
M.J. HARRIS: Second Creditors' Meeting Set for May 30
-----------------------------------------------------
A second meeting of creditors in the proceedings of M.J. Harris
Group Pty Ltd has been set for May 30, 2017, at 11:00 a.m. at the
offices of PPB Advisory, Level 21, 181 William St, in Melbourne,
Victoria.
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 29, 2017, at 4:00 p.m.
Andrew Scott and Nicholas Martin of PPB Advisory were appointed
as administrators of M.J. Harris on April 24, 2017.
MAHALA NOMINEES: First Creditors' Meeting Set for May 26
--------------------------------------------------------
A first meeting of the creditors in the proceedings of
Mahala Nominees Pty Ltd will be held at the offices of Deloitte,
Level 9, Tower 2, Brookfield Place, 123 St Georges Terrace, in
Perth, WA, on May 26, 2017, at 11:00 a.m.
Jason Mark Tracy and Richard John Hughes of Deloitte were
appointed as administrators of Mahala Nominees on May 16, 2017.
P & K ALOMES: Second Creditors' Meeting Set for May 30
------------------------------------------------------
A second meeting of creditors in the proceedings of P & K Alomes
Pty Ltd, trading as Great Northern Steam Laundry, has been set
for May 30, 2017, at 11:00 a.m. at the offices of Helm Advisory,
Suite 4, Level 35, 50 Bridge Street, in Sydney, NSW.
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 29, 2017, at 4:00 p.m.
Stephen Wesley Hathway and Adam Bernard Preiner of Helm Advisory
were appointed as administrators of P & K Alomes on April 26,
2017.
SI POWDERS: First Creditors' Meeting Set for May 29
---------------------------------------------------
A first meeting of the creditors in the proceedings of SI Powders
Pty Ltd will be held at the offices of Artemis Insolvency, Level
36 Riparian Plaza, 71 Eagle Street, in Brisbane, Queensland, on
May 29, 2017, at 2:00 p.m.
Peter Dinoris of Artemis Insolvency was appointed as
administrator of SI Powders on May 18, 2017.
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C H I N A
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CHINA EVERGRANDE: S&P Raises CCR to 'B' on Improved Liquidity
-------------------------------------------------------------
S&P Global Ratings said that it had raised its long-term
corporate credit rating on China Evergrande Group to 'B' from
'B-'. The outlook is stable. S&P also raised its long-term
Greater China regional scale rating on the China-based property
developer to 'cnBB-' from 'cnB-'.
At the same time, S&P raised its long-term issue rating on
Evergrande's senior unsecured notes to 'B-' from 'CCC+'. S&P
also raised its Greater China regional scale rating on the notes
to 'cnB+' from 'cnCCC+'.
"We upgraded Evergrande because the company's liquidity has
improved significantly as a result of its strong sales
performance, resulting in steady cash collection, as well as its
diversified funding sources," said S&P Global Ratings credit
analyst Matthew Chow. "We have therefore revised our assessment
of Evergrande's liquidity to adequate from weak."
Evergrande's cash balance surged to Chinese renminbi (RMB) 304
billion as of end-2016, from RMB164 billion in 2015. The company
has secured RMB30 billion in strategic investments, and is likely
to secure additional investments prior to its A-share listing
that is planned for 2017. The company has also signed an
investment agreement for 10 projects, which will result in
RMB10.85 billion in equity investments plus additional
shareholder loans. Nonetheless, Evergrande had a very limited
record of financial discipline. Any aggressive acquisition of
land or ad-hoc business beyond S&P's base case could weigh on its
improved liquidity position.
The upgrade also reflects Evergrande's improving debt and capital
structure, albeit from a very weak level. The company's debt
maturity profile is improving, although it remains concentrated.
Its short-term debt as a percentage of total debt decreased to
38% as of end-2016, compared with 54% in 2015. Its weighted
average maturity also lengthened to 2.3 years, compared with two
years in 2015. S&P expects this trend to continue in the next 12
months because of more strategic investments or potential capital
raisings.
In S&P's view, Evergrande's proposed A-share listing will enlarge
its equity base, improve its capital structure, and set up a
platform to further tap the onshore equity market. The listing
would be a positive event for the company's deleveraging plan,
provided it happens on schedule.
S&P anticipates that Evergrande will maintain its strong sales
performance with a moderate recovery in profit margins in the
next 12 to 18 months. Its contracted sales were RMB373 billion
in 2016, representing an 85.4% growth from 2015. Evergrande also
became the largest Chinese developer by contracted sales in 2016.
The company's contracted sales reached about RMB145 billion in
the first four months of 2017, up 63% year on year. S&P
estimates contracted sales in 2017 will be RMB460 billion-RMB480
billion. The company's EBITDA margin also improved to 20.9% in
2016, from 18.5% a year earlier. S&P expects EBITDA margin to
increase to 23% in the next 12 months due to the recognition of
higher-margin projects sold in the past two years.
S&P expects Evergrande's financial leverage, as measured by debt-
to-EBITDA ratio, to remain high over the next 12 months.
However, the ratio is likely to stabilize or slightly improve to
12x-14x over the period, from 14.8x in 2016 and 15.3x in 2015.
S&P believes the company's large capital expenditure (capex) will
continue to push up its total debt, but we expect the growing
sales and revenues will partially offset the impact. Evergrande
also plans to repay 70% of perpetual capital instruments in 2017.
At the same time, S&P expects the company's EBITDA interest
coverage to improve to 1.1x-1.3x in the next 12 months, compared
with 1.0x in 2016, partly driven by lower funding costs.
"The stable outlook reflects our expectation that Evergrande will
continue its strong sales performance and gradually improve its
margins over the next 12 months, supporting the company's
adequate liquidity position," said Mr. Chow. "The outlook also
reflects Evergrande's high, albeit improving, financial leverage
and capital structure, as indicated by the redemption of
perpetual capital instruments and fund-raising from pre-IPO
strategic investors."
S&P may lower the rating if: (1) Evergrande's liquidity
deteriorates significantly. This could happen if the company
makes aggressive acquisitions or significantly increases its
capex; (2) Evergrande materially increases its borrowings with
high funding cost, such that its EBITDA interest coverage
decreases to below 1.0x; or (3) the company's sales execution or
revenue recognition weakens, such that its debt-to-EBITDA ratio
deteriorates materially.
S&P may raise its rating if Evergrande further improves its
leverage and interest coverage as well as its debt maturity
profile. This could happen if: (1) the company further improves
its margin; or (2) it has a track record of a more cautious
expansion strategy and a more prudent financial policy. The
EBITDA interest coverage staying above 1.5x and the debt-to-
EBITDA ratio improving significantly from our current
expectations would trigger an upgrade.
UNITED PHOTOVOLTAICS: Moody's Reviews Ba3 CFR for Downgrade
-----------------------------------------------------------
Moody's Investors Service has placed United Photovoltaics Group
Limited's (United PV) Ba3 corporate family rating and B1 senior
unsecured rating on review for downgrade.
RATING RATIONALE
"The review for downgrade follows United PV's proposal to engage
in the hydropower business, in addition to its core solar power
business, its high level of capital expenditure in 2017 and the
potential heightening in execution risks from such a rapid
expansion," says Ada Li, a Moody's Vice President and Senior
Analyst.
Moody's review will focus on United PV's updated new energy
expansion plans, together with the corresponding financing and
execution risk management. The review will also consider any
countermeasures that United PV may implement to offset the
negative impact of its aggressive expansion plans.
On May 14, 2017, United PV announced its plan to acquire China
New Energy Holdings (Hong Kong) Limited (China NE) for HKD1.2
billion, with 50% of the funding from its own cash balance and
50% from issuing shares to the seller.
China NE's key asset is the development rights to 4.583GW in
hydropower facilities in Tibet.
The transaction is subject to further certain condition
precedents, including due diligence review and will conclude
before end-October 2017.
The rating action reflects significant challenges associated with
United PV's increasingly opportunistic expansion strategies,
considering its absence of track record in large scale power
generation projects, hydropower and the Tibet market. The rapid
and sizeable expansion in not fully incorporated in the original
rating and positions the company's credit profile at a level that
may no longer be consistent with its current rating level.
In addition, there is a limited level of visibility for the
subsequent financing of the hydropower assets to be constructed,
if the acquisition and the development rights materialize.
At the same time, the planned acquisition represents around 27%
of Moody's estimated pro-forma year-to-date total equity of
United PV. Together with other solar related equity investments
and acquisitions, United PV's capital expenditure and investments
for the year already exceeded Moody's estimate.
On the other hand, Moody's understands that United PV's capex
plan is discretionary and subject to its ability to balance its
capital structure through raising equity.
United PV has so far demonstrated its ability to balance its
financial profile through successful equity placements announced
to its single largest shareholder, China Merchants New Energy
Group Limited (unrated), subsidiaries of ORIX Corporation (Baa1
positive), and China Huarong Asset Management Co., Ltd (A3
stable), totaling RMB 1.9 billion year-to-date 2017.
The principal methodology used in this rating was Unregulated
Utilities and Unregulated Power Companies published in October
2014.
United Photovoltaics Group Limited (United PV) principally
engages in solar power generation in China. At May 17, 2017,
United PV demonstrated 1.39GW of installed capacity based on 38
projects through its subsidiaries (1.3GW) and associates (84MW).
United PV is listed on the Hong Kong Stock Exchange. As of
May 12, 2017, United PV was 26.51%-owned by China Merchants Group
(CMG, unrated) and parties acting in concert with, before full
dilution of outstanding options, convertible bonds and completion
of proposed share placements. CMG - through China Merchants New
Energy Group Limited (CMNE, unrated) - assumes management control
over United PV. CMG is a conglomerate which is wholly owned by
the State-owned Assets Supervision and Administration Commission
of China's State Council.
XINHU (BVI): Moody's Rates USD700MM Notes B3; Outlook Stable
------------------------------------------------------------
Moody's Investors Service has assigned a definitive B3 senior
unsecured debt rating to the USD700 million notes issued by Xinhu
(BVI) Holding Company Limited and unconditionally and irrevocable
guaranteed by Xinhu Zhongbao Co., Ltd. (B2 stable).
The outlook on the rating is stable.
RATINGS RATIONALE
Moody's assignment of the definitive rating follows the company's
completion of its notes issuance, the final terms and conditions
of which are consistent with Moody's expectations and are
registered with the relevant authorities.
The provisional rating was assigned on February 17, 2017, and
Moody's ratings rationale was set out in a press release
published on the same day. The proceeds of the notes will be used
for general corporate purposes, such as refinancing existing debt
and replenishing working capital.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Xinhu Zhongbao Co., Ltd. was founded in 1992 and is headquartered
in Hangzhou. It commenced its first residential property project
in Wenzhou, Zhejiang Province, in early 1990. Its operations are
mainly focused on residential property development. In addition,
it invests in financial services, internet and information-
related companies, and is engaged in commodity trading.
XINYUAN REAL: Fitch Affirms 'B' Long-Term Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed Chinese homebuilder Xinyuan Real
Estate Co., Ltd.'s Long-Term Foreign-Currency Issuer Default
Rating (IDR) at 'B' with Stable Outlook. The agency has also
affirmed Xinyuan's senior unsecured rating at 'B', with Recovery
Rating at 'RR4'.
Xinyuan's ratings continue to be supported by its solid sales and
well-located land bank. Its ratings are constrained by its small
land bank that will require the company to keep replenishing
sites at rising prices and put pressure on its leverage. Fitch
expectations that Xinyuan is likely to maintain the improvement
in its margin and its leverage is likely to remain below 50%
support its Stable Outlook.
KEY RATING DRIVERS
Strong Contracted Sales: Xinyuan's contracted sales increased by
35% to CNY12 billion in 2016, following a 35% increase in 2015.
The strong growth was driven by robust market sentiment in its
core Tier 2 cities as well as satellite cities close to Tier 1
cities, namely Zhengzhou, Jinan, Suzhou and Kunshan. Tier 2
cities accounted for around 60% of Xinyuan's contracted sales.
Fitch expects the contracted sales growth will slow to 10% in
2017 as the government has taken steps cooling down the property
market.
Margin Improved: Xinyuan's EBITDA margin (after adding back
capitalised interest) improved to 19% in 2016 from 15% in 2015.
Higher average selling prices (ASPs) in core cities and
recognition of revenue from its US projects helped the
homebuilder's gross margin to recover in 2016. Fitch expects
Xinyuan's EBITDA margin to continue improving in 2017, with ASPs
rising for most of its 10 largest projects on sale in 2016.
In addition, the homebuilder's EBITDA margin is likely to improve
faster than the gross margin, as the 7% increase in selling,
general and administration costs lagged the 35% increase in
contracted sales, which suggests operational costs are under
control. However, this improvement may reverse for projects on
land acquired in 2017 if land acquisition costs sprint ahead of
the rising ASP.
Small Land Bank: Xinyuan's total sellable gross floor area (GFA)
decreased to 2.2 million square metres (sq m) at end-2016, from
2.3 million sq m at end-2015. Its land bank will last for two
years (based on 2016 contracted sales), which is low compared
with 'B' rated peers. Xinyuan acquires its land through normal
public auctions, mergers and acquisitions, and paying advance
deposits to local government and industry partners to support its
fast-churn model.
Land Replenishment Pressures Leverage: The high contracted sales
and its small land bank have made it more urgent for Xinyuan to
accelerate land replenishment to sustain operations. The ratio of
land acquisitions to contracted sales (measured by GFA) declined
to 1x in 2016 from 2.4x in 2014. Xinyuan's expenditure on
development sites is likely to keep leverage high, as fierce
competition in Xinyuan's core cities drives up land prices. Fitch
expects Xinyuan's leverage, measured by net debt to adjusted
inventory, to increase to 49% in 2017 as it steps up land
acquisitions, before coming off to 45% in 2018 and 2019 as
acquisitions slow down.
DERIVATION SUMMARY
Xinyuan's rating is supported by its solid sales and constrained
by its high leverage and small land bank. Xinyuan has a larger
scale measured by EBITDA, higher contract sales and elevated
leverage compared with 'B' rated Chinese property peers, such as
Redco Properties Group Ltd (B/Stable). Furthermore, Xinyuan has
more stable profitability and lower leverage than 'B-' peers,
such as Jingrui Holdings Limited (B-/Negative).
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Contracted sales to increase 10% a year in 2017-2019.
- Land purchases to pick up in 2017, but remain prudent. New land
acquisition GFA / contracted sales GFA increases to 1.2x in 2017
and falls to 1.1x in 2018 and 2019.
- Land cost per sq m increases to USD401 in 2017, and USD400-450
in 2017-2018.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Significant increase in scale as reflected by contracted sales
exceeding CNY15 billion
- Net debt/adjusted inventory sustained below 40%
- Improvement in contracted sales/total debt to above 1.0x on a
sustained basis
- Improvement in EBITDA margin to above 20% on a sustained basis
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Net debt/adjusted inventory rising above 60% on a sustained
basis
- Contracted sales/total debt falling below 0.6x on a sustained
basis
- EBITDA margin falling below 15% on a sustained basis
LIQUIDITY
Better Liquidity Position: Xinyuan's liquidity position has
improved as its ratio of cash to short-term debt rose to 103% at
end-2016 from 66% end-2014. Xinyuan's total cash of USD907
million (CNY6.2 billion) and undrawn credit facilities of USD968
million at end-March 2016 are sufficient to cover its short-term
borrowings of USD883 million and acquisition costs.
FULL LIST OF RATING ACTIONS
Xinyuan Real Estate Co., Ltd.
Long Term Foreign-Currency IDR affirmed at 'B'; Outlook Stable
Senior unsecured rating affirmed at 'B', with a Recovery Rating
of 'RR4'
Rating on USD200 million 13.00% senior unsecured notes due 2019
affirmed at 'B', with a Recovery Rating of 'RR4'
Rating on USD300 million 8.125% senior unsecured notes due 2019
affirmed at 'B', with a Recovery Rating of 'RR4'
Rating on USD300 million 7.75% senior unsecured notes due 2021
affirmed at 'B', with a Recovery Rating of 'RR4'
=========
I N D I A
=========
3B FILMS: ICRA Assigns 'B' Rating to INR39.50cr Loan
----------------------------------------------------
ICRA Ratings has assigned the long term rating of [ICRA]B to the
INR39.50 crore long term fund based facilities of 3B Films
Private Limited. The outlook on the long term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 39.50 [ICRA]B (Stable); assigned
Rationale
The assigned rating is constrained by the start-up nature of the
company's operations and its relatively modest scale of
operations. The assigned rating is also constrained by the
fragmented and competitive nature of the CPP films manufacturing
industry, which limits pricing flexibility. ICRA notes the
vulnerability of the company's profitability to adverse
fluctuations in raw material (PP granules) prices and its low
bargaining power with major suppliers, which cumulatively is
expected to impact profitability. The rating further takes into
account the company's moderate debt servicing liability, which
coupled with the high gestation period associated with
stabilisation of operations, is expected to keep its credit
profile constrained in the near to medium term. The rating,
however, favorably takes into account the key managerial
personnel with more than two decades of experience in the flexi
packaging industry. ICRA also notes the stable demand outlook for
the packaging industry and various fiscal benefits available to
the company that are likely to support profitability. ICRA notes
that the ability of the company to improve its scale of
operations and profitability amidst the competitive environment,
while maintaining a comfortable capital structure will remain the
key rating sensitivity.
Going forward, the scale-up and stabilisation of operations and
achievement of optimal capacity utilisation levels, so as to
generate adequate cash flows for repayment of debt obligations,
will remain some of the key rating sensitivities
Key rating drivers
Credit strengths
* Experienced key managerial personnel with more than
two decades of experience in the flexi packaging industry
* Various available fiscal benefits likely to support
profitability
* Stable demand outlook for flexi packaging products
Credit weaknesses
* Start-up nature of business, coupled with relatively modest
proposed scale of operations.
* Capital structure expected to remain highly leveraged due to
primarily debt funded nature of the project
* Moderate debt-servicing liability, coupled with high gestation
period associated with stabilisation of operations, expected
to keep the credit profile constrained over the near term.
* Future cash flow adequacy and project metrics will be highly
sensitive to product establishment and pricing power in the
market
* High level of competition due to fragmented industry structure
* Vulnerability of profitability to any adverse fluctuation in
prices of raw material, which are crude oil-linked
Description of key rating drivers:
Currently, the company manufactures CPP films with 20-300
microns. CPP films have various applications in the flexible
packaging segment, such as bags for food packaging, stationery,
groceries and textiles, etc. The flexible packaging industry is
expected to register further growth fuelled by demand for more
expensive films and coatings for longer shelf lives of products
packaged. However, intense competition and pricing pressure
stress the profit margins of most industry players. The company
is eligible for various incentives under state government and
Central Government schemes which are expected to support the
company's profitability, going forward. Polypropylene homopolymer
(PPH), PP granules and other adhesives are the major raw
materials which are crude oil derivates and prices of these raw
materials witness a high degree of volatility, which affects the
company's profitability. The total project cost was INR53.5
crore, which was funded through a debt-equity ratio of 3.28:1
times.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the standalone business risk profile, financial risk
drivers and the management profile of the company The Company
operates as a standalone entity and doesn't have a subsidiary.
3B Films Private Limited, incorporated in September 2014, has set
up a Greenfield project at Vadodara (Gujarat) to manufacture cast
polypropylene films (CPP films), which are used as flexi
packaging. The unit has an estimated production capacity of 7,200
metric tonnes per annum. Its commercial operations were
commissioned in March 2017. 3B Films is promoted by Mr. Ashok
Babariya and his family. The company has appointed Mr. Malay
Bhowmick, who has two decades of experience in the flexi
packaging industry, as the Chief Executive Officer.
ADIE BROSWON: ICRA Reaffirms B+ Rating on INR81.14cr LT Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ and
short-term rating of [ICRA]A4 for the INR112.45-crore fund based
and non-fund based limits of Adie Broswon Breweries Private
Limited. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund
based 81.14 [ICRA]B+ (Stable); Reaffirmed
Long-term:
Unallocated 24.31 [ICRA]B+ (Stable); Reaffirmed
Short-term: Non-
fund based 7.00 [ICRA]A4; Reaffirmed
Rationale As part of its process and in accordance with its
rating agreement with ABB, ICRA has been trying to seek
information from the company so as to undertake a surveillance of
the ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of
requisite information, ICRA's Rating Committee has taken a rating
view based on best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA] B+/[ICRA[A4
(Stable) ISSUER NOT COOPERATING". The lenders, investors and
other market participants may exercise appropriate caution while
using this rating, given that it is based on limited or no
updated information on the company's performance since the time
it was last rated.
Key rating drivers
Credit strengths
* Raw material pass on clause with SAB Miller insulates the
margins against the raw material price fluctuations to a
large extent
* Part of Chadha Group of companies which has strong presence
in the liquor trading business
* Increasing the geographical footprint for home brewed beer
'Rockberg'
Credit weaknesses
* Weak capital structure and coverage indicators
* Low profitability levels
* Exposed to inherent business risk associated with operating
in the liquor industry- taxes and other regulatory changes
Description of key rating drivers:
ABB runs a brewery unit in Gurdaspur area of Amritsar, Punjab
which got operational in May 2012. The brewery has a capacity of
5 lakh hectolitre per annum (i.e. 500 lakh cases per annum) and
is catering to Skol Breweries Limited (SBL). Further, the
facilities are also being used to manufacture the company's own
brand of beer "Rockberg". ABB has entered into a 10 year contract
manufacturing agreement with Skol Breweries Limited (SBL) to
employ portion of its total capacity towards manufacturing of SAB
Miller's two renowned beer brands. ABB has significant debt and
interest obligations owing to the debt funded capital expenditure
made in the past. With losses made in FY2014 and FY2015, the
company has infused unsecured loans in FY2014 to the tune of
INR19.42 crore and in FY2015 infused capital to the tune of
INR19.73 crore, enabling them to service the debt obligations. In
FY2016, the company has issued additional equity worth INR5
crore. The rating remains constrained by the fact that the liquor
industry is highly regulated in nature, which attracts high
duties and taxes and is exposed to changes in state policies
governing sale, distribution and pricing of liquor.
ABB was incorporated in March, 2010 and is engaged in brewing
beer at its manufacturing facility located in Amritsar, Punjab.
The company is a part of the Late Mr. Hardeep Chadha Group. The
company has an installed capacity for manufacturing and brewing 5
lakh hector liters of beer per annum. ABB also undertakes
contract manufacture for SBL. The company has also recently
launched its own beer brand "Rockberg".
AMBRISH KUMAR: Ind-Ra Migrates B+ Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Ambrish Kumar
Tripathi's (AKT) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are.
-- INR10 mil. Fund-based working capital limit migrated to
Non-Cooperating Category;
-- INR45.5 Non-fund-based working capital limit migrated to
Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 28, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2009 by Mr. Ambrish Kumar Tripathi, AKT is a
proprietorship concern. It is engaged in the construction work
of dams and canals for Madhya Pradesh Water Resources Department
(MPWRD). The firm has a status of 'Class A' contractor with
MPWRD.
ARCHIT PLYWOOD: ICRA Reaffirms 'B' Rating on INR4.0cr Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating of [ICRA]B on
the INR4.00-crore cash credit facilities and INR0.75-crore term
loan facility of Archit Plywood Private Limited (APPL), and the
short-term rating of [ICRA]A4 to the INR4.00-crore non-fund based
limits of APPL. ICRA has also reaffirmed its long-term rating and
short-term rating of [ICRA] B and [ICRA] A4 on the INR0.25 crore
unallocated limit of APPL. The outlook on the long-term rating is
Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term: Cash
Credit 4.00 [ICRA]B (Stable); Reaffirmed
Long-term: Term
Loan 0.75 [ICRA]B (Stable); Reaffirmed
Short-term: Letter
of Credit 4.00 [ICRA]A4; Reaffirmed
Short-term/Long-
term: Unallocated 0.25 [ICRA]B(Stable)/[ICRA]A4;
reaffirmed
Rationale
As part of its process and in accordance with its rating
agreement with APPL, ICRA has been trying to seek information
from the company so as to undertake a surveillance of the
ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of
requisite information, ICRA's Rating Committee has taken a rating
view based on best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA] B/[ICRA[A4
(Stable) ISSUER NOT COOPERATING". The lenders, investors and
other market participants may exercise appropriate caution while
using this rating, given that it is based on limited or no
updated information on the company's performance since the time
it was last rated.
APPL commenced operations from October 2011 and is engaged in the
trading of timber and manufacturing of plywood, veneer, block
board and flush doors. It sells the products under the registered
brand name "Archit". The company's head office is located in New
Delhi whereas the manufacturing facility is located in
Gandhidham, Gujarat.
ASSOCIATED ENGINEERING: Ind-Ra Assigns B+ Long-Term Issuer Rating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Associated
Engineering Enterprises (AEE) a Long-Term Issuer Rating of
'IND B+'. The Outlook is Stable. Instrument-wise rating actions
are:
-- INR45 mil. Fund-based working capital limit assigned with
'IND B+/Stable/IND A4' rating
-- INR95 mil. Non-fund-based working capital limit assigned
with 'IND A4' rating
-- INR20 mil. Proposed fund based working capital limit*
assigned with 'Provisional IND B+/Stable/Provisional
IND A4' rating
*The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by AEE to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The rating reflects AEE's weak credit profile and a tight
liquidity position. As per provisional financials for FY17,
revenue plunged to INR8.9 million (FY16: INR69.7 million; FY15:
INR174.4 million). The decline in revenue over FY16-FY17 is
attributed to the draining of the order book due to non-
participation in the new tender. The substantial decline in the
revenue in FY17 led to EBITDA losses. The company also had a
volatile EBITDA margin of 9-24% over FY13-FY16. Interest
coverage (Ind-Ra operating EBITDA/gross interest expense)
deteriorated to 1.3x in FY16 (FY15: 2.5x) and net leverage (total
adjusted net debt/operating EBITDAR) was to 9.4x (4.1x) due to a
decline in the absolute EBITDA to INR7.8 million (INR15.8
million). However, Ind-Ra's expects a substantial improvement in
AEE's credit profile by FY18 on the back of strong order book of
INR390.9 million as of April 2017, scheduled to be completed by
FY19, thus providing near-term revenue visibility.
AEE had almost full utilization of its fund-based facilities over
the 12 months ended March 2017.
However, the ratings are supported by AEE's partners' experience
of over three decades in the engineering, procurement and
construction business.
RATING SENSITIVITIES
Positive: A substantial improvement in the revenue and
profitability margin, leading to a sustained improvement in the
credit metrics could lead to a positive rating action.
Negative: Non-achievement of the revenue and profitability margin
as expected by the management, leading to a stress on the
liquidity and the consequent impairing of timely debt servicing
could lead to a negative rating action.
COMPANY PROFILE
Established in 1985 and located in Hyderabad, AEE is an
engineering, procurement and construction firm. The firm is
registered with roads and buildings department as a special Class
Civil Contractors in Andhra Pradesh and Telangana.
CHANDRALOK TEXTILE: ICRA Reaffirms B- Rating on INR9.32cr Loan
--------------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B- for
the INR9.32 crore bank facilities of Chandralok Textile
Industries Private Limited. The outlook on long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 9.32 [ICRA]B- (Stable); Re-affirmed
Rationale
The rating action is based on best available information. As part
of its process and in accordance with its rating agreement with
Chandralok Textile Industries Private Limited, ICRA has been
trying to seek information from the company to undertake a
surveillance of ratings; but despite multiple requests, the
company's management has remained non-cooperative. In the absence
of the requisite information, ICRA's Rating Committee has taken a
rating view based on the best available information. In line with
SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating is now denoted as:
"[ICRA]B- (Stable); ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited information or no updated information on the company's
performance since the time it was last rated.
Key rating drivers
Credit strengths
* Strong experience of the promoters within the textile business
* Favourable location of the plant in Bhiwandi, entailing
proximity to suppliers and customers.
* Sustained growth in operations of the company over last three
years
Credit weaknesses
* Weak financial profile characterised by low profitability and
moderate coverage indicators
* Highly leveraged capital structure, debt funded capex plan to
further stretch the capital structure.
* Stretched liquidity position as evident in full utilisation of
working capital limits
* Industry characterised by severe competition from players in
the unorganised sector
Chandralok Textile Industries Private Limits is engaged in
processing grey cloth, mainly in the nature of bleaching, dyeing
and printing in order to produce fabric for manufacturing
suiting, shirting and dress materials. In a small way, the
company is also engaged in trading of grey and finished fabrics.
Its promoters have extensive experience in the textile industry
and handle the overall operations and marketing of the company.
Furthermore, the presence of its manufacturing unit in Bhiwandi,
which is a textile hub of Maharashtra, provides advantages in
terms of proximity to suppliers and customers. However, the
company's profit metrics remains weak due to limited value
addition in the fabric processing and trading operations.
Furthermore, a highly fragmented and competitive industry
structure with a large number of unorganised players due to low
entry barriers, limits the company's pricing flexibility.
Chandralok Textile Industries Private Limited, incorporated in
2003, is in the business of processing grey cloth for the
production of fabric used in making suitings, shirtings and dress
materials. The company's registered office is in Mumbai and its
manufacturing unit is in Bhiwandi (Maharashtra). Mr. Chandramohan
Chaudary is the key director of the company, with more than four
decades of experience in the textile industry.
D AND M CABLES: Ind-Ra Migrates B+ Rating to Non-Cooperating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated D and M Cables
Private Limited's (DMCPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR60 mil. Fund-based working capital limit Migrated to
Non-Cooperating Category;
-- INR15 mil. Non-fund-based working capital limit migrated to
Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 1, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
DMCPL was incorporated in 2013 and began operations in 2014. It
manufactures aluminium cable wires at its 12,000mtpa plant in
Sonepat, Haryana.
HARSHA STONE: ICRA Withdraws 'B' Rating on INR4.5cr Loan
--------------------------------------------------------
ICRA Ratings has withdrawn the long-term rating of [ICRA]B and
the short-term rating of [ICRA]A4 for the INR9.50 crore fund-
based/ non-fund-based limits of Harsha Stone Industries (HSI) at
the request of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Packing Credit 4.50 [ICRA]B Withdrawn
Foreign Outward
Bills Purchase
(FOBP) 5.00 [ICRA]A4 Withdrawn
INTERNATIONAL FRESH: ICRA Cuts Rating on INR17cr Term Loan to D
----------------------------------------------------------------
ICRA Ratings has revised its long-term rating on the INR30.00
crore fund-based bank facilities of International Fresh Farm
Products India Limited (IFFPIL) to [ICRA]D from [ICRA]B+.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 17.00 [ICRA]D; revised from
[ICRA]B+
Working Capital 13.00 [ICRA]D; revised from
Limits [ICRA]B+
Rationale
The revision in ratings is on account of delays in debt servicing
by the company due to its stretched liquidity position. IFFPIL
has a modest scale of operations of IFFPIL, which coupled with
the highly capital-intensive nature of the business has resulted
in weak return indicators. ICRA however, takes note of the
extensive experience of the promoters in the cold storage
business.
Going forward, the ability of the company to improve its
liquidity position and service its debt in a timely manner will
be the key rating sensitivity.
Key rating drivers
Credit strengths
* Established track record of promoters in cold storage and
warehousing business
* Annual agreement with PIH ensures revenue visibility
Credit weaknesses
* Delay in debt servicing on account of stretched liquidity
position
* Decline in operating income in FY2017 driven by lower
volumes and sales realization
* Highly competitive nature of the industry characterized by
presence of numerous unorganized players in wheat processing
and cold storage industry
* Vulnerability of margins to raw material price trends,
partially mitigated by the short conversion cycle and fast
moving nature of the product
* Agro climatic risks associated with the availability of wheat
and green peas
* Corporate guarantee of INR26.40 crore given by company in
favor of its subsidiary
Description of key rating drivers:
Weak realizations and declining sales volumes along with
deterioration in the working capital metrics has resulted in
inadequate cash flows and stretched liquidity position for IFFPIL
leading to delays in term loan repayments. The financial profile
remains weak with the company incurring losses in the warehousing
and wheat processing division. Further, high annual debt
repayment obligation with declining cash accruals has led to weak
debt service coverage indicators.
The promoters and their families have been involved in the food
processing and warehousing business for more than a decade and
have gained a thorough knowledge of the market. Their long
presence in this industry has helped the company to establish
strong relationships with its suppliers and customers.
Incorporated in 1996, IFFPIL has been promoted by Mr. Sukhinder
Singh and his family members. Initially the company was engaged
in the business of providing cold storage and warehousing
facility on a rental basis. In FY2012, the company ventured into
the processing of wheat and started manufacturing various wheat
products like Atta, Maida, Suji, Bran and other byproducts. In
FY2014, the company forayed into processing of vegetables and
installed a cold chain facility for frozen vegetables. IFFPIL
sells its frozen food products under its own brand "Fresh Farm".
The company also owns a cold storage facility of 8,600MT in
Punjab, which has been given to Pepsico India Holdings Private
Limited on a rental basis.
IFFPIL recorded a net profit after tax (PAT) of INR0.94 crore on
an operating income of INR30.82 crore in FY2016 as against a net
profit of INR3.78 crore on an operating income of INR27.55 crore
in the previous year.
JAI BHARAT: Ind-Ra Migrates B+ Rating to Non-Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Jai Bharat
Industries' Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR40 mil. Fund-based working capital limit migrated to Non-
Cooperating Category;
-- INR42.5 mil. Term loans migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 12, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Jai Bharat Industries is a partnership entity and runs the
business of rice and flour milling. The plant of the entity is
located in Hardoi (Uttar Pradesh).
JAI SHIV: ICRA Reaffirms 'B' Rating on INR15.50cr LT Loan
---------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR15.50-crore fund-based bank facilities of Jai Shiv Food
Products Private Limited (JSF). ICRA has also reaffirmed the
short-term rating of [ICRA]A4 on the INR0.50-crore fund-based and
INR0.01-crore non-fund based bank facilities of JSF. The outlook
on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund-based 15.50 [ICRA]B (Stable); Reaffirmed
Short-term non-fund
based 0.01 [ICRA]A4; Reaffirmed
Short-term fund-based 0.50 [ICRA]A4; Reaffirmed
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with JSF, ICRA has been trying to seek information from the
company to undertake a surveillance of ratings, but despite
repeated requests by ICRA, the company's management has remained
non-cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B (Stable)/[ICRA]A4
ISSUER NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Incorporated in April, 2012, JSF mills and processes parboiled
basmati rice of Pusa 1121 variety. The company started operations
in February 2013 with the facilities located at Dabra (district
Gwalior), Madhya Pradesh.
JAL EXPORTS: ICRA Revises Rating on INR6.50cr Loan to B-/A4
-----------------------------------------------------------
ICRA Ratings has revised the long-term rating to [ICRA]B- from
[ICRA]B+ and reaffirmed the short-term rating of [ICRA]A4 for the
INR12.00 crore fund based limits and INR0.50 crore non-fund based
limits of Jal Exports. The outlook on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term/Short 6.50 [ICRA]B-(Stable)/[ICRA]A4;
Term Fund Based revised from
Limits-PC/PCFC [ICRA]B+/[ICRA]A4
Long Term/Short 5.50 [ICRA]B-(Stable)/[ICRA]A4;
Term Fund Based revised from
Limits-FDB/FBE/ [ICRA]B+/[ICRA]A4
BRD/Rupee Advance
Short Term Non fund 0.50 [ICRA]A4/Reaffirmed
Based Limits-Letter
of Credit
Rationale
The revision in the long term rating takes into account the
firm's stretched financial profile as characterized by decline in
sales and net losses reported in FY2016 and FY2017, weak debt
coverage indicators and the high working capital intensity of
operations resulting from high inventory holding period. ICRA
notes that the profitability of the firm remains vulnerable to
adverse fluctuations in raw material prices and foreign currency
risks, given that the firm hedges only ~50-60% of its export
receivables. The firm witnesses intense competition by virtue of
the highly fragmented industry structure which limits its pricing
power with the customers.
The ratings, however, continue to factor in the long experience
of the firm's partners in the garment export business, the
established relationships with its customers in the international
market, and the financial support by the partners in the form of
capital infusion over last two fiscals.
Going forward, the ability of the firm to turnaround its
operations while ensuring revenue growth and improvement in
profitability, and efficient management of working capital cycle
will remain key rating sensitivities.
Key rating drivers
Credit Strengths
* Long standing experience of the partners of over three decades
in garment exports business
* Established relationships with the customers, catering to
private label brands in international markets
* Financial support by way of capital infusion by the partners
to support losses and repayments over last two fiscals
Credit Challenges
* Deterioration in financial profile as reflected by decline
in sales and net losses for FY2016 and FY2017 and weakening
of debt coverage indicators
* High working capital intensity of operations due to higher
inventory holding period
* Profitability exposed to adverse fluctuations in raw material
prices and foreign exchange currency risk
* Intense competition owing to high fragmentation limits pricing
Power
Description of key rating drivers highlighted above:
The firm sold 7.31 lakh pieces of ready-made garments in FY2016
as compared to 10.17 lakh pieces in the previous fiscal. The firm
stopped dealing with two of its key export customers, which
together constituted ~30-35% of its revenues, over payment issues
since FY2016. This led to decline in sales volumes and thereby
sales revenues in FY2016. JE's operating revenues declined by
~21% from INR41.21 crore in FY2015 to INR32.54 crore in FY2016
and further by ~11% to INR28.81 crore in FY2017 due to lower
sales volumes. The decline in sales coupled with high fixed
overheads led to subdued operating profitability for the firm
over last two fiscals. The operating profit margin declined from
6.25% in FY2015 to 0.34% in FY2016 and 0.56% in FY2017
(provisional) due to loss of revenue and high fixed overheads.
The firm reported PBT loss of 5.29% in FY2016 and 1.56% in FY2017
(provisional) as compared to a profit of 0.53% in FY2015 due to
subdued operating margins, coupled with a forex loss of INR0.78
crore in FY2016. The working capital intensity remained high due
to higher inventory holding period as on March 31, 2017.
Analytical approach: To arrive at the ratings, ICRA has taken
into account the standalone financials of the firm along with key
operational developments in the recent past. The firm operates as
a standalone entity and doesn't have any subsidiary in place.
Incorporated in 1976 as a partnership firm, Jal Exports (JE) is a
Government recognized Star Export House engaged in the
manufacture and export of high fashion readymade garments (mainly
casual shirts for men) catering to the export markets of Europe,
South America, USA and UK. The firm's registered office is
located in Mumbai, and its manufacturing facility is in Karnataka
with an annual installed production capacity of 3.60 lakh pieces
of ready-made garments. The firm primarily sells its products to
private label brands like Lee Cooper and Seaport in the
international markets. The firm also carries out trading of
fabrics on a small scale.
The partners of the firm have an extensive experience of over
three decades in the textile export business. Apart from JE, the
partners are actively associated with other group entities like
V.C. Enterprises, Pat International, Thakersey Exports Pvt. Ltd.
and Jal Exports Pvt. Ltd. The companies are managed by Mr. Vishal
Thakkar and Mr. Chirag Thakkar.
JE reported a loss of INR1.72 crore on an operating income of
INR32.54 crore in FY2016 as compared to a Profit Before Tax (PBT)
of INR0.22 crore on an operating income of INR41.21 crore in
FY2015. For FY2017, the firm reported a loss of INR0.45 crore on
an operating income of INR28.81 crore, as per provisional
estimates.
KAMAKSHYA AGRO: Ind-Ra Migrates BB Rating to Non-Cooperating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kamakshya Agro
Products Pvt Ltd's (KAPPL) 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:
-- INR40 mil. Fund-based working capital limit migrated to
Non-Cooperating Category;
-- INR20.87 mil. Long-term loans migrated to Non-Cooperating
Category; and
-- INR1.20 mil. Non-fund-based working capital limit migrated
to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 4, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
KAPPL was incorporated in 2009 by Mr. Susobhan Sarkar and Ms.
Manjusha Sarkar. It is primarily engaged in the processing and
milling of rice. The company's 14,400mtpa paddy milling facility
is located in Burdwan, West Bengal.
The company sells its products under the Kamakshya Gold brand to
traders and wholesalers in West Bengal, Bihar and Jharkhand.
KAYA KNITS: ICRA Reaffirms 'B' Rating on INR9.90cr Loan
-------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B for
the INR9.90 crore long-term fund-based limits of Kaya Knits. ICRA
has also re-affirmed the long-term rating of [ICRA]B and short-
term rating of [ICRA]A4 for the INR0.10 crore unallocated limits
of the firm. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 9.90 [ICRA]B (Stable); re-affirmed
Unallocated limits 0.10 [ICRA]B (Stable)/[ICRA]A4;
re-affirmed
Rationale
The re-affirmation of ratings continues to factor the modest
scale and limited track record of operations of Kaya Knits. The
ratings are further constrained by the firm's highly leveraged
capital structure owing to primarily debt-funded nature of capex,
which is likely to keep the credit metrics stretched in the
medium term. The ratings also factor in the firm's presence in
the highly fragmented and competitive fabric manufacturing
industry and the vulnerability of its profitability to adverse
movements in yarn prices. ICRA also notes that Kaya Knits is a
partnership firm and any significant withdrawals from the capital
account could affect its net-worth and thereby its capital
structure.
The ratings, however, continue to favourably factor in the
established experience of the partners in the textile industry
and the advantages it enjoys from its location in Surat, which
provides easy accessibility to key raw materials and proximity to
customers.
Key rating drivers
Credit Strengths
* Established experience of the promoters across different
value chains in the textile industry
* Presence in Surat provides easy accessibility to key raw
Materials
Credit Weakness
* Limited track record and modest scale of operations
* Highly leveraged capital structure on account of primarily
debt-funded nature of the capex; credit metrics likely to
remain stretched in the medium term.
* Margins susceptible to adverse movement in prices of key raw
Materials
* Highly fragmented and competitive nature of industry due to a
large number of players in the organised and unorganised
segments
* Partnership concern; any substantial withdrawals from capital
account would adversely impact the capital structure.
Kaya Knits commenced manufacturing and trading of knitted fabric
from December 2014. The firm recorded an operating income of
INR20.37 crore during its first full year of operations in
FY2016. Thus, while the firm's track record of operations is
limited, its operations remain modest. The increase in the firm's
scale of operations has been supported by the capacity expansions
undertaken by it. The firm has increased its installed capacity
to 1,080 MT per annum in FY2016 from 157 MT per annum in FY2015.
The capex has been largely funded by the term loans and unsecured
loans availed from its partners/group concerns. Accordingly, the
firm's capital structure remains highly leveraged as reflected by
a gearing of 3.60 times as on March 31, 2016. Furthermore, any
significant withdrawals by the partners from the capital account
will affect the firm's net-worth and thereby its capital
structure. The profitability of the firm remains vulnerable to
fluctuations in the prices of key raw materials comprising
polyester and nylon yarn, which derive their prices from the
highly volatile crude oil prices. Additionally, since, the firm
faces stiff competition from several small and large players in
the highly fragmented knitting industry, its pricing flexibility
remains limited.
Nevertheless, the promoters of the company have an experience of
over two decades in the industry through associate concerns,
which provides some comfort. Kaya Knits also benefits from
uninterrupted supply of raw material, savings in freight cost,
reduced lead time and proximity to customers on account of its
factory location.
KONERU CONSTRUCTIONS: ICRA Assigns B+ Rating to INR5.12cr Loan
--------------------------------------------------------------
ICRA Ratings has assigned the long-term/short-term rating of
[ICRA]B+/[ICRA]A4 to the INR3.38-crore unallocated limits of
Koneru Constructions Private Limited. The outlook on the long-
term rating is 'Stable'. ICRA also has long-term rating of
[ICRA]B+(Stable) outstanding on INR5.12 crore (revised from
INR4.00 crore) fund-based facilities and short-term rating of
[ICRA]A4 outstanding on INR7.50 crore (revised from INR7.00
crore) non fund-based facilities of Koneru Constructions Private
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 5.12 [ICRA]B+ (Stable);
assigned/outstanding
Non Fund-based 7.50 [ICRA]A4;
assigned/outstanding
Unallocated Limits 3.38 [ICRA]B+ (Stable)/[ICRA]A4;
assigned
Rationale
The assigned ratings are constrained by KCPL's small scale of
operation in a highly competitive industry limiting financial
flexibility and margin expansion. The ratings are further
constrained by high client concentration risk faced by the
company with only one customer accounting for 79% of the revenues
in FY2015 and 55% of the revenues in FY2016; the revenue
concentration is also expected to remain high going forward as
the same customer accounts for significant portion of outstanding
order book of KCPL. The ratings also factor in the stretched
liquidity profile of the company on account of high receivables
and inventory levels resulting in high utilisation of working
capital limits in the past twelve months. ICRA also notes the
absence of price escalation clause with its major customer which
exposes it to fluctuations in raw material prices.
The ratings however, positively factor in the long track record
of promoters in civil and mechanical construction works resulting
in well established client base.
Going forward, ability of the company to improve the scale of
operations by securing new orders and timely execution of
existing orders, improve margins, and effectively manage its
working capital requirements would be the key rating sensitivity.
Key rating drivers
Credit strengths
* Significant experience (of over a decade) of the promoters
in civil and mechanical construction works
* The unexecuted order book/ revenue as on March 31, 2016 is
2.05 times which provides visibility to revenues in the
medium term
Credit weaknesses
* Small scale of operations with revenues of INR18.10 crore
in FY2016 despite being in the industry for more than 9 years
* High client concentration risks with 79% of the revenue in
FY2015 and around 55% in FY2016 from Thermal Power Corporation
of India limited (TPCIL); going forward for FY2018 the
concentration is expected to remain high on TPCIL with it
being the largest customer in the outstanding order book
* Significant competition from well-established and reputed
players of the industry keeps the margin in check
* Stretched liquidity position on account of high working
capital intensive nature of operations as evident from high
utilisation of CC limits
* Absence of price escalation clause with its major customer
exposes it to fluctuations in raw material prices
Description of key rating drivers:
The company has been engaged in civil construction for more than
9 years and currently is into construction of railway sheds &
buildings and construction of buildings for various government
and private clients. The company had outstanding order book of
INR37.10 crore as on June 30, 2016 which constitute projects from
Indian Railway departments, Power Mech Infra Limited, Thermal
Powertech Corporation India Limited (TPCIL) etc.
The company is exposed to high client concentration risk with 79%
of the revenue in FY2015 and ~55% in FY2016 being contributed by
a single entity. Also, going forward, this trend is expected to
continue with majority of the company's outstanding order book
being dominated by TPCIL. The company also faces significant
competition from other well established and reputed players of
the industry which often restricts its margins.
The Operating income of the company declined from INR20.43 crore
in FY2015 to INR18.10 crore in FY2016 owing to lower work order
execution on the back of limited fresh orders. However, operating
margin improved from 9.51% in FY2015 to 10.95% in FY2016 on the
back of reduced raw material expenses.
The working capital utilisation remains high for the company
owing to high debtor and inventory days resulting in stretched
liquidity.
LIMTEX INDIA: ICRA Reaffirms 'D' Rating on INR43cr Loan
-------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating of [ICRA]D
assigned to the INR0.92 crore term loan facility, INR13.00 crore
cash credit facility, and INR12.00 crore of standby line of
credit of Limtex India Limited. ICRA has also reaffirmed the
short term rating assigned to the INR43.00 crore fund based
limits and INR19.84 crore non-fund based bank limit of LIL at
[ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term
Loan 0.92 [ICRA]D; Reaffirmed
Fund-based-Cash
Credit 13.00 [ICRA]D; Reaffirmed
Fund-based-Standby
Line of Credit 12.00 [ICRA]D; Reaffirmed
Fund based-Packing
Credit 43.00 [ICRA]D; Reaffirmed
Non fund based-
Bill Discounting 19.84 [ICRA]D; Reaffirmed
Rationale
The rating action is based on the continued delays in the
company's debt servicing. As part of its process and in
accordance with its rating agreement with LIL, ICRA had sent
repeated reminders to the company for payment of surveillance fee
that became overdue; however despite multiple requests; the
company's management has remained non-cooperative. ICRA's Rating
Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Mr. Gopal Poddar, founder of the Limtex group, started a
proprietorship company in the name of Limtex India in 1977 and
the same was converted into a private limited company, Limtex
India Limited (LIL) in 1992. The company is primarily engaged in
blending and trading of tea in the domestic and export markets.
The company is also engaged in tea processing with an annual
installed capacity of 12 lakh kg. This apart, the company is also
engaged in trading of agri-products in the domestic as well as
exports market.
M/S MANMADE: Ind-Ra Migrates BB- Rating to Non-Cooperating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated M/s Manmade'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 BB-(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating action is:
-- INR60 mil. Fund-based working capital limit migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 4, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Formed in 2002, M/s Manmade is a partnership firm that is engaged
in the manufacture and export of medium-to-high hand-knotted/-
woven/-tufted woollen/viscose/silk carpets and rugs. The firm
has two partners Mr. Deepak Khanna and his wife Ms. Aarti Khanna.
MACHHALANDAPUR SIMLON: Ind-Ra Issues B+ Not Cooperating Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Machhalandapur
Simlon Agro Private Limited's (MSAPL) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR57.5 mil. Fund-based limits migrated to Non-Cooperating
Category;
-- INR35.25 mil. Long-term loans migrated to Non-Cooperating
Category; and
-- INR1.14 mil. Non-fund-based limits migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 30, 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 2011, MSAPL is engaged in the cold storage
business. It mainly stores potatoes and has an annual capacity
of 22500mt. The company is managed by Mahadev Ghosh, Madhusudan
Tah, Bimal Chandra Ghosh, Asim Chandra Kumar and Haromurari Pal.
MADHUCON AGRA: ICRA Withdraws 'D' Rating on INR230cr Loan
---------------------------------------------------------
ICRA Ratings has withdrawn the long-term rating of [ICRA]D
assigned to the INR230.0-crore fund-based bank facilities (from
State Bank of India led consortium of lenders) of Madhucon Agra
Jaipur Expressways Limited (MAJEL) as there is no amount
outstanding against the rated facility.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans (from
SBI-led consortium) 230.0 [ICRA]D; Rating Withdrawn
Fund Based 208.0 [ICRA]AA-(stable);
Facilities (Term Loans) Outstanding
ICRA also has a rating of [ICRA]AA- with stable outlook on
INR208.0 crore fund based facilities of MAJEL.
Rationale
The rating for the INR230.0-crore fund-based facilities (term
loans from State Bank of India led consortium of lenders) have
been withdrawn as the company has repaid this facility and has
shared No Dues Certificates (NDC) from all the lenders of this
facility.
In July-2016, ICRA had assigned rating of [ICRA]AA- (stable) for
proposed INR208.0-crore fund-based facilities of the company.
ICRA had also mentioned that the company is expected to repay the
earlier facility of INR230.0 crore with this new line of credit.
MAJEL is a special purpose vehicle initially promoted by Madhucon
Projects Limited (MPL along with its associates) and SREI
Infrastructure Finance Limited for widening the existing 57 km
two lane stretch between Bhartapur and Mahwa (both in Rajasthan)
on NH-11 (new NH number 21). The project has been awarded by
National Highway Authority of India (NHAI) on BOT(Toll) basis,
and has a concession period of 25 years starting April 14, 2006.
Tolling has commenced in May 2009 with a delay of 7 months as
against the scheduled commercial operations date. The first major
maintenance activity has been concluded during June 2016.
In March 2016, Cube Highways & Infrastructure Pte Ltd (Cube
Highways) has acquired 74% stake in MAJEL which was subsequently
increased to 99.97%. Cube Highways is backed by ISQ and IFC
holding 80% and 20% stake, respectively. ISQ is an independent
global infrastructure fund with focus on energy, utility and
transport sectors in USA, Europe and select high growth economies
such as China and India. IFC is the private sector arm of the
World Bank.
MAKSON NUTRITION: Ind-Ra Raises Long-Term Issuer Rating to BB
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Makson Nutrition
(Food) India Private Limited's (MFINPL) Long-Term Issuer Rating
to 'IND BB' from 'IND BB-'. The Outlook is Stable. The
instrument-wise rating actions are:
-- INR7.5 mil. Fund-based limits raised to 'IND BB/Stable'
rating; and
-- INR365.66 (reduced from INR421.59) mil. Term Loans raised to
'IND BB/Stable' rating
KEY RATING DRIVERS
The upgrade reflects the improvement in MFINPL's scale of
operations and credit metrics based on FY17's provisional
financials, from FY15 financials. Revenue increased to
INR294 million in FY17 (FY16: INR259.49 million; FY15: INR207.2
million), interest coverage (operating EBITDA/gross interest
expense) to 2.2x (7.0x; 2.1x) and net financial leverage (total
adjusted net debt/operating EBITDA) to 4.9x (1.5x; 5.9x). This
improvement was driven by a rise in conversion rate along with a
reduction in the overall debt level, which led to a decline in
financial cost. The agency believes the credit metrics will
further improve in coming years on account of a further decline
in debt level due to the repayment of existing term loans.
In FY16, MFINPL had received huge pending claims of INR152.97
million (FY15: INR28.05 million) which was included in the
revenue of company, leading to a sudden improvement in the credit
metrics.
The ratings are constrained by the company's moderate liquidity
position as reflected in average working capital utilization of
89% during the12 months ended March 2017. The ratings also
factor in the limited scale of operations on account of the
nature of business - contractual manufacturing.
The ratings continue to be supported by the company's strong
association with Mondelez India Foods Pvt Ltd (formerly Cadbury
India Limited).
RATING SENSITIVITIES
Positive: A substantial improvement in the scale of operations
along with improvement in the credit metrics will lead to a
positive rating action.
Negative: Any deterioration in liquidity profile would be
negative for the ratings.
COMPANY PROFILE
MNFIPL is a closely held company, promoted by Mr. Rajendra Patel
and Smt Parul Patel, set up in 2000. It manufactures Choclairs
for Mondelez Foods India. The company's manufacturing unit is
located in Raisen, Madhya Pradesh.
OMKAR FERTILISERS: ICRA Reaffirms 'B' Rating on INR4.30cr Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating at [ICRA]B to
the INR4.30 crore fund based limits of Omkar Fertilisers Private
Limited. ICRA has also reaffirmed the long term/short term rating
of [ICRA]B/[ICRA]A4 to the INR5.70 crore unallocated limits of
OFPL. The outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 4.30 [ICRA]B(Stable) Re-affirmed
Unallocated Limits 5.70 [ICRA]B(Stable)/[ICRA]A4
Re-affirmed
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with OFPL, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings, but
despite repeated requests by ICRA, the company's management has
remained non-cooperative. In the absence of requisite
information, ICRA's Rating Committee has taken a rating view
based on best available information. In line with SEBI's Circular
No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B(Stable)/[ICRA]A4;
ISSUER NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Omkar Fertilisers Private Limited was incorporated in the year
2010 to start a plant with a capacity of 30000 TPA for the
manufacturing of NPK Fertilizers. The total project cost was
INR8.50 crore which was funded by INR4.50 crore of debt and
INR4.00 crore of equity. The company started its commercial
production in the month of June, 2013. The company has its plant
in the west Godavari district of Andhra Pradesh.
PERTH CERAMIC: ICRA Upgrades Rating on INR18.94cr Loan to BB-
-------------------------------------------------------------
ICRA Ratings has upgraded the long-term rating to [ICRA]BB- from
[ICRA]B+ for the INR12.50-crore fund-based cash credit facility
and the INR18.94-crore term loan facility of Perth Ceramic
Private Limited (PCPL). ICRA has reaffirmed the short-term rating
of [ICRA]A4 on the INR6.00-crore short-term non-fund-based limits
of PCPL. ICRA has also upgraded the long-term rating to [ICRA]BB-
from [ICRA]B+ and has reaffirmed the rating of [ICRA]A4 on the
INR14.06-crore unallocated limits of PCPL. The outlook on the
long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash 12.50 [ICRA]BB- (Stable); Upgraded
Credit from [ICRA]B+
Fund-based-Term 18.94 [ICRA]BB- (Stable); Upgraded
Loan from [ICRA]B+
Non Fund-based-
Letter of Guarantee 6.00 [ICRA]A4; Reaffirmed
Unallocated Limits 14.06 [ICRA]BB- (Stable); Upgraded
from [ICRA]B+ and [ICRA]A4;
Reaffirmed
Rationale
The upgrade in the long-term rating primarily takes into account
the healthy growth in PCPL's operating income in FY2017, on the
back of increased sales volumes, and the healthy operating profit
margins. The ratings also draw comfort from the long experience
of the promoters in the ceramic industry and the proximity of the
company's manufacturing unit to the ceramic hub of Morbi,
benefiting it in terms of easy and timely availability of key raw
materials.
Nonetheless, the ratings continue to remain constrained by the
company's high gearing level, moderate coverage indicators and
high working capital intensity, resulting from elongated
receivables as on March 31, 2017. Furthermore, the ratings also
factor in the highly fragmented nature of the tiles industry,
which results in intense competitive pressures; the cyclical
nature of the real estate industry which is the main end-user
sector; and the exposure of the company's profitability to
volatility in raw material and natural gas prices.
Going forward, PCPL's ability to increase its scale of
operations, while maintaining healthy operating profit margins
and effectively managing its working capital requirement, would
remain important from the credit perspective.
Key rating drivers
Credit strengths
* Extensive experience of PCPL's promoters in the ceramic
tile industry
* Location advantage with presence in India's largest ceramic
Hub- Morbi
Credit weaknesses
* Financial profile characterised by high gearing and moderate
debt coverage indicators
* High working capital intensity due to elongated receivables
as on March 31,2017
* Vulnerability of profitability to adverse fluctuations in
prices of key raw materials and natural gas, which are the
major cost components
* Intense competition from various organised and unorganised
players
Description of key rating drivers:
PCPL started manufacturing vitrified tiles in May 2015 from its
plant at Morbi in Gujarat, having production capacity of 25.2lac
boxes per annum. The company manufactures vitrified tiles of one
size i.e. "600 mm X 600 MM" with its current set of machineries.
PCPL is predominantly a domestic player and has successfully
established a pan-India marketing and distribution network of
more than 320 dealers and distributors. The company's
manufacturing unit is located at Morbi, which is the largest
ceramic hub of India, providing easy access to raw material.
PCPL's promoters have long experience in the ceramic industry as
its other group concerns, namely Elica Vitrified Private Limited,
have been involved in the same line of business.
The company has been able to increase its scale of operations and
has reported a healthy increase of 38.0% in its operating income
in FY2017, which was its first full year of operations. The
profitability of the company has improved as it diversified from
soluble salt vitrified tiles to twin-charge vitrified tiles in
FY2017, which fetches higher realisations.
Incorporated in 2014, Perth Ceramic Private Limited (PCPL) is a
vitrified tiles manufacturer. Its manufacturing plant is located
in Morbi, Gujarat. PCPL commenced its operations in May 2015 and
currently manufactures vitrified tiles of single size 600mm" X
600mm", which find wide application in residential as well as
commercial buildings. The company is managed and promoted by Mr.
Parshottam Sherasiya, Mr. Jayanti Kotadiya, Mr. Rupesh Kotadiya,
Mr. Vinod Barasara and Mr. Haresh Barasara. It has an installed
capacity to manufacture 25.2 lakh boxes of vitrified tiles per
annum. The promoters of PCPL have associate concerns, namely
Elica Vitrified Private Limited, who are involved in the same
line of business.
The company reported a profit before tax of INR0.83 crore on an
operating income of INR73.38 crore as per provisional financials
for FY2017, as compared to a net loss of INR0.66 crore on an
operating income of INR53.02 crore in the previous year.
POLESTAR TRADERS: ICRA Lowers Rating on INR8.0cr Loan to 'D'
------------------------------------------------------------
ICRA Ratings has revised the long term rating assigned to the
INR08.00 crore long-term fund based bank facility of Polestar
Traders Private Limited to [ICRA]D from [ICRA]B-. ICRA has also
revised the short-term rating assigned to the INR01.50 crore non-
fund based limit of INR01.50 crore to [ICRA[D from [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 8.00 [ICRA]D; Revised from
[ICRA]B-
Non Fund Based Limit 1.50 [ICRA]D; Revised from
[ICRA]A4
Rationale
The rating downgrade factors in the delays in debt servicing by
the company on its bank facilities. As part of its process and in
accordance with its rating agreement with Polestar Traders
Private Limited, ICRA had sent repeated reminders to the company
for payment of surveillance fee that became overdue; however
despite multiple requests; the company's management has remained
non-cooperative. ICRA's Rating Committee has taken a rating view
based on best available information. In line with SEBI's Circular
No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA] D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance.
Key rating drivers
Credit strengths
* Long experience of the management in the business of steel
Trading
Credit weaknesses
* Recent delays in debt servicing by the company on its bank
Facilities
* Susceptibility of margins to volatility in steel prices
* Industry characterized by severe competition from players
in the unorganized as well as organized sector
Description of key rating drivers:
The company is engaged in trading of various types of ferrous and
non ferrous metals. However, it predominantly deals in trading of
various types of stainless steel like pipes, plates, sheets, wire
rods etc. The company derives majority of its revenues from
trading of stainless steel pipes.
The operating profit margins of the company have remained low
during the past due to low value additive nature of work
performed by the company and high competitive intensity. PTPL
maintains freehold inventory of about 2-3 months which are not
backed by orders. This exposes the company to significant risks
arising out of fluctuations in metal prices, given the
cyclicality inherent in steel prices.
Polestar Traders Private Limited was incorporated in March 2013
by Mr. Umesh Vrajlal Damania and Mr. Manish Babel. The company
started operations by taking over the asset and liabilities of
M/s Polestar Industries, a proprietorship concern established by
Mr. Umesh Vrajlal Damania. The company is engaged in trading of
various ferrous and non ferrous metals. It predominantly deals in
trading of various types of stainless steel like pipes, plates,
sheets, wire rods etc. The company has its registered office in
Mumbai and warehouse in Navi Mumbai.
RAJGANGPUR ISPAT: ICRA Reaffirms B- Rating on INR3.0cr Loan
----------------------------------------------------------- ICRA
Ratings has reaffirmed the long term rating assigned to the
INR3.00 crore fund based cash credit facility of the entity at
[ICRA]B- and the short term rating assigned to the INR5.00 crore
fund based limits of Rajgangpur Ispat Udyog at [ICRA]A4. The
outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 3.00 [ICRA]B- (Stable) Reaffirmed
Fund Based Limit 5.00 [ICRA]A4 Reaffirmed
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with RIU, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings and also
had sent repeated reminders to the company for payment of
surveillance fee that became overdue, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the entity's
rating is now denoted as: "[ICRA]B- (Stable) / [ICRA]A4 ISSUER
NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the entity's performance since the time it was
last rated.
Rajgangpur Ispat Udyog, promoted in the year 1982, is a
partnership concern promoted by the Agarwal family based out of
Odisha. The firm has an installed annual crushing capacity of
90000MT for iron ore lumps and 30000MT for iron ore fines.
ROLEX LANOLIN: ICRA Lowers Rating on INR10.51cr Loan to B
---------------------------------------------------------
ICRA Ratings has revised the long-term rating to the INR4.95-
crore cash credit and the INR5.56-crore term loan facilities of
Rolex Lanolin Products Limited from [ICRA]B+ to [ICRA]B. The
outlook on the long-term rating is 'Stable'. ICRA has re-affirmed
the short term rating to the INR0.25 crore short-term non-fund
based and INR2.00 crore (sublimit of cash credit) short-term
fund-based facilities of RLPL at [ICRA]A4. The unallocated amount
of INR3.09 crore has been rated on both the long term and the
short term scale at [ICRA]B(Stable) and [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-fund Based
Limits 0.25 [ICRA]A4 re-affirmed
Non-fund Based
Limits (2.00) [ICRA]A4 re-affirmed
Fund-based Limits 10.51 [ICRA]B(Stable) downgraded
from [ICRA]B+
Unallocated Limits 3.09 [ICRA]B(Stable) downgraded
from [ICRA]B+//[ICRA]A4
re-affirmed
Rationale
The revision of the long-term rating and re-affirmation of the
short-term rating factors the company's failure to scale up
revenues in FY2016 as well as FY2017 on account of the slump in
demand for lanolin products and a fall in average sales
realisations. The ratings continue to remain constrained on
account of the company's weak financial profile as reflected by a
decline in revenues, net losses incurred, high gearing level of
2.39 times as on March 2016 and deteriorating coverage
indicators. ICRA also notes the strong competition from other
suppliers of lanolin products, particularly in technical grade
segment and exposure to adverse fluctuations in crude wool prices
and foreign exchange rates. Nonetheless, the ratings continue to
favourably factor in the extensive experience of the promoters
spanning over four-and-a-half decade and its established client
base from FMCG, pharmaceutical and industrial sectors.
ICRA expects RLPL's revenues to remain flat in FY2017 compared to
that during FY2016 while the operating profitability is expected
to remain at the past levels. The company has sizeable repayments
lined up for the next four fiscals and hence achievement of
optimum utilisation of the Vapi plant, scaling up of revenues
while maintaining healthy profitability levels, and funding
support from promoters if needed, would remain crucial from the
credit perspective, going forward.
Key rating drivers
Credit strengths
* Extensive experience of the promoters and established track
record of the company in the manufacture of lanolin products
* Established client base comprising leading domestic and
multinational companies from FMCG, pharmaceutical and
industrial sectors
* Low sector specific risks on account of wide range of
applications offered by lanolin and its derivatives
Credit weaknesses
* Failure to scale up revenues post completion of the Vapi
project; sharp fall in demand has resulted in lower volumes
and average sales realisations in FY2016 and FY2017
* Weak financial profile characterised by dip in revenues and
profitability, leveraged capital structure with a gearing of
2.39 times as on March 31, 2016 and weak coverage indicators
* Intense competition from domestic lanolin manufacturers/
suppliers in low purity industrial/technical grade segment
Detailed description of key rating drivers:
The company has set up a new plant at Vapi of 900MTPA capacity
with the objective of shifting its manufacturing base from Mumbai
to Gujarat. The plant was expected to be ready for commercial
production by October 2014. However, as there was a delay in
obtaining the Food and Drug Administration (FDA) approval for
pharmaceutical grade lanolin products from the Gujarat
Government, the commercial production commenced from March 30,
2015. The manufacturing activity at the company's earlier plant
in Andheri was completely stopped from July 4, 2015.
In the initial year of production of the new unit, i.e. in
FY2016, the capacity utilisation levels have declined
significantly to 39% compared to 68% in FY2015 because of the
slowdown in demand and the company reported a de-growth in
revenues of ~46% in FY2016 over FY2015. Slowdown in demand, along
with a sharp fall in sales realisations of the products coupled
with high depreciation and interest charges have resulted in net
losses in FY2016. In the 6M of FY2017 the utilisation level has
increased marginally to 43% from 39% in FY2016. Although the
utilisation levels for the 6M of FY2017 stood marginally higher,
the overall utilisation levels are expected to remain low
following the continuation of the slack demand condition, coupled
with the demonetisation of high valued currencies in November
2016, which has further slowed down the demand. Further the
capital structure of the company continues to remain highly
leveraged with a gearing of 2.39 times as on
March 31, 2017 on account of an increase in debt levels in
addition to the marginal decline in net worth base on account of
the net losses incurred. Decline in profit levels as well as
increase in debt levels have led to deterioration of the debt
protection metrics in FY2016.
Nevertheless, the company's long track record in the
manufacturing of lanolin products backed by its established
relationships with well reputed customers lends some comfort.
With the multiple applications of lanolin products manufactured
by RLPL, exposure to any particular sector is limited.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the debt-servicing track record of RLPL, its
business risk profile, financial risk drivers and management
profile.
Rolex Lanolin Products Ltd. (referred as 'RLPL' or 'The Company')
was established in 1967 as a partnership firm under the
leadership of Mr. Hasmukh Zaveri. RLPL manufactures and supplies
lanolin and its allied products of various grades and
specifications. The promoter initially started trading in lanolin
and later ventured into manufacturing by setting up a plant in
Mumbai for the indigenous commercial production of lanolin. In
1990, the firm became a private limited company under the name of
Rolex Lanolin Products Pvt. Ltd. On December 16, 1994, the
company was reconstituted as a limited company and the name was
changed to Rolex Lanolin Products Ltd. RLPL currently operates
from its manufacturing unit located in Vapi, Gujarat and has a
manufacturing capacity of 900 MTPA.
RLPL recorded a net loss of INR0.19 crore on an operating income
of INR13.32 crore for the year ending March 31, 2016.
RUKMINI EDUCATIONAL: ICRA Raises Rating on INR125cr Loan to BB
--------------------------------------------------------------
ICRA Ratings has upgraded the long-term rating from [ICRA]B+ to
[ICRA]BB assigned to the INR125.00-crore term-loan facility of
Rukmini Educational Charitable Trust. The outlook assigned on the
long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 125.00 [ICRA]BB (Stable); upgraded
from [ICRA]B+
Rationale
The rating upgrade factors in the strong growth witnessed in
RECT's revenues over the past fiscals on the back of increased
student base together with hike in tuition fees. The rating also
factors in the trust's healthy profitability indicators leading
to adequate debt-protection metrics. ICRA continues to draw
comfort from the strong background of the trustees and its
association with Divyasree Group which is a renowned player in
the real-estate sector. The rating is, however, constrained by
the large debt-funded capital expenditure undertaken by the trust
over last five years towards expansion of the infrastructure
facility at its Kattigenahalli campus. The rating is also
constrained by the moderately high gearing level, notwithstanding
the improvement on account of healthy accretion to the net worth
over the years. The rating continues to take into consideration
the concentration risk arising from the fact that a major portion
of the fee generation is accounted by engineering courses.
Further, the revenue growth and profitability of the trust remain
exposed to the persisting high competitive intensity in the
region and strong regulatory controls in the education sector
which may restrict its flexibility to increase fees and student
strength. Going forward, generation of adequate surplus and
prudent management of cash flows will remain critical, given the
huge debt-repayment obligations. Moreover, the scale of capital
expenditure plans and source of funding the same will remain the
key rating monitorable.
Key rating drivers
Credit strengths
* Experience of the promoters in the education sector for over
a decade
* Occupancy level for the flagship engineering course of the
trust continues to remain healthy (88% in FY2017)
* Significant revenue growth and healthy profitability
indicators
* Part of the reputed Divyasree Group which has well established
presence in real-estate space in South India
Credit weaknesses
* Notwithstanding diversified disciplines, the concentration is
high with engineering courses accounting for ~67% of the total
revenues in FY2017
* Consistent debt-funded capital expenditure incurred towards
expansion of infrastructure facility, leading to moderately
leveraged capital structure; repayment obligations are
expected to remain high over the medium term
* Regional footprint with operations limited to Karnataka
* High competitive intensity due to presence of many
established engineering colleges in Bangalore
* High regulatory intensity of the educational sector
Description of key rating drivers:
RECT offers various courses in the fields of engineering,
science, management and pre-university education. The trust
derives a large portion of its revenue from collection of fees,
which translated into ~79% of total revenues in FY2016, followed
by hostel fees (19%). Other revenue channels of the trust include
transportation fees, application and prospectus fees, fines, and
uniforms, which form 2% of the total revenue. The revenue mix is
highly concentrated towards the engineering segment, which formed
~67% of total revenues in FY2017. The trust has maintained
healthy admission level in FY2017, whereby engineering courses,
B.Com, BBA and BCA have witnessed good admission levels at almost
88-95% of the allocated seats. However, some of the courses (such
as LLB, MCA and M.Tech) have shown moderate performance. The
total number of students increased from 11,014 in FY2016 to
11,711 in FY2017 on account of maturing colleges and better
placement records. The trust's profitability indicators remained
healthy with good absorption of the fixed costs such as employee
expenses and interest cost as reflected by operating margin of
43.40% and return on capital employed of 22.24% in FY2017 as per
the provisional figures. With generation of healthy accruals over
the years, the trust's net worth improved, leading to moderate
gearing levels despite huge debt-funded capital expenditure
undertaken by the trust every year. Going forward, the capital
expenditure plans of the trust and the source of funding remain
the key rating factors.
RECT is a Bangalore-based educational trust operating in
engineering, science, management and pre-university education
fields since 2000. It was earlier known as Bheemaneni Education
Systems Trust. Its management was taken over by present trustees
(headed by Mr. P Shyama Raju of DivyaSree Group) in 2004. Reva
University (RU) under RECT was notified as a Private University
in 2013 under the Government of Karnataka Act No. 80 of 2012. It
has three campuses in Bangalore at present. The student strength
of the trust is close to 11,700.
Based on provisional results for FY2017, RECT reported a net
surplus of INR30.12 crore on revenue receipts of INR144.72 crore
against a net surplus of INR12.84 crore on revenue receipt of
INR112.31 crore in FY2016.
SADASAT CORN: ICRA Withdraws B+ Rating on INR3.50cr Cash Loan
-------------------------------------------------------------
ICRA Ratings has withdrawn the long-term rating of [ICRA]B+ on
the INR5.50 crore fund-based limits of Sadasat Corn Products
Private Limited (SCPPL) at the request of the company, as there
is no outstanding amount against the rated instruments.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term
Loan 2.00 [ICRA]B+/Withdrawn
Fund-based-Cash
Credit 3.50 [ICRA]B+ /Withdrawn
SCPL is engaged in wet milling of maize for manufacturing of
starch. The company's manufacturing facility is located in
Kurukshetra (Haryana), and has a milling capacity of 100 metric
tonnes per day (MTPD) on a three shift basis. The company
supplies starch to industrial customers across various sectors,
which include textiles, adhesives, paper, etc. The company is
promoted by the Goyal family, which has a long track record in
agro processing business, through group company, Goya Agro
Products Private Limited, which is engaged in manufacturing of
rice bran solvent oil, rice bran de-oiled cake, liquid glucose
and high protein supplements for animal feed.
SAI INTERNATIONAL: ICRA Reaffirms B+ Rating on INR8.25cr Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating assigned to Sai
International's INR13.00-crore fund-based limits at [ICRA]B+. The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 8.25 [ICRA]B+(Stable) Reaffirmed
Cash Credit 2.00 [ICRA]B+(Stable) Reaffirmed
Buyer's Credit 2.75 [ICRA]B+(Stable) Reaffirmed
The ratings continue to take into account the extensive
experience of the partners in the shoe-manufacturing industry.
However, the ratings are constrained by the vulnerability of its
revenues and profitability to adverse fluctuations in raw
material prices as well as foreign exchange rates as majority of
the raw material, namely polyurethane (a crude oil derivative) is
imported. The rating also factors in the partnership constitution
of the firm which exposes it to the risk of capital withdrawals,
dissolution etc.
As a part of its process and in accordance with its rating
agreement with Sai International, ICRA had sent repeated
reminders to the company for payment of surveillance fee that
became overdue. Despite multiple requests, the company's
management have remained non-cooperative. ICRA's Rating Committee
has taken a rating view based on the best available information.
In line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, the company's rating is now denoted as:
"[ICRA] B+(Stable); ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited or no updated information on the company's performance
since the time it was last rated.
Sai International is a partnership firm and was incorporated in
2005 by two brothers Mr. Nishant Jagga and Mr. Vishal Jagga. The
firm manufactures footwear at its plant at Bahadurgarh in
Haryana. The product profile of the firm includes sports shoes,
sandals and slippers. The sports shoes of the firm are sold under
the brand name 'Tavera' whereas the sandals and slippers are sold
under the brand name 'PU-Lite'. The firm's major raw material is
Polyurethane, which is mostly imported and Rexine which is
procured from suppliers in Haryana, Delhi and Uttar Pradesh.
SAI KRISHNA: ICRA Downgrades Rating on INR15cr LT Loan to D
-----------------------------------------------------------
ICRA Ratings has revised the long term rating to [ICRA]D from
[ICRA]BB- for the INR15.00 crore long-term fund based bank
facility of Sai Krishna Developers.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Term 15.00 [ICRA]D revised from
Loan [ICRA]BB-(Stable)
Rationale
The revision in rating factors in the recent instances of delays
in servicing debt obligations by the firm, commencing from
January 2017, owing to its stretched liquidity position. Slowdown
in real estate industry, post announcement of demonetization,
resulted in low collections from customers and weak incremental
bookings. Furthermore, being a partnership firm, any withdrawal
from the capital account can further deteriorate the firm's
liquidity profile.
Key rating drivers
Credit weaknesses
* Delays in debt servicing on account of stretched liquidity
Position
* Slowdown in real estate industry resulting in low booking and
advance inflows
Credit strengths
* Long track record of the promoters in real estate market in
Bardoli and nearby areas
Description of key rating drivers:
Established in January 2014, SKD is a Special Purpose Vehicle,
formed with an objective to develop a residential project
comprising 268 nos 3BHK, 4 BHK and 5 BHK bungalows and two towers
in Bardoli, Surat. The promoters have executed various
residential and commercial projects in Surat through other
partnership concerns in the last decade. The project was
developed to target Non Resident Indians (NRIs) and high-income
group. The project is completed; however, the firm's liquidity
profile has been deteriorating on account of slow-down in real
estate industry. The firm has been delaying its principal payment
obligations from January 2017.
SKD was established as a partnership firm in January 2014, to
undertake the development of residential project-'Sai Krishna
Residency' comprising 268 3BHK, 4 BHK and 5 BHK bungalows and two
towers in Bardoli, Surat. The firm is owned by twelve partners
having vast experience in Surat real estate industry.
The project is proposed to be developed in three phases and
spread across an area of 25,443 sq. metre. The development of
phase I (14226 sq.mts of area) comprising of 114 bungalows
commenced in April 2014 and completed in April 2016. The units in
phase I are 3BHK and 4 BHK bungalows with a saleable area in the
range of 1890 sq.ft to 2410 sq.ft. The total estimated cost of
phase I of the the project was INR57.92 crore and the revenues of
INR62.70 crore is estimated from this phase.
SHANTHILAL & SONS: Ind-Ra Assigns BB- Long-Term Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned M/s. Shanthilal
& Sons Jewellers (SSJ) a Long-Term Issuer Rating of 'IND BB-'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR240 mil. Fund-based working capital assigned with
'IND BB-/Stable' rating
KEY RATING DRIVERS
Ind-Ra has taken a consolidated view of Shantikalash Jewellers
(SJ) and SSJ, as both entities operate in the same line of
business, have a common proprietor and engage in inter-party
transactions.
The ratings reflect a consolidated moderate credit profile.
Revenue increased to INR1.504 billion in FY16 from
INR1.294 billion in FY15 on account of a rise in work orders.
Net financial leverage (total adjusted net debt/operating
EBITDAR) stayed flat at 7.9x in FY16 (FY15: 7.9x) due to
continued dependency on cash credit facilities despite an
increase in EBITDA margin to 6.6% (5.9%). Interest coverage
(operating EBITDA/gross interest expense) was 1.5x in FY16 (FY15:
1.5x). As of March 2017, the company had INR50 million worth
orders in hand that would be executed in the next two months.
The ratings also reflect a tight liquidity position, indicated by
full utilisation of fund-based working capital limits over the 12
months ended March 2017.
The ratings, however, are supported by over two decades of the
promoter's experience as a gold jeweller.
RATING SENSITIVITIES
Negative: A decline in EBITDA margin leading to a deterioration
in credit metrics could lead to a negative rating action.
Positive: Significant revenue growth, along with improved EBITDA
margin, leading to an improvement in credit metrics could result
in a positive rating action.
COMPANY PROFILE
SSJ was set up as a proprietorship firm by Mr. Shanthilal Jain in
1964. In 1991, his son Mr. Shankarlal Jain started a
proprietorship firm, SJ.
SSJ is engaged in the retailing of jewelry. It has a jewellery
retail showroom in Nellore, Andhra Pradesh. On the other hand,
SJ is engaged in the wholesale manufacturing of jewelry.
In 10MFY17, revenue was INR1.292 billion, EBITDA margin was 7.0%,
net leverage was 6.5x and interest coverage was 1.3x.
SHREE COTEX: ICRA Reaffirms 'B' Rating on INR7.0cr Cash Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR7.68-crore fund-based bank facilities and INR1.42-crore
unallocated limits of Shree Cotex. The outlook on the long-term
rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 7.00 [ICRA]B (Stable); Reaffirmed
Fund-based-Term
Loan 0.68 [ICRA]B (Stable); Reaffirmed
Unallocated 1.42 [ICRA]B (Stable); Reaffirmed
Rationale
The rating reaffirmation continues to factor in the weak
financial profile of Shree Cotex, characterised by low
profitability margins, stretched capital structure and weak
coverage indicators. The rating also continues to take into
account the commoditised nature of products and the vulnerability
of the firm's profitability to adverse movements in cotton price,
which in turn is subject to seasonality and crop harvest. The
firm's operations are exposed to regulations governing the
industry such as restrictions on cotton exports and minimum
support price (MSP). Furthermore, the rating also considers the
highly fragmented nature of the industry due to the presence of
large number of manufacturers, which coupled with low-entry
barriers, leads to high competition and consequently limited
margins. Furthermore, the rating also considers the potential
adverse impact on net worth and gearing levels in case of any
substantial withdrawal from capital accounts. The rating,
however, continues to derive comfort from the long experience of
SC's partners in the cotton industry and the proximity of the
firm's manufacturing unit to raw materials, easing procurement.
Going forward, the scale of the firm is expected to remain
stable. Further, the ability of the firm to manage the impact of
raw material price fluctuations on its profitability in a highly
competitive business environment and improve its capital
structure by managing working capital efficiently will remain the
key rating sensitivity.
Key rating drivers
Credit strengths
* Extensive experience of the partners in the cotton ginning
Industry
* Locational advantage by virtue of proximity to raw materials
Credit weaknesses
* Weak financial profile characterised by low profit margins,
stretched capital structure and weak coverage indicators
* Highly fragmented industry structure due to the presence of
a large number of manufacturers and traders; low-entry
barriers result in high competition
* Operations exposed to regulatory restrictions on cotton
export, minimum support price (MSP) and agro-climatic
condition
* Risks inherent in partnership firms, wherein any substantial
capital withdrawal could impact the net-worth and gearing
levels
Description of key rating drivers:
The firm reported a growth of ~21% in the first year of
operations in FY2016 backed by increase in sales volume and sales
realisations. In FY2017, the firm has reported stable operating
income. However, the profitability indicators remained low due to
limited value additive nature of business and highly fragmented
as well as competitive nature of the industry with numerous
organised and unorganised players. Despite scheduled repayment of
term loan installments, the capital structure remained stretched
as on March, 2017. However, the cash flows for the firm remained
positive in FY2017 with moderate working capital utilisation.
Established in 2013 as a partnership firm, Shree Cotex (SC) is
involved in the business of ginning and pressing of raw cotton to
produce cotton bales and cottonseeds. SC's manufacturing
facility, located at Rajkot in Gujarat, is equipped with 36
ginning machines, 1 pressing machine with an installed capacity
of 13,759 MT per annum. The firm commenced operations on July
2014. The partners of the firm have extensive experience in the
cotton industry.
The firm reported a net profit of INR0.21 crore on an operating
income of INR38.41 crore for the year ending March 31, 2016.
SOHAM MANNAPITLU: ICRA Reaffirms B+(SO) Rating on INR54.40cr Loan
-----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating assigned to the
INR54.40-crore term loan of Soham Mannapitlu Power Private
Limited at [ICRA]B+(SO). The outlook on the long-term rating is
Stable. An SO rating is specific to the rated issue, its terms,
and its structure. SO rating does not represent ICRA's opinion on
the general credit quality of the issuers concerned.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 54.40 [ICRA]B+(SO)(Stable);
Reaffirmed
Rationale
ICRA has factored in the comfort drawn from the pledge of 30% of
SMPPL's shares held by the parent company, Ambuthirtha Power
Private Limited [APPL, rated [ICRA]BBB(Negative)], in favour of
the lender and also from the Non-Disposal Undertaking-Power of
Attorney (NDU-POA) on the remaining 70% of SMPPL's shares held by
APPL to the lender. The pledge agreement and NDU POA covers the
principal and interest payment obligations on the rated debt.
Key rating drivers
Credit strengths
* Term loan of SMPPL carries a guarantee from its parent,
APPL, in the form of a pledge of its shares (30%) in SMPPL
and a NDU-POA in the favour of lender for the remaining 70%
shares held by APPL
* Operational project since 2009; received capital subsidy of
INR2.5 crore in June 2011.
Credit weaknesses
* Exposure to hydrological risks, given that the entity is
not covered under a deemed generation clause in case of loss
of generation due to shortage of water
* Modest generations of 25-26% PLF annually as against design
energy PLF of 35% due to moderate rainfall in the region
* High project cost of INR7.26 crore/MW due to significant
time over-run in the completion of the project has led to
subdued return indicators.
Description of key rating drivers:
SMPPL operates a 15 MW run of the river hydro power project in
Karnataka. The project commenced commercial operations from
September, 2009. The project had experienced a significant time
over-run as a result of which, the project cost increased to
INR7.26 crore/MW. Furthermore, as against design energy
generation of 45 MU per annum, the project's generations remained
subdued in the range of 25-33MU in the last three years.
The company has signed a power purchase agreement with MESCOM and
is currently receiving an average tariff of INR3.306/Kwh.
Historically, the company has received support from APPL in order
to meets its funding requirements. However, during 9M FY2017,
improved performance owing to refurbishment activity taken up at
the project site coupled with reduction in overall debt (and
thus, the interest burden) has reduced dependence of SMPPL on the
funding support from APPL.
The rating primarily takes comfort from the pledge of 30% of
SMPPL's shares held by APPL in favor of the lender and also from
the NDU-POA on the remaining 70% of SMPPL's shares held by APPL
to the lender. The said arrangement covers the principal and
interest payment obligations on the rated debt.
SMPPL is an Independent Power Producer (IPP) which operates a 15
MW run of the river hydel power plant on the Puchamugaru River in
the Dakshina Kannada District of Karnataka. Earlier, SMPPL was
100% held by Soham Renewable Energy India Private Limited, which
is the flagship company of the Soham Group. However, in October
2011, the entire stake of SMPPL was bought by Ambuthirtha Power
private Limited for INR20.78 crore, pursuant to which SMPPL
became a 100% subsidiary of APPL.
In FY2016, the company reported a loss of INR1.00 crore on an
operating income of INR8.27 crore as compared to loss of 0.97
crore on an operating income of INR8.71 crore in the previous
year.
Ambuthirtha Power Private Limited (APPL) is an independent power
producer promoted by the Soham Group (incorporated in 1991),
which operates 53.5 MW of hydro power projects in Karnataka. APPL
operates a 22 MW small containment run of the river hydel power
plant located near Jog Falls in the Shimoga district of
Karnataka.
SPEEDAGE TRADE: ICRA Withdraws 'B' Rating on INR60cr Loan
---------------------------------------------------------
ICRA Ratings has withdrawn the long term rating of [ICRA]B
assigned to the INR60.00 crore proposed non-convertible debenture
programme of Speedage Trade Limited as the company has not raised
funds against the rated instrument. There is no amount
outstanding against the rated instrument.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Proposed Non-
Convertible
Debentures 60.00 [ICRA]B (Stable) withdrawn
Speedage Trade Limited (STL), a part of the Keventer Group, was
incorporated on December 26, 2016 to carry out wholesale trading
business in FMCG and stainless steel products. The company will
get business insights from some its group companies viz. Keventer
Agro Ltd and MKJ Tradex Ltd.
SUBHAMASTHU SHOPPING: ICRA Reaffirms 'B+' Rating on INR6.5cr Loan
-----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+
assigned to the INR6.50 crore fund-based bank facilities of
Subhamasthu Shopping Mall. The outlook on the long term is
stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 6.50 [ICRA]B+ (Stable); Reaffirmed
Rationale
The reaffirmation of the rating is constrained by the firm's
moderate financial risk profile as reflected by high gearing of
2.30 times as on March 31, 2017, interest coverage ratio of 1.90
times and NCA/Debt of 9.5% for FY2017; and low operating margins
of ~5% for the past three years inherent to the textile retailing
business; and high geographic concentration risk with operations
limited to a single store in Nellore, Andhra Pradesh. The rating
further considers the project execution risk involved in setting
up new store in Tirupati given that ~50% of the cost is yet to be
incurred; high working capital intensity of the operations
inherent in the textile retailing business; and vulnerability to
changing customer preferences and economic factors which may lead
to slowdown in purchases. ICRA also notes the seasonality in the
business and the risks arising from partnership nature of the
firm. The rating, however, positively considers over two decades
of promoters' experience in textile retailing business; steady
growth in turnover in the past three years from INR18. 48 crore
in FY2014 to INR54.56 crore in FY2017 which is expected to grow
further with the establishment of new store in Tirupati in
FY2018; and favourable demand for sarees in South India that
ensures offtake. ICRA also notes SSM's established relationship
with suppliers across the country who provide sufficient credit
period thus reducing the working capital requirements; and
prominent location of mall at the centre of Nellore city.
Going forward, the firm's ability to increase the scale of
operations and profitability while effectively managing its
working capital cycle shall be the key credit rating sensitivity.
Key rating drivers
Credit strengths
* Steady growth in revenues in the past three years to
INR54.56 crore in FY2017 from INR18.48 crore in FY2014
owing to higher sales from women's wear segment
* More than 20 years of experience of the promoters in the
retailing of clothing and apparels
* Strategically important location of mall coupled with
healthy demand for sarees in South India supports offtake
* Established relationship with the suppliers-especially saree
manufacturers in Varanasi, Surat, Dharmavaram, etc who provide
sufficient credit period reducing working capital requirements
to some extent
Credit weaknesses
* Moderate financial risk profile as reflected by gearing of
2.30 times as on March 31, 2017 and NCA/Debt of 9.56% for
FY2017; further operating margins remained low at ~5% in the
past two years due to higher employee expenses
* High geographic concentration risk with operations restricted
to Nellore in Andhra Pradesh; though the same is expected to
reduce with the establishment of new store in Tirupati
* Project execution risk given that nearly 50% of the
construction cost of store in Tirupati is yet to be incurred;
further, stabilization in operations after commencement of
the mall in FY2019 remains to be seen
* Seasonality in business as majority of revenues are generated
in second half of the financial year on account of high
purchases during festive and wedding seasons
* Sales vulnerable to changing consumer tastes, dynamic fashion
trends and economic environment
* Working capital intensive nature of the retail business;
inventory remains susceptible to markdowns and associated
off take risks (stock clearance)
* Risks arising from partnership nature of the firm
Description of key rating drivers:
SSM was founded in February 2012 and is being managed by Mr. B.
Srinivasulu and Mr. B. Ravi Kumar who have more than two decades
of experience in textile retailing. The firm is engaged in
retailing of all types of apparel for men, women and children
through a single store, centrally located in Nellore, Andhra
Pradesh. The firm started its operations in October 2013 and its
revenues have steadily grown in the past three years to INR54.56
crore in FY2017 from INR18.48 crore in FY2014. The firm is
currently setting up a new store in Tirupati which would further
improve the turnover from FY2018 onwards. The capex for this
store is about INR13 crore to be funded by INR9 crore promoters
funds and internal accriuals and INR4 crore debt. However, ~50%
of the construction cost of the new store is yet to be incurred
resulting in high project execution risk. The financial closure
for this project is yet to be achieved. Further, textile players
across retailing are vulnerable to seasonality in business,
slowdown in purchase by customers due to macro economic factors,
changing consumer preferences and trends. The financial profile
of the firm is weak with high leverage and modest coverage
metrics, low profitability and low networth levels.
T.K. INTERNATIONAL: ICRA Reaffirms B- Rating on INR12cr Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B- on
the INR12.00-crore (enhanced from INR9.06 crore) fund-based bank
facilities of T.K. International Limited. ICRA also reaffirmed
the short-term rating of [ICRA]A4 on the INR0.50 crore non-fund
based facilities of TKIL. The outlook on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 12.00 [ICRA]B- (Stable); Reaffirmed
Non-fund based Limits 0.50 [ICRA]A4; Reaffirmed
Rationale
The rating reaffirmation takes into account the significant
experience of promoters and the diversified and stable revenue
streams of the company. The rating, however, remains constrained
by the modest scale of operations, the low levels of operating
profitability on account of modest RevPars3 and the high debt-
funded capex, which stretches the liquidity position of the
company. The ratings are further constrained by the high
competitive intensity and the seasonality of the business. Going
forward, the ability of the company to improve its RevPars over
an expanded scale and improve its coverage indicators and
liquidity position in the light of the ongoing capex would be the
key rating sensitivity.
Key rating drivers
Credit strengths
* Diversified revenue streams - operates two established
properties - one each in Puri and Shimla along with ticketing
and time share divisions
* Promoters' experience and their established track record
in the hotel business for more than three decades
Credit weaknesses
* Modest scale of operations and stagnant revenue generation
due to low average occupancy and decreased profitability in
its two hotels
* Increased debt-funded capex and high repayments to put
pressure on coverage metrics
* Stretched liquidity on account of capex and advances to
other group companies, also evident from high limit
utilization
* High competitive intensity and seasonal nature of business
Description of key rating drivers:
The promoters of the company have more than 30 years of
experience in the hospitality industry. The company owns two
small-sized hotels - one each in Puri and Shimla, which have been
operational since 1985 and 1999 respectively, and contributes
around 70% of its total revenues. Apart from these two
operational properties, the company also derives revenues from
three leased properties, ticketing/event management and time
share business. The scale of operations of the company remains
modest as revenue from its owned hotels, which contribute
significantly to the company's topline, has been stagnant over
the years due to low average occupancy (~50%). RevPar increased
from INR1445 in FY2015 to INR1558 in FY2016 for Puri hotel with
increase in occupancy and ARR4, whereas RevPar declined from
INR1013 to INR918 for Shimla hotel due to substantial decrease in
average occupancy (by 19%) although ARR increased by 34%. The
operating profitability has declined from 19.89% in FY2015 to
13.55% in FY2016 due to increased employee expenses, stagnant
revenue and high competitive intensity. Furthermore, in the
current year, the company faced demand pressures pursuant to
demonetisation. The liquidity position of the company remained
stretched as evident from the high limit utilisation on account
of capital expenditure, increased expenses and receivables. The
coverage indictors declined; interest coverage and DSCR fell from
2.33x and 1.33x in FY2015 to 1.79x and 1.18x in FY2016
respectively. Further, the increased debt-funded capital
expenditure towards renovation of both the hotels in FY2017 is
expected to result in deterioration of capital and coverage
indicators, pending the ramp up of operating metrics. The company
is also contemplating on adding more properties; however, the
plan remains in nascent stages.
TK, incorporated in 1982, is engaged in the development and
management of hotels and resorts and is currently managing two
owned hotels and three leased hotels. The company's first hotel
started operations in 1985 in Puri, and in 1999, it commenced the
operations of its resort in Shimla. The company also operates
three leased properties in Ratnagiri, Odisha, awarded by the
Department of Tourism under the PPP model, with an aggregate of
43 rooms. TK also has additional revenue streams from time share
customers and ticketing business.
In FY2016, the company reported a net profit of INR0.36 crore on
an operating income of INR25.31 crore, as compared to a net
profit of INR1.00 crore on an operating income of INR25.38 crore
in the previous year.
VISHNU RICE: Ind-Ra Migrates B+ Rating to Non-Cooperating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Vishnu Rice
Mills' (VRM) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR105 mil. Fund-based working capital limit migrated to
Non-Cooperating Category;
-- INR6.5 mil. Non-fund-based working capital limit migrated
to Non-Cooperating Category; and
-- INR11.9 mil. Term loan migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Dec. 18, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 1996 in Haryana, VRM is a partnership firm engaged
in the business of rice milling. The total installed capacity of
the paddy processing plant is 3 tonnes/hour. The firm uses paddy
as raw material and rice is the final product.
WESTERN HILL: ICRA Assigns 'D' Rating to INR23.81cr Loan
--------------------------------------------------------
ICRA Ratings has assigned the long-term and short-term rating of
[ICRA]D on the INR23.81-crore fund-based limits and the INR3.19-
crore unallocated limit of Western Hill Foods Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 23.81 [ICRA]D Assigned
Unallocated Limit 3.19 [ICRA]D/[ICRA]D Assigned
Rationale
The assigned ratings takes into account Western Hill Foods
Limited's (WHFL) delays in debt servicing owing to its weak
financial profile, characterised by net losses and a modest
operating scale, over the period under study, due to sub-optimal
utilisation of the production capacity. Furthermore, the debt-
funded nature of capex, impending debt repayment and interest
burden have translated into an adverse capital structure,
inadequate coverage indicators and strained cash flows position.
The ratings also incorporate the susceptibility of business
operations to availability of agro-products given the agro-
climactic risks and the competitive pressures limiting pricing
flexibility. The ratings, however, factor in the management's
established track record in the agriculture industry.
Key rating drivers
Credit strengths
* Experience of the key management in the agriculture industry
Credit weaknesses
* Delay in debt servicing
* Modest operating scale owing to sub-optimal capacity
utilisation; limited operational track record of the company
* Stretched financial profile and strained cash flows given the
debt-funded nature of the project
* Business operations remain exposed to adequate availability of
raw materials given the agro-climactic risks and seasonality
associated with it
* Strong competition mainly from organised players limits
pricing flexibility
Description of key rating drivers:
WHFL is a closely held company engaged in processing and
exporting Individual Quick Freezer (IQF) frozen fruits and
vegetables. Since revenues are vulnerable to agro-climatic risks,
lower crop output has led to sub-optimal capacity utilisation,
which along with fixed overheads incurred on the processing
facility, has led to net losses. The equity capital base of the
company has eroded as it absorbed the losses, leading to
substantial deterioration in the net worth base.
Going forward, the ability of the company to profitably improve
its scale of operations, manage its working capital cycle and
improve its liquidity position while timely servicing its debt
obligations will remain the key rating sensitivity. While the
company is expected to benefit from the favourable demand
prospects of the food processing industry, any delay in
stabilisation of the manufacturing facility or an inability to
maintain an optimum capacity utilisation will be a revenue growth
constraint.
Incorporated in 2008 by Mr. Bhagwan Bende, Mr. Girishkumar
Samdadia and Mr. Vivek Walsepatil, Western Hill Foods Limited
(WHFL or the company) is engaged in processing and exporting
Individual Quick Freezer (IQF) frozen fruits and vegetables. The
company's facility is located at Pune, Maharashtra.
Status of non-cooperation with previous CRA: Not applicable
WILLIAM INDUSTRIES: ICRA Reaffirms 'B' Rating on INR7cr Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B and
the short-term rating of [ICRA]A4 assigned to the INR7.00-crore
cash credit facility of William Industries Private Limited. The
outlook assigned on the long-term rating is 'Stable'. ICRA has
also reaffirmed the short-term rating assigned to the INR3.00-
crore short-term fund-based facilities, which are sublimits of
cash credit facility at [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 7.00 [ICRA]B (Stable); Re-affirmed
PC/FBP as Sub
limit of CC (1.50) [ICRA]A4; Re-affirmed
Bill Discounting
as Sub limit of CC (1.50) [ICRA]A4; Re-affirmed
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with William Industries Private Limited, ICRA has been trying to
seek information from the company to undertake a surveillance of
ratings; but despite multiple requests, the company's management
has remained non-cooperative. In the absence of the requisite
information, ICRA's Rating Committee has taken a rating view
based on the best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 01,
2016, the company's rating is now denoted as: "[ICRA]B
(Stable)/[ICRA]A4; ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited or no updated information on the company's performance
since the time it was last rated.
Key rating drivers
Credit strengths
* Long experience of the management in socks manufacturing
Segment
* Products marketed under the Anchor brand enjoy moderate brand
recognition
Credit weaknesses
* Small scale of operations amidst intense competition from
organised and unorganised players in a highly fragmented
industry; lack of product diversification (only socks
manufacturing capability) exposes the company to product
concentration risk
* Weak capital structure given its low net worth base as a
result of sizeable accumulated losses over the past years
* Operations remain vulnerable to regulatory changes mainly
imposition of excise duty, which could adversely impact the
sales and profitability
Description of key rating drivers:
WIPL is in the business of manufacturing socks and stockings
(variation to socks) apart from trading handkerchiefs and ties in
a small way. The socks are widely marketed under the in-house
registered brand Anchor.
WIPL's limited product profile exposes the company to
considerable product concentration risk. The risk is heightened
by WIPL's small scale of operations amidst intense competition
from organised and unorganised players in a highly fragmented
industry, thereby limiting its pricing power.
Furthermore, WIPL's weak financial risk profile is reflected in
the continued net losses in the last three fiscal years with low
accruals and weak return indicators, which is further accentuated
by the company's adverse capital structure following the erosion
of net worth in the past.
WIPL was initially promoted by Mr. Surendranath Juneja and Mr.
Narendranath Juneja as a partnership firm in 1962 and
subsequently incorporated as a private limited company in 2004.
Since inception WIPL has been manufacturing various types of
socks, including stockings. The present directors, Mr. Vivek
Juneja and Mr. Manoj Juneja, manage the company's overall
operations and administration. WIPL manufactures various types of
socks for men, women, and kids under the in-house brand Anchor
and also under private labels for various institutional players.
The company's marketing and designing activities are undertaken
in-house; however, the socks are manufactured under job work
arrangement with its group companies, Narvin Chemicals Private
Limited (Navi Mumbai) and Global Knits Private Limited. Both
these companies carry out exclusive work for WIPL.
=========
J A P A N
=========
SHOES OTTO: Court Declares Shoe Shop Bankrupt
---------------------------------------------
Japan Today reports that a Japanese shoe shop known for holding a
"store-closing sale" for more than 20 years finally went bust, a
credit research agency said on May 19.
Shoes Otto, which started the "going out of business sale" after
the burst in the early 1990s of Japan's asset-inflated bubble
economy and continued it through last year as a marketing tactic,
formally went bankrupt on April 26 this year, Tokyo Shoko
Research said, Japan Today relates.
Among the mainstay products of the shoe shop in Osaka was a
lineup of "secret shoes," or elevator shoes with thick insoles
under the heels to make wearers look taller than they really
were.
The Kobe District Court's Amagasaki Branch declared the shop
bankrupt on April 26. The shop had stopped operating in February
last year.
Founded in 1977, Shoes Otto had advertised itself as "Osaka's
cheapest shoe store." But sales shrank in recent years as
discount shoe shop chains expanded, the report notes.
TAKATA CORP: 4 Automakers Settle Suit Over Air Bags
---------------------------------------------------
Japan Today reports that Toyota, Subaru, Mazda and BMW have
reached a proposed settlement that would compensate owners of
15.8 million vehicles for money they lost due to the massive
recall of Takata air bags.
In documents filed May 18 with a federal court in Miami, the
automakers agreed to pay $553 million to compensate owners and
widen their efforts to make sure vehicles are being repaired,
Japan Today relates. The court must still approve the settlement.
According to the report, Takata's air bag inflators can explode
with too much force, hurling shrapnel into drivers and
passengers. The inflators are blamed for at least 16 deaths and
180 injuries worldwide. The problem touched off the largest
automotive recall in U.S. history involving 42 million vehicles
and 69 million air bag inflators.
Japan Today relates that the settlement would compensate owners
for things like lost wages or child care while they were taking
their vehicle in for the recall repair. Owners could also be
compensated if they paid for a rental car or for vehicle storage
while they were waiting for a car to be repaired. Owners may also
get payments of up to $500 each.
The report says the settlement would also require the automakers
to step up their efforts to locate owners and educate them about
the need to complete the recall repairs. As of April 28, only 32
percent of Toyota owners, 31 percent of Subaru owners, 18 percent
of Mazda owners and 16 percent of BMW owners had completed the
repairs, according to the National Highway Traffic Safety
Administration, Japan Today relays.
Japan Times notes that automakers would be required to provide
free rental cars to owners of the highest-risk cars. U.S. safety
regulators have determined that older cars are at the highest
risk, since a chemical Takata used in its air bags can break down
over time when it's exposed to humidity. The 2002-2006 BMW 3
Series, 2003-2006 Mazda6, 2005-2008 Subaru Legacy and 2003-2007
Toyota Corolla are among the vehicles covered by this settlement
that are considered the highest risk.
According to the report, the settlement affects 9.2 million
Toyota vehicles, 2.6 million Subaru vehicles, 2.3 million BMW
vehicles and 1.7 million Mazda vehicles. The recall affects
vehicles as far back as the 2000 model year and as recent as the
2016 model year.
Toyota would pay the most under the settlement, at
$278.5 million, the report says.
Nissan, Honda and Ford are also part of the ongoing federal court
case, but plaintiffs' attorney Peter Prieto wouldn't say whether
he is talking to those companies about similar settlements,
according to Japan Today.
Japanese auto supplier Takata Corp pleaded guilty to fraud in
federal court in February, Japan Today notes. The company has
agreed to pay $1 billion in penalties for concealing defects with
its air bags.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. The
Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TOSHIBA CORP: SK Hynix Joins Final Bid for Memory Chip Unit
-----------------------------------------------------------
Yonhap News Agency reports that South Korea's chipmaker SK hynix
said on May 19 it has joined the final bidding to take over the
memory division of Toshiba Corp.
Through a regulatory filing, the company said it has decided to
join the final bidding with its consortium partner, Yonhap
relates. Sources said earlier that SK hynix formed an alliance
with Bain Capital.
According to the report, sources said SK hynix has conducted a
study on the acquisition under a request from Toshiba. The report
says the South Korean company is widely expected to suggest a
price higher than the JPY2 trillion (US$18 billion) proposed
during the first bidding.
Shortly after the first bidding, SK Group's head Chey Tae-won
said its initial proposed price was not significant, the report
relays.
Other major tech firms, such as Taiwan-based Hon Hai better known
as Foxconn, and U.S.-based Broadcom Corp. are also expected to
join the bidding, the report says.
Yonhap notes that Western Digital, which has been maintaining
closes ties with Toshiba, however, is presumed to have been
excluded in the second bidding.
The report says the U.S. company earlier filed a request for an
arbitration to an international court, demanding exclusive
negotiation rights. Industry watchers said Western Digital's move
lead to the delay in Toshiba's selling of the memory chip
business.
Toshiba has put its stake in its memory operations up for sale as
it struggles with losses from its nuclear power business in the
United States, Yonhap notes. Accordingly, the Japanese firm must
conclude the deal by March 2018 to repay the debt.
Even if the deal is reached on time, the entire negotiation may
be scrapped if the International Chamber of Commerce accepts
Western Digital's request, adds Yonhap.
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 RESORTS: S&P Assigns 'BB-' Rating to Proposed Sr. Notes
-------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term issue rating and
'cnBB' Greater China regional scale rating to a proposed issue of
U.S. dollar-denominated senior unsecured notes by Melco Resorts
Finance Ltd. The ratings on the notes are subject to S&P's
review of the final issuance documentation.
Melco Resorts Finance is a wholly-owned financing subsidiary of
Melco Resorts & Entertainment Ltd. (MLCO). In S&P's view, Melco
Crown (Macau) Ltd. (Melco Crown: BB/Negative/--; cnBB+/--), the
rated Macau-based casino operator, is the most important cash-
generating asset of its intermediate parent (MLCO) and ultimate
parent (Melco International Development Ltd.). S&P expects Melco
Crown to continue to drive the group's credit profile.
S&P expects Melco Resorts Finance to use the net proceeds of the
proposed notes, together with cash on hand as applicable, to
repurchase in full its existing US$1.0 billion senior unsecured
notes due 2021.
S&P rates the proposed notes one notch below our corporate credit
ratings on Melco Crown, reflecting S&P's view of subordination
risks. Melco Crown has senior secured debt and priority
liabilities directly under its operating subsidiaries, which rank
senior to the proposed senior unsecured notes.
The negative outlook on Melco Crown reflects S&P's view that the
Melco International group has a limited financial buffer at the
current rating level, given its high debt leverage. S&P believes
the group's debt service capability could deteriorate over the
next 12 months if capital investments or dividends increase more
than S&P expect. On the other hand, S&P could revise the outlook
to stable if the consolidated debt-to-EBITDA ratio improves to
well below 4.0x on a sustained basis.
====================
N E W Z E A L A N D
====================
RAKON LIMITED: Annual Loss Widens to NZ$13.6MM on Sales Drop
------------------------------------------------------------
BusinessDesk reports that Rakon Limited posted a wider full-year
loss after sales fell 16 per cent and the company recognised an
impairment against its Centrum Rakon India joint venture.
The net loss widened to NZ$13.6 million in the 12 months ended
March 31, from NZ$1.7 million a year earlier. Sales fell to
NZ$94.7 million from NZ$112.7 million, while cost of sales
recorded a more modest decline to NZ$61 million from NZ$64.8
million, BusinessDesk discloses.
BusinessDesk says the latest results include impairments of about
NZ$6.6 million, of which NZ$3.2 million was against the carrying
value of its 49 per cent-owned Centrum Rakon India Private Ltd
JV, which Rakon said reflected value-in-use calculations based on
future forecasts that "did not support the full value of this
investment being retained". As revenue declined the company also
increased inventory obsolescence provisions during the year by
NZ$4.2 million, it said. Restructuring costs amounted to NZ$3
million and among other one-time items was a NZ$1.9 million
impairment of goodwill.
The decline in sales reflected a 16 per cent drop revenue from
telecommunications, it said, BusinessDesk relays. Positives in
the year included a reduction in net debt to NZ$4.5 million from
NZ$12.6 million and an increase in positive operating cash flow
to NZ$9.5 million from NZ$7.3 million, it said.
According to BusinessDesk, Managing director Brent Robinson said
Rakon continued to suffer from reduced demand from equipment
makers in the telecommunications sector "as major global network
operators had continued to delay infrastructure investment."
"While we experienced a lift in business in the telecommunication
market in the final quarter, it was not enough to recover the
reduced demand that had negatively affected revenue in the first
three quarters," BusinessDesk quotes Mr. Robinson as saying. Key
priorities in the latest year were reducing operating costs and
balance sheet risk, he said.
"Although the result for FY2017 is very disappointing, there has
been a number of achievements in the year that provide Rakon a
stronger position from which improved results can be achieved in
the coming year," Mr. Robinson said, BusinessDesk relays.
Rakon Limited (NZE:RAK) -- http://www.rakon.com/-- is engaged
development and production of high performance quartz products
and crystal components.
=====================
P H I L I P P I N E S
=====================
GIFT GATE: Last Store in Philippines to Close on May 31
-------------------------------------------------------
ABS-CBN News reports that in the window of Gift Gate in San Juan,
a sign with bold letters read: "Closing Out Sale. Everything Must
Go."
ABS-CBN News says it was big enough to hide from onlookers the
barely stocked shelves and cabinets inside the store, which was
once a favorite of Filipino kids who were looking for cute bags,
pencil cases, and other pink-colored school stuff.
Established in 1976, Gift Gate was the go-to destination for
those fans of Sanrio staples Hello Kitty, My Melody, and Little
Twin Stars. But once the popularity of those cartoon characters
waned, apparently so did sales, the report notes.
According to the report, one of the store's clerks said the San
Juan branch was the first to open its doors for Filipinos. It
will also be the last one to close them, she said.
ABS-CBN News anchor Julius Babao said the store will close on
May 31, adds ABS-CBN News.
=================
S I N G A P O R E
=================
STATS CHIPPAC: Fitch Affirms B+ IDR; Removes from RWN
-----------------------------------------------------
Fitch Ratings has removed the Rating Watch Negative (RWN) on
Singapore-based semiconductor outsourced assembly and test (OSAT)
company STATS ChipPAC Pte. Ltd.'s Long-Term Foreign-Currency and
Local-Currency Issuer Default Ratings (IDR) and affirmed the
ratings at 'B+'. The Outlook is Stable. Simultaneously, the
agency has removed the RWN on STATS's 8.5% USD425 million senior
secured notes due 2020 and affirmed the rating at 'BB' with
Recovery Rating of 'RR2'. The notes are guaranteed by all the key
operating companies, except those in China and Thailand.
The removal of the RWN and affirmation of the ratings reflects
the Chinese Securities Regulatory Commission's (CSRC) approval
for the swap of USD100 million of shares held by Semiconductor
Manufacturing Investment Corp (SMIC) and USD300 million of shares
held by China Integrated Circuit Industry Investment Fund Co.,
Ltd. (IC fund) in the intermediate holding companies of STATS for
shares in its parent, Jiangsu Changjiang Electronics Technology
Co. Ltd. (JCET) CSRC has also approved SMIC's equity injection of
USD400 million into JCET.
As a result, Fitch expects the liquidity and leverage of JCET and
STATS to improve in 2017. Fitch expects JCET group's consolidated
2017 FFO-adjusted leverage to improve to around 4.0x-4.3x as
Fitch will treat the investments by SMIC and IC fund in JCET as
equity in Fitch analysis. Fitch previously treated the
investments in the intermediate holding companies as debt because
of the investors required their cash principal plus a return as a
condition for their exit.
KEY RATING DRIVERS
Strong Linkages with Parent: STATS's ratings are based on the
consolidated credit profile of JCET, its parent, given the strong
operational and strategic linkages between the two entities.
STATS is strategically important to the JCET group's consolidated
credit profile because STATS will account for 40%-50% of the
group's 2017 revenue and EBITDA. STATS's advanced packaging
capability in Korea and Singapore are critical for JCET's success
in the industry. JCET controls the board at STATS and its key
operating decisions.
High Leverage: Fitch expects JCET group's FFO-adjusted leverage
to be around 4.0x-4.3x at end-2017 - lower than 4.5x, the level
above which Fitch would consider negative rating action. JCET
group's leverage is higher than that of industry peers. Both, the
market leader Advanced Semiconductor Engineering, Inc. (ASE,
BBB/RWN) and second-largest Amkor Technology have FFO-adjusted
leverage of around 2.0x.
Negative FCF: Fitch forecasts JCET group's FCF in 2017-2018 to be
negative as its CFO will be insufficient to fund planned capacity
expansion. JCET group is likely to invest about USD550 million-
600 million mainly to expand STATS's wafer level technology
capacity and expand its system in package (SiP) capacity at its
Korean facility. Most peers' FCF are likely to decline in 2017
due to high capex requirements. The top-three OSAT peers are
investing in advanced packaging technologies, such as flip chip,
wafer level and SiP, to enhance their product portfolio. SiP
capabilities are increasingly important to meet demand from the
growing market for wearable devices, such as the Apple Watch.
Improving EBITDA: Fitch expects JCET group's revenue and EBITDA
in 2017 to increase by around 10%-15%, driven by rising assembly
and testing service demand from Chinese customers, and growth in
the SiP business and wafer-level packaging at STATS. Fitch
expects STATS's EBITDA to also improve as its Korean flip-chip
capacity's utilisation is likely to rise with orders from its
customers. The completion of the relocation of STATS's Shanghai
facility to Jiang Yin, which is closer to JCET's facility, will
also support higher utilisation levels and cash generation.
The group's technological capability is improving and it now has
a full suite of packaging technologies, including traditional
wire bonding and advanced packaging technologies, such as flip
chip and wafer level. Also, the group's investments in wafer-
level packaging and SiP will further strengthen its competitive
position relative to larger Taiwanese peers.
Negative Industry Outlook: Fitch expects OSAT industry
participants to face soft market fundamentals, high competition,
debt-funded consolidation, and large investments in capex in the
near term. Competition will likely remain intense and capacity
utilisation could fall below 2016 levels as JCET aggressively
adds capacity to try to narrow the technology gap with Taiwanese
peers. Average selling prices (ASP) could decline annually by 3%-
5%. Industry revenue may increase only by 3%-4%, driven by
growing demand for smartphones in China and India. Most analysts
forecast global smartphone demand to rise by only a low-single-
digit percentage in 2017 and for the PC and tablet market to
continue to decline.
The on-going consolidation in the OSAT industry will only partly
address the problems of a fragmented market and price erosion.
The benefits of consolidation - in the form of higher capacity
utilisation, better bargaining power and stable ASPs - are likely
to be realised only in the medium term.
Bond Rated Above IDR: Fitch rates STATS's 8.5% USD425 million
secured bond two notches above the IDR, reflecting superior
recovery from the security package, which covers principally all
of STATS's group assets outside China and Thailand. About 70% of
STATS's group assets are held at the subsidiaries providing
security. The guarantors on the bond generate about 76% of group
revenue and EBITDA. At end-2016, the non-guarantor subsidiaries
had USD27 million of debt and about USD183 million of trade
payables.
DERIVATION SUMMARY
STATS's 'B+' rating is based on the consolidated credit profile
of JCET group, given strong operational and strategic linkages
between the two entities. JCET group's credit profile benefits
from its position as the third-largest OSAT company globally with
about 10% revenue market share, and its diversified operations,
where about half of revenue and EBITDA are derived from China and
the balance from US- and Europe-based customers. Its credit
profile continues to be constrained by high leverage and Fitch's
expectation of lower FCF generation relative to peers. However,
JCET group's revenue and EBITDA are likely to grow faster than
the industry average due to its higher exposure to growing
Chinese demand for assembly and testing services.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- JCET group's consolidated revenue to grow by around 10%-15% in
2017 and around 4%-5% in 2018 mainly driven by fast-growing SiP
business and recovery in STATS's revenue.
- Consolidated EBITDA margin to remain stable around 15%-16%
(2016: 16%) as better capacity utilisation levels offset lower
margin at the growing SiP business.
- Capex investments of USD550 million-600 million during 2017-
2018.
- STATS to relocate its Shanghai facility to Jiang Yin (closer to
JCET's existing facility) in 2017 and receive USD59 million in
compensation in 2017. Fitch has assumed that the amount will be
used for relocation expenses during the same period.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Fitch may upgrade the IDRs to 'BB-' if JCET group's
consolidated FFO-adjusted leverage improves to below 3.0x.
However, given the tough market environment and the group's
investment plans, Fitch believes that the group is unlikely to
deleverage organically to this extent and would be likely to
require an equity injection for leverage to fall below 3.0x
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- JCET's consolidated cash flows are lower than Fitch
expectations, leading to its consolidated FFO-adjusted leverage
deteriorating above 4.5x.
- JCET's loss of control or majority board representation in
STATS and its holding companies.
LIQUIDITY
CSRC Approval Boost Liquidity: JCET group's liquidity improved
following the CSRC's approval of SMIC's equity injection of
USD400 million. At end-2016, JCET's liquidity was adequate with
cash balance of CNY2.2 billion (USD326 million) and undrawn
committed bank facilities of CNY4.4 billion, which were
sufficient to pay for short-term debt of CNY5.8 billion. JCET
also enjoys good funding support from Chinese banks.
JCET will likely use the SMIC injection to repay the USD120
million loan from Bank of China and capital leases. STATS will
receive USD170 million in equity from JCET - out of the SMIC
equity injection. Also, liquidity at STATS was adequate with cash
balance of USD140 million sufficient to pay short-term debt of
USD37 million. Most of the USD1.1 billion debt at STATS is long
term in nature.
TRANSPORTATION PARTNERS: Moody's Assigns B2 CFR; Outlook Stable
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) to Transportation Partners Pte. Ltd. (TP), and a B3
rating to the company's proposed USD-denominated senior unsecured
notes.
The ratings outlook is stable.
This is the first time that Moody's has assigned ratings to TP.
RATINGS RATIONALE
The B2 CFR incorporates TP's standalone credit profile of b2, and
takes into consideration TP's young and fast growing position
within the regional aircraft leasing industry, its track record
of operating profitability since its establishment in 2011, and
its business profile that is underpinned by its alliance with the
Lion Air Group airlines, which are also owned by TP's
shareholder, the Kirana family.
The rating also reflects the company's modest capitalization,
reliance on wholesale funding sources, limited liquidity
coverage, and high share of secured debt. Moreover, its capital
and liquidity profile are prone to deterioration from additional
financing requirements resulting from its business growth.
The rating also takes into account the company's short track
record of operations, and developing governance and management
structure. In addition, the rating also incorporates the credit
risks associated with the company's mono-line business model,
which is subject to external disruptions.
TP has a unique and close business relationship with its
affiliate airlines under Lion Air Group (not rated), which is
owned by one of its shareholders, Mr. Rusdi Kirana. Lion Air
Group operates 3 airlines in Indonesia - Lion Air (the largest
private carrier in Indonesia), Wings Air and Batik Air -- which
together account for around 54% of Indonesia's domestic air
traffic in 2016. Other affiliate airlines of the Lion Air Group
include Malindo Air, a full service carrier in Malaysia, and Thai
Lion Air, a low cost carrier in Thailand.
This alliance has so far supported TP's business growth since its
establishment in 2011, but has also resulted in the very limited
diversification of its operations across geographies and business
lines. Over 95% of the company's income are attributed to the
airlines under Lion Air Group.
Given the company's limited history and small portfolio of leases
to third-party airlines, Moody's views TP's franchise positioning
to be weaker than more established competitors in the industry.
The mono-line industry nature of TP's operations poses a
constraint on the firm's rating, given the cyclical nature of the
airline industry which exposes the company to a weakened level of
aircraft demand, lower lease renewal rates, and declines in
aircraft utilization levels during industry downturns.
TP's net income over the past three years has exhibited some
level of volatility. In 2016, net income, as a percentage of
average managed assets, was 1.5%, down from 2.8% in 2015, as a
result of gains recorded from aircraft disposals in 2015. Moody's
expects income volatility to continue over the medium term as the
company scales up its operations.
Given TP's relatively short operating history, corporate
governance practices and risk management capabilities continue to
develop with business growth, and remain largely untested. The
current lean management structure allows limited room for
turnover or succession planning. Given the rapid growth TP
anticipates, retaining and attracting the right talent can pose
operational and risk management issues going forward.
TP maintains a modest capital position, as reflected by effective
leverage (measured by debt as a percentage of tangible common
equity) of 3.3x at end-2016. Its leverage remains moderately
higher than that of many industry peers rated by Moody's. As the
company intends to fund its future business growth primarily with
wholesale debt and bank borrowings, leverage could rise, reducing
its capital cushion as it pursues business growth.
The lack of sizable excess liquidity on its balance sheet raises
concerns that the company would have difficulties coping with
liquidity issues that could arise from cash flow shocks, or
significant increases in financing requirements from business
growth. At end-2016, the total liquidity resources available to
the company were only sufficient to cover less than 35% of its
total debt maturing over the next 24-month period. This 24-month
coverage ratio is significantly lower than the levels for its
rated peers (between 60% and above 100%), and reflects TP's
weaker liquidity profile relative to peers.
TP's management has indicated that new business growth will be
muted in 2017-2018, and that it will begin to take new aircraft
deliveries in 2019 and later. As such, Moody's expects TP's
purchase commitments and the associated lease-out and funding
risks will remain manageable over the next 12-18 months. However,
if TP's fleet grows faster than planned in 2017-2018, operating
and funding risks will increase and could affect its ratings
negatively.
On a positive note, TP's aircraft fleet has lower risk
characteristics compared with its global industry peers,
including a younger average aircraft age of 2.5 years and a
higher percentage of in-demand narrow-body aircraft. These
features, in Moody's view, help to alleviate concerns of asset
impairment and liquidity risks to a large extent.
In addition, TP's dependence on secured debt results in a high
level of encumbered assets that limits the company's financial
and operational flexibility. It currently does not maintain any
committed backup credit lines, or substantial unencumbered assets
that can used to source for contingent liquidity.
Moody's rated the proposed senior unsecured notes at B3, based on
TP's B2 CFR or credit profile, and -1 notch to reflect the
substantial amount of secured debt in TP's capital structure. The
B3 rating on the notes also incorporates the notes' relative
priority and proportion in the company's capital structure, and
the strength of the notes' asset coverage. The company intends to
use the proceeds of the notes for general corporate purposes,
which may include debt repayment and aircraft acquisitions.
WHAT COULD CAUSE THE RATINGS OR OUTLOOKS TO CHANGE (UPWARD OR
DOWNWARD)
TP's ratings could be upgraded if the company strengthens its
franchise positioning as a competitive player in the third-party
aircraft leasing business, establishes a track record of
improvements in its corporate governance framework which includes
having adequate independent director representation on the board
and increasing its management resources in key functions, reduces
customer concentrations, and achieves a sustainable improvement
in its capital and liquidity profiles. Specifically for
liquidity, a sustained improvement in the 24-month coverage ratio
to above 50% would increase prospects for a higher rating.
Conversely, the ratings could be downgraded if the company's
profitability unexpectedly declines, leverage increases, or its
liquidity weakens materially as a result of an acceleration in
its business growth.
The principal methodology used in these ratings was Finance
Companies published in December 2016.
Transportation Partners Pte. Ltd. (TP) is an aircraft lessor
headquartered in Singapore. The company had $1.5 billion in
aircraft assets as of the end of 2016.
=============
V I E T N A M
=============
VIETNAM: Fitch Affirms BB- IDR; Revises Outlook to Positive
-----------------------------------------------------------
Fitch Ratings has revised the Outlook on Vietnam's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDR) to
Positive from Stable and affirmed the ratings at 'BB-'. The
ratings on Vietnam's senior unsecured foreign- and local-currency
bonds are also affirmed at 'BB-'. The Country Ceiling is affirmed
at 'BB-' and the Short-Term Foreign-and Local-Currency IDRs at
'B'.
KEY RATING DRIVERS
Vietnam's ratings reflect strong growth performance and
prospects, persistent current account surpluses, manageable debt
service costs and sustained foreign direct investment inflows.
The ratings also reflect a high public debt ratio, low foreign-
exchange reserve buffers, macro-prudential and banking sector
risks and some structural indicators being weaker than those of
peers, including per capita income and human development
standards.
The revision of the Outlook to Positive reflects the following
key rating drivers:
Vietnam is building a record of policy-making focused on
macroeconomic stability. This approach, which includes greater
exchange-rate flexibility and an increasing focus on inflation
stability, has supported consistently strong levels of foreign
direct investment (FDI) and helped maintain robust economic
growth. Vietnam's real GDP expanded by 6.2% in 2016, taking the
five-year average real GDP expansion to 5.9%, against the 'BB'
median of 3.4%. Growth remains supported by the country's export-
oriented manufacturing sector and steady expansion in services,
despite weakness in the mining and quarrying sectors from the
ongoing oil and gas industry downturn. Fitch expects real GDP
growth to improve gradually over the forecast period, to 6.3% in
2017 and 6.4% in 2018, supported by continued FDI inflows into
the manufacturing sector and strong private consumption
expenditure.
Vietnam's foreign-exchange reserves continued to improve, rising
to USD37.0 billion by end-2016, from USD28.6 billion at end-2015.
This improvement was supported by the adoption of a new exchange-
rate mechanism in early 2016, which aims at greater exchange-rate
flexibility, alongside a strong current account surplus and
continued robust FDI inflows. However, the new regime, in which
the central bank sets a daily trading range on either side of the
reference rate, could be tested in a stronger dollar environment
that results in currency weakness among emerging economies
dependent on foreign capital flows.
Vietnam's 'BB-' rating also reflects the following key rating
drivers:
Government debt is above the 'BB' median and has continued to
rise. Based on preliminary estimates of the authorities,
government debt/GDP rose to 53.4% at end-2016, from 50.1% at end-
2015. A broader definition of overall public debt that includes
explicit government guarantees reached 63.7% at end-2016, just
short of the official 65% debt ceiling. The authorities have
reaffirmed their commitment to remain within the ceiling through
fiscal measures and limits on guarantee issuance. Fitch expects
the authorities to avoid breaching the debt ceiling using a
combination of these measures. Proceeds from the 2016-2020
equitization programme could also help contain debt over the
forecast period.
Fitch estimates a decline in the 2016 fiscal deficit to 5.7% of
GDP (on the agency's adjusted deficit, which is more closely
aligned with Government Finance Statistics criteria), from 6.2%
at end-2015 as fiscal revenues are estimated to have
outperformed. The authorities have reinforced their commitment to
lower deficit and debt levels under their 2016-2020 budget plan.
Fitch expects the deficit to remain close to 5.7% of GDP over
2017-2018, absent major revenue reforms.
Vietnam's rankings on a range of governance indicators have
improved over the previous few years, including on all six
dimensions of the World Bank's worldwide governance indicators
from 2014 to 2015. Nevertheless, the country's ranking on the
composite governance metric is at the 39th percentile, still
below the 'BB' median's 50th percentile. On the Ease of Doing
Business Index, Vietnam is close to the 'BB' median. Vietnam's
per capita income and human development indicators remain weaker
than the peer median: per capita income was USD2,172 at end-2016,
ranking at the 37th percentile on the UN Human Development Index,
compared with the USD5,058, or 58th percentile, for the 'BB'
median.
Vietnam's current account remains in surplus, averaging around 4%
of GDP for the five years ending 2016. Although Vietnam's reserve
coverage of current external payments is below that of its peers,
at 2.3 months against 4.2 months of the 'BB' median, a still-high
share of concessional debt supports its external liquidity
position. External debt service as a percentage of current
external receipts was 4.9% at end-2016, against the 'BB' median's
12.9%, although this advantage is likely to start declining in
2017 when Vietnam is scheduled to graduate from the World Bank's
International Development Association eligibility criteria,
leading to higher funding costs. The sovereign has been
increasing its share of domestic debt financing to prepare for
the reduced access to concessionary financing.
Although Fitch's banking sector outlook for Vietnam is stable,
some challenges remain. The agency believes the large stock of
non-performing loans (NPLs) is likely to take time to resolve due
to legal impediments, and the 2.5% reported system NPL ratio at
end-2016 understates actual asset quality issues. In addition,
structural systemic weaknesses remain, as evident from thin
capital buffers and weak profitability. Fitch believes
recapitalisation needs of the banking sector remain a risk for
the sovereign. Further, while improving economic performance is
likely to support lower NPL formation, a rapid and sustained
increase in credit growth poses a risk to financial stability in
the medium term. Overall credit growth at end-2016 was around 18%
(2016 target: 18%-20%) and the official credit growth target for
2017 has been capped at 18%.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Vietnam a score equivalent to a
rating of 'BB+' on the Long-Term Foreign-Currency IDR scale.
Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final Long-Term Foreign-Currency IDR by
applying its qualitative overlay (QO), relative to rated peers:
- Public Finances: -1 notch to reflect relatively high contingent
liability risks stemming from government guarantees for state-
owned entities and potential banking sector recapitalisation
costs.
- Structural Features: -1 notch to reflect continued risks to
macro-stability, including rapid credit growth and unresolved
legacy issues in the banking sector.
Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO
is a forward-looking qualitative framework designed to allow for
adjustment to the SRM output to assign the final rating,
reflecting factors within Fitch criterias that are not fully
quantifiable and/or not fully reflected in the SRM.
RATING SENSITIVITIES
The main factors that, individually or collectively, might lead
to positive rating action are:
- Maintenance of continued macroeconomic stability, low and
stable inflation and a build-up of external buffers.
- Greater confidence in the government's ability to achieve
fiscal consolidation, resulting in a reduction in fiscal deficit
and government debt.
- Sustainable resolution of structural weaknesses in the banking
sector.
The main factors that could lead to negative rating action,
individually or collectively, are:
- A shift in the macroeconomic policy mix that results in
macroeconomic instability, higher inflation and a rise in
external imbalances.
- Depletion of foreign-exchange reserves on a scale sufficient to
destabilise the economy or deter foreign investment.
- Crystallisation of contingent liabilities on the sovereign's
balance sheet, which add to the government debt burden.
*********
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, and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***