/raid1/www/Hosts/bankrupt/TCRAP_Public/170717.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, July 17, 2017, Vol. 20, No. 140
Headlines
A U S T R A L I A
DANLEIGH TOOLING: Second Creditors' Meeting Set for July 24
J & A DAVIS: Second Creditors' Meeting Set for July 24
MCM LAW: First Creditors' Meeting Set for July 24
PATINACK FARM: Gerry Harvey Recoups Millions From Nathan Tinkler
SYDNEY PROJECT: First Creditors' Meeting Set for July 24
TECH PROJECT: Creditors Approve Deed of Company Arrangement
XIANG RONG: Second Creditors' Meeting Set for July 24
YERING MEADOWS: First Creditors' Meeting Set for July 24
I N D I A
ADHUNIK METALIKS: Lenders Initiate Corporate Insolvency Process
AKHIL SHIP: Ind-Ra Upgrades LT Issuer Rating to B, Outlook Stable
AMODA IRON: CRISIL Assigns B+ Rating to INR9MM Cash Loan
ARKA CARBON: CARE Downgrades Rating on INR120cr ST Loan to D
ARROW CABLES: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
AUTOTEC SYSTEMS: CRISIL Cuts Rating on INR6.50MM Bank Loan to B+
DERON PROPERTIES: CRISIL Reaffirms B+ Rating on INR50MM Term Loan
DSP INFRATECH: CRISIL Assigns B+ Rating to INR9.2MM LT Loan
GLOBAL CLOUD: Fitch Lowers Long-Term IDR to B-; Outlook Negative
JAY KRISHNA: CRISIL Raises Rating on INR12MM Cash Loan to BB-
JAYANTH INDUSTRIES: CRISIL Reaffirms B+ Rating on INR6.33MM Loan
KEVIN METPACK: CARE Assigns B+ Rating to INR12cr LT Loan
KTC AUTOMOBILES: CRISIL Lowers Rating on INR10MM Cash Loan to D
M.P K. ISPAT: CRISIL Cuts Rating on INR10MM Cash Loan to 'D'
M.P.K. STEEL: CRISIL Lowers Rating on INR15MM Cash Loan to 'D'
M.S MENTHOL: CRISIL Reaffirms B Rating on INR4MM Cash Loan
MOHIT VENTURES: Ind-Ra Assigns B+ Issuer Rating, Outlook Stable
NAVKAR SUGARS: CARE Assigns B+ Rating to INR5.25cr LT Loan
NRI EDUCATIONAL: CRISIL Reaffirms B+ Rating on INR16.5MM Loan
PEARL INFOTECH: CRISIL Assigns 'B' Rating to INR3MM Cash Loan
PIXIE DUSTT: CRISIL Assigns B- Rating to INR15MM Term Loan
PK THUNGAN: CRISIL Reaffirms B+ Rating on INR20MM Cash Loan
POOJA SPONGE: CRISIL Reaffirms D Rating on INR9MM Cash Loan
SADHA EXPORTS: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
SANCHETI COTEX: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan
SATYA SURYA: CRISIL Raises Rating on INR25.5MM Cash Loan to B-
SHEETAL AGROFOOD: CRISIL Assigns B- Rating to INR5MM Term Loan
SHREE GANPATLAL: CARE Lowers Rating on INR20cr LT Loan to B
SHRI SALASAR: CARE Reaffirms B+ Rating on INR7cr LT Loan
SKAF CONSTRUCTION: CRISIL Lowers Rating on INR8MM Loan to D
SR CONSTRUCTION: CRISIL Assigns B+ Rating to INR5MM LT Loan
SWASTIK COAL: CARE Lowers Rating on INR320cr ST Loan to D
SWASTIK COTEX: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
YASHODA COLD: CARE Assigns B+ Rating to INR5.40cr LT Loan
I N D O N E S I A
ABM INVESTAMA: Fitch Assigns BB- Long-Term Issuer Default Rating
J A P A N
TAKATA CORP: Asks Bankruptcy Judge to Halt Air Bag Lawsuits
TOKYO ELECTRIC: To Lay Out Turnaround Path by 2019
TOSHIBA CORP: Greenlight Capital Takes New Toshiba Stake
TOSHIBA CORP: Judge Moves Decision in WD Bid to Block Sale
N E W Z E A L A N D
NOSH GROUP: Placed Into Receivership
S O U T H K O R E A
INDUSTRIAL BANK: Moody's Assigns Ba2 Rating to Proposed USD Notes
S R I L A N K A
SRI LANKA: Robust GDP Growth Prospects Support Moody's B1 Rating
- - - - -
=================
A U S T R A L I A
=================
DANLEIGH TOOLING: Second Creditors' Meeting Set for July 24
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Danleigh
Tooling and Engineering Pty. Ltd., trading as "Danleigh
Engineering" has been set for July 24, 2017, at 11:00 a.m., at
the offices of The Qantas Meeting Rooms, Qantas domestic T1
Mezzanine Level (opposite Gate 1), Departure Dr Melbourne
Airport, in 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 July 21, 2017, at 4:00 p.m.
Gavin Moss and Trent McMillen of Chifley Advisory Pty Ltd were
appointed as administrators of Danleigh Toolin
J & A DAVIS: Second Creditors' Meeting Set for July 24
------------------------------------------------------
A second meeting of creditors in the proceedings of J & A Davis
Pty Ltd, trading as Bundy Hobbies & Toys, has been set for
July 24, 2017, at 10:30 a.m., at the offices of Worrells
Brisbane, Level 8, 102 Adelaide Street, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by July 23, 2017, at 5:00 p.m.
Morgan Lane and Chris Cook of Worrells Solvency & Forensic
Accountants Ltd were appointed as administrators of J & A Davis
on June 12, 2017.
MCM LAW: First Creditors' Meeting Set for July 24
-------------------------------------------------
A first meeting of the creditors in the proceedings of
MCM Law Pty Ltd, formerly Trading As McMillan Criminal Law, will
be held at the offices of Artemis Insolvency, Level 1, 190 Edward
Street, in Brisbane, Queensland, on July 24, 2017, at 11:00 a.m.
Peter Dinoris of Artemis Insolvency was appointed as
administrator of MCM Law on July 12, 2017.
PATINACK FARM: Gerry Harvey Recoups Millions From Nathan Tinkler
----------------------------------------------------------------
Donna Page at Newcastle Herald reports that there isn't a lot
billionaire retail giant Gerry Harvey doesn't know about
business. But a bemused Mr. Harvey was left scratching his head
on July 13 when his lengthy business dealings with bankrupt
former billionaire Nathan Tinkler finally came to an end.
Newcastle Herald relates that Mr. Harvey is set to be repaid the
last $5.5 million of the $60 million he loaned to Mr. Tinkler,
after liquidators announced the sale of Patinack Farm's former
headquarters, Richmond Grove, in Sandy Hollow.
The property, that Mr. Tinkler spent more than $26 million buying
and developing, was carved up into three lots and sold for an
undisclosed sum, the report says.
"It's been a hell of a ride," the report quotes Mr. Harvey as
saying. "It's been going on for close to 10 years, well, it feels
like that anyway."
According to the report, Mr. Harvey said he "couldn't get his
head around" how it turned out for the former mine electrician
from Muswellbrook who became Australia's youngest billionaire at
the age of 35, and lost it all in spectacular fashion. Having
lavished a fortune on racehorses and struggling to pay the bills,
Mr. Tinkler reached out for help and Mr. Harvey loaned millions
on the condition that he had first security over Patinack's
properties.
"How do you do that?" Mr Harvey said, notes the report. "No-one
can comprehend that sort of loss."
The Harvey Norman founder is a huge player in racing and owns
Magic Millions, a leading Australian auction house for horses.
Patinack properties in Sandy Hollow, Broke and Port Macquarie
sold for $15 million, plus GST, notes the report.
Mr. Harvey, as first secured creditor, will receive the lion's
share of debts to be paid from the sales, the report says.
Newcastle Herald discloses that administrators for the Patinack
Farm Group initially recommended that creditors accept a deed of
company arrangement that would see unsecured creditors receive
just 3 cents in the dollar on the $30.7 million they were owed.
But the administrator was unable to secure funds to refinance the
properties and the group of companies was placed into the hands
of liquidator Deloitte Restructuring Services Partners, meaning
the 11 unsecured creditors receive nothing.
A report to creditors in October 2015 disclosed the depth of
Patinack's demise, revealing that when Mr. Tinkler called in the
administrators in August 2015 the company had 35 horses, 38
cattle and less than $4000 in the bank. A far cry from when Mr.
Tinkler went on the most spectacular spending spree in racing's
history, investing about $300 million in establishing Patinack
Farm, Newcastle Herald relays.
Deloitte partner Neil Cussen said the Sandy Hollow property sales
would be finalised next month, adds Newcastle Herald.
Deloitte partners Neil Cussen and David Mansfield were appointed
administrators of Patinack Farm Group's horse agistment and
property business on Aug. 23, 2015.
SYDNEY PROJECT: First Creditors' Meeting Set for July 24
--------------------------------------------------------
A first meeting of the creditors in the proceedings of
Sydney Project Group Pty Ltd and S.E.T Services Pty Ltd will be
held at the Radisson Blue Plaza Sydney, Sir James Fairfax Room
Mezzanine Level, 27 O'Connell Street, in Sydney, on July 24,
2017, at 11:00 a.m.
Michael Hogan and Christian Sprowles of HoganSprowles were
appointed as administrators of Sydney Project on June 16, 2017.
TECH PROJECT: Creditors Approve Deed of Company Arrangement
-----------------------------------------------------------
Brendon Foye at CRN reports that Brisbane IT solution provider
Tech Project has pulled itself out of administration after
creditors approved the director's deed of company arrangement
(DOCA).
Creditors have accepted an arrangement where the directors will
pay back AUD375,000, which works out to be 11-15 cents in the
dollar, according to a report to creditors cited by CRN. Tech
Project's claimed debts amounted to AUD2.8 million, including
AUD1 million owed to the Australian Taxation Office, the report
discloses.
The company was placed in voluntary administration in May citing
cash flow problems. Last month, administrator Darren Vardy told
CRN that Tech Project's rapid growth led to constrained
liquidity, compounded with pressure from creditors.
There is also a claim from a related entity, Tech Project
Holdings, to the tune of AUD1.6 million. However, the
administrators said that records showed the amount is only
AUD81,000, and further investigation is required, the report
relates.
"The company has grown significantly over the past four years
since its foundation, having a sizable client footprint in
Brisbane, Queensland as a managed services provider," Mr. Vardy
said previously, CRN relays. "The company's rapid growth has led
to constrained liquidity and as a result of creditor pressure,
the company entered into voluntary administration by resolution
of its directors to complete a restructure."
A DOCA was agreed upon by creditors in order to keep the business
running and increase the likelihood of a return to creditors.
Under the arrangement, control of Tech Project will be handed
back to its directors, who will make monthly payments of
AUD25,000 to the sum of AUD300,000, CRN notes. They will pay an
additional AUD75,000 on top of that to cover the trading losses
incurred during the administration.
If payments aren't made on time, creditors can vote on whether to
vary or terminate the arrangement. The directors are also barred
from winding up the company, and must take steps to avoid doing
so, CRN relates.
Tech Project was founded in 2012 and offers IT services to SMB
customers including managed services and cloud.
XIANG RONG: Second Creditors' Meeting Set for July 24
-----------------------------------------------------
A second meeting of creditors in the proceedings of Xiang Rong
(Australia) Investment Group Pty Ltd has been set for July 24,
2017, at 11:00 a.m., at Level 13, 60 Castlereagh Street, in
Sydney.
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 July 21, 2017, at 4:00 p.m.
David John Kerr of RSM Australia Partners was appointed as
administrator of Xiang Rong on June 28, 2017.
YERING MEADOWS: First Creditors' Meeting Set for July 24
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Yering
Meadows Golf Club Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Level 15, 114 William Street, in
Melbourne, Victoria, on July 24, 2017, at 2:30 p.m.
Matthew Jess & Matthew Kucianski of Worrells Solvency & Forensic
Accountants were appointed as administrators of Yering Meadows on
July 12, 2017.
=========
I N D I A
=========
ADHUNIK METALIKS: Lenders Initiate Corporate Insolvency Process
---------------------------------------------------------------
Dalal Street Investment Journal reports that Adhunik Metaliks
Limited has informed the exchanges that the lenders have
initiated the corporate insolvency resolution process on July 11,
2017, and filed documents with National Company Law Tribunal,
Kolkata, for the company under the Insolvency and Bankruptcy
Code, 2016.
Adhunik Metaliks Limited is an alloy, special and construction
steel manufacturing company. The Company is engaged in the
manufacture and sale of steel, both alloy and non-alloy.
AKHIL SHIP: Ind-Ra Upgrades LT Issuer Rating to B, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Akhil Ship
Breakers Pvt Ltd's (ASBPL) Long-Term Issuer Rating to 'IND B'
from 'IND B-'. The Outlook is Stable. Instrument-wise rating
action is given below:
-- INR300 mil. Non-fund-based limits Long-term rating upgraded;
Short-term rating affirmed with IND B/Stable/IND A4
KEY RATING DRIVERS
The upgrade reflects an improvement in ASBPL's scale of
operations as it secured a ship breaking assignment in FY17. As
per FY17 provisional financials, the company reported revenue of
INR266 million (FY16: INR1 million), EBITDA of INR2 million
(FY16: EBITDA loss of INR1 million), gross interest coverage
(operating EBITDA/gross interest expense) of 1.2x and net
interest coverage (operating EBITDA/net interest expense) of
2.6x.
However, the ratings remain constrained by volatile metal prices
leading to fluctuations in EBITDA margin (FY17P: 0.9%).
RATING SENSITIVITIES
Positive: Improvement in the scale of operations and
profitability leading to an improvement in the credit metrics
will be positive for the ratings.
Negative: Deterioration in the scale of operations and
profitability leading to deterioration in the credit metrics will
be negative for the ratings.
COMPANY PROFILE
Incorporated in 1999, ASBPL engaged in ship breaking activity.
The company owns a plot in Alang-Sosiya belt of Bhavnagar
district. Presently, the company is managed by Mr. Anil Jain and
Mr. Manish Jain.
AMODA IRON: CRISIL Assigns B+ Rating to INR9MM Cash Loan
--------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Amoda Iron and Steel Limited (AISL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Open Cash Credit 9 CRISIL B+/Stable
Long Term Loan 2.79 CRISIL B+/Stable
Bank Guarantee 0.34 CRISIL A4
Letter of Credit 3.63 CRISIL A4
The rating reflects AISL's modest scale of operations in an
intensely competitive industry and susceptibility of operating
profitability to volatility in raw material prices. These rating
strengths are partially offset by the promoters' extensive
experience and moderate financial risk profile.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in an intensely competitive industry
AISL is a small player in a highly competitive iron and steel
industry which is highly fragmented with presence of small,
medium and large sized players. The large players benefit from
economies of scale, which smaller sized players like AISL do not
benefit from.
* Susceptibility of operating profitability to volatility in raw
material prices
The prices of iron ore and sponge iron have been highly volatile
in the past resulting in volatility in players' operating
margins. The margins would continue to remain susceptible to
changes in input prices over the medium term as well.
Strengths
* Extensive experience of its promoters
AISL benefits from the extensive industry experience of its
promoters in the iron and steel industry. The company is promoted
and managed by Mr. U Kondal Rao, who has 25 years of extensive
experience in the industry. He is a Post Graduate in Business
Administration and has started his entrepreneurial journey at an
age of 25 and has a diverse portfolio to his credit that includes
Granite, Laterite, Ware Housing, Mining, and Steel.
* Moderate financial risk profile
AISL has a moderate financial risk profile because of moderate
gearing and debt protection metrics, supported by moderate
operating profitability. Gearing is estimated at around 1.66
times and net worth at INR13 crore as on March 31, 2017. Debt
protection metrics were moderate, with interest coverage of 2.4
times for fiscal 2017.
Outlook: Stable
CRISIL believes AISL will continue to benefit over the medium
term from its established position in key market ensuring steady
sales, and extensive experience of the promoters. The outlook may
be revised to 'Positive' if significant improvement in scale of
operations and profitability, leads to better business risk
profile coupled with an improvement in debt protection metrics.
Conversely, the outlook may be revised to 'Negative' if operating
margin or cash accrual declines or if the company contracts
sizeable debt to fund working capital requirement or large capex,
thereby weakening financial risk profile.
AISL is promoted by Mr.U Kondal Rao in April 2003 and is engaged
in manufacturing of Sponge Iron which is used in induction
furnaces to produce steel bars. The Plant is located in
Jaggayyapet, Andhra Pradesh.
The company reported, on a provisional basis, net loss of INR60
lacs on revenues of INR28.8 crore for fiscal 2017. For 2016 net
loss was INR1.01 crore on revenues of INR29.6 crore.
ARKA CARBON: CARE Downgrades Rating on INR120cr ST Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Arka Carbon Fuels Private Limited (ACFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE D Revised from
Facilities CARE BB+; Stable
Short-term Bank 120.00 CARE D Revised from
Facilities CARE A4
Detailed Rationale & Key Rating Drivers
The revision in ratings assigned to the bank facilities of ACFPL
factors in the delays in debt servicing obligation owing to acute
liquidity stress.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in servicing of debt obligation:
ACFPL had delayed in servicing of its debt obligations due to
severe deterioration in the financial and liquidity indicators.
Analytical approach: Combined Swastik group includes three
companies operating in similar line of coal trading & transport
businesses viz. Swastik Coal Corporation Pvt. Ltd. (SCCPL), Arka
Carbon Fuels Pvt. Ltd. (ACFPL), Shree Ganpatlal Onkarlal Agarwal
& Co (SGOAC). CARE has taken a combined approach of these three
companies for arriving at ratings of SCCPL, ACFPL & SGOAC due to
common promoters & management and strong operational & financial
linkages among the group companies in coal
trading business.
ACFPL was incorporated as Swastik Coal International Limited in
2005 for trading in coal and Mr. Hitesh Bindal is the
founder promoter of the company. It was renamed as Swastik Coal
International Private Limited in 2007 and registered
with current name i.e. ACFPL in 2012. ACFPL mainly imports coal
directly or purchase from merchant importers in India
and supplies in the domestic market for usage by various
industries viz. cement, captive power plants, steel, brick etc.
ACFPL is also in to trading of domestic coal purchased through e-
auction route from Coal India Ltd. (CIL).
Swastik group, based out of Indore, Madhya Pradesh, is primarily
involved in the business of coal trading. The group has presence
of more than two decades with interests in diversified businesses
including coal trading, logistics, construction and real estate.
The group is operating at 9 Indian ports with 48 marketing
offices located strategically in close proximity to end-use
industries. ACFPL, a group company, promoted by the same promoter
group is also engaged in the coal trading business with a
relatively smaller scale of operations compared with SCCPL's
operations. Also, group has formed a partnership firm viz. SGOAC
to fulfill its coal transportation requirement. SGOAC has its own
fleet of around 150 trucks, dumpers and loaders for
transportation of coal for group companies as well as other
consumers.
During FY16 (refers to the period April 1 to March 31), Swastik
group (on a combined basis), reported a total operating income of
INR2087.38 crore (FY15: INR2189.97 crore) with a PAT of INR15.53
crore (FY15: INR21.40 crore). As per provisional results for
9MFY17, Swastik group reported a total operating income of
INR1200.70 crore with a PBT of INR16.20 crore.
During FY16, ACFPL (on a standalone basis) reported a total
operating income of INR603.42 crore (FY15: INR595.28 crore)
with a PAT of INR5.02 crore (FY15: PAT of INR5.50 crore). As per
provisional results for 9MFY17, ACFPL reported a total operating
income of INR388.20 crore with a PBT of INR4.46 crore.
ARROW CABLES: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Arrow Cables Limited (ACL) at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 6.5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the company's modest scale and
working capital intensive nature of operations in the highly
competitive power cable industry. These rating weaknesses are
partially offset by the extensive experience of the promoters in
the power cable industry and the above-average financial risk
profile of the company marked by healthy gearing and moderate
debt protection metrics, albeit constrained by a modest net
worth.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and exposure to intense competition:
With revenue of around INR65 Crores in 2016-17 (refers to the
financial year, April 1 to March 31), scale remains small in the
competitive power cable and conductor industry that has many
small, medium-sized, and large players. This limits bargaining
power with customers and suppliers, resulting in a low operating
margins.
* Working-capital-intensive operations: ACL's operations are
working-capital-intensive, as reflected in its gross current
assets (GCAs) of around 140 days of sales as on March 31, 2017.
ACL's working capital requirements are driven by debtors of 64
days of sales and inventory of 40 days of cost of sales as on
March 31, 2017.
Strengths
* Extensive experience of promoter and established customer
relationship: Presence of over two decades in the power cables
industry has enabled the promoter to establish strong
relationship with customers.
* Above-average financial risk profile: The financial risk
profile is above average marked by healthy gearing and moderate
debt protection metrics, albeit constrained by a modest net
worth.
Outlook: Stable
CRISIL believes that ACL will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if there is a sustained
increase in revenue and profitability leading to improvement in
the business risk profile. Conversely, the outlook may be revised
to 'Negative' in case the company's profitability or revenues
decline, resulting in lower-than-expected cash accruals or
stretch in working capital cycle leading to deterioration of its
financial risk profile.
Established in 1996, ACL manufactures power conductors and power
cables. The company is promoted by Mr.K.S.Varma and is based in
Hyderabad.
For fiscal 2017, ACL's net profit was INR0.29 crore on operating
income of INR65.21 crore, against INR0.40 crore and INR66.76
crore, respectively, for the previous fiscal.
AUTOTEC SYSTEMS: CRISIL Cuts Rating on INR6.50MM Bank Loan to B+
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
AutoTEC Systems Private Limited (AutoTEC) to 'CRISIL
B+/Stable/CRISILA4' from 'CRISIL BB/Stable/CRISIL A4+'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6.75 CRISIL A4 (Downgraded from
'CRISIL A4+')
Cash Credit 2.00 CRISIL B+/Stable (Downgraded
from 'CRISIL BB/Stable')
Letter of Credit 2.00 CRISIL A4 (Downgraded from
'CRISIL A4+')
Proposed Cash 6.50 CRISIL B+/Stable (Downgraded
Credit Limit from 'CRISIL BB/Stable')
The downgrade reflects deterioration in the business and
financial risk profile, particularly liquidity, due to stretched
working capital cycle. Owing to stretched debtors and a longer
inventory holding period, reliance on the working capital bank
line is high. At the same time business risk profile has
deteriorated which is reflected from negative operating margins
as on March 31, 2017. While operations are expected to remain
working capital intensive, improvement in the receivable cycle
and better utilization of the inventory along with high margins
orders from the customers would be a key rating driver over the
medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks pertaining to customer concentration in
revenue, and volatility in raw material prices and foreign
exchange (forex) rates
AutoTEC is exposed to customer concentration risks. It derives a
significant portion of its revenue from a few customers including
Bharat Dynamic Limited (BDL), Hindustan Aeronautical Limited
(HAL) and divisions of Defence Research and Development
Organisation (DRDO). AutoTEC imports almost half of its raw
materials, and sources the remainder from the domestic market.
However, the company does not hedge its forex exposure. This
exposes it to risks related to fluctuations in forex rates.
CRISIL believes that AutoTEC's operating margin will continue to
be susceptible to fluctuations in raw material prices and forex
rates over the medium term. CRISIL believes that AutoTEC's may
remain exposed to risks pertaining to customer concentration in
revenue and fluctuations in raw material prices and forex rates
over the medium term.
* Working-capital-intensive nature of operations
The working capital cycle is large with GCAs of 773 days, largely
contributed by debtors of 567 days and inventory holding of 154
days as on March 31, 2017. The cycle has elongated significantly
during last year due to few contracts getting executed towards
the end of year. Accordingly, the same was partially funded by
creditors to the tune of 117 days. CRISIL believes that AutoTEC's
operation may remain working capital intensive over the medium
term.
Strength
* Established position in defense hardware industry
AutoTEC manufactures, assembles, and trades in defense hardware.
Around 95 per cent of its revenue comes from manufacturing and
assembling, and the remainder from product support and
maintenance services (for products after expiry of warranty
period). AutoTEC is one of the preferred vendors for major
customers such as Bharat Dynamics Ltd (BDL) and Hindustan
Aeronautics Ltd (HAL). CRISIL believes that AutoTEC will continue
to benefit from its established position in the defense hardware
industry over the medium term.
Outlook: Stable
CRISIL believes that AutoTEC will continue to benefit over the
medium term from its established position in the defence hardware
industry and its comfortable order book. The outlook may be
revised to 'Positive' if the company books significantly higher-
than-expected cash accruals, driven by improvement in its scale
of operations, while it maintains its capital structure.
Conversely, the outlook may be revised to 'Negative' in case of a
substantial increase in AutoTEC's working capital requirements,
or large capital expenditure, or low cash accruals.
AutoTEC, set up in 2000, provides hardware, software, and related
support services to the defence sector. The company, based in
Bengaluru, is managed by Mr. Satish Kumar.
For fiscal 2017, AutoTEC's net loss was INR1.09 crore on net
sales of INR5.42 crore, against a PAT of INR0.5 crore on net
sales of INR21.62 crore for fiscal 2016.
DERON PROPERTIES: CRISIL Reaffirms B+ Rating on INR50MM Term Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Deron Properties Private Limited (DPPL) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12.5 CRISIL B+/Stable (Reaffirmed)
Proposed Rupee
Term Loan 50 CRISIL B+/Stable (Reaffirmed)
Rupee Term Loan 17.5 CRISIL B+/Stable (Reaffirmed)
In June 2017, CRISIL had assigned 'CRISIL B+/Stable' rating on
the long-term bank facility of DPPL.
The rating reflects the company's exposure to risks related to
implementation, funding, and saleability of its projects, and
susceptibility to intense competition and cyclicality inherent in
the real estate industry. These weaknesses are partially offset
by promoters' extensive experience and healthy sales in past
projects.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks related to implementation, funding, and
saleability of projects: DPPL is developing three projects (mix
of residential and commercial) in Pune at an estimated cost of
INR130 crore. Timely completion and sales of these projects will
determine liquidity over the medium term.
* Vulnerability to cyclicality inherent in the Indian real estate
industry: The real estate sector in India is cyclical, highly
fragmented, and is affected by volatile prices and opaque
transactions. Business risk profile will remain susceptible to
risks arising from any industry slowdown.
Strengths
* Promoters' extensive experience: Key promoter, Mr. Umang Madan,
has experience of 30 years and has established himself in the
real estate market in Pune through successful project
implementation.
* Strategic location of projects: The three projects are in
strategic locations (close to Hinjewadi information technology
park) and are well connected to the industrial belt in Pune,
which is likely to support sales.
Outlook: Stable
CRISIL believes DPPL will continue to benefit from its promoters'
extensive industry experience. The outlook may be revised to
'Positive' if substantial sales and timely receipt of customer
advances lead to higher-than expected cash inflow. The outlook
may be revised to 'Negative' if time or cost overrun in the
projects, or slower-than-expected customer bookings result in low
cash inflow and constrain the financial risk profile and
liquidity.
Incorporated in 2011 and promoted by Mr. Umang Madan and his
wife, Ms Mansi Madan, DPPL develops residential and commercial
real estate in Pune. The company is currently developing Deron
Bhushnam in Baner, Deron Business Square in Hinjewadi, and Deron
Prosper / Rise in Rahatani (all in Pune).
DSP INFRATECH: CRISIL Assigns B+ Rating to INR9.2MM LT Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' rating to
the bank facilities of DSP Infratech Private Limited (DSP).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Secured Overdraft
Facility 2.5 CRISIL B+/Stable
Bank Guarantee 0.3 CRISIL A4
Proposed Long Term
Bank Loan Facility 9.2 CRISIL B+/Stable
The rating reflects its modest scale and working-capital-
intensive nature of operations, and its exposure to intense
competition in the civil construction industry. These rating
weaknesses are partially offset by the benefits that DSP derives
from its promoters' extensive experience and its established
relationships with key customers and suppliers and its moderate
financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale and working-capital-intensive nature of operations
DSP's scale of operations are modest, as indicated by its
revenues of INR16 crores during 2016-17 (refers to financial
year, April 1 to March 31). DSP's has large working capital
requirements as indicated by its estimated gross current assets
(GCA) days of 476 days as on March, 2017 due its high debtor and
inventory days of 139 and 403 days, respectively.
* Intense competition in the construction industry
Civil construction industry is highly fragmented with the
presence of very large companies as well as smaller local
players. While large players operate in several segments
including roads, hydel projects, thermal plants and urban
infrastructure, smaller players specialize in one or two
resulting in exposure to intense competition.
Strengths
* Promoters extensive experience and its established
relationships with key customers and suppliers
DSP is promoted and managed by Mr. D Srinivasa Rao who is engaged
in civil construction work since 2008; he is a Class I contractor
and has established relationship with reputed clients. The
company has an order book of INR110 crores as on May, 2017 to be
executed in the ensuing 12 to 18 months.
* Moderate financial risk profile
DSP has moderate financial risk profile marked by estimated
moderate gearing of 0.6 times as on March, 2017 with a net worth
estimated at INR10.6 crores. The modest accruals and moderate
debt levels have resulted in moderate debt protection metrics
marked by net cash accruals to total debt (NCATD) and interest
coverage of 0.2 and 1.8 times, respectively for 2016-17.
Outlook: Stable
CRISIL believes that DSP will benefit over the medium term from
the long standing experience of its promoters and its healthy
order book. The outlook may be revised to 'Positive' if DSP's
revenues and profitability continue to improve while maintaining
its capital structure. Conversely, the outlook may be revised to
'Negative' if DSP's revenue and profitability deteriorate or if
there is a delay in receipt of bills from principals leading to
deterioration in financial risk profile.
Established in 2008 as a private limited company, D S P Infratech
Pvt Ltd (DSP) is engaged in civil construction mainly in
construction for government buildings. Based in Hyderabad
(Telangana), the company is promoted and managed by Mr.D Srinivas
Rao.
For fiscal 2017, DSP is estimated to report profit after tax
(PAT) of INR3.2 crores on net sales of INR16.2 crores against PAT
of INR2.3 crores on net sales of INR12.5 crores for fiscal 2016.
GLOBAL CLOUD: Fitch Lowers Long-Term IDR to B-; Outlook Negative
----------------------------------------------------------------
Fitch Ratings has downgraded Global Cloud Xchange Limited's (GCX)
Long-Term Foreign- and Local-Currency Issuer Default Ratings
(IDRs) to 'B-' from 'B+'. The Outlook is Negative.
Fitch has also downgraded the rating on GCX Limited's USD350
million 7% senior secured notes due 2019 to 'B+' with a Recovery
Rating of 'RR2' from 'BB+/RR1'. GCX Limited is a wholly owned
subsidiary of GCX. The notes are secured by the assets and equity
interests of GCX and its key subsidiaries and are guaranteed by
GCX and its key operating subsidiaries, which generate most of
group's revenue and EBITDA.
The downgrades reflect Fitch expectations that GCX's liquidity
could weaken significantly in the financial year ending March
2018 (FY18). GCX's cash balance could deplete to below USD40
million in FY18 (FY17: USD62 million) due to lower indefeasible
right of usage (IRU) sales, weakness at its managed service
segment and working capital outflows. Fitch forecasts FFO-
adjusted net leverage to deteriorate to over 5.0x in FY18 (FY17:
4.2x).
The 'RR2' Recovery Rating indicates superior recoveries on the
senior secured notes in a default scenario - between 71%-90% -
based on Fitch prudent estimate of value that would be available
to creditors.
The Negative Outlook reflects near-term risks to the credit
profile, in particular the risk of persistently negative FCF,
deteriorating liquidity, and therefore higher refinancing risk of
the bond due in August 2019. A revision of the Outlook to Stable
would be contingent upon an improvement in GCX's cash generation
due to high IRU sales or improvement in receivable collections
such that FCF breaks even. In case GCX's IDR is downgraded to
'CCC', the bond rating will be downgraded by two notches to 'B-'
as instruments cannot be rated 'CCC+' under Fitch's criteria.
KEY RATING DRIVERS
Depleting Cash Balance: Fitch expects GCX's cash balance in FY18
to drop below USD40 million, the minimum it needs to meet
financial and operational commitments. It needs a minimum cash
balance of USD40 million-50 million to meet its interest expense
of USD25 million, maintenance capex of USD22 million and taxes of
USD3 million. Cash EBITDA could decline to around USD70 million
(FY17: USD78 million) due to lower IRU sales of around USD50
million (FY17: USD51 million) and weakness at its managed service
segment.
FCF Deficit: Fitch forecasts GCX to have negative FCF of USD30
million-35 million in FY18, as cash flow from operations may fall
short of Fitch capex estimate of around USD30 million and
dividend payments of USD15 million. GCX paid USD15 million in
dividends in FY17. Capex includes maintenance expenditure of
USD22 million and USD6 million-8 million to invest in its Indian
enterprise business and expand landing stations. Management does
not intend to pay any dividends and make any capex for the Indian
enterprise business in FY18.
Higher Counterparty Risk: GCX's faces higher counterparty risk
due to uncertainty over collection of receivables, mainly from
its parent Reliance Communications Limited (Rcom; RD), with which
it has about USD30million-35 million worth of trading
relationship in FY18-19. Fitch assess GCX's IDR based on its
standalone profile under Fitch Parent and Subsidiary Rating
Linkage criteria, due to weak legal, operational and strategic
linkages with its parent.
Fitch understand that Rcom may be looking to sell all or part of
its stake in GCX. GCX's cash flows are ring-fenced and dividends
to Rcom are subject to an incurrence test of debt/EBITDA of below
3.75x (FY17: 3.0x) and restricted payment covenants. However, GCX
is allowed to pay about USD10million-15 million in dividends
annually under the ring-fencing conditions.
Enterprise Venture is Credit Negative: Fitch believes that GCX's
entry into the enterprise telecommunications market in India is
negative for its credit profile as Fitch expects minimal
additional FCF during FY18-19. Rcom will assign GCX enterprise
assets, including an intra-city fibre network, worth USD90
million to partly pay its USD94 million of receivables due to GCX
at end-March 2017. GCX is still waiting to obtain unified telecom
licence approval from the Indian telecom regulator.
Chronic Industry Over-Capacity: EBITDA remain vulnerable to
chronic industry over-capacity, which has resulted from bandwidth
increases from new submarine cables added by "over-the-top"
operators and telecommunication companies. Also, technological
advancements continue to improve the capacity of existing cables.
Hence, bandwidth tariffs will continue declining over the medium
term despite increased demand.
Recovery Rating of 'RR2': The rating on GCX Limited's senior
secured guaranteed bond is now two notches higher than the IDR.
Fitch use the going-concern value approach to calculate the post-
restructuring enterprise value as the liquidation approach is not
appropriate given GCX's under-sea cable assets are of little use
if liquidated. Fitch estimates post-restructuring cash flow to be
around USD74 million - the same as at Fitch last reviews - which
assumes depletion of the current business position to reflects
the distress that provoked a default, and a level of corrective
action that would have occurred during restructuring.
Fitch has assumed a lower cash flow multiple of 4.5x instead of
earlier 5.0x as Fitch believes that Rcom may settle for lower
value for GCX given the parent's weak liquidity and cash
requirements. The adjusted going-concern enterprise value after
administrative claims of USD300 million is then applied to USD380
million owed to creditors, comprising an undrawn revolving credit
facility of USD30 million and USD350 million of secured notes.
DERIVATION SUMMARY
GCX is smaller and has a weaker market position than US-based
Level 3 Communications, Inc. (LVLT, BB/Stable). LVLT, with its
strong position in the US enterprise market and solid network
capabilities, generates FCF of over USD1 billion compared with
the consistently negative FCF for GCX. LVLT is committed to
deleverage to the low end of its net leverage target of between
3.0x and 4.0x, while Fitch expects GCX's leverage to worsen to
over 5.0x in FY18. GCX's ratings reflect its worsening liquidity
profile due to weaker cash generation. GCX also has a weaker
business risk profile because its cash generation is exposed to
lumpy IRU sales.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Revenue to remain flat in FY18
- Fitch's calculated cash EBITDA of around USD70 million-75
million with IRU sales of USD50 million
- Working capital outflow of USD30 million-35 million during
FY18
- Dividends of USD15 million to Rcom in FY18
- Annual capex of around USD30 million
- Recovery analysis used a going-concern value approach with
post-restructuring EBITDA of USD74 million and cash flow
multiple of 4.5x.
- 10% administrative claims are applied on the going-concern
value.
RATING SENSITIVITIES
Developments That May, Individually or collectively, lead to the
Outlook reverting to Stable
- An improvement in GCX's cash generation and receivable
collection such that FCF breaks even.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Deterioration of liquidity evidenced by cash balance falling
below USD40 million.
- FFO-adjusted net leverage deteriorates to above 6.0x (FY18
forecast: above 5.0x)
LIQUIDITY
Deteriorating Liquidity: Fitch expects GCX's unrestricted cash
balance to deplete to below the minimum critical level of USD40
million (FY17: USD62 million) in FY18. Its only debt is the
USD350 million secured note due in 2019. GCX has committed
undrawn facilities of USD30 million, of which USD10 million was
drawn in March 2017 but was paid back in May 2017. Its ability to
access additional debt is limited due to an incurrence covenant
in its bond indenture that limits debt/EBITDA to 3.75x.
JAY KRISHNA: CRISIL Raises Rating on INR12MM Cash Loan to BB-
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of Jay Krishna Sizers (JKS) to 'CRISIL BB-/Stable' from 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
Term Loan 3.32 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
The upgrade reflects the improvement in the firm's operating
performance in fiscal 2017, with strong revenue growth and better
profitability. Enhanced capacity and commissioning of new
machinery led to increased production and lower cost. The revenue
rose to INR57.43 crore in fiscal 2017 from INR43.85 crore in the
previous fiscal, while operating margin improved to 5.6% from
4.7%. The revenue growth should sustain because of increasing
capacity utilisation, while the operating margin is expected to
remain stable. Cash accrual increased to INR1.4 crore in fiscal
2017 from INR44 lakh in fiscal 2016, and is expected at INR2
crore per annum over the medium term.
The rating reflects the extensive experience of the firm's
partners in the textile industry, and their fund support. The
strength is partially offset by below-average financial risk
profile and modest, though increasing, scale of operations.
Analytical Approach
Unsecured loans of INR0.56 crore as on March 31, 2017, from the
partners have been treated as neither debt nor equity.
Key Rating Drivers & Detailed Description
Strengths
* Extensive industry experience of the partners and their fund
support: The partners have sound understanding of the dynamics of
the local market by virtue of their longstanding presence in the
textile industry. This has helped the firm establish healthy
relationships with large and established customers. The partners'
experience and proximity to large customer base will continue to
support the business risk profile. Partners have extended fund
support in the form of unsecured loans and capital to the firm.
Weakness
* Below-average financial risk profile: The financial risk
profile is constrained by modest networth, high gearing, and
subdued debt protection metrics.
* Modest, though increasing, scale of operations in the intensely
competitive textile industry: Though revenue is expected to
increase because of improved capacity utilisation, the scale of
operations will remain subdued. The firm also faces competition
because of fragmentation in the textile industry due to low entry
barriers. The competition restricts the pricing and bargaining
power of players and results in low operating margin, and will
keep the firm's scale of operations modest over the medium term.
Outlook: Stable
CRISIL believes JKS will continue to benefit from its partners'
extensive industry experience. The outlook may be revised to
'Positive' if healthy and sustained revenue growth and stable
profitability lead to higher-than-anticipated cash accrual and
better capital structure. The outlook may be revised to
'Negative' if lower-than-expected cash accrual, or a stretch in
working capital cycle, or unanticipated large, debt-funded
capital expenditure affects the financial risk profile and
liquidity.
Established in 1995 as a partnership between Mr Dhirajlal Boghra,
Mr Chetankumar Boghra, Mr Shailesh Boghra, and their family
members, JKS is engaged in sizing of polyester yarn in the range
of 50-150. Its manufacturing unit is in Surat, Gujarat.
For fiscal 2017, JKS had a profit after tax (PAT) of INR36 lakh
on total sales of INR57.43 crore, against a PAT of INR26 lakh on
total sales of INR43.85 crore in fiscal 2016.
JAYANTH INDUSTRIES: CRISIL Reaffirms B+ Rating on INR6.33MM Loan
----------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Jayanth
Industries continues to reflect the firm's small scale of
operations in the intensely competitive rice milling industry,
and its below-average financial risk profile because of small
networth and weak debt protection measures. These weaknesses are
partially offset by extensive experience of the firm's promoters
in the rice milling business.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.33 CRISIL B+/Stable (Reaffirmed)
Standby Line
of Credit .67 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations in intensely competitive rice milling
industry: The rice milling industry is highly fragmented. Being
a small player, Jayanth has a modest scale of operation. Large
players have better command over pricing and procurement, and
this impacts profitability of small players. Furthermore, lesser
investment and complexity of operations lowers entry barriers,
thereby exposing small players like Jayanth to intensifying
competition.
* Below-average financial risk profile: The modest scale of
operations and limited accretion to reserve would keep Jayanth's
networth at modest level over medium term . Jayanth has weak debt
protection metrics, with interest coverage and net cash accruals
to total debt ratios estimated at 1.7 times and 0.08 times,
respectively, for 2016-17. Debt protection measures are expected
to remain at similar levels going ahead.
Strengths
* Extensive experience of promoters in rice milling business :
Jayanth benefits from entrepreneurial experience and financial
flexibility of its promoters. Mr. Surya Prakash Reddy is a non-
resident Indian, who holds 88 per cent share in the firm. Mr.
Rajendra Kumar Reddy and Mr. Venkat Krishna Reddy manage daily
operations. The firm has capacity to process 3 tonnes of paddy
per hour into parboiled rice, half boiled rice, steamed rice, and
raw rice. Over the years, partners have developed healthy
relationships with suppliers and customers, ensuring timely and
adequate supply of raw materials and regular orders. The firm has
over 500 customers across Tamil Nadu, Karnataka, Maharashtra, and
Andhra Pradesh.
Outlook: Stable
CRISIL believes Jayanth will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if substantial increase in
revenue and profitability leads to better financial risk profile
and liquidity. Conversely, the outlook may be revised to
'Negative' in case of aggressive debt-funded expansion, or
decline in accrual, resulting in deterioration in financial risk
profile.
Jayanth, set up in 2010, mills and processes paddy. The firm is
promoted by Mr. Surya Prakash Reddy, Mr. Rajendra Kumar Reddy,
and Mr. Venkat Krishna Reddy.
Jayanth reported profit after tax of INR21 lakh on net sales of
INR36.40 core for fiscal 2016 and profit after tax INR 21 lakh on
net sales INR36.40 crore for fiscal 2015.
KEVIN METPACK: CARE Assigns B+ Rating to INR12cr LT Loan
--------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Kevin
Metpack Private Limited (KMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12 CARE B+/Stable Assigned
Short-term Bank
Facilities 3 CARE A4 Assigned
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of KMPL are
constrained by small scale of operations, leveraged capital
structure and stressed coverage indicators. The ratings are
further constrained by operating losses, elongated operating
cycle, residual project execution and competitive and fragmented
nature of industry. The aforementioned rating weaknesses,
however, are partially offset by experienced management in the
packaging industry and established group associates.
Going forward, the ability of the company to timely execute the
ongoing capital expansion within estimated costs and profitably
scale up its operations and improve its capital structure shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations: KMPL has small scale of operations
evident from total operating income (TOI) and gross cash accruals
(GCA) of INR11.05 crore and INR1.42 crore, respectively in FY16
(refers to the period April 1 to March 31). The small scale of
operations and low base of net worth restricts the company's
financial flexibility in case of exigency. Weak financial risk
profile: KMPL has leveraged capital structure evident from debt-
equity and overall gearing ratio of 4.50 times and 4.58 times,
respectively in FY16. Additionally, company has stressed coverage
indicators evident from interest coverage and total debt to gross
cash accruals (TD/GCA) of -1.04 times and 28.07x, respectively in
FY16 on account of operational losses and high debt levels. The
company continues to incur operating losses on account of fixed
expenses, higher depreciation charged during the year coupled
with increasing interest and finance cost resulting into negative
operating profit.
Elongated operating cycle: KMPL's operations are highly working
capital intensive evident from elongated operating cycle of 145
days in FY16 against 110 days in FY15. The elongated operating
cycle emanates from inventory holding and collection period of
118 days and 36 days, respectively in FY16 against 90 days and 29
days respectively in FY15. The average utilization of fund based
working capital limits remains around 98 per cent during the
trailing 12 months ending April 2017.
Residual project execution risk: Company is exposed to residual
project risk, as they are undertaking capital expansion of
INR11.4 crore, which is funded in the ratio of debt and
equity/promoter contribution (4:1). The debt for the same has
tiedup.
The company has already placed an order for importing machinery,
which is in transit. The new facility is expected to become
operational in January 2018. Any delay in commencement of same or
any cost overrun would have a direct impact on financial risk
profile of the company.
Competitive and fragmented nature of industry: KMPL operates in a
highly fragmented industry marked by the presence of a large
number of players in the unorganized sector. The industry is
characterized by low entry barriers due to minimal technological
inputs and easy availability of standardized machinery for the
production. This further leads to high competition among the
various players and low bargaining power with the suppliers. This
restricts KMPL's pricing power with limited ability to pass on
any increase in input cost due to intense competition, will have
an impact on profitability profile.
Experienced management and established promoter group: Mr Vikas
Malu, Director of KMPL has around 20 years of experience in the
packaging industry through an association with KMPL and other
group concerns. Besides that, company has dedicated team of
production manager, quality inspector, supply chain procurement
manager, accounts and finance manager, marketing personnel, who
have around 15 years of experience of their respective field.
KMPL belongs to Kuber Group, which is managed by Mr Mul Chand
Malu and Mr Vikas Malu. The group has presence in diverse
businesses such as tobacco, food products, securities trading
etc. The promoters/group associates have infused funds in the
form of unsecured loans worth INR23.10 crore in last three
financial years (FY14-FY16) to set up the manufacturing
facilities, to meet the liquidity requirement also to support the
losses making operations of the company. The amount of unsecured
loans extended by the promoters stood at INR38.23 crore as on
March 31, 2016.
New Delhi-based KMPL, was incorporated in November 2007 by Mr
Vikas Malu and his family members. The main objective to setup a
new manufacturing facility to manufacture metallized cast
polypropylene and polyethylene terephthalate shrink film, and
thermoforming grade polyester for the packaging industry. The
company commenced commercial production in 2013. KMPL
manufacturing facilities are based out in Delhi and Gandhi Nagar
(Gujarat), with annual production capacity of 4100 metric tonne
per annum, as on March 31, 2017. Polyester film and amorphous
polyester resin are key raw material for manufacturing of varied
range of packaging materials, which is procured from suppliers
operating in domestic markets.
During FY16 (refers to the period April 1 to March 31), KMPL has
reported a total operating income (TOI) of INR11.05 crore with
net loss of INR5.78 crore, as against TOI of INR11.18 crore with
net loss of INR14.28 crore in FY15. The company has achieved TOI
close to INR20.47 crore during FY17 (as per provisional results).
KTC AUTOMOBILES: CRISIL Lowers Rating on INR10MM Cash Loan to D
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank loan
facilities of KTC Automobiles Private Limited (KTC) to 'CRISIL D'
from 'CRISIL B-/Stable'. The rating downgrade reflects instances
of delay in servicing term debt; the delays were on account of
weak liquidity from modest scale of operations and accrual.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Inventory Funding 6 CRISIL D (Downgraded from
Facility 'CRISIL B-/Stable')
Long Term Loan 5.85 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The rating also reflects KTC's below-average financial risk
profile, marked by high gearing and modest networth. These
weaknesses are partially offset by the extensive entrepreneurial
experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With lower than expected revenue in
fiscal 2017, the scale of operations in the intensely competitive
automotive dealership segment remains small, restricting benefits
from economies of scale enjoyed by large entities.
* Weak financial risk profile: Networth was small due to modest
accretion to reserves, and gearing was high because of large
external borrowings. With expected low accretion to reserves, the
gearing and networth are expected to remain at similar levels
over the medium term.
Strength
* Extensive experience of the promoters: Longstanding presence in
the automotive servicing industry has helped maintain stable
service income over the years.
Set up in 1998 as a partnership firm, KTC was reconstituted as a
private limited company in 2004. The company, based in Kozhikode,
Kerala, operates service centres for Hyundai vehicles in Kerala.
Profit after tax (PAT) was estimated at INR0.35 crore on
estimated revenue of INR130 crore for fiscal 2016 against loss of
INR0.77 crore on net sales of INR164 crore in the previous
fiscal.
M.P K. ISPAT: CRISIL Cuts Rating on INR10MM Cash Loan to 'D'
------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
M.P.K. Ispat India Private Limited (MPKI; a part of the MPK
group) to 'CRISIL D/CRISIL D' from 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Downgraded from
'CRISIL B/Stable')
Letter of Credit 5 CRISIL D (Downgraded from
'CRISIL A4')
Standby Line of 1.5 CRISIL D (Downgraded from
Credit 'CRISIL B/Stable')
Term Loan 6.5 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delays in servicing term debt obligations
due to stretched liquidity on account of lower realisation from
steel products.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of MPKI, MPK Metals Pvt Ltd (MPKM), and
MPK Steels India Pvt Ltd (MPKS). This is because the three
companies, together referred to as the MPK group, have common
ownership and management, and MPKM and MPKS have the same product
profile and sell under a common brand. MPKI has been set up in
order to backward integrate into billet manufacturing for
supporting the operations of the other two companies and has also
received corporate guarantees from them for its bank funding.
Key Rating Drivers & Detailed Description
Weakness
* Instances of delay in term debt servicing: The group has
delayed meeting its term debt obligation due to insufficient cash
accrual because of weakening of the business risk profile on
account of lower realisation from steel products.
* Weak financial risk profile: The financial risk profile is
constrained by modest debt protection metrics and working
capital-intensive operations.
Strengths
* Extensive experience of promoters: Presence of over a decade in
the steel industry has helped the promoters to establish strong
relationships with customers and suppliers.
MPKS was set up as a private limited concern in 2005. It
manufactures structural products, including thermo-mechanically
treated (TMT) bars, channels, angles, and joints, at its
manufacturing facility in Jaipur. The company markets the
products under its own brand, MPK. The operations of the company
are managed by Mr. Santosh Kumar Upadhyay and his son, Mr. Manoj
Upadhyay.
MPKM was set up as a private limited concern in 2009 and
manufactures structural products including TMT bars, channels,
angles, and joints at its manufacturing facility in Jaipur and
markets the same under its MPK brand. The operations of the
company are managed by Mr. Santosh Kumar Upadhyay and Mr. Manoj
Upadhyay.
MPKI was set up as a private limited concern in 2010 and started
operations in 2012-13 (refers to financial year, April 1 to
March 31) with 2013-14 being its first full year of operations.
The company has been set up as a backward integration unit of the
group to manufacture steel billets and ingots for captive
consumption in MPKS and MPKM. The company has its plant in Bagru
(Jaipur) and is managed by Mr. Santosh Kumar Upadhyay and Mr.
Manoj Upadhyay.
On standalone basis MPKI reported net profit of INR0.22 crore on
net sales of INR85.55 crore in fiscal 2015 against INR0.24 crore
and INR76.60 crore in previous fiscal.
M.P.K. STEEL: CRISIL Lowers Rating on INR15MM Cash Loan to 'D'
--------------------------------------------------------------
CRISIL has downgraded its long term rating on the bank facilities
of M.P.K. Steel India Private Limited (MPKS; a part of the MPK
group) to 'CRISIL D' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15 CRISIL D (Downgraded from
'CRISIL B/Stable')
Proposed Long Term .36 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B/Stable')
Standby Line of .50 CRISIL D (Downgraded from
Credit 'CRISIL B/Stable')
Term Loan 2.44 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delays in servicing term debt obligations
due to stretched liquidity on account of lower realisation from
steel products.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of MPKS, MPK Metals Pvt Ltd (MPKM), and
MPKI Ispat India Pvt Ltd (MPKI). This is because the three
companies, together referred to as the MPK group, have common
ownership and management, and MPKM and MPKS have the same product
profile and sell under a common brand. MPKI has been set up in
order to backward integrate into billet manufacturing for
supporting the operations of the other two companies and has also
received corporate guarantees from them for its bank funding.
Key Rating Drivers & Detailed Description
Weakness
* Instances of delay in term debt servicing: The group has
delayed meeting its term debt obligation due to insufficient cash
accrual because of weakening of the business risk profile on
account of lower realisation from steel products.
* Weak financial risk profile: The financial risk profile is
constrained by modest debt protection metrics and working
capital-intensive operations.
Strengths
* Extensive experience of promoters: Presence of over a decade in
the steel industry has helped the promoters to establish strong
relationships with customers and suppliers.
MPKS was set up as a private limited concern in 2005. It
manufactures structural products, including thermo-mechanically
treated (TMT) bars, channels, angles, and joints, at its
manufacturing facility in Jaipur. The company markets the
products under its own brand, MPK. The operations of the company
are managed by Mr. Santosh Kumar Upadhyay and his son, Mr. Manoj
Upadhyay.
MPKM was set up as a private limited concern in 2009 and
manufactures structural products including TMT bars, channels,
angles, and joints at its manufacturing facility in Jaipur and
markets the same under its MPK brand. The operations of the
company are managed by Mr. Santosh Kumar Upadhyay and Mr. Manoj
Upadhyay.
MPKI was set up as a private limited concern in 2010 and started
operations in 2012-13 (refers to financial year, April 1 to March
31) with 2013-14 being its first full year of operations. The
company has been set up as a backward integration unit of the
group to manufacture steel billets and ingots for captive
consumption in MPKS and MPKM. The company has its plant in Bagru
(Jaipur) and is managed by Mr. Santosh Kumar Upadhyay and Mr.
Manoj Upadhyay.
On standalone basis MPKS reported net profit of INR0.37 crore on
net sales of INR97.35 crore in fiscal 2015 against INR0.63 crore
and INR78.87 crore in previous fiscal.
M.S MENTHOL: CRISIL Reaffirms B Rating on INR4MM Cash Loan
----------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
M.S Menthol Private Limited (MSM) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Bill
Discounting 3 CRISIL B/Stable (Reaffirmed)
Packing Credit 3 CRISIL A4 (Reaffirmed)
Proposed Cash
Credit Limit 4 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect a modest scale of operations and
exposure to intense competition. Revenue, estimated at INR21
crore in fiscal 2017, is expected to grow at 10-15% per fiscal
over the medium term backed by the extensive experience of the
promoters in the menthol industry.
Liquidity is supported by minimal debt-funded capital expenditure
(capex) plans for the medium term. However, capital requirement
is large as reflected in estimated gross current assets of 187
days as on March 31, 2017.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations:
The presence of larger players in the industry restricts the
firm's ability to scale up operations. Furthermore, there is a
geographical and customer concentration in revenue, thus
constraining the business risk profile.
* Working capital-intensive operations:
Gross current assets were about 187 days, due to stretched
receivables of 76 days and inventory of 106 days, as on March 31,
2017. As around 85% of revenue is derived from exports, inventory
is more than three months. The large debtors are primarily due to
exports to China. Working capital requirement is likely to remain
high over the medium term.
* Below-average financial risk profile:
The total outside liabilities to tangible networth (TOLTNW) ratio
and networth were at 3.7 times and INR2.31 crore, respectively,
as on March 31, 2017. The TOLTNW ratio is expected to improve to
3.4-3.6 times over medium term due to minimal debt-funded capex
plans. Debt protection metrics are estimated to have been
average, with interest coverage and net cash accrual to total
debt ratios at around 1.38 times and 0.01 time, respectively, for
fiscal 2017. The ratios are expected at 1.5-1.6 times and 0.02
time, respectively, over medium term.
Strength
* Extensive industry experience of the promoters:
The promoters have been in the menthol industry for over three
decades. This has enabled the company to build a strong network
of customers and suppliers.
Outlook: Stable
CRISIL believes MSM will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of a significant increase in scale of
operations and improvement in profitability, leading to higher-
than-expected cash accrual, while a comfortable capital structure
is maintained. The outlook may be revised to 'Negative' in case
of pressure on profitability, constraining cash accrual, a highly
stretched working capital cycle, or large, debt-funded capex,
adversely impacting the financial risk profile, particularly
liquidity.
MSM, incorporated on October 29, 2013, is promoted by Mr Mukul
Agarwal, Mr Sanchit Agarwal, Mr Satish Agarwal, and Ms Shweta
Agarwal. The company manufactures menthol and dementholised
products at its facility in Chandausi, Uttar Pradesh.
Net profit is estimated at INR0.11 crore on net sales of INR21
crore for fiscal 2017; net profit was INR0.10 crore on net sales
of INR20 crore in fiscal 2016.
MOHIT VENTURES: Ind-Ra Assigns B+ Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Mohit Ventures
Private Limited (MVPL) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable. Instrument-wise rating actions are:
-- INR140 mil. Term loan due on March 2024 assigned with IND
B+/Stable rating;
-- INR65 mil. Fund-based working capital limits assigned with IND
B+/Stable rating; and
-- INR35 mil. Non-fund-based working capital limits assigned with
IND A4 rating
KEY RATING DRIVERS
The ratings reflect MVPL's nascent stage of operations as the
company is setting up a new thermo-mechanically treated (TMT) bar
manufacturing unit in Koderma, Jharkhand with a total production
capacity of 29,700 metric tonnes per annum. The unit is expected
to start commercial production from mid-July 2017. As on 14 June
2017, about 89% of the project was completed.
However, the ratings are supported by the plant's locational
advantage with easy availability of raw material.
The ratings also benefit from the promoters' more than one-
decade-long experience in the construction, transportation and
steel trading business.
RATING SENSITIVITIES
Positive: Stabilisation of operations could lead to a positive
rating action.
Negative: Inability to stabilise operations due to any disruption
for commercialisation could lead to a negative rating action.
COMPANY PROFILE
MVPL was incorporated in July 1999 as a private limited company
by Mr. Pawan Kumar Gupta. The company is managed by Mr. Anil
Kumar Pandey and Mr. Jitesh Kumar Singh.
NAVKAR SUGARS: CARE Assigns B+ Rating to INR5.25cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Navkar
Sugars, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.25 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Navkar Sugars is
constrained by its modest scale of operations, low and declining
profit margins, weak debt coverage indicators and working capital
intensive operations. The rating is further constrained by
susceptibility to fluctuation in traded goods prices, presence in
highly fragmented and competitive industry and constitution of
the entity as a proprietorship firm. The rating, however, derives
benefit from the experience of promoter, long track record of
operations, growing scale of operations and moderate capital
structure.
The ability of the firm to increase its scale of operations and
improve its profitability and capital structure amidst
competition and efficient working capital management are the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters and long track record of operations: The
proprietor of the firm holds an experience of around three
decades in sugar industry through his association with Navkar
Sugars. Over the years of track record of operations, the firm
has developed strong association with the suppliers as well as
customers.
Moderate capital structure: The capital structure of the firm
stood moderate for the past two financial years (FY15-FY16
[refers to the period April 1 to March 31]) owing to high net
worth base and lower dependence on bank debt.
Key Rating Weaknesses
Growing yet modest scale of operations: The total operating
income of the firm has been growing at a CAGR of around 8.42%
during the last three financial years, ie, FY14-FY16. However, it
stood small with low net worth base which deprives it of scale
benefits and limits its financial flexibility to meet any
exigency.
Declining and low profit margins: The profit margins of the firm
have historically been on the lower side due to trading nature of
the business where the profit margins are susceptible to raw
material prices along with intense competition in the sugar
industry and pricing pressure. The operating profit margin has
been declining over past three years (FY14-FY16) on account of
higher cost of procurement coupled with pricing pressure owing to
intense market competition.
Weak debt coverage indicators and working capital intensive
nature of operations: The debt service coverage indicators
remained weak owing to low profitability leading to low gross
cash accruals. The operations of the company remain working
capital intensive in nature with funds being blocked in debtors
with average debtor period of over 70 days in last two years
resulting in high utilization of its working capital limits.
Navkar Sugars was established in 1986 as a proprietorship firm by
Mr Nemichand Mutha. The firm is engaged in the trading of sugar.
The firm procures traded goods domestically across Maharashtra
and sells its products pan India.
Besides Navkar Sugars, the group consists of Navkar Glass world
which is primarily engaged in the trading of glass products.
During FY16 (A) (refers to the period April 1 to March 31), the
firm achieved a turnover of INR26.78 crore (as against INR25.10
crore in FY15) and net profit of INR0.15 crore (as against PAT of
INR0.15 crore during FY15). Furthermore, the firm has achieved a
turnover of INR23.73 crore till March 31, 2017.
NRI EDUCATIONAL: CRISIL Reaffirms B+ Rating on INR16.5MM Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the bank
facilities of NRI Educational Society - Guntur (NRI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Secured Overdraft
Facility 16.5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect its modest scale of operation in
highly competitive education sector, its geographical
concentration risk, and it's below average financial risk profile
marked by high gearing, modest debt protection metrics and net
worth. The rating also factors in its low operating margins and
exposure to high degree of regulation by Governmental agencies.
These rating weaknesses are partially offset by the benefits
derived from its trustees' extensive experience in education
sector and its established presence in Guntur, AP.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operation in highly competitive education
sector and exposure to regional concentration
The society's operations are modest as reflected in its revenue
of INR101 crores in fiscal 2017. the trust's growth over the
medium term will be constrained due to its geographical
concentration in its revenue profile and exposure to stiff
competition from other schools in the same and other region.
* Below-average financial risk profile
NRI has been following aggressive gearing policy, with estimated
gearing of 3.6 times as on March 31, 2017. The society had modest
net worth around INR9.8 crores as on March 2017. On account of
modest accruals and high debt levels the society has modest debt
protection metrics as reflected in estimated interest coverage
and NCATD ratios of about 2.9 times and 12 per cent respectively
in 2016-17.
* Exposure to high degree of regulation by Governmental agencies
NRI is exposed to highly regulated environment in the education
sector. The establishment and running of higher educational
institutions are governed by various governmental and quasi-
governmental agencies such as the University Grants Commission
(UGC), AICTE, universities, and state governments.
* Low operating margins
NRI's margins have been in the range of 5-6 per cent over the
last 3 years ending March, 2017. This is primarily because all
the institutions run by the Trust are leased resulting in
significant rentals hampering the operating margins.
Strengths
* Extensive industry experience of Trustees and established
presence in Guntur, AP
NRI has a long track record in the education sector for over two
decades and has gradually diversified its revenue profile by
providing education across various disciplines from primary
education to post graduation. NRI is managed by Mr.Alapti
Rajendra Prasad who has around two decades of experience in
education sector.
Outlook: Stable
CRISIL believes that NRI will continue to benefit over the medium
term from the established market presence in the education sector
and track record of its management. The outlook may be revised to
'Positive' if ability to increase intake in its schools and
colleges improves the fee income and operating profitability
while improving its capital structure. Conversely, the outlook
may be revised to 'Negative' if any larger-than expected, debt-
funded capital expenditure or lower occupancy result in
deterioration in liquidity, or in case of any adverse regulatory
change.
Established in 2005, NRI operates 45 junior colleges (FYJC and
SYJC) for science and commerce. It also runs 10 schools offering
education from kindergarten to class 10. The schools under the
trust operate under the name of Indian Springs which is located
in Hyderabad and Guntur while the colleges run under the names
NRI Vidya Junior College, NRI SAI Junior College, and NRI Junior
College. The society is managed by Mr. Alapti Rajendra Prasad.
For fiscal 2017, NRI is estimated to report profit after tax
(PAT) of INR1.2 crores on net sales of INR101 crores against PAT
of INR1 crores on net sales of INR97 crores for fiscal 2016.
PEARL INFOTECH: CRISIL Assigns 'B' Rating to INR3MM Cash Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Pearl Infotech (PI). The rating reflects
the firm's moderate scale of operations and low profitability.
These weaknesses are partially offset by its promoters' extensive
industry experience.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL A4
Cash Credit 3 CRISIL B/Stable
Key Rating Drivers & Detailed Description
Weaknesses
* Moderate scale of operations:
The operations of PI are entirely restricted to Karnataka and are
of moderate scale, as characterized by estimated revenues of INR
45 crores in fiscal 17. This translates into limited clout and
stature and low bargaining power in the highly fragmented mobile
handset trading business. PI's business prospects are expected to
be constrained in the medium term by its moderate scale of
operations.
* Low profitability:
Owing to the trading nature of its operations, the firm's
operating profitability is typically low, at 1.5 percent in
fiscal 17. The operating margins of the firm are expected to
remain at similar levels over the medium term owing to limited
value addition.
Strength
* Extensive industry experience of promoters:
PI was incorporated by Mr. Habib and his family as a distributor
of handsets in Karnataka. The promoter family also manage other
entities, which operate as distributors of Vivo and Spice
handsets across Karnataka. PI has a strong distributorship
network and distributes its products to 22 sub-distributors based
in Karnataka. CRISIL believes the business risk profile of the
firm will benefit from the promoters' extensive experience in the
handsets trading industry.
Outlook: Stable
CRISIL believes that PI will benefit from extensive experience of
promoters in the handsets
trading business. The outlook may be revised to 'Positive' if
there is significant improvement in financial risk profile and
profitability leading to higher cash accruals. Conversely, the
outlook may be revised to 'Negative' in case of larger than
expected working capital requirements or any significant decline
in scale of operations.
Pearl Infotech is a distributor of Micromax, LeEco & Vivo mobile
handsets in Karnataka with 2016-17 being its first year of
operations.
PI is expected to report profit after tax (PAT) of INR 0.50 crore
on estimated net sales of INR 26.59 crore for 2016-17.
PIXIE DUSTT: CRISIL Assigns B- Rating to INR15MM Term Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the long-
term bank loan facilities of Pixie Dustt (PD). The rating
reflects the firm's exposure to risks related to implementation
and occupancy at its upcoming resort. The weakness is partially
offset by its partners' extensive experience in the hospitality
business.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Term Loan 15 CRISIL B-/Stable
Proposed Long Term
Bank Loan Facility 5 CRISIL B-/Stable
Key Rating Drivers & Detailed Description
Weakness
* Exposed to risks related to implementation and occupancy at
upcoming resort: The firm is constructing a luxury resort near
Puducherry. The project is expected to be partially operational
in July 2017. The firm is exposed to risks related to
implementation of the project and to occupancy at the resort.
Strengths
* Extensive experience of the partners in the hospitality
business: The partners have been in the hospitality business for
over a decade, and have a strong business network which will
enable the firm to establish business tie-ups, leading to higher
occupancy for its resort.
Outlook: Stable
CRISIL believes PD will continue to benefit from its partners'
extensive experience in the hospitality business. The outlook may
be revised to 'Positive' if stabilisation of operations, and
healthy occupancy and average room rate, lead to higher-than-
expected revenue and profitability. The outlook may be revised to
'Negative' if occupancy is lower than expected; or if the
financial risk profile, particularly liquidity, weakens due to
larger-than-expected debt-funded capital expenditure; or if cash
accrual is low.
Promoted by Ms Swapna Mathivanan, Mr Jeevan Nedunchezhiyan, and
Dr M A S Subramanian in 2013, PD is setting up a luxury resort
with 40 cottages, swimming pool, restaurant and bar. The firm has
a restaurant, Celine's Kitchen, in Puducherry, which has been
operational since 2014.
For fiscal 2016, the firm had a net loss was INR0.08 crore and
net sales of INR0.7 crore, against net profit of INR0.06 crore
and net sales of INR0.57 crore for fiscal 2015.
PK THUNGAN: CRISIL Reaffirms B+ Rating on INR20MM Cash Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of PK Thungan Builders Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL A4 (Reaffirmed)
Cash Credit 20 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect PKTBPL's nascent and small scale
of operations in high fragmented industry along with geographical
concentration. These rating weaknesses are partially offset by
PKTBPL's promoters' extensive experience in the construction
industry and healthy revenue visibility due to strong order book
Key Rating Drivers & Detailed Description
Weakness
* Nascent and small scale of operations in high fragmented
industry along with geographical concentration.
PKTBPL is a small player in the civil construction industry with
estimated operating income of INR 73 cr. in 2016-17 (refer to
financial year ending 31st March). The revenue profile of the
company is dependent on timely winning and execution of orders.
The tender based nature of business also limits pricing
flexibility due to high level of competition and modest
profitability. Hence, CRISIL believes that PKTBPL's is exposed to
small scale of operations in highly fragmented industry along
with geographical concentration.
Strength
* Promoters extensive experience in the construction industry and
healthy revenue visibility due to strong order book
The promoters of the company have an extensive experience in
construction industry for around three decades. Its customers
consist of various private players and government organizations.
In 2016-17, the company is estimated to achieve the operating
income of INR73 cr. and has order book of INR 144.6 cr. to be
completed in near future, offering healthy revenue visibility.
CRISIL believes that PKTBPL will continue to benefit from the
promoter's experience and established relationships with
customers.
Outlook: Stable
CRISIL expects that PKTBPL will maintain its business risk
profile over the medium term backed by the promoters' extensive
experience and healthy order book position. The outlook may be
revised to 'Positive' in case of significant improvement in scale
of operations along with geographical diversification of its
revenues and sustenance of profitability while maintaining its
working capital management. Conversely, the outlook may be
revised to 'Negative', if the company registers less than
expected accruals or if it undertakes any large additional debt-
funded capex leading to deterioration in its financial risk
profile or pressure on liquidity due to further stretch in
working capital requirements.
Incorporated in 2014, PKTBPL based in Hyderabad, is promoted by
Mr. JVS Srinivas & Mr. PK Thungan. PKTBPL is engaged in
construction of tunnels for hydroelectric projects, power houses,
dams, and other types of heavy construction works mainly in
Andhra Pradesh.
For fiscal 2017, PKTBPL's profit after tax (PAT) was INR1.5 crore
on net sales of INR73 crore, against a PAT of INR0.49 crore on
net sales of INR8.43 crore for fiscal 2016.
POOJA SPONGE: CRISIL Reaffirms D Rating on INR9MM Cash Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL D/CRISIL D' ratings on the bank
loan facilities of Pooja Sponge Private Limited (PSPL)
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL D (Reaffirmed)
Letter of Credit 4 CRISIL D (Reaffirmed)
The ratings continue to reflect instances of delay by PSPL in
servicing its debt, because of weak liquidity. The company's
account has been classified as a non-performing asset (NPA) by
its bank also the company is exposed to cyclicality in the steel
industry The company benefits from its promoters' experience in
the steel industry.
Key Rating Drivers & Detailed Description
Weakness
* Delays in servicing debt: PSPL continues to delay obligation on
its bank debt on account of weak liquidity. The bank has
classified its account as an NPA.
* Marginal market share and risks related to cyclicality in the
steel industry: PSPL primarily manufactures sponge iron, market
for which is intensely competitive. Commoditized product also
limits bargaining power, which is aggravated by the company's
modest market share. Also, profitability is linked to overall
performance of the steel industry and that of end-user segments
(infrastructure and real estate sectors), which are currently
experiencing a slowdown.
Strength
* Promoters extensive industry experience: Key promoter Mr Kavit
Agarwal has experience of a decade in manufacturing sponge iron,
resulting in strong industry insight and healthy relationships
with suppliers, customers, and logistic providers.
PSPL was incorporated in 2002 in Rourkela and was initially
promoted by the Odisha-based Gupta family. The company was
acquired in 2006 by the Agarwal family. PSPL manufactures sponge
iron at its facility in Rourkela (kiln capacity of 200 tonne per
day) and also trades in steel flat and long products. Operations
are managed by director, Mr. Kavit Agarwal.
The company had a net loss of INR10.13 crore and revenue of
INR44.13 crore in fiscal 2016, against a profit after tax of INR2
lakh and revenue of INR59.30 crore in fiscal 2015.
SADHA EXPORTS: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Sadha Exports (SE) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's modest scale of
operations in the intensely competitive cashew processing
industry, and its below-average financial risk profile. These
rating weaknesses are partially offset by promoter's extensive
experience in the cashew processing industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive cashew
processing industry: SE's business risk profile remains
constrained on account of its modest scale of operations in a
highly fragmented industry. The firm recorded revenues of INR 34
crore during fiscal 2017, underpinning its modest scale of
operations. The cashew industry is marked by limited
differentiation in technology involved in the processing of
cashew nuts. Consequently, the domestic cashew processing
industry is highly fragmented, marked by the presence of many
small players, leading to intense competition in both the
organised and unorganised segments.
* Below average financial risk profile: The financial risk
profile of the firm is below average marked by modest net wort,
moderate gearing and debt protection metrics. Net worth and
gearing were estimated at around INR 3 Crores and 1.9 times
respectively as on March 31, 2017. The debt protection metrics
were below average with interest coverage and net cash accrual to
total debt ratio of 1.66 times and 0.05 times respectively for
fiscal 2017.
Strengths
* Extensive experience of promoter in the cashew processing
industry: The business risk profile of SE benefits from the
extensive industry experience of over 13 years of its promoter in
the cashew trading and processing industry. The promoter, Mr.
Santosh Kumar has been in the same line of business with his
earlier firm since 2004. Over the years, the promoters have
developed healthy relationships with their suppliers, thereby
ensuring adequate and timely supply of raw materials.
Outlook: Stable
CRISIL believes SE will continue to benefit from the promoter's
extensive industry experience. The outlook may be revised to
'Positive', if scaling up of revenue and profitability improves
the financial risk profile. Conversely, the outlook may be
revised to 'Negative' in case of lower-than-expected accrual, or
any larger-than-expected, debt-funded capital expenditure, or a
stretch in the working capital cycle, leading to deterioration in
liquidity.
Set up in 2003, SE processes raw cashew nuts and sells cashew
kernels. The operations are managed by the promoter, Mr. Santosh
Kumar.
For 2015-16 (refers to financial year, April 1 to March 31), SE
reported profit after tax (PAT) of INR 10.5 lakh on net sales of
INR30.08 Crore against PAT of INR9.1 lakh on net sales of
INR23.40 crore for 2014-15.
SANCHETI COTEX: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan
---------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Sancheti
Cotex (SC) continues to reflects's modest scale of operations in
the intensely competitive cotton ginning industry. These rating
weaknesses are partially offset by the partner's funding support
and locational advantage.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3.25 CRISIL B/Stable (Reaffirmed)
Term Loan 0.75 CRISIL B/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in intensely fragmented cotton
ginning and pressing industry: SC will be engaged in ginning and
pressing of cotton which is a low value addition process.
Furthermore, the output is commoditised with minimal product
differentiation, and will result in low profitability. The firm's
operating margin is expected to be 5 per cent, over the medium
term. Furthermore, SC's inventory will be primarily non-order
backed and will expose the firm's profitability to movement in
cotton prices. Cotton is an agricultural commodity; hence, its
availability largely depends on the monsoons. Furthermore,
government interventions and fluctuations in global cotton output
resulted in sharp fluctuations in cotton prices. Domestic cotton
prices were stable over the past 12 months but have historically
been volatile.
* Below-average financial risk profile: SC is expected to have a
weak financial risk profile marked by a high gearing, modest net
worth and depressed debt protection metrics.
Strength
* Partner's funding support and locational advantage : The Jain
family has been engaged in the cotton ginning and pressing
industry for over 10 years through their business interests and
established relationships with farmers and raw cotton traders in
and around Madhya Pradesh, over the years
Outlook: Stable
CRISIL believes that SC will benefit over the medium term from
the extensive industry experience of its partners and their
funding support. The outlook maybe revised to 'Positive' in case
the firm reports significantly better than expected cash accruals
while maintaining its working capital cycle. Conversely, the
outlook maybe revised to 'Negative' in case of lower than
expected cash accruals or larger than expected working capital
requirements exerting further pressure on the firm's liquidity.
Incorporated in 2014, SC, a partnership firm, is promoted by four
partners, comprising mainly of Jain family. The firm has
installed ginning and pressing unit in Ketia, Madhya Pradesh with
a capacity of 300 bales per day which would commence commercial
operations in November 2014. The firm's day to day operations are
handled by the key partners, Mr Aditya Jain and Mr Chetan Jain
(cousins).
SC on provisional basis reported profit after tax (PAT) of INR41
lakh on net sales of INR47.43 crore for fiscal 2017 and PAT of
INR39 lakh on net sales of INR29.45 crore for fiscal 2016.
SATYA SURYA: CRISIL Raises Rating on INR25.5MM Cash Loan to B-
--------------------------------------------------------------
CRISIL has upgraded its rating on bank facilities to 'CRISIL B-
/Stable/CRISIL A4' from 'CRISIL D/CRISIL D' for Satya Surya
Aluminium Industries Limited (SSAIL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4.5 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 25.5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The upgrade reflects improvement in SSAIL's liquidity resulting
in timely servicing of debt. SSAIL has been timely in servicing
its debt obligations over the past six months, supported by
larger cash accruals aided by healthy revenue growth. Revenue is
estimated to grow by 75 per cent to INR106 crores in fiscal
2017(refers to financial year, April 1 to March 31). This,
coupled with moderate profitability led to higher net cash
accruals vis-a-vis its debt obligations, thereby, improving its
financial risk profile. However, SSAIL's bank lines remain fully
utilised because of large working capital requirements and would
remain a key rating sensitivity factor over the medium term.
The ratings continue to reflect its modest scale and working
capital intensive nature of operations, and its below-average
financial risk profile marked by moderate gearing, modest debt
protection metrics and net worth. These rating weaknesses are
partially offset by the benefits derived from its promoters'
extensive industry experience in the aluminium extrusions
industry and its established relationship with customers and
suppliers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale- and working capital intensive nature- of
operations
SSAIL's scale of operations is modest reflected in its modest
revenue of INR106 crores in fiscal 2017. Operations remain
working capital intensive with gross current asset (GCA) days at
169 days as on March, 2017 which is marked by high debtor and
inventory days of 75 and 82 days, respectively.
* Below-average financial risk profile
SSAIL has below-average financial risk profile marked by moderate
gearing, modest net worth and debt protection metrics. SSAIL's
net worth is estimated at INR17 crores as on March 31, 2017. The
gearing has remained below 1.5 times over the last two years
ending March, 2017. Modest cash accruals and high debt levels
have resulted in its modest debt protection metrics reflected in
its estimated net cash accruals to total debt (NCATD) and
interest coverage of 0.15 times and 2.7 times for fiscal 2017.
Strengths
* Promoters extensive industry experience in the aluminium
extrusions industry and its established relationship with
customers and suppliers
The company benefits from extensive industry experience of its
promoter in aluminium fabrication and manufacturing aluminium
extrusions. Mr. K. Ramesh is in the business for more than 1
decade. Over the years, he and his father Mr.K Suryanarayana has
developed strong understanding of the industry and has built
healthy relationship with various suppliers and customers.
Outlook: Stable
CRISIL believes that SSAIL will continue to benefit over the
medium term from its promoter's extensive industry experience.
The outlook may be revised to 'Positive' if a substantial
increase in revenue and profitability, and efficient working
capital management and substantial capital infusion, lead to a
better financial risk profile. The outlook may be revised to
'Negative' if low cash accrual, or stretched working capital
cycle, or large debt-funded capital expenditure weaken liquidity.
Incorporated in 1994 and promoted and managed by Mr.K Ramesh,
SSAIL is a manufacturer of Aluminium Extrusions and construction
of facades. It is based out of Hyderabad, Telangana.
For fiscal 2017, SSAIL is estimated to report profit after tax
(PAT) of INR3 crores on net sales of INR106 crores against PAT of
INR0.9 crores on net sales of INR61 crores for fiscal 2016.
SHEETAL AGROFOOD: CRISIL Assigns B- Rating to INR5MM Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the bank
facilities of Sheetal Agrofood Park Private Limited (SAFPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 4 CRISIL B-/Stable
Term Loan 5 CRISIL B-/Stable
The rating reflects a modest scale of operations, susceptibility
to project related risks and an average financial risk profile.
These weaknesses are partially offset by the extensive experience
of the partners in the cold storage and agro trading industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operation: Scale is modest as reflected in
revenue estimated at INR3.06 crore for fiscal 2017 (Rs 3.02 crore
in fiscal 2016). Modest scale limits bargaining power with
suppliers as well as customers.
* Project related risks: The company is in process of setting up
of cold chain facility of capacity of enhancing the warehouse
capacity to further 4200 MTPA for processing of frozen fruits and
vegetables. The total cost of the project is around INR21.60
crores. About INR5.0 crore is expected to be funded by term loan,
Subsidy from MOFPI of INR8.56 crore and rest through infusion of
equity (Rs. 4.55 crore) and unsecured loan (~ INR3.49 crore) The
capex is expected to be completed by the end of December, 2017.
The company will face demand related risks along with
implementation risk due to the large size of the project.
Although term loan has been sanctioned, the timely disbursement
and equity infusion by promoters will remain critical to project
completion.
* Average financial risk profile: Financial risk profile is
expected to remain moderate marked by high TOL/TNW of 2.73 times
as on March 31, 2017. Debt protection metrics are likely to be
moderate, with interest coverage and net cash accrual to total
debt ratios of 2.09 times and 0.05time, respectively, for fiscal
2017.
Strengths
* Extensive experience of promoters in agro commodity trading
business: SAFPL is promoted by Mr. Mehboob Alam and Mr. Masroor
Alam. SAFPL has a moderate business risk profile, backed by the
promoters' experience of around a decade in trading of agro
commodities and in cold storage industry. The company's presence
in the cold storage segment of potatoes, onions, garlic enables
healthy utilisation of its storage capacity.
Outlook: Stable
CRISIL believes the company will continue to benefit from its
extensive experience of promoters in agro trading business. The
outlook may be revised to 'Positive' if the company reports
substantial growth in revenue, and stable profitability and
financial risk profile post timely completion of the project
being undertaken. The outlook may be revised to 'Negative' if
lower-than-expected growth in revenue and accrual, or any major
delay in the project completion, weakens the financial risk
profile specially liquidity.
Sheetal Agro Foodpark Pvt Ltd (SAFPL) was incorporated in 2010 by
Mr. Mehboob Alam and Mr. Masroor Alam. The unit is located in
Lalganj in the Rae bareli district, Uttar Pradesh. The company is
engaged in cold storage business and trading of Agro commodity
such as Potato, onion, garlic, etc. SAFPL has a storage capacity
of 5326 MTPA.
Net loss was INR0.25 crore on net sales of INR3.02 crore in
fiscal 2016, against a net profit of INR0.11 crore on net sales
of INR2.11 crore in fiscal 2015.
SHREE GANPATLAL: CARE Lowers Rating on INR20cr LT Loan to B
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shree Ganpatlal Onkarlal & Co. (SGOAC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term bank 20.00 CARE B; Stable Revised
Facilities from CARE BB+; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating of SGOAC factors in the deterioration
in liquidity indicators of Swastik Group comprising of three
entities namely Swastik Coal Corporation Pvt. Ltd. (SCCPL), Arka
Carbon Fuels Pvt. Ltd. (ACFPL), Shree Ganpatlal Onkarlal Agarwal
& Co (SGOAC).
The revision also factors in the moderation in debt coverage
indicators of group during 9MFY17 and weakening of liquidity in
recent past.
The ratings further continue to remain constrained on account of
risk associated with volatility in coal prices and foreign
exchange rate fluctuations, working capital intensive nature of
operations, thin profitability margins, high leverage and
inherent risks associated with trading nature of business. The
ratings, however, continue to derive strength from its
experienced promoters, long track record of operations of the
Swastik group in coal trading business, long standing
relationship with coal suppliers, along with established
logistics and warehousing arrangements of the group.
Swastik group's ability to improve its liquidity through better
receivables management, efficient management of its working
capital requirement, increase its scale of operations along with
improvement in its leverage and debt coverage indicators;
efficiently manage the volatility in coal prices and exchange
rate fluctuations are the key rating sensitivities. Also,
regulatory changes in the industry shall be a key monitorable.
Detailed description of the key rating drivers
Key Rating Weaknesses
Deterioration in liquidity indicators for Swastik Group
The entities belonging of Swastik group has been facing the
liquidity issues in recent past, which has led to deterioration
in debt servicing capabilities of group.
Moderation in liquidity on the back of delay in realisation of
receivables amidst subdued market scenario
Upon subdued industry scenario for imported coal trading
business, there has been moderation in liquidity profile of
Swastik group. There have been delays in receipt of payments from
few of its customers which has led to elongation in receivables
period of SCCPL to 120 days in 9MFY17 from 76 days in FY16.
Receivables period of ACFPL has also got elongated to 95 days in
9MFY17 from 72 days in FY16. Partners of SGOAC, apart from
withdrawal of profit for FY16 & 9MFY17, have also withdrawn
partner's capital of INR1.08 crore during 9MFY17. Further, even
with decline in its scale of operations, debt level of group has
gone up leading to higher finance cost in FY16 & 9MFY17. There
has been nearly full utilization of fund based & non-fund based
working capital limits of the group for the last 12 months ended
February 2017 which has resulted in tight liquidity in the group.
Moderate profitability and debt coverage indicators along with
high leverage
Total operating Income of Swastik group has declined from INR2190
crore during FY15 to INR2087 crore during FY16 mainly because of
sharp decline in imported coal prices. Profitability margins are
inherently thin on account of trading nature of business. During
FY16, there had been higher utilisation of bank borrowing leading
to higher finance cost which affected its PAT margin. TD/GCA and
PBILDT interest coverage have deteriorated to 31.22 times and
1.43 times respectively as on March 31, 2016 with the increase in
use of working capital borrowings. This has also led to very high
overall gearing of 4.02 times for the Swastik group as on
March 31, 2016.
Moderate client concentration along with below average credit
profile of some of its customers
Swastik group has developed relationship with various customers
across diversified end-user industries including captive power
plants, steel, textile, paper, brick, cement etc. However, the
group has major focus on private sector business whereby the
credit profile of some of its customers is below average which at
times results in delay in realization of debtors as has happened
during 9MFY17. Top ten customers comprised around 68% of total
sales of SCCPL during FY16 which exposes it to the risk
associated with customer concentration.
Risk associated with volatility in coal prices and exchange rate
fluctuations
Swastik Group is predominantly involved in the business of
imported and domestic coal trading. Prices of coal are mainly
linked with the international coal price indices. Group companies
sell about 50% of coal under the stock and sale model. Hence,
group is exposed to significant short-term variation in imported
coal prices. Swastik Group is also exposed to the risk associated
with exchange rate fluctuations since part of its coal sourcing
is through imports, which are denominated in USD and entire sales
is in INR.
Risk associated with the trading nature of operations
Group is exposed to the risks associated with the trading nature
of business like inherently low profitability. Apart from that,
group has no long-term coal sourcing and coal supply contracts,
which reduces the revenue visibility of the group. However, the
group's presence in the market for more than two decades reduces
these risks to a large extent, since it has been able to get
repeat business from its key customers in diversified industries.
Group is also exposed to the competition in imported coal trading
business due to low entry barriers.
Working capital intensive nature of operations
Operations of the group have remained working capital intensive
over the years. Usual credit period allowed to the customers is
around two months. Inventory is maintained for around 20-30 days
for stock & sale business and average LC tenure is 90 days.
Accordingly, it has negligible operating cycle. However, during
9MFY17 there has been elongation in its receivables period.
Utilization of both fund based and Non-fund based working capital
limits was nearly 100% during the last 12 months ended February
2017.
Key Rating Strengths
Experienced promoters and long track record of operations of the
group in coal trading business
Swastik group was started as a family business promoted by Mr.
Vishnu Prasad Bindal and Ms. Geeta Devi Bindal, both having an
experience of over three decades in coal trading and logistics.
Swastik group was incorporated in 1988 with the incorporation of
its first logistic firm i.e. Shree Ganpatlal Onkarlal Agrawal &
Co. The group has developed business relationship with merchant
traders and miners in Indonesia, Australia and South Africa for
procurement of imported coal. Large scale of operations with
established presence in imported coal trading business
Swastik group has handled around 4 Million Metric Ton (MMT) of
coal during FY16. There has been rise in coal handled by the
group over the last four years. SCCPL is the flagship company of
the group handling majority of the coal of the group. SCCPL's
share is at around 68%, out of combined total revenue from sale
of coal in the group. ACFPL is also in the coal trading business
on a somewhat smaller scale. SGOAC provides logistics solution to
the group companies in coal trading business.
Established logistics and warehousing arrangements
SCCPL is one of the major traders of coal in India, it offers a
complete mine to plant solution to its customers. The company
with the assistance of its associate concern viz. SGOAC has
presence in the logistics chain involved in the supply of coal
which ensures effortless and timely delivery to the customers.
Group is operating at nine Indian Ports while 48 marketing
offices located strategically in close proximity to user
industries. Group takes advantage of the presence in all port
locations to reduce its transportation cost making its imported
coal at par with market prices.
Analytical Approach: Combined
Swastik group includes two companies & one firm operating in
similar line of coal trading & transport businesses viz. Swastik
Coal Corporation Pvt. Ltd. (SCCPL), Arka Carbon Fuels Pvt. Ltd.
(ACFPL), Shree Ganpatlal Onkarlal Agarwal & Co (SGOAC). CARE has
taken a combined analytical approach of these three entities for
arriving at ratings of SCCPL, ACFPL & SGOAC due to common
promoters & management and strong operational & financial
linkages among the group entities in coal trading business.
SGOAC was incorporated in 1988 as proprietorship firm by Ms.
Geeta Devi Bindal. It was reconstituted as partnership firm in
April 2008 and registered with current name i.e. SGOAC. Ms. Geeta
Devi Bindal, Mr. Vishnu Prasad Bindal and Mr. Hitesh Bindal are
the partners of the firm. SGOAC operates through more than 40
branches in India with its own fleet of around 150 trucks,
dumpers and loaders for transportation of coal for group
companies as well as other consumers. It also hires fleets from
the market for transportations of coal of group companies.
Swastik group, based out of Indore, Madhya Pradesh, is primarily
involved in the business of coal trading. The group has presence
of more than two decades with interests in diversified businesses
including coal trading, logistics, construction and real estate.
The group is operating at 9 Indian ports with 48 marketing
offices located strategically in close proximity to end-use
industries. ACFPL, a group company, promoted by the same promoter
group is also engaged in the coal trading business with a
relatively smaller scale of operations compared with SCCPL's
operations. Also, group has formed a partnership firm viz. SGOAC
to fulfill its coal transportation requirement.
During FY16 (refers to the period April 1 to March 31), Swastik
group (on a combined basis), reported a total operating income of
INR2087.38 crore (FY15: INR2189.97 crore) with a PAT of INR15.53
crore (FY15: INR21.40 crore). As per provisional results for
9MFY17, Swastik group reported a total operating income of
INR1200.70 crore with a PBT of INR16.20 crore.
During FY16, SGOAC (on a standalone basis) reported a total
operating income of INR210.62 crore (FY15: INR195.27 crore) with
a PAT of INR1.23 crore (FY15: PAT of INR1.51 crore). As per
provisional results for 9MFY17, SGOAC reported a total operating
income of INR172.96 crore with a PBT of INR4.85 crore.
SHRI SALASAR: CARE Reaffirms B+ Rating on INR7cr LT Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shri Salasar Agro Processors (SSAP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7 CARE B+; Stable Reaffirmed
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facilities of SSAP continues to
be contrained by the modest scale of operations with low
capitalisation, thin profitability with susceptibility to
fluctuations in the raw material prices, leveraged capital
capital structure and weak debt coverage indicators. The rating
is further constrained due to its presence in highly competitive
and fragmented industry, seasonality associated with raw material
availability and partnership nature of constitution.
The above constrains continue to draw support from the wide
experience of the partners in the oil extraction business.
The ability of the firm to increase its scale of operations and
improve profitability and capital structure while efficiently
managing its working capital requirements are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced partners: SSAP is managed by Mr Madanmohan Purohit
and Mr Vinay Vyas. The partners have an average experience of
over 15 years in oil extraction and trading through various
association with local entities. Being in the industry for long
has helped the
partners in gaining adequate acumen and establish longstanding
relationships with key customers and suppliers.
Key Rating Weaknesses
Modest scale of operations with low capitalization : The firm is
operational since December 2014 and FY16 was the first full year
of operations. However, the entity has stabilised its operations
with moderate and increasing operating income in last two years
ending FY16. However, the net worth base remained small limiting
financial flexibility of the entity.
Thin profitability with susceptibility of margins to raw material
price fluctuation risk: The profitability of the firm remained
thin with below unity PBILDT margin in last two years ending FY16
owing to limited value addition nature of business. Furthermore,
the margins are greatly influenced by the movement in prices of
soya seed. Prices of soya-based products are governed by the
demand-supply dynamics prevalent in major soya growing nations,
weather conditions and prices of substitute edible oils.
Leveraged capital structure and weak debt coverage indicators:
The high debt profile as against low tangible net worth resulted
in
weak capital structure of the firm. Moreover, with increase in
total debt and low cash accruals, the debt coverage indicators of
the firm deteriorated remained weak.
Presence in highly competitive and fragmented industry: The
soyabean oil extraction industry is highly fragmented with a
large
number of crushing units, solvent extraction and refining plants.
Hence, SSAP faces stiff competition from other players operating
in the same industry, which results in low bargaining power
against its customers.
Partnership nature of constitution: Being a partnership firm,
SSAP is exposed to the risk of withdrawal of capital by partners
due to
personal exigencies, dissolution of firm due to retirement or
death of any partner and restricted financial flexibility due to
inability to explore cheaper sources of finance leading to
limited growth potential. This also limits the firm's ability to
meet any financial exigencies.
Established in June 2013, SSAP is a Nagpur-based (Maharashtra)
entity engaged in extraction of soya bean oil. The unit is spread
over an area of 12 acres (land owned by partners) and has an
installed capacity to extract 250 metric tons of soya bean oil
per day (MTPD) with capacity utilization of around 40% during the
12-months period ended March 31, 2016. The firm procures raw
material primarily (soya bean seeds) from farmers and traders in
the vicinity of Nagpur, while the customer profile is diversified
comprising majorly of refineries spread across states of
Maharashtra, Madhya Pradesh, Karnataka and Tamil Nadu. The firm
also sells the by-product, ie, deoiled cake to traders in
vicinity of Nagpur.
SKAF CONSTRUCTION: CRISIL Lowers Rating on INR8MM Loan to D
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Skaf
Construction Private Limited (Skaf) to 'CRISIL D/CRISIL D' from
'CRISIL BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 8 CRISIL D (Downgraded from
'CRISIL A4+')
Cash Credit 3 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Proposed Long Term 7 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL BB/Stable')
The downgrade reflects the company's continuously overdrawn bank
limit because of weak liquidity. The company also has large
working capital requirement and faces intense competition.
However, it benefits from its promoters' extensive experience in
the civil construction business.
Key Rating Drivers & Detailed Description
* Overdrawn bank limit: Working capital-intensive operations have
led to high reliance on debt and over-utilisation of the bank
limit.
Weakness
* Working capital-intensive operations
Gross current assets are estimated at 163 days as on March 31,
2017, driven by substantial receivables of 141 days.
* Exposure to intense competition: Low entry barrier has led to
presence of many players in the civil construction industry,
affecting players' ability to win tenders and maintain
profitability.
Strengths
* Extensive industry experience of the promoters: Presence of
over 25 years in the civil construction industry has enabled the
promoters to undertake several projects for various corporate
bodies.
SKAF was incorporated in 2006 to take over the business of a
partnership firm, SKAF Constructions. It offers construction
services in civil, electrical, plumbing, firefighting and
finishing work, to real estate players. The company is based in
Mumbai.
Profit after tax (PAT) was INR 4.21 crore on net sales of
INR94.35 crore in fiscal 2017 (provisional) against INR 1.83
crore and INR 61.27 crore in fiscal 2016.
SR CONSTRUCTION: CRISIL Assigns B+ Rating to INR5MM LT Loan
-----------------------------------------------------------
CRISIL has assigned its rating of 'CRISIL B+/Stable' to the bank
facilities of SR Construction and Developers (SRCD).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 5 CRISIL B+/Stable
Long Term Loan 2.5 CRISIL B+/Stable
Overdraft 2.5 CRISIL B+/Stable
The rating reflects susceptibility of SRCD's exposure to moderate
project risk and cyclicality in the real estate industry. These
rating weaknesses are partially offset by the promoter's
extensive experience in real estate business.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to moderate project risk: The ongoing project is
exposed to moderate project risk marked by moderate
implementation and funding risk.
* Exposure to risks and cyclicality inherent in Indian real
estate industry: SRCD remains exposed to the inherent risks and
cyclicality associated with the Indian real estate industry
because of a highly fragmented market structure due to the
presence of a large number of regional players.
Strengths
* Extensive experience of promoter: SRCD benefits from the
extensive experience of promoters of over 10 years in real estate
industry. The promoter has successfully completed residential and
commercial projects in state of Odisha.
Outlook: Stable
CRISIL believes SRCD will sustain its business risk profile over
the medium term backed by the extensive industry experience of
its promoter. The outlook may be revised to 'Positive' if robust
response to project leads to higher-than-expected cash flow. The
outlook may be revised to 'Negative' if low cash inflows, because
of subdued response to project, weakens liquidity.
Formed in 2009 as a proprietorship firm, SRCD undertake real
estate projects in Odisha. Firm undertakes both residential and
commercial real estate projects state of Odisha.
For fiscal 2016 company reported profit after tax of INR0.15
crore on net sales of INR3.04 crore against INR0.27 crore and
2.04 crore respectively in fiscal 2015.
SWASTIK COAL: CARE Lowers Rating on INR320cr ST Loan to D
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Swastik Coal Corporation Private Limited (SCCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 55.00 CARE D Revised from
CARE BB+; Stable
Short-term Bank
Facilities 320.00 CARE D Revised from
CARE A4
Detailed Rationale & Key Rating Drivers
The revision in ratings assigned to the bank facilities of SCCPL
factors in the delays in debt servicing obligation owing to acute
liquidity stress.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in servicing of debt obligation:
SCCPL had delayed in servicing of its debt obligations due to
severe deterioration in the financial and liquidity indicators.
Analytical approach: Combined Swastik group includes three
companies operating in similar line of coal trading & transport
businesses viz. Swastik Coal Corporation Pvt. Ltd. (SCCPL), Arka
Carbon Fuels Pvt. Ltd. (ACFPL), Shree Ganpatlal Onkarlal Agarwal
& Co (SGOAC). CARE has taken a combined approach of these three
companies for arriving at ratings of SCCPL, ACFPL & SGOAC due to
common promoters & management and strong operational & financial
linkages among the group companies in coal trading business.
SCCPL is the flagship company of Swastik group and Mr. Vishnu
Prasad Bindal is the founder promoter of the company. It was
incorporated in 1995 as Jainam Enterprises Private Limited for
trading in coal. It was renamed as Bindal Coal Sales Private
Limited in 2002 and registered with current name i.e. SCCPL in
2004. SCCPL imports its coal requirement directly or through
merchant importers in India and supplies in the domestic market
for usage by various industries viz. cement, captive power
plants, steel, brick etc. SCCPL is also into trading of domestic
coal purchased through e-auction route from Coal India Ltd. (CIL)
and its subsidiaries. Swastik group, based out of Indore, Madhya
Pradesh, is primarily involved in the business of coal trading.
The group has presence of more than two decades with interests in
diversified businesses including coal trading, logistics,
construction and real estate. The group is operating at 9 Indian
ports with 48 marketing offices located strategically in close
proximity to end-use industries. ACFPL, a group company, promoted
by the same promoter group is also engaged in the coal trading
business with a relatively smaller scale of operations compared
with SCCPL's operations. Also, group has formed a partnership
firm viz. SGOAC to fulfil its coal transportation requirement.
SGOAC has its own fleet of around 150 trucks, dumpers and loaders
for transportation of coal for group companies as well as other
consumers.
During FY16 (refers to the period April 1 to March 31), Swastik
group (on a combined basis), reported a total operating income of
INR2087.38 crore (FY15: INR2189.97 crore) with a PAT of INR15.53
crore (FY15: INR21.40 crore). As per provisional results for
9MFY17, Swastik group reported a total operating income of
INR1200.70 crore with a PBT of INR16.20 crore.
During FY16, SCCPL (on a standalone basis) reported a total
operating income of INR1273.35 crore (FY15: INR1399.42 crore)
with a PAT of INR9.27 crore (FY15: INR14.39 crore). As per
provisional results for 9MFY17, SCCPL reported a total operating
income of INR639.54 crore with a PAT of INR4.62 crore.
SWASTIK COTEX: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
--------------------------------------------------------------
CRISIL's rating on the bank loan facility of Swastik Cotex (SC)
continue to reflect SC's modest scale of operations in a highly-
fragmented industry, and working-capital-intensive operations.
These rating weaknesses are partially offset by the benefits that
the firm derives from the extensive industry experience of its
promoters and from its proximity to the cotton-growing belt.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in highly competitive industry: SC
had started its operations in January 2014. The cotton ginning
industry is largely unorganised with the presence of several
small players. In addition, the entry barriers are low because of
low capital and technology intensity and low differentiation in
end product. This has led to a highly-fragmented industry
structure with intense competition among the players. CRISIL
believes that going forward the fragmented nature of the industry
will restrict SC's bargaining and pricing power, leading to lower
margins and modest scale of operations in the near term.
* Working-capital-intensive operations: The company has working-
capital-intensive operations, marked by gross current assets of
about 40-60 days. CRISIL believes that SC's operations will
remain working capital intensive over the medium term.
Strengths
* Extensive experience of promoters in cotton industry: The
promoters of SC have more than three decades of experience in the
cotton ginning industry. SC benefits from its promoters'
extensive experience and their understanding of the dynamics of
the local market, and established relationship with various
suppliers, farmers and customers. CRISIL believes that SC will
continue to benefit from its promoters' extensive industry
experience, and established customer and supplier relationship,
resulting in sustained revenue growth over the medium term.
* Proximity to cotton-growing belt in Gujarat: SC's production
facility is based near Rajkot which is a part of the cotton-
growing belt in Gujarat. This will enable SC to procure raw
cotton directly from local farmers, thus making its operations
more cost effective.
Outlook: Stable
CRISIL believes that SC will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if SC significantly improves
its scale of operations, leading to large cash accruals and a
stronger financial risk profile. Conversely, the outlook may be
revised to 'Negative' if SC reports low accruals because of
reduced profitability, or weakening of its financial risk
profile, most likely because of stretched working capital cycle
or substantial debt-funded capital expenditure.
SC, a partnership firm set up in 2013, is promoted by members of
the Rajkot (Gujarat)-based Sangani and Sejpal families, who have
experience of over 35 years in the cotton industry. The firm gins
and presses cotton and commenced commercial operations in January
2014.
For 2015-16, SC reported a profit after tax (PAT) of INR30 lakhs
on sales of INR103.5 Cr.; it had reported a PAT of INR23 lakhs on
sales of INR106.1 Cr. for 2014-15.
YASHODA COLD: CARE Assigns B+ Rating to INR5.40cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Yashoda Cold Storage Private Limited (YCSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.40 CARE B+/Stable Assigned
Short-term Bank
Facilities 0.10 CARE A4 Assigned
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of YCSPL are
constrained on account of small scale of operations, leveraged
capital structure and weak debt service coverage indicators. The
ratings are further constraint by residual project execution risk
coupled with project funding not tied and competitive and
fragmented nature of industry. The aforementioned ratings
weakness, however, are partially off-set by experienced
management in the warehousing sector, healthy profitability
margins and positive outlook of warehousing space. Going forward,
the ability of the successful implementation of the on-going
capital expenditure projects within estimated costs and timelines
and scale-up its operations, while maintaining profitability
profile shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak financial risk profile: YCSPL has leveraged capital
structure evident from debt-equity and overall gearing ratio of
2.39 times and 5.98 times, respectively in FY16 on account of low
net worth base. Furthermore, the company has weak coverage
indicators evident from interest coverage and total debt to gross
cash accruals (TD/GCA) of 1.61 times and 14.28x, respectively in
FY16, which has deteriorated from 1.92 times and 12.37x,
respectively in FY15 on the back of increase in interest cost as
well as debt levels. Small scale of operations: YCSPL has small
scale of operations evident from total operating income (TOI) and
gross cash accruals (GCA) of INR1.80 crore and INR0.30 crore
respectively in FY16. The small scale of operations and low base
of net worth restricts the company's financial flexibility in
case of exigency.
Funding as well as residual project risk: Company is exposed to
residual project risk, as they are undertaking construction
of additional 2 storage blocks and same is expected to complete
by end of October, 2017. The total project cost of INR4.3 crore
to be funded by debt of INR2.5 crore and remaining from promoter
own funds and internal accruals. The debt for the same is yet to
be tied up. Any delay in the sanction of project or any cost
overrun would have direct impact on financial risk profile of the
company.
Competitive and fragmented nature of industry: The company is
exposed to competition from other regional players operating in
warehousing industry, which is fragmented in nature and has
limited entry and exit barrier. This leads to limited bargaining
power with customers and restrict to charge additional rent,
which constraints its scale of operations.
Key Rating Strengths
Experienced management: Mr Mahender Singh Katiyar, Mr Kuldeep
Katiyar and Mr Akhilesh Kumar Katiyar, all are Directors, who has
experience of around 18 years, 10 years and 17 years respectively
in warehousing as well as trading of agro commodity business. Mr
Mahender Singh Katiyar along with his son Mr Kuldeep Katiyar
manages routine operations of the company.
Healthy profitability profile: The company has healthy
profitability profile evident from PBILDT and PAT margins
continues to remain healthy and stood above 44% and 4%,
respectively from last two financial years (FY15-FY16) on the
back of operating in service industry.
Farukhabad-based (Uttar Pradesh) YCSPL was incorporated in 2010
by Katiyar family for providing warehousing storage facility of
perishable product mainly potatoes. Company is currently managed
by Mr Kuldeep Katiyar and Mr Mahender Singh Katiyar. As on March
31, 2017, company is having the storage capacity of 11,338 MT of
its warehouse, which is based out in Farrukhabad (UP).
During FY16 (refers to the period April 1 to March 31), YCSPL has
reported a total operating income (TOI) of INR1.8 crore with PAT
of INR0.07 crore, as against TOI of INR1.54 crore with PAT of
INR0.06 crore in FY15. The company has achieved TOI close to
INR1.90 crore during FY17 (as per provisional results).
=================
I N D O N E S I A
=================
ABM INVESTAMA: Fitch Assigns BB- Long-Term Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has assigned PT ABM Investama Tbk a Long-Term
Foreign-Currency Issuer Default Rating (IDR) of 'BB-'. The
Outlook is Stable. The agency has also assigned an expected
rating of 'BB-(EXP)' on ABM's proposed US dollar senior notes.
The proceeds from the proposed notes will be used to repay the
company's existing secured term loan.
The final ratings on the proposed notes are contingent upon the
receipt of final documents conforming to information already
received.
KEY RATING DRIVERS
Well-Established, Diversified Operations: The ratings reflect
ABM's well established and diversified operations, which include
Indonesia's fourth-largest coal contracting business, low-cost
coal mining, a logistics business and an engineering business
that designs and manufactures products and provides support
services for industrial, energy and mining customers. The company
benefits from its relationships with affiliated companies,
including PT Trakindo Utama, which provides most of the
equipment, spare parts and servicing for ABM's coal contracting
business and is also an important customer for the company's
logistics and engineering business.
Exposure to Cyclical Coal Industry: ABM is vulnerable to the
commodity cycle as around 75% of its EBITDA and cash flow derive
from the coal industry. Thermal coal prices have risen since mid-
2016, although prices have now come off their peak, reflecting
China's policies aimed at managing coal prices. Fitch expects
some production increases in response to the higher prices, which
could lead to price moderation over the medium term. This risk is
mitigated by ABM's position as a low-cost coal producer and
having an integrated coal mining, transportation (through its
logistics business) and contracting operation.
ABM operates in coal contracting via its wholly owned subsidiary,
PT Cipta Kridatama (CK), which benefits from a young fleet,
quality Caterpillar equipment sourced through Trakindo and a
cost-efficient operation that contributed to an EBITDA margin of
close to 30% in 2016; comparable to CK's larger competitors.
Credit counterparty risk appears to have improved, but CK
continues to experience delinquencies on receivables from some
legacy customers.
Low-Cost Coal Mining; Reserves Depleting: ABM's key mine, PT
Tunas Inti Abadi (TIA), which produces calorific value (CV) coal
of 3,900-4,100kcal/kg in Indonesia's South Kalimantan province,
has rapidly depleting reserves and a concession that ends in
2021. ABM also plans to reduce its stake in the PT MIFA
Bersaudara mine, which produces lower-range CV coal of 3,100-
3,400kcal/kg. Fitch has assumed an acquisition of a mid-range CV
mining concession for USD100 million in 2018 to replace the TIA
concession and have factored in an improved reserve life from the
acquisition into the ratings; but Fitch has not assumed any new
production under Fitch base case.
Fitch expects annual production from the TIA mine to remain
steady at historical levels of 5.5 to 6.0 million metric tonnes
per year over the next four years. Fitch assume moderate annual
production ramp-up from the MIFA mine to around 2.0 million
tonnes in 2017-2018, from 0.5 million tonnes in 2016, but have
not factored in a potential divestment of a majority stake in
MIFA over this period under Fitch base case.
Moderate Capex, Improving Credit Ratios: Fitch expects ABM's
capex to remain moderate over the next four years, at around
USD40-45 million annually excluding ABM's distributive power
division, PT Sumberdaya Sewatama (SS), or USD65 million
consolidated. Moderate capex, which combined with solid cash flow
from operations, will contribute to positive free cash flow under
Fitch base case scenario. Fitch expects FFO-adjusted net
leverage (excluding SS) to remain at or below 3.0x (2016: 4.1x).
A significant portion of operating leases is short-term, which
affords ABM with flexibility to lower or cancel in case of a
downturn. However, increasing operating lease expenses - as ABM
pursues an asset-light strategy - constrain Fitch forecasted FFO
fixed-charge coverage to just above 2.5x (excluding SS) (2016:
2.3x).
Fitch has excluded SS in Fitch computations of credit ratios for
Fitch guidelines. SS has historically operated as a standalone
business that Fitch views as non-core to ABM's operations; and
debt at SS is non-recourse to ABM. Fitch assume that ABM will
maintain its stated intention of not providing any support to SS
and will treat any change in this policy as event risk.
Experienced Management, Strong Shareholder: ABM benefits from a
management team with extensive industry experience and from a
strong majority shareholder, the Hamami family, which has an
effective 74.3% stake in ABM.
DERIVATION SUMMARY
ABM's rating is comparable to PT Bukit Makmur Mandiri Utama
(BUMA, BB-/Stable). ABM benefits from a more diversified business
than BUMA, which is a mining contractor only, but BUMA has a
stronger mine contracting business in terms of efficiency (higher
EBITDA margin) and market share. BUMA is Indonesia's second-
largest mining contractor, against ABM's fourth position, where
scale is important. The financial profiles of BUMA and ABM are
similar in terms of leverage metrics, but ABM's Fitch-adjusted
fixed-charge coverage ratio is weaker than BUMA's on account of
ABM's high operating lease expense as it pursues an asset-light
strategy.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for ABM include:
- average sale price for coal production and contract pricing
uses Fitch's mid-cycle commodity price assumptions, (average
Newcastle of USD70 per tonne in 2017 and USD65 per tonne in
2018) adjusted for calorific value;
- EBITDA margin of around 27%-28% in 2017-2018 (consolidated),
supported by focus on cost efficiency;
- capex of around USD40-45 million in 2017-2018 excluding SS
(2016: USD29 million), or around USD65 million consolidated
(2016: USD52 million);
- acquisition of mining concession for USD100 million in 2018
due to depleting TIA mine; no production contribution from new
mine over 2017-2021. No divestments in 2017-2018;
- no dividends.
RATING SENSITIVITIES
Developments that may, individually or collectively, lead to
positive rating action:
No positive rating action is expected in the near-term due to
ABM's exposure to the cyclical coal industry and moderate
operating scale.
Developments that may, individually or collectively, lead to
negative rating action:
- Weaker than Fitch-expected cash flow generation due to adverse
industry conditions, higher capex or larger-than-expected cash
outflow leading to a deterioration of credit ratios as
follows:
- FFO-adjusted net leverage above 3.0x (excluding SS) for a
sustained period;
- FFO fixed-charge coverage falling below 2.5x (excluding SS)
for a sustained period.
- Failure to replace declining reserves or terminating mining
concessions with ones of an acceptable calorific value.
LIQUIDITY
Adequate Liquidity: ABM has adequate liquidity from internal cash
generation. Cash and cash equivalents were USD82 million
(consolidated), or USD74 million excluding SS, against short-term
debt maturities of around USD50 million due in 2017. The proposed
bond will replace the amortising term loan due 2021 with a bullet
payment in 2022. ABM has a long-standing relationship with its
bank group, resulting in strong access to the domestic bank
market.
=========
J A P A N
=========
TAKATA CORP: Asks Bankruptcy Judge to Halt Air Bag Lawsuits
-----------------------------------------------------------
Randall Chase at The Associated Press reports that Takata Corp.
is asking a Delaware bankruptcy judge for an injunction
prohibiting the governments of Hawaii, New Mexico and the U.S.
Virgin Islands from prosecuting lawsuits involving the company's
lethally defective air bag inflators.
AP relates that in a complaint filed July 13, Takata also is
seeking to extend the automatic halt of litigation against a
company in bankruptcy to hundreds of individual lawsuits against
automobile manufacturers who installed the faulty air bags.
The judge was hold a telephonic status conference on Takata's
request last July 16, AP discloses.
According to the report, Takata said allowing the lawsuits to
proceed would seriously jeopardize its restructuring efforts,
including the planned sale of most of its assets to a Chinese-
owned rival for $1.6 billion.
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.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017. Takata's main U.S. subsidiary TK Holdings Inc.
and 11 of its U.S. and Mexican affiliates each filed voluntary
petitions under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Del. Lead Case No. 17-11375) on June 25, 2017. Together with the
bankruptcy filings, Takata announced it has reached a deal to
sell all its global assets and operations to Key Safety Systems
(KSS) for US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and
Lazard is serving as investment banker to Takata. Ernst & Young
LLP is tax advisor. Prime Clerk is the claims and noticing
agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor while UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List), among other things, granting
a stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The
Canadian Court appointed FTI Consulting Canada Inc. as
information officer.
TK Holdings, as the foreign representative, is represented by
McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimant.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New
York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in Washington, D.C., as its bankruptcy counsel.
TOKYO ELECTRIC: To Lay Out Turnaround Path by 2019
--------------------------------------------------
Nikkei Asian Review reports that Tokyo Electric Power Co.
Holdings' new chairman is eager to turn the utility into "a
normal company" that generates profit and gives back to society.
Chairman Takashi Kawamura, who took the position in late June,
commented on the turnaround plan compiled in May in a recent
interview, Nikkei relates. "One of the goals is to set a clear
direction for a turnaround by 2019," Nikkei quotes Mr. Kawamura
as saying. "We aim to create an organization with clearly defined
responsibility and authorities."
Tepco's top shareholder, the government-backed Nuclear Damage
Compensation and Decommissioning Facilitation, will evaluate the
utility around the end of fiscal 2019 to decide whether it is
ready to be taken off government support, according to Nikkei.
Nikkei relates that the turnaround plan estimates the cost of
decommissioning and damage compensation at around JPY22 trillion
($194 billion), and paying for those costs is premised on Tepco
setting aside an average of JPY500 billion a year.
While skeptical Tepco alums have called the plan "absolutely
unrealistic," Mr. Kawamura said it is a target that "could be
achieved if we work really hard," Nikkei relays.
"We will let staff understand the importance of making money," he
said. "A company pays taxes, interests, wages and dividends. To
earn profit and give it back to society is the raison d'etre of a
company."
About Tokyo Electric
Tokyo Electric Power Company is the largest electric power
company in Japan and the largest privately owned electric
utility in the world. TEPCO supplies electricity to meet the
increasingly diversified and sophisticated demands of its over
28.09 million customers in the metropolitan Tokyo, which is the
political, economic, and cultural center of Japan, and eight
surrounding prefectures.
Bloomberg News said the utility is battling radiation leaks at
the Fukushima Dai-Ichi power plant north of Tokyo after a
March 11 earthquake and tsunami knocked out its cooling systems,
causing the biggest atomic accident in 25 years. More than
50,000 households were forced to evacuate and Bank of America
Corp.'s Merrill Lynch estimates TEPCO may face compensation
claims of as much as JPY11 trillion (US$135 billion).
As reported in the Troubled Company Reporter-Asia Pacific on
May 11, 2012, Bloomberg News said Japan's government took control
of Tepco and agreed to provide JPY1 trillion (US$12.5 billion) as
part of the nation's largest bailout since the rescue of the
banking industry in the 1990s.
Bloomberg related that the government will obtain more than 50%
of the voting rights in the utility under a 10-year plan approved
on May 8 by Trade and Industry Minister Yukio Edano. The
government stake may rise to two-thirds if TEPCO fails to meet
goals that include cost cuts and compensation payments, said
Bloomberg.
Under the plan, Bloomberg disclosed, the utility aims for an
unconsolidated profit of JPY106.7 billion in the year ending
March 2014, based on an electricity rate increase and the restart
of the Kashiwazaki Kariwa nuclear station. Bloomberg says
nationalization of TEPCO paves the way for the government to
restructure the electricity industry monopolized by regional
utilities and possibly break up power generation and transmission
networks to allow more competition.
TOSHIBA CORP: Greenlight Capital Takes New Toshiba Stake
--------------------------------------------------------
Simone Foxman at Bloomberg News reports that Greenlight Capital,
the hedge fund firm led by David Einhorn, took a new stake in
Toshiba Corp. during the second quarter.
Bloomberg relates that the firm said in a note to clients dated
July 14 that it's wagering Toshiba shares will rise once it exits
money-losing contracts tied to its Westinghouse business, which
filed for bankruptcy protection in March. Greenlight also said it
believes Toshiba can resolve a legal dispute over a sale of its
memory business that was meant to shore up its balance sheet, the
report relays.
"We believe investors will refocus on the significant margin and
valuation upside at Toshiba once it has resolved uncertainties,"
Greenlight wrote in the letter, a copy of which was seen by
Bloomberg News. The stock, which the firm said "is worth closer
to JPY400 per share," closed in Japanese trading at JPT231.6,
Bloomberg discloses.
Bloomberg says the Greenlight hedge funds dropped 4 percent in
the aggregate during the period, pushing their first-half return
to a loss of 2.8 percent. In the letter, the firm called the
second-quarter "a bit of a head-scratcher" as it lost money even
though its main long holdings beat or met earnings expectations
while its short targets underwhelmed analyst expectations. The
S&P 500 Index returned 9.3 percent in the first six months of
2017.
Greenlight also said it exited an "unusually large number of
positions" last quarter, including a stake in Liberty Global Plc,
saying "recent operating trends weakened," Bloomberg adds.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
June 19, 2017, S&P Global Ratings said it has kept its 'CCC-'
long-term and 'C' short-term ratings on Japan-based capital goods
and diversified electronics company Toshiba Corp. on CreditWatch
with negative implications. 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 a 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 and when S&P lowered the long-term
ratings in March 2017.
The ratings remain on CreditWatch, reflecting S&P's view that
creditor banks' support for Toshiba together with the company's
liquidity levels warrant continued close monitoring because its
plan to sell its memory business has yet to materialize and
additional losses or financial burdens might still arise in
connection with its U.S. nuclear power business. S&P continues
to hold the view that without unanticipated, significantly
favorable changes in Toshiba's circumstances, the company might
become unable to fulfill its financial obligations in a timely
manner or might undertake a debt restructuring S&P classifies as
distressed in the next six months.
TOSHIBA CORP: Judge Moves Decision in WD Bid to Block Sale
----------------------------------------------------------
Reuters reports that a U.S. judge did not reach a decision on
July 14 in Western Digital Corp's bid to temporarily block
Toshiba Corp from selling its flash memory business in an
$18 billion deal but proposed requiring Toshiba to give Western
Digital two weeks' notice before closing.
Toshiba is scrambling to sell its flash memory unit to cover
losses from its nuclear reactor business, Reuters says.
In late June, Toshiba announced its preferred bidder was a group
made up of Bain Capital, South Korean chip maker SK Hynix and
Japanese-government backed banks that offered $18 billion, the
report recalls.
Western Digital, which is also bidding, sued Toshiba in San
Francisco County Superior Court in mid-June, saying it believed a
joint venture with Toshiba means Toshiba needs its consent to
sell the flash business.
Western Digital's joint venture with Toshiba helps finance
equipment at Toshiba's plants in exchange for some of their
output.
Separately from the California lawsuit, Western Digital is also
contesting its consent rights in an international arbitration
tribunal, notes the report. Western Digital filed its lawsuit in
San Francisco to prevent Toshiba from closing the sale of its
memory unit before arbitration has a chance to play out.
At the hearing, Judge Kahn proposed requiring Toshiba to give
Western Digital two weeks notice if it believed it would close
the sale before the arbitration finished, Reuters relates.
According to the report, Toshiba's attorney said they were
concerned about agreeing to be bound by the San Francisco court's
jurisdiction. Toshiba has argued that because it is a Japanese
company and the deal is taking place mostly in Japan, the court
should not have jurisdiction.
Attorneys for Western Digital subsidiary SanDisk, which is
formally party to the case, expressed concern that any order in
which Toshiba did not agree to the court's jurisdiction would not
be enforceable, Reuters adds.
The two sides could not agree, so Judge Kahn instructed them to
come up with final language for his proposed order and set a new
hearing for July 28, when a related dispute between the two will
be heard, the report relates.
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
June 19, 2017, S&P Global Ratings said it has kept its 'CCC-'
long-term and 'C' short-term ratings on Japan-based capital goods
and diversified electronics company Toshiba Corp. on CreditWatch
with negative implications. 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 a 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 and when S&P lowered the long-term
ratings in March 2017.
The ratings remain on CreditWatch, reflecting S&P's view that
creditor banks' support for Toshiba together with the company's
liquidity levels warrant continued close monitoring because its
plan to sell its memory business has yet to materialize and
additional losses or financial burdens might still arise in
connection with its U.S. nuclear power business. S&P continues
to hold the view that without unanticipated, significantly
favorable changes in Toshiba's circumstances, the company might
become unable to fulfill its financial obligations in a timely
manner or might undertake a debt restructuring S&P classifies as
distressed in the next six months.
====================
N E W Z E A L A N D
====================
NOSH GROUP: Placed Into Receivership
------------------------------------
Steven Khov -- steven@waterstone.co.nz -- and Damien Grant --
damien@waterstone.co.nz -- from Waterstone Insolvency were
appointed as receivers of Nosh Group Limited on July 14, 2017.
Based in News Zealand, Nosh Group Limited operates a chain of
food retail stores. It offers various gourmet treats; ham and
turkey products; and a range of cheeses, breads, flowers, coffee,
and chocolates. The company also engages in the online retail of
flowers, platter, and other gift products. Nosh Group Limited was
formerly known as Veritas Holdings Limited and changed its name
to Nosh Group Limited in September 2014.
====================
S O U T H K O R E A
====================
INDUSTRIAL BANK: Moody's Assigns Ba2 Rating to Proposed USD Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2(hyb) rating to the
proposed USD non-cumulative additional Tier 1 notes (AT1
securities) to be issued by Industrial Bank of Korea (IBK,
deposits Aa2/senior unsecured Aa2 stable, BCA baa2).
Moody's has also assigned a (P)Ba2 rating to the AT1 securities
component of the $8 billion Global Medium Term Note program of
IBK. Moody's had previously assigned a (P)Aa2 rating to the
senior unsecured component and a (P)Prime-1 rating to the short-
term component of this program.
The Ba2(hyb) rating assigned to the proposed AT1 securities is
notched down from IBK's baa2 adjusted baseline credit assessment
(BCA), which in turn is at the same level as its baa2 BCA.
The rating of the AT1 notes is placed three notches below the
bank's baa2 adjusted BCA, in line with Moody's framework for
rating non-viability contingent capital securities.
IBK's proposed AT1 securities are subject to full write down upon
the occurrence of a trigger event. In addition, coupons are
skipped on a non-cumulative basis at the issuer's option, and on
a mandatory basis subject to the availability of distributable
items.
IBK is a policy bank that was 51.8% owned by the Korean
government (Aa2 stable) as of March 31, 2017, and Article 43 of
IBK Act stipulates that the government is ultimately responsible
for its solvency. Moody's does not believe that this stipulation
insulates holders of IBK's AT1 securities from coupon skip risks.
This is because the Regulation on Supervision of Banking Business
of Korea imposes a minimum internal reserve ratio for the net
profit of the current fiscal year if a bank's capital ratios fall
below minimum thresholds, which may trigger a mandatory coupon
skip.
The rating is subject to receipt of final documentation, the
terms and conditions of which are not expected to change in any
material way from the draft documents that Moody's has reviewed.
RATINGS RATIONALE
The Ba2(hyb) rating has two main drivers. First, the anchor for
the rating is the standalone creditworthiness of IBK, plus any
rating uplift for affiliate support, if applicable. IBK's
standalone credit strength is reflected in its baa2 BCA.
Second, in line with Moody's methodology for rating non-viability
contingent capital securities, the Ba2(hyb) rating for the
proposed AT1 securities is three notches below this anchor point
of baa2. This three-notch differential captures instrument-
specific risks, including the risks of mandatory and/or
discretionary coupon suspension, and the contractual loss-
absorption features in combination with the AT1 securities'
deeply subordinated claim in the event of liquidation.
The proposed AT1 securities are contractual non-viability
securities. The principal of the securities will be written down
in full with no chance of recovery if the issuer is designated as
an "insolvent financial institution" pursuant to the Act on
Structural Improvement of the Financial Industry. In the event of
liquidation, the securities are senior only to equity shares, and
coupons are skipped on a non-cumulative basis at the issuer's
option, and on a mandatory basis subject to the availability of
distributable items.
WHAT COULD CHANGE THE RATING UP/DOWN
The rating of this instrument could be upgraded if Moody's
adjusts the baa2 adjusted BCA of IBK upwards. The bank's BCA
could rise if (1) its Tangible Common Equity capital ratio
exceeds 11.0%; or (2) the three-year average ratio of its net
income to tangible assets exceeds 1.5%, without a deterioration
in asset quality.
Conversely, downward pressure on the rating of this instrument
could emerge if the baa2 adjusted BCA of IBK is adjusted
downward. The bank's BCA could be lowered if (1) the operating
environment for Korean banks deteriorates, resulting in a
lowering of Korea's Macro Profile; (2) its Tangible Common Equity
capital ratio falls below 9.5%; (3) its three-year average net
income to tangible assets falls below 0.5%, due to a sharp
increase in credit losses; (4) its problem loans to gross loans
ratio rises above 2.0%; or (5) its liquidity coverage ratio falls
below the regulatory minimum of 70%.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
published in January 2016.
Industrial Bank of Korea (IBK) was established in 1961 as a
government-owned financial institution pursuant to the IBK Act.
The bank's assets totaled KRW256.8 trillion as of end-2016. IBK
is a policy bank mandated to provide long-term funding to small
and medium-sized enterprises.
================
S R I L A N K A
================
SRI LANKA: Robust GDP Growth Prospects Support Moody's B1 Rating
----------------------------------------------------------------
Moody's Investors Service says that the Government of Sri Lanka's
B1 rating is supported by the economy's robust medium-term GDP
growth prospects, relatively large economy, and high income
levels when compared with similarly rated sovereigns.
At the same time, despite recent progress in fiscal
consolidation, credit challenges include high general government
debt, very low debt affordability and large borrowing
requirements. Moreover, Sri Lanka's external payments position
also remains fragile.
Moody's conclusions are contained in its just-released annual
credit analysis, "Government of Sri Lanka -- B1 Negative". This
report elaborates on Sri Lanka's credit profile in terms of
Economic Strength, Moderate (+); Institutional Strength, Low (+);
Fiscal Strength, Very Low (-); and Susceptibility to Event Risk,
Moderate. These are the four main analytic factors in Moody's
Sovereign Bond Rating Methodology.
In 2017, Moody's expects real GDP growth of 4.6%, which reflects
the temporary negative impact of adverse weather-related events
during the first half of the year. Meanwhile, Moody's expects GDP
growth to average 5.2% per year in 2017-21, a robust growth rate.
Sri Lanka has progressed with some reforms under its three-year
International Monetary Fund (IMF) Extended Fund Facility (EFF)
program. In particular, revenue measures aimed at increasing
taxes, such as last year's value-added tax (VAT) rate hike and
this year's pending new Inland Revenue Reform act, have the
potential to sustainably increase government revenues.
"Sri Lanka's low tax efficiency and tax collection provide
significant scope to broaden the tax base and increase the tax
revenue/GDP ratio, which was only 12.4% in 2016" said William
Foster, a Vice President and Senior Credit Officer at Moody's.
Total government revenues are also very low, with a general
government revenue/GDP ratio of 14.3% in 2016, one of the lowest
among B-rated sovereigns.
Despite ongoing fiscal consolidation, Sri Lanka's credit profile
will remain constrained by its large debt burden and very low
debt affordability, combined with contingent liability risks from
state-owned enterprises. Moody's expects general government debt
to decline only gradually to around 78% of GDP in 2018, from
79.3% in 2016, significantly higher than the median of 53% for B-
rated sovereigns.
Progress on reducing external vulnerability has been slower.
External and foreign currency debt account for about 43% of total
government debt, giving rise to significant exposure to external
financing conditions. In particular, large volumes of external
government debt maturing in 2019-22 will test government
liquidity and external vulnerability. Further measures to build
foreign-exchange reserves would help establish buffers against
external pressure, in particular ahead of 2019.
Signs that planned fiscal consolidation measures are less
effective than Moody's currently expects or that the authorities'
commitment towards such steps has diminished would weigh on Sri
Lanka's rating, particularly if foreign-exchange reserves remain
low while refinancing of market debt is challenging.
Meanwhile, evidence of effective implementation of reforms that
leads to significant and lasting improvements in tax collection,
and more stable external financing conditions, would support a
return of the rating outlook to stable.
*********
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
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552.
*** End of Transmission ***