/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170731.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 31, 2017, Vol. 20, No. 150 Headlines A U S T R A L I A ALL G M: Second Creditors' Meeting Set for Aug. 8 BLOOMER CONSTRUCTIONS: More Than 600 Creditors Hit in Collapse DIRECT SHOPFITTING: First Creditors' Meeting Set for Aug. 7 FIREBRACE LIFE: First Creditors' Meeting Set for Aug. 7 WENDY.B PTY: First Creditors' Meeting Set for Aug. 9 C H I N A HENGDELI HOLDINGS: Fitch Lowers IDR to B-; Outlook Stable OCEANWIDE HOLDINGS: Fitch Affirms B IDR; Revises Outlook to Neg. I N D I A A RAJA: CARE Lowers Rating on INR7.13cr LT Loan to 'D' AMITH CASHEW: CRISIL Reaffirms B+ Rating on INR3.50MM Loan APPU HOTELS: CARE Lowers Rating on INR42.15cr Loan to 'D' BALDOVINO: CRISIL Lowers Rating on INR4MM Packing Loan to B BASHIR OIL: CRISIL Reaffirms 'B' Rating on INR8.5MM Loan BHAVANAM TEXTILES: CARE Reaffirms B+ Rating on INR12.23cr Loan DINESH OILS: Ind-Ra Moves 'D' Issuer Rating to Not-Cooperating GENERIC ENGINEERING: CRISIL Cuts Rating on INR7MM Loan to 'B' GR POWER: CARE Reaffirms B+ Rating on INR28cr LT Loan HARSH PRECIOUS: CARE Revises Rating on INR3.70cr Loan to BB- HEM COTEX: CRISIL Lowers Rating on INR14MM Cash Loan to 'B' INDONA INDUSTRIES: CARE Upgrades Rating on INR2.46cr Loan to BB- INOX WIND: NCLAT Sets Aside Insolvency Proceedings JAY SHIV: CARE Raises Rating on INR1.22cr LT Loan to BB- JBF INDUSTRIES: Ind-Ra Lowers Issuer Rating to 'D', Outlook Neg. JBF PETROCHEMICALS: Ind-Ra Lowers Long-Term Issuer Rating to 'C' KANDAGIRI SPINNING: CARE Cuts Rating on INR49.18cr Loan to B+ KHUKHRAIN BUILDERS: CRISIL Reaffirms B+ Rating on INR5.56MM Loan M L RICE: CARE Assigns B+ Rating to INR24.50cr LT Loan MAHAPRABHU RAM: CARE Assigns 'D' Rating to INR4.0cr ST Loan MAHESHWAR MULTITRADE: CARE Reaffirms B+ Rating on INR12.68cr Loan MEGHA AGROTECH: Ind-Ra Ups Issuer Rating to BB+, Outlook Stable MILAN GINNING: CRISIL Cuts Rating on INR20MM Cash Loan to 'B' MITTAL FIBERS: Ind-Ra Moves Issuer Rating to B+ Not Cooperating N.E. TRADE: Ind-Ra Assigned 'B+' Issuer Rating, Outlook Stable OREN HYDROCARBONS: Ind-Ra Downgrades LT Issuer Rating to 'D' P.S.T. ENGINEERING: Ind-Ra Gives BB+ LT Issuer Rating RAYAT EDUCATIONAL: CARE Assigns 'C' Rating to INR20cr LT Loan SABOO TOR: Ind-Ra Raises Issuer Rating to 'BB+', Outlook Stable SHREE BABA: CRISIL Lowers Rating on INR125MM Cash Loan to 'B' SHREE NARSHINGHA: CARE Assigns 'B' Rating to INR8.85cr Loan SHUBHSHREE ENGINEERING: Ind-Ra Assigns 'BB+' LT Issuer Rating SMT. MOHINI: CARE Assigns B+ Rating to INR7.27cr LT Loan SOVA SOLAR: Ind-Ra Hikes Issuer Rating to 'BB+'; Outlook Stable SRI LAKOSHA: CRISIL Reaffirms 'B' Rating on INR3MM Loan SUSTAINABLE SPINNING: CRISIL Cuts Rating on INR44.5MM Loan to 'B' SWATI MENTHOL: CRISIL Lowers Rating on INR120MM Loan to 'B' TDI INFRATECH: CRISIL Reaffirms B- Rating on INR164.5MM Term Loan VEDANTA RESOURCES: S&P Rates New US$-Denom. Sr. Unsec. Notes B+ VETRIVEL EXPLOSIVES: CRISIL Cuts Rating on INR31.45MM Loan to D VISHNU CARS: Ind-Ra Migrates Issuer Rating to 'B' Not Cooperating J A P A N TOSHIBA CORP: Creditors Involved in Workout Push for Bankruptcy TOSHIBA CORP: Ordered to Notify WD of Any Deal to Sell Chip Unit N E W Z E A L A N D SOLID ENERGY: Regulatory Approval Clears Way for Liquidation S O U T H K O R E A DAEWOO ENGINEERING: KDB Picks 2 Candidates to Manage Sale KUMHO TIRE: Creditors OK Kumho Asiana's Proposal in Brand Dispute T A I W A N TAIWAN FINANCE: Fitch Affirms 'bb+' Viability Rating X X X X X X X X REPUBLIC OF FIJI: S&P Affirms B+ Sovereign Rating, Outlook Stable - - - - - ================= A U S T R A L I A ================= ALL G M: Second Creditors' Meeting Set for Aug. 8 ------------------------------------------------- A second meeting of creditors in the proceedings of All G M Spares Pty Ltd has been set for Aug. 8, 2017, at 10:00 a.m., at the Cor Cordis Chartered Accountants, One Wharf Lane, Level 20, 161 Sussex 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 Aug. 7, 2017, at 4:00 p.m. Jason Tang & Andre Lakomy of Cor Cordis Chartered Accountants were appointed as administrators of All G M on July 11, 2017. BLOOMER CONSTRUCTIONS: More Than 600 Creditors Hit in Collapse -------------------------------------------------------------- John Weekes at Sunshine Coast Daily reports that a hodgepodge of creditors were at odds over how to claw back money after Bloomer Constructions went belly up, court documents showed. People and companies owed millions after Bloomer Constructions collapsed voted against liquidation and in favor of a different arrangement, the report says. Companies in Emerald, Bundaberg and Gladstone as well as on the Fraser Coast and the Sunshine Coast were among those claiming money owed, Sunshine Coast Daily relates citing papers filed in Brisbane Supreme Court. More than 600 creditors were identified in an affidavit from an administrator earlier this year, the report says. "There are severable identifiable groups of creditors, with varying priorities," Sule Arnautovic wrote, Sunshine Coast Daily relays. Three included "subcontractors, trade suppliers, employees, larger developers" as well as "mums and dads" home owners, National Australia Bank, insurance companies, statutory authorities and others, the report discloses. A creditor who was at the most recent creditors meeting told NewsRegional people owed money voted for a deed of company arrangement, or DOCA, by "probably three votes to one". The Australian Securities and Investments Commission says DOCAs aim to get a better return for creditors than immediate winding up of the company, although court documents showed that remained a matter of debate, according to the report. The report adds that Bloomer owner Onterran said in a market update "the formalities of entering into the DOCA are in the process of being completed and a market update will be provided once done". Trent Andrew Devine & Sule Arnautovic of Cliftons Brisbane were appointed as administrators of Bloomer Constructions on April 26, 2017. DIRECT SHOPFITTING: First Creditors' Meeting Set for Aug. 7 ----------------------------------------------------------- A first meeting of the creditors in the proceedings of Direct Shopfitting Pty. Ltd. will be held at the offices of Deloitte Financial Advisory Pty Ltd, Level 10, 550 Bourke Street, in Melbourne, Victoria, on Aug. 7, 2017, at 3:00 p.m. David Ian Mansfield and Robert Woods of Deloitte Financial Advisory Pty Ltd were appointed as administrators of Direct Shopfitting on July 26, 2017. FIREBRACE LIFE: First Creditors' Meeting Set for Aug. 7 ------------------------------------------------------- A first meeting of the creditors in the proceedings of Firebrace Life Pty Ltd will be held at Level 12, 460 Lonsdale Street, in Melbourne, on Aug. 7, 2017, at 10:30 a.m. Glenn Anthony Crisp and Liam William Paul Bellamy of Jirsch Sutherland were appointed as administrators of Firebrace Life on July 27, 2017. WENDY.B PTY: First Creditors' Meeting Set for Aug. 9 ---------------------------------------------------- A first meeting of the creditors in the proceedings of Wendy.B Pty Limited, trading as "Big As Mechanical Services", will be held at Singleton Diggers, York Street, in Singleton, NSW, on Aug. 9, 2017, at 2:00 p.m. Chad Rapsey of Rapsey Griffiths Insolvency + Advisory was appointed as administrator of Wendy.B Pty Limited on July 27, 2017. ========= C H I N A ========= HENGDELI HOLDINGS: Fitch Lowers IDR to B-; Outlook Stable --------------------------------------------------------- Fitch Ratings has downgraded Hengdeli Holdings Limited's (Hengdeli) Long-Term Issuer Default Rating (IDR) to 'B-' from 'B+' with a Stable Outlook. The rating has been removed from Rating Watch Negative. The senior unsecured rating has been withdrawn as the 2018 notes were repaid early. The downgrade reflects the loss of Hengdeli's position as the market leader in the retailing of Swiss watches in China and a severe shrinkage in operating scale after the disposal of Xinyu Group and Harvest Max. KEY RATING DRIVERS Diminished Scale After Disposal: Fitch estimates that Hengdeli's remaining businesses after the disposal of Xinyu Group and Harvest Max accounted for only 20% of sales by the pre-disposal group in 2016, and will generate lower profitability compared with the businesses disposed. The consolidated group already faced thin EBITDA margin at 4.9% in 2016 as sales declined from persistent market weakness. High Cash Balance: Fitch expects the company to maintain a high cash balance of over CNY2 billion due to the disposal proceeds, even after repaying debt, including the 2018 notes, and paying a special dividend related to the disposal. However, the remaining operations are likely to generate negative cash flow (FCF), which Fitch expects to persist through to 2019, because the remaining operations have low profitability or are unprofitable, and the company is likely to make investments to expand. However, Fitch estimates the negative FCF will be small relative to the cash balance, and therefore expects the company to maintain a debt- free position, assuming no sizeable acquisitions. Stable Operations: Hengdeli will no longer be the market leader in Swiss watch retailing in China after the disposal, and its market share will be smaller in its remaining markets of Hong Kong and Taiwan. Retail sales in Hong Kong have started to stabilise, and increased 2% yoy in 2H16, compared with a 16% decline in 1H16 but in Fitch's view, the weaker market position could make the company more vulnerable to changing economic conditions and increased competition. In addition to the current operations, the company is also exploring opportunities overseas and has set aside up to CNY0.4 billion of the disposal proceeds for this purpose. Acquisitions may increase the company's scale, but they come with high execution risk, given the marginal position of the remaining retail operations. Fitch may review the ratings if there is a substantial acquisition. DERIVATION SUMMARY Hengdeli's operations that it remain after the disposal have a much smaller operating scale and weaker profitability than global retailing peers rated 'B-', such as apparel brand New Look Retail Group Ltd (B-/Rating Watch Negative) and China-based department store operator Parkson Retail Group Limited (B-/Negative). However, Hengdeli has stronger liquidity and is in a net cash position compared with the high leverage and low fixed-charge coverage for similarly rated peers. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: - Sales growth to gradually recover from -1% in 2017 (excluding contribution from the disposed businesses) to 3% in 2020 - Gross margin in the range of 18%-19% from 2017-2020 - Stable operating expenses at 19% of sales from 2017-2020 - Annual capex of CNY250 million in 2017-2018 RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - No positive rating action will be considered until Hengdeli significantly boosts its operating scale and profitability Developments That May, Individually or Collectively, Lead to Negative Rating Action - Sustained loss at the EBITDA level beyond CNY100 million - Failure to sustain a net cash position LIQUIDITY Debt-Free Position: Fitch expects the company to repay most of its debt using the disposal proceeds, leaving Hengdeli with cash and equivalents of over CNY2 billion after the special dividend has been paid out according to the disposal terms. FULL LIST OF RATING ACTIONS Hengdeli Holdings Limited -- Long-Term Foreign-Currency IDR downgraded to 'B-' from 'B+', Outlook Stable, removed from Rating Watch Negative -- Senior unsecured rating of 'B+', with Recovery Rating of 'RR4', withdrawn OCEANWIDE HOLDINGS: Fitch Affirms B IDR; Revises Outlook to Neg. ---------------------------------------------------------------- Fitch Ratings has affirmed China-based property developer Oceanwide Holdings Co. Ltd.'s Long-Term Issuer Default Rating (IDR) at 'B', and revised its outlook to Negative from Stable. Fitch has also affirmed Oceanwide's senior unsecured rating and the ratings of all outstanding bonds at 'B'. The affirmation of the IDR reflects Oceanwide's sufficient liquidity and good-quality land bank. The Negative Outlook reflects Fitch belief that Oceanwide's contracted sales to net debt, a measure of its sales efficiency, will remain below 0.25x due to contracted sales growing at a slower pace than Fitch had expected, which would push its net debt higher. Oceanwide's rating is constrained by its persistently high leverage, which has been increasing and will continue to do so for the next 18-24 months as the company ramps up development expenditure to support sales growth and continues to invest in its finance business. KEY RATING DRIVERS Low Sales Efficiency: Fitch expects Oceanwide's sales efficiency, as measured by contracted sales to net debt, to remain lower than previously expected, notwithstanding the prospect for some improvement in sales due to project launches in Wuhan, and new projects in Beijing and Shanghai. The tightening of government policies have and will continue to weigh on the company's prospects. Oceanwide's contracted sales fell 15% in 2016, and as a result, contracted sales to net debt declined to 0.16x in 2016 from 0.3x in 2015. Fitch now expects sales efficiency to remain below 0.25x. Continuing Finance Expansion: Oceanwide has been aggressively diversifying its business from pure property development to financial institutions since 2014. It has spent more than CNY20 billion on building its finance business, which includes securities, trusts, insurance and internet finance. Fitch expects Oceanwide to continue investing in the finance sector, with the aim of providing customers with comprehensive financial services. This will continue to put pressure on its leverage. Leverage Remains High: Oceanwide's leverage, as measured by net debt/adjusted inventory and after deconsolidating debt from the financial business, reached 92% in 2016 (2015: 86.2%), which is higher than that of 'B' rated peers. Fitch expects this ratio to remain above 80% due to Oceanwide's property-development business model, which requires more time to generate sales due to the lengthy primary-land development phase. Oceanwide's consolidated net debt jumped to CNY74 billion at end-2016, from CNY39 billion in 2014, due to higher development expenditure, the rapid expansion of its finance business, additional investment in financial assets and overseas acquisitions. Fitch expects Oceanwide's net debt to keep rising in the next two years because of its higher interest burden. This means that assuming its finance segment EBITDA remains at the 2016 level of CNY1.1 billion in the next two years, its contracted sales will have to rise closer to CNY30 billion to offset the higher interest burden. This will remain difficult to achieve if the government curbs remain in place. High Quality Land Bank: Oceanwide's large land bank, most of which was acquired many years ago, is sufficient for more than 10 years of development. Sites in tier 1 cities like Beijing and Shanghai, affluent tier 2 cities like Wuhan and major cities in the US make up more than 80% of its land bank. Many of Oceanwide's projects in Beijing and Shanghai have prime locations. The low land cost together with the high quality land bank will become the key driver behind a solid EBITDA margin and sustained growth for the next two to three years. DERIVATION SUMMARY Oceanwide has a larger scale in terms of contracted sales and EBITDA than other China-based property companies rated in the 'B' category, such as Redco Properties Group Ltd (B/Stable) and Guorui Properties Limited (B/Stable). However, its leverage is high compared with 'B' category peers partially due to Oceanwide's active investments in financial institutions and larger exposure to commercial development properties that have a longer cash collection cycle. This also drives its lower project churn compared with peers, but Oceanwide's slow-churn business model also means its land bank was acquired years ago, which substantially undervalues its inventory compared with fast-churn homebuilders. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: - Limited new land acquisitions at 0.5x of contracted sales' gross floor area - Contracted sales growth driven mainly by growth in average selling prices to CNY35,000/sq m in 2017-2018 from CNY32,000/sq m in 2015 - Property development EBITDA margin of 35%-40% in 2017-2019 (2016: 33.6%) Recovery Rating assumptions - Oceanwide would be liquidated in a bankruptcy because it is an asset-trading company - 10% administrative claim - The value of inventory and other assets can be realised in a reorganisation and distributed to creditors - A haircut of 20% on adjusted inventory, lower than the norm used for peers because of Oceanwide's higher-than-industry profit margin, which implies its inventory will have a higher liquidation value than that of peers - A 20% haircut to investment properties and the net tangible assets of its financial subsidiaries - A 50% haircut to available for sale financial securities as well as land and buildings - Fitch considers Oceanwide's CNY24 billion in available cash, excluding cash of its financial subsidiaries, as excessive, as it significantly exceeds its 2016 contracted sales of CNY12.9 billion. Fitch assume the difference will be spent on development expenditure, for which Fitch has applied a 40% haircut. - Based on Fitch calculations of the adjusted liquidation value after administrative claims, Fitch estimates the recovery rate of the offshore senior unsecured debt to be 42%, which corresponds to a Recovery Rating of 'RR4'. RATING SENSITIVITIES Negative: Developments that may, individually or collectively, lead to negative rating action include: - Contracted sales/net debt excluding financial institutions sustained below 0.25x; or a sustained deterioration of this ratio - EBITDA margin sustained below 35% - Substantial weakening of the credit profile of its key financial institutions ========= I N D I A ========= A RAJA: CARE Lowers Rating on INR7.13cr LT Loan to 'D' ------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of A Raja Cottex, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 7.13 CARE D; Issuer Not Cooperating; Facilities Revised from CARE BB- Detailed Rationale & Key Rating Drivers CARE has been seeking information from A Raja Cottex to monitor the rating(s) vide e-mail communications/ letters dated April 25, 2017, June 8, 2017, June 14, 2017, June 21, 2017, June 26, 2017, and numerous phone calls. However, despite our repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Furthermore, A Raja Cottex has not paid the surveillance fees for the rating exercise as agreed to in its Rating Agreement. The rating of A Raja Cottex's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. The rating has been revised on account of irregularity in servicing of its debt obligations. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers Delay in debt servicing The rating has been revised since the account has become NPA on the back of ongoing delay in its debt servicing due to weak liquidity position. ARC is a partnership firm established by six partners led by Mr. Harunbhai Bilakhiya and Mr. Sajidbhai Bilakhiya in the year 2013. Mr. Harunbhai Bilakhiya and Mr. Sajidbhai Bilakhiya have 33 years and 13 years of industry experience, respectively. ARC is engaged into the business of cotton ginning and pressing. Its plant is located at Amreli (Gujarat) with an installed capacity of 400 bales per day as on March 31, 2016 and is spread across 1,295 sq. meters of area. All the partners of ARC except Ms Rasidaben Bilakhiya also held partnership in Raja Cotton Industries (RCI), a partnership firm established in the year 2009. RCI is engaged into the business of cotton ginning & pressing and seed crushing. Its plant is located at Amreli (Gujarat) with an installed capacity of 200 bales per day as on March 31, 2016 and is spread across 3,500 sq. yard of area. AMITH CASHEW: CRISIL Reaffirms B+ Rating on INR3.50MM Loan ---------------------------------------------------------- CRISIL has been consistently following up with Amith Cashew Industries (ACI) for obtaining information through letters and emails dated February 7, 2017 and March 22, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 2.5 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) Long Term Loan 0.68 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) Pledge Loan 3.50 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term 0.32 CRISIL B+/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Amith Cashew Industries. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Amith Cashew Industries is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB' Rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B+/Stable'. Set up in 2009 as partnership firm, ACI processes raw cashew nuts and sells cashew kernels. The firm market its products under the 'OM Cashews' brand. The firm, based in Udupi (Karnataka), is promoted by the Pai family. Operations are managed by Mr. Paladka Shankar Pai and his son Mr. Amith Pai. APPU HOTELS: CARE Lowers Rating on INR42.15cr Loan to 'D' --------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Appu Hotels Limited (AHL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Non-convertible 42.15 CARE D Revised from Debenture issue CARE B+; Stable Detailed Rationale & Key Rating Drivers The revision in the rating assigned to the Non-convertible debenture (NCD) of AHL takes into account the instances of delays in servicing debt obligations. Detailed description of the key rating drivers Key Rating Weaknesses Instances of delays in debt servicing: Continuing losses during the period FY13-FY16 (refers to the period April 1 to March 31) along with cash flow mismatches has led to tight liquidity position for the company due to which there were instances of delays in servicing the NCD. Appu Hotels Limited (AHL) is a Chennai-based public limited company engaged in the hospitality business in the state of Tamil Nadu. AHL is part of the PGP Group of Companies which has diversified business interests in sugar, chemicals, finance, hospitality, and real estate etc. AHL is founded and promoted by Dr Palani G Periasamy, Chairman of the group. The group companies include Dharani Sugar and Chemicals Limited, Dharani Finance Limited, Ananthi Developers Limited, Dharani Developers Limited, Dharani Credit and Finance Limited among others. AHL owns two 5-star deluxe category hotels in the name of 'Le Royal Meridien' (LRM), situated in Chennai (240-rooms property) and 'Le Meridien' Coimbatore (254-room property) respectively. Both these properties are operated under the license issued by Starwood (M) International Inc., one of the leading and well recognised names in the hospitality industry with presence across the world. During FY16, AHL registered net loss of INR28 crore on a total income of INR88 crore. During 9MFY17 as per provisional financials, the company posted net loss of INR24 crore on a total income of INR66 crore. BALDOVINO: CRISIL Lowers Rating on INR4MM Packing Loan to B ----------------------------------------------------------- CRISIL has been consistently following up with Baldovino for obtaining information through letters and emails dated March 15, 2017 and April 4, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Export Packing Credit 4 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB/Stable') Foreign Discounting 6 CRISIL A4 (Issuer Not Bill Purchase Cooperating; Downgraded from 'CRISIL A4+') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Baldovino. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Baldovino is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' category or lower. Based on the last available information, CRISIL has downgraded the rating at 'CRISIL B/Stable/CRISIL A4'. For arriving at its rating, CRISIL has combined the business and financial risk profiles of Ankit and its group entity - M/S Baldovino. This is because these two entities, together referred to as the Ankit Diamonds group, have common promoters, are in the same line of business, and have significant operational linkages and fungible cashflows. nkit Diamonds was set up in 1983 as a partnership firm by Mr. Kirit Shah and his family members. The firm is engaged in cutting and polishing of diamonds. It currently has two partners - Mr. Kirit Shah, and Mr. Rikin Shah. M/S Baldovino was set up in 2010 as a proprietorship concern by Mr. Rikin Shah. The firm is also engaged in cutting and polishing of diamonds. BASHIR OIL: CRISIL Reaffirms 'B' Rating on INR8.5MM Loan -------------------------------------------------------- CRISIL has been consistently following up with Bashir Oil Mills (BOM) for obtaining information through letters and emails dated March 15, 2017 and April 04, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8.5 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term 2.0 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Bashir Oil Mills. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Bashir Oil Mills is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable'. BOM was set up in 1937 as a proprietorship concern by Mr. Ishak Chini. It was converted to a partnership firm with other family members in the mid-1960s. It manufactures and trades in cotton seed, cotton seed oil, and cotton seed cake. The firm procures cotton seeds from ginners. It has a crushing capacity of 100 tonne per day. BOM currently has six partners (all members of the same family). Mr. Jabbar Chini (son of Mr. Ishak Chini) and his son, Mr. Irfan Chini, look after the day-to-day operations of the firm. BOM's crushing unit and registered office are in Warora (Maharashtra). BHAVANAM TEXTILES: CARE Reaffirms B+ Rating on INR12.23cr Loan -------------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Bhavanam Textiles (India) Private Limited (BTIPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12.23 CARE B+; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of BTIPL continues to be constrained by inexperience of the promoters in cotton yarn manufacturing segment, limited track record with small scale of operation and low profitability, leveraged capital structure and weak debt coverage indicators, presence in highly fragmented industry regulated by the government and raw material price volatility risk. However, the rating continues to derive benefits from established track record of promoters in other businesses coupled with financial support being extended in the form of unsecured loans, satisfactory working capital cycle despite working capital intensive nature of operations and strategic location of manufacturing unit. The rating also factors in increase in total operating income and achievement of net profit in FY16 (refers to period April 1 to March 31). Going forward, the company's ability to increase its scale of operations, improve profitability margins, capital structure and debt coverage indicators would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Established track record of promoters in other businesses albeit inexperience in cotton yarn manufacturing segment The company has been promoted by Mr. Bhavanam Rama Koti Reddy and Mrs Bhavanam Adi Lakshmi. Mr. Bhavanam Rama Koti Reddy (Managing Director) has long established track record in other business such as trading of chillies and cotton for more than two decades. However, the business operations of BTIPL are relatively new as the company was incorporated in February 2013 and the commercial operations commenced from April 01, 2013. This leads to risks associated with relatively new operations of the company. However, the risk is mitigated to an extent given the previous experience of promoters in trading of cotton. The promoters are supported by an able management team which includes experienced professionals, some of whom have more than two decades of experience in this industry. Limited track record with small scale of operation and low profitability The size and scale of company's operation is small marked by total operating income of INR28.12 crore in FY16 coupled with relatively low net worth base of INR2.21 crore as on March 31, 2016 as the company commenced its operations on April 01, 2013. The total operating income of the company grew by 33.52% from INR21.06 crore in FY15 to INR28.12 crore in FY16 backed by increase in volume sales of cotton yarn from existing customers and addition of new customers. Furthermore, the company achieved total sales of INR55.06 crore in FY17 (Provisional) and INR6.00 crore in 2MFY18. The PBILDT margin improved by 260 bps to 8.38% in FY16 compared to 5.78% in FY15 backed by decrease in raw material costs coupled absorption of overheads on account of stabilisation of business operations. The company has turnaround from net loss to net profit during FY16 and registered PAT margin of 1.02% compared to -0.43% in FY15 on account of increase in PBILDT in absolute terms along with marginal decline in financial expenses. Leveraged capital structure and weak debt coverage indicators The capital structure of the company deteriorated and remained leveraged marked by debt equity and overall gearing ratio from 4.94x and 6.64x respectively as on March 31, 2015 to 5.13x and 7.15x respectively as on March 31, 2016 due to increase in unsecured loans brought-in by the promoters to support operations of the company. Due to increase in profitability and gross cash accruals, the debt coverage indicators of the company improved, however, remained weak marked by total debt/GCA and interest coverage of 17.11x and 1.80x respectively in FY16. Presence in highly fragmented industry regulated by the government The textile industry is marked by intense competition with large number of units operating in similar business resulting in high fragmentation and restricting the profitability. Thus, spinning players have very low bargaining power against its customer as well as suppliers. Furthermore, the cotton prices in India are highly regulated by Government through MSP (Minimum Support Price) fixed by government, though due to huge demand-supply mismatch the prices have rarely been below the MSP. Moreover, exports of cotton are also regulated by government through quota systems to suffice domestic demand for cotton. Hence, any adverse change in government policy i.e. higher quota for any particular year, ban on the cotton or cotton yarn export may negatively impact the prices of raw cotton in domestic market and could result in lower realizations and profit. Raw material price volatility risk BTIPL is exposed to risk of price volatility as prices of raw material i.e. raw cotton are highly volatile in nature and depend upon factors like, area under production, yield for the year, demand and supply scenario, export quota decided by government and inventory carry forward of the last year. The company has to procure raw materials at significantly higher volume to bargain bulk discount from suppliers. Furthermore, cotton is seasonal in nature, as sowing season is done during March to July and harvesting cycle (peak season) is spread from November to February every year. This results in a higher inventory holding period for the business. Thus, aggregate effect of both the above factors results in exposure of spinners to price volatility risk. Key Rating Strengths Satisfactory working capital cycle The company operates in a working capital intensive industry. The working capital cycle, though deteriorated from 36 days in FY15 to 51 days in FY16, remained satisfactory during review period. The company receives upfront cash for sale of cotton yarn and hence the collection period is on the lower side. The inventory days are higher as the company has to maintain relatively large stock of raw materials due to season availability of cotton with harvesting cycle (peak season) spread from November to February every year. The average fund-based working capital utilisation has been high at nearly 65% during the 12 months period ended May 31, 2017. Strategic location of manufacturing unit BTIPL's manufacturing unit is located at Thimmapuram village in Guntur District. The unit is well connected to Telangana and Andhra Pradesh based prominent cotton growing belts. Hence, the company's presence in cotton producing region leads to benefits derived out of lower logistics expenditure (both on transportation and storage), easy availability of labour and raw material and consistent demand for finished goods resulting in sustained revenue visibility. It is located near several ginning mills due to which the company will also be saving on bailing charges as cotton lint procured from these mills can be consumed instead of bale. Bhavanam Textiles (India) Private Ltd. (BTIPL) was incorporated on February 27, 2013 by Mr. Bhavanam Rama Koti Reddy and Mrs Bhavanam Adi Lakshmi after the promoters took over the operations of another company i.e., Pujita Spinning Mills Limited. The commercial operations of the company commenced from April 01, 2013 and FY14 was the first full year of operation. The company is engaged in the manufacturing of cotton yarn through its manufacturing unit at Thimmapuram village, Guntur district, Andhra Pradesh, with an installed capacity of 13,644 spindles. In FY16, BTIPL reported a Profit after Tax (PAT) of INR0.29 crore on a total operating income of INR28.12 crore, as against a net loss and TOI of INR0.09 crore and INR21.06 crore respectively in FY15. During FY17 (Provisional), the company achieved sales of INR55.06 crore. DINESH OILS: Ind-Ra Moves 'D' Issuer Rating to Not-Cooperating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Dinesh Oils Limited's (DOL) Long-Term Issuer Rating to 'IND D' from 'IND BB- '. The ratings have also been migrated to the non-cooperating category. The issuer did not participate in the surveillance exercise despite continuous requests and follow-ups by the agency. Thus, the rating is based on the best available information and feedback from a banker. The rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR600 mil. Fund-based limit (long- and short term) Downgraded and Migrated to Non-Cooperating Category with IND D(ISSUER NOT COOPERATING) rating; -- INR1,082 mil. Non-fund-based limit (long- and short term) Downgraded and Migrated to Non-Cooperating Category with IND D(ISSUER NOT COOPERATING) rating; and -- INR10 mil. Long-term loans (long-term) Downgraded and Migrated to Non-Cooperating Category with IND D(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: Issuer did not cooperate; Based on best available information KEY RATING DRIVERS The downgrade reflects DOL's devolvement in non-fund-based limits during the 12 months ended June 2017. The details of the devolvement are not available. RATING SENSITIVITIES Positive: Timely debt servicing for at least three consecutive months could result in an upgrade. COMPANY PROFILE Incorporated in 1986, DOL primarily manufactures refined edible oils (mainly refined palm olein oil and refined palm oil) and vanaspati. The company has a manufacturing site with a capacity of 750 tonnes per day (vansapati: 125 tonnes per day; refined oil: 625 tonnes per day) in Kanpur. GENERIC ENGINEERING: CRISIL Cuts Rating on INR7MM Loan to 'B' ------------------------------------------------------------- CRISIL has been consistently following up with Generic Engineering and Construction Private Limited (GECPL) for obtaining information through letters and emails dated February 7, 2017, and March 7, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL B+/Stable') Letter of credit & 8 CRISIL A4 (Issuer Not Bank Guarantee Cooperating; Downgraded from 'CRISIL B+/Stable') Proposed Long Term 1 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Downgraded from 'CRISIL B+/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Generic Engineering and Construction Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Generic Engineering and Construction Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' category or lower. Based on the last available information, CRISIL has downgraded the long term rating to 'CRISIL B/Stable and reaffirmed short term rating at CRISIL A4'. GECPL, incorporated in 1994, is promoted by Mr. Manish Patel and Mr. Navin Patel. The company is a civil contractor based in Mumbai; it takes up commercial and real estate projects in Mumbai, on contractual and sub-contractual basis. GR POWER: CARE Reaffirms B+ Rating on INR28cr LT Loan ----------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of GR Power Switchgear Limited (GRPSL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 28 CARE B+; Stable Reaffirmed Short-term Bank Facilities 12 CARE A4 Reaffirmed Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of GRPSL continue to be constrained by moderate scale of operations, thin PAT margin albeit satisfactory operating profits, leveraged capital structure and weak debt coverage indicators, elongated operating cycle and presence in the highly fragmented and competitive electrical goods industry. The ratings are also constrained by marginal decrease in total operating income in FY16 (refers to the period April 1 to March 31). However, the ratings continue to derive benefits from established track record and experience of the promoters along with strong management team, long-term association with reputed clientele and favorable demand outlook of the power industry. Going forward, the company's ability to increase its scale of operations, improve profitability margins, capital structure and debt coverage indicators would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Moderate scale of operations The scale of operations of the company is moderate marked by total operating income at INR71.76 crore in FY16 and net worth of INR11.70 crore as on March 31, 2016 when compared to other peers in the industry. Thin PAT margin albeit satisfactory operating profits The company has satisfactory PBILDT margins during the review period. The PBILDT margin of the company improved by 112 bps from 11.59% in FY15 to 12.71% in FY16 due to decrease in raw material cost coupled with high closing stock during the said period. However, the company has thin PAT margins during the review period. The PAT margin of the company declined by 42 bps to 0.48% in FY16 as against 0.90% in FY15 due to increase in interest cost (LC charges, bank charges and interest on USL). Leveraged capital structure and weak debt coverage indicators The capital structure of the company though improved marked by debt equity and overall gearing ratio from 1.41x and 3.53x respectively as on March 31, 2015 to 1.13x and 2.98x respectively as on March 31, 2016 due to scheduled repayment of term loan coupled with increase in tangible net worth, still remained leveraged. Despite decrease in total debt level, the debt coverage indicators of the company deteriorated marked by total debt/GCA deteriorated from 29.42x in FY15 to 43.67x in FY16 due to decrease in cash accruals. The PBILDT interest coverage ratio remained in line with previous year i.e, 1.27x in FY16. Elongated operating cycle Though the operating cycle of the company marginally improved from 240 days in FY15 to 233 days in FY16 due to marginal improvement in collection and inventory days i.e., from 141 days and 163 days in FY15 to 138 days and 154 days in FY16, still remained elongated. The company receives 80% of the payment from its customers once the product delivered and the remaining 20% will be kept as retention money with the customer and the same is released after the commission, installation and erection process. The gestation period for executing order is two months. The average utilization of bank borrowings is 90% for the last 12 months ended February 28, 2017. The company makes the payment to its supplier within 60 days. Presence in the highly fragmented and competitive electrical goods industry The industry is highly competitive with presence of number of players. Furthermore, GRPSL business is tender driven. However, the company is able to withstand the competition and procure orders through its established track record and experience of the promoters. Marginal decrease in total operating income in FY16 The total operating income of the company remained stagnant during FY15-FY16 i.e., INR71.76 crore in FY16 as against INR72.01 crore in FY15 due to repeat orders (bulk) for insulators from the existing customer. Furthermore, the company achieved sales of INR86 crore up to March 30, 2017 (Provisional). Key Rating Strengths Established track record and experience of promoters along with strong management team GRPSL is promoted as a proprietorship concern in the year 1984 by Mr. C Gopal Reddy. Therefore the company has a long track record of more than three decades. GRPSL is promoted by Mr. C Gopal Reddy and other three directors. Mr. C Gopal Reddy is a qualified B.E and has an experience of more than three decades in the electrical industry. All the four directors are actively involved in day to day operations of the company. The company is well supported by a team of experienced personnel like Mr. Bhavnarayana who is an MBA and looks after financial activities, Mr. M N S Rao and Mr. S V Ramana are electrical engineers and looks after production and operations respectively. Long-term association with reputed clientele The clientele of the company includes Gujarat Energy Transmission Corporation Limited (GETCO-CARE A+/CARE A1+), Bharat Heavy Electricals Limited, Transmission Corporation of Andhra Pradesh (APTRANSCO) and Transmission Corporation of Telangana Limited (TSTRANSCO). Favorable demand outlook of the power industry With the continuous increase in disposable income and the advancement of technology, the need for varied consumer durable goods are increasing. The demand in the Indian market is expected to touch $400 billion by 2020. The largest segment is the consumer electronics segment. The growth in country's infrastructure coupled with the growing number of industrial as well as residential units requiring greater use of electrical appliances augurs well for the demand of electrical appliances. Other factors such as shortening of the product cycle, higher rate of technological obsolescence and increasing use of electricity in the rural and urban areas further adds to the demand for electrical goods. GR Power Switchgears (GRPS) was established in the year 1986 as a proprietorship concern. Later on, the name of the company was changed to current nomenclature, i.e., GR Power Switchgear Limited (GRPSL) in 1992. GRPSL is promoted by Mr. Gopal Reddy along with other three directors. The company is engaged in designing and manufacturing of high voltage isolators from 11 KVA to 420 KVA which are used in the power sector. The major products include Horizontal Double Break type Isolator, 11 KVA Porcelain Clad Vacuum Breakers, Horizontal Centre Break type Isolator, Motor/Manual Operating Mechanism Boxes. In FY16, GRPSL reported a Profit after Tax (PAT) of INR0.34 crore on a total operating income of INR71.76 crore, as against a PAT and TOI of INR0.64 crore and INR72.01 crore respectively in FY15. The company achieved sales of INR86 crore up to March 30, 2017 (Provisional). HARSH PRECIOUS: CARE Revises Rating on INR3.70cr Loan to BB- ------------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of Harsh Precious Metals Private Limited (HPMPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 0.36 CARE BB-; Stable Revised Facilities from CARE BB to CARE D and revised to CARE BB-; Stable Long-term/Short 3.70 CARE BB-; Stable/CARE A4 Term Bank Revised from CARE BB to Facilities CARE D/CARE D and revised to CARE BB-; Stable/ CARE A4 Short-term Bank 1.33 CARE A4 Revised from CARE A4 Facilities to CARE D and revised to CARE A4 Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities of HPMPL to CARE D factors in the delay in debt servicing of term loans during June 2016 and July 2016. Furthermore, the rating has been revised to CARE BB-; Stable/CARE A4 on account of regular debt servicing track record in the said facility since August 2016. The revision in the ratings also factors in the deterioration in profit margins in FY17 (refers to the period April 1 to March 31), deterioration in the capital structure & debt coverage indicators in FY16 albeit improvement in FY17 and deterioration in the operating cycle. Further, the ratings continue to be constrained by small scale of operations, moderate & fluctuating profit margins, moderate capital structure & moderately weak debt coverage indicators, working capital intensive nature of perations marked by high inventory holding and collection period, supplier concentration & foreign exchange fluctuation risk and presence in highly competitive gems & jewelry industry. The ratings, however, continue to derive strength from the company's long track record of over two decades of operations coupled with highly experienced promoters with over three decades of experience in gems & jewelry industry and established relationship with reputed & moderately diversified clientele. The ability of HPMPL to increase the scale of operations and improve profit margins amidst competition, and also to improve the capital structure and liquidity position by efficiently managing working capital requirement is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Strengths Long track record with over two decades of operations in jewelry locking systems business: HPMPL has a long track record with over two decades of operations in manufacturing & job-work of various locking systems in the form of gold & silver findings used in gold & silver jewelry viz. bracelets, chains, kangans, bangles, watches, etc. on a customized basis. Highly experienced promoters with over three decades of experience in jewelers locking system business: The overall operations of HPMPL are looked after by Mr. Vijay Gopani with his son Mr. Harsh Gopani, who possess a total experience of over three decades and 7 years respectively in the gems & jewelry industry. Established relationship with reputed & moderately diversified clientele: Over the years, HPMPL has established its long-term relationship with various reputed gems & jewelry/gold refining players in India and overseas. Moreover, the customer profile of the company is moderately diversified with top 5 customers comprising 50-55% of the net sales in FY16 and FY17. Key Rating Weaknesses Past delays in debt servicing: As per interaction with banker due to immediate requirement of funds to support working capital requirement, there had been delays in repayment of term loans in June 2016 and July 2016, however the repayment track record has remained clear thereafter. Small scale of operations albeit continuous improvement over last 4 years: The total operating income of HPMPL stood small, however the same has been continuously improving at a CAGR of 15.62% over FY13-FY17 owing to increase in demand from existing as well as new customers, backed by increase in retail outlets. Given this, accretion of profits to the net-worth base remained slow resulting in small networth base thereby limiting the financial flexibility of the company. Moderate & fluctuating profit margins: The PBILDT margin of HPMPL stood moderate in the range of 8%-13% over FY13-FY17, given the jewelry components manufacturing nature of operations. Moreover, the same has been fluctuating over the same period owing to variances viz. sizes, shapes, quality & specifications in different products, coupled with fluctuating gold prices. Moderately leveraged capital structure and moderately weak debt coverage indicators albeit funding support from promoters: The capital structure of HPMPL stood moderately leveraged owing to high reliance on working capital facilities. Moreover, led by low profitability & cash accruals on the back of small scale of operations, the debt coverage indicators also stood moderately weak. However, the company has been receiving funding support from the promoters in form of interest-free unsecured loans. Working capital intensive nature of operations marked by high inventory holding coupled with high dependence on fund-based limits: The operations of HPMPL are working capital intensive in nature with majority of funds blocked in inventory, given the slower pace of movement of the jewelry in the end-users market. Moreover, a significant amount of funds is blocked in debtors owing to high credit period to be granted to them being the players of repute. Given this, the operating cycle stood elongated with gross current assets days ranging between 190-240 days over FY13-FY17 which also resulted in high utilization of its working capital limits. Supplier concentration & foreign exchange fluctuation risk albeit mitigated by natural hedge: The supplier profile of HPMPL is concentrated with top 5 suppliers comprising 80%-85% of the net sales in FY16 and FY17. Moreover, the company is exposed to foreign exchange fluctuation risk to certain extent owing to imports comprising 8-10% of the total purchases. However, the said risk is mitigated to an extent by way of natural hedge served on account of exports comprising 20%-22% of the net sales. Moreover, the company also enjoys a forward contract limit from the bank, thereby providing hedging to its foreign exchange exposure. Competitive nature of operations coupled with stringent government regulations: HPMPL operates in highly competitive industry with a large number of players operating in the jewelry accessories manufacturing line of activities. Moreover, the industry is under continuous governmental pressure with regard to increasing import tariffs on gold and other import-related restrictions, coupled with increasing excise duty on jewelry items, etc. Incorporated in 1997 by Mr. Vijay Gopani and Mrs. Nita Gopani, HPMPL is engaged into manufacturing & job-work (19.08% of the net sales in FY17) of locking systems viz. gold & silver findings for gold & silver jewellery viz. bracelets, chains, kangans, bangles, watches, etc. on a customized basis. It imports a semi-finished product named lobster (imports comprising 8.93% of the total purchases in FY17) from Italy and procures gold & silver bars from local suppliers, whereas sells the resultant gold & silver findings to the local jewelers and also exports the same to Thailand, Hong Kong and USA (exports comprising 20.23% of the net sales in FY17). The local customers of the company consist of various reputed players in the gems & jewelry/gold refining market. HEM COTEX: CRISIL Lowers Rating on INR14MM Cash Loan to 'B' ----------------------------------------------------------- CRISIL has been consistently following up with Hem Cotex (HC) for obtaining information through letters and emails dated March 6, 2017 and March 22, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 14 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL B+/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Hem Cotex. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Hem Cotex is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' category or lower. Based on the last available information, CRISIL has downgraded the rating at 'CRISIL B/Stable'. Established in June 2013, HC gins and presses cotton bales with capacity of 45,000 bales per annum at its facility in Rajkot (Gujarat). Operations are managed by Mr. Dinesh Parsottam Davda. The plant commenced operations in May 2014. INDONA INDUSTRIES: CARE Upgrades Rating on INR2.46cr Loan to BB- ---------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Indona Industries (IIN), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 2.46 CARE BB-; Stable Revised from CARE B Short-term Bank Facilities 0.25 CARE A4 Reaffirmed Long-term/Short- term Bank Facilities 4.50 CARE BB-; Stable/CARE A4 Revised from CARE B/CARE A4 Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities of Indona Industries (IIN) are on account of increase in its scale of operations, profitability, improvement in solvency position and debt coverage indicators during FY17 (refers to the period April 1 to March 31). The ratings continue to derive benefit from the experienced promoters. The ratings, however, continue to remain constrained on account of susceptibility of its profit margins to volatility in raw material prices and presence in highly fragmented and competitive industry. Going forward, IIN's ability to increase its scale of operations, profit margins, maintain comfortable capital structure and debt protection metrics would remain the key rating sensitivity. Detailed description of key rating drivers Key rating Weaknesses Susceptibility of profit margins to volatility in raw material prices The raw material prices i.e. aluminum scrap is highly fluctuating due to volatility in the price of aluminum. Hence, any adverse fluctuation in raw material price will have direct impact on profit margins. Presence in highly fragmented and competitive industry Aluminum sections and channel manufacturing segment is a highly fragmented and unorganized market for aluminum products with presence of large number of small sized players. The industry is characterized by low entry barriers due easy access to clients and suppliers. Key Rating Strengths Improvement in scale of operations and profitability FY17, being the first full year of operations, IIN reported a TOI of INR28.23 crore as against INR14.83 crore during 8MFY16. The TOI improved on the back of steady demand from its existing customers as well as addition of new customers in IIN's portfolio. On the back of improved turnover, both operating profit and net profit improved gradually. Improvement in solvency position and debt coverage indicators Capital structure of the company improved and remained comfortable marked by below unity overall gearing as on March 31, 2017, on the back of lower utilization of working capital limits as well as improved net worth position. Debt coverage indicators marked by total debt to GCA improved on the back of increase in cash accruals. Moderate liquidity position Liquidity position stood moderate marked by current ratio of 2.34 times as on March 31, 2017 while average working capital utilization remained at 90% during past twelve months ended May, 2017. Ankleshwar-based (Gujarat) IIN was established in March 2014 as a partnership firm by Mr. Ishwar Chalodia, Mr. Vipul Chalodia, Mr. Rasik Raythatha, Mr. Ranjitsinh Jadeja and Mr. Harshrajsinh Jadeja. IIN has commenced manufacturing operations from August, 2015 after completion of capex for manufacturing aluminum sections and aluminum channels. Aluminum sections and channels find application in wide range of industries such as automobile, furniture, real estate, home interior, etc and can be used as alternative of wood and mild steel. IIN sells its products through network of dealers all over India. IIN operates from its sole manufacturing facility located at Ankleshwar where it has installed capacity of 4200 metric Tons Per Annum (MTPA) as on March 31, 2017. During FY17, IIN reported PAT of INR0.41 crore on a TOI of INR28.23 crore as against PAT of INR0.09 crore on a TOI of INR14.83 crore during FY16. IIN has achieved a TOI of INR6.10 crore till June 20, 2017. INOX WIND: NCLAT Sets Aside Insolvency Proceedings -------------------------------------------------- BloombergQuint reports that the National Company Law Appellate Tribunal (NCLAT), on July 28 set aside insolvency proceedings against Inox Wind Ltd, on grounds that "principles of natural justice were not followed" in the matter. Creditor Jeena & Co had not given the debtor Inox Wind sufficient notice prior to admission of the case under the Insolvency and Bankruptcy Code, according to the order posted by the NCLAT on its website, BloombergQuint relates. According to the report, the appellate tribunal noted that the INR57 lakh default amount in question had already been paid to the creditor by Inox Wind. BloombergQuint relates that the Chandigarh bench of the NCLT had admitted insolvency proceedings against Inox Wind earlier this month and appointed Bhupesh Gupta as the interim resolution professional in the matter. The company then approached the NCLAT pleading that the bankruptcy proceedings initiated be quashed. In its order on July 28, the appellate tribunal said that Inox Wind will have to pay Gupta a fee for the days he has worked in the company, as determined by the NCLT, the report says. The banking system is currently in the middle of resolving 12 large corporate accounts through the insolvency process, which will determine the fate of about 25 percent of the gross non- performing assets (NPAs) in the banking system, BloombergQuint adds. Inox Wind Limited is an integrated wind energy solutions provider. The Company is engaged in the manufacture of Wind Turbine Generators (WTGs). The Company provides Engineering, Procurement and Commissioning (EPC); Operations and Maintenance (O and M), and Common Infrastructure Facilities services for WTGs. The Company offers various products, which include Inox DF 93.3, Inox DF 100 and Inox DF 113. The Company offers various services, which include infrastructure support and capabilities, operations and maintenance, and customer relationship management (CRM). The Company offers wind energy solutions and provides servicing to independent power producer (IPPs), Utilities, Public Sector Undertaking (PSUs), Corporates and Retail Investors. The Company also manufactures Blades and Tubular Towers, and Hubs and Nacelles. The Company has over three manufacturing plants located in Gujarat, Himachal Pradesh and Madhya Pradesh. JAY SHIV: CARE Raises Rating on INR1.22cr LT Loan to BB- -------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of M/s. Jay Shiv Agro Industries (JSAI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 1.22 CARE BB-; Stable Revised Facilities From CARE B+ Short-term Bank Facilities 0.50 CARE A4 Assigned Long-term/Short- 13.50 CARE BB-; Stable/CARE A4 term Bank Revised from CARE B+/CARE A4 Facilities Rating Rationale The revision in the ratings assigned to the bank facilities of JSAI factors in the improvement in operating profit margin on back of higher proportion of income being contributed from export sales which has relatively better margins and improvement in leverage as on March 31, 2017, owing to accretion to reserves. The ratings, however, continue to be constrained due to its presence in the highly fragmented rice milling industry where, working capital intensive nature of operations on account of seasonality associated with the procurement of raw material and its constitution as partnership firm. The ratings, however, continue to derive strength from vast experience and established track record of partners in rice milling business moderate leverage and liquidity indicators. JSAI's ability to grow its total operating income (TOI) while managing volatility associated with raw material (ie, paddy) prices along with improvement in profitability and leverage would be the key rating sensitivities. Detailed description of key rating drivers Key Rating Weaknesses Presence in highly fragmented rice milling industry and susceptible to fluctuations in paddy prices The presence of JSAI in rice milling & processing industry inherently exposes it to the risks associated with agro-climatic conditions and seasonality of agro products. Rice milling industry is highly fragmented and competitive in nature due to low-entry barriers, presence of a large number of players in the organized and unorganized sector and restricted purchasing power of players in the industry due to high level of fragmentation and regulation of rice prices by Government of India (GOI) through fixation of Minimum Support Price (MSP) to safeguard interest of farmers. Also, the sale of rice in the open market is regulated through levy of quota, depending on the target laid by the GoI for the central pool. Constitution as a partnership firm JSAI, being a partnership firm, is exposed to inherent risk of partners' capital being withdrawn at time of personal contingency, and firm being dissolved upon the death/retirement/insolvency of partners. Furthermore, partnership firms have restricted access to external borrowing as credit worthiness of partners would be key factors affecting credit decision for lenders. Key rating Strengths Improvement in operating profit margin on back of increase in export sales and improvement in leverage JSAI reported improvement in its operating profit margin during FY17 (refers to the period April 1 to March 31) on back of higher contribution from export sales, which yields relatively better operating profit margins. The export sales of JSAI have improved from INR4.64 crore in FY16 (5% of TOI) to INR18.81 crore in FY17 (20% of TOI). The improvement in PBILDT margin also led to marginally higher cash accruals resulting in better debt coverage indicators for FY17. The leverage indicators also improved on back of higher accretion to reserves coupled with relatively lower debt outstanding as on March 31, 2017. Vast experience and established track record of partners in rice milling business Mr. Tarachand Ramwani and Mr. Madankumar Ramwani, key partners of JSAI, have experience of around three decades in rice milling and processing through their associate concerns, viz, SVAI, JAI and JRSIPL, which are in the same line of business. The other partners too have an experience of 15-20 years in agro commodity business. JSAI was established as a partnership firm in 2008 by the Ramwani and Vaghela families and has seven partners currently. The firm is primarily engaged in the milling, processing, grading and packing of par boiled rice and has a processing capacity of 43,200 Tonnes Per Annum (TPA) at its sole processing unit located at Sanand (Ahmedabad). The partners are engaged in similar line of business through their other entities - Siddhivinayak Agro Industries (SVAI; rated 'CARE B+', assigned in May 2016), Janki Agro Industries (JAI; rated 'CARE B+/CARE A4', reaffirmed in January 2017), Janki Rice & Solvent Industries Private Limited (JRSIPL; rated 'ICRA B' reaffirmed and 'ICRA A4' assigned in January 2016). JBF INDUSTRIES: Ind-Ra Lowers Issuer Rating to 'D', Outlook Neg. ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded JBF Industries Limited's (JBF) Long-Term Issuer Rating to 'IND D' from 'IND BBB- '. The Outlook was Negative. Instrument-wise rating actions are: -- INR4,000 mil. Fund-based working capital limits (Long-term) downgraded with IND D rating; -- INR16,000 mil. Non-fund-based working capital limits (Short- term) downgraded IND D rating; -- INR2,800 Term loan (Long-term) due on March 2020 downgraded IND D rating; and -- INR200 mil Proposed term loan (Long-term)* downgraded with Provisional IND D rating. * The rating is provisional and shall be confirmed upon the sanction and execution of loan documents for the above facilities by JBF to the satisfaction of Ind-Ra. KEY RATING DRIVERS Ind-Ra has taken a consolidated view of JBF along with its subsidiaries, JBF Petrochemicals Ltd ('IND C'/'IND A4'), JBF RAK LLC, JBF Global Europe BVBA and JBF Bahrain SPC, together referred to as the JBF group to arrive at the ratings. The downgrade reflects delays by JBF group in servicing its debt obligations. This was on account of a significant deterioration in the group's financial risk profile, resulting from losses in overseas operations and continuous delays in the commencement of an ongoing purified terephthalic acid (PTA) plant. The group's liquidity also weakened due to these losses and the November 2016 demonetisation, resulting in cash flow mismatches. RATING SENSITIVITIES Positive: Timely debt servicing for at least three consecutive months could result in a positive rating action. COMPANY PROFILE JBF group is a leading producer of polyester and other related products in the polyester value chain. Its current production capacity is about 1.9mtpa, which is slated to increase to 3.2mtpa following the commencement of operations at its PTA plant. The group operates three domestic facilities - one in Gujarat and two in Silvassa, and three international facilities, one each in the UAE, Belgium and Bahrain. JBF PETROCHEMICALS: Ind-Ra Lowers Long-Term Issuer Rating to 'C' --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded JBF Petrochemicals Limited's (JBF Petro) Long-Term Issuer Rating to 'IND C' from 'IND BBB-'. The Outlook was Negative. Instrument- wise rating actions are: -- USD416 mil. External Commercial Borrowings (ECBs)* due on April 2025 downgraded with IND C/IND A4 rating. * Including USD326.96 million sub-limit of letter of credit/bank guarantee KEY RATING DRIVERS Ind-Ra has taken a consolidated view of the financial and credit profiles of JBF Petro and its ultimate parent, JBF Industries Limited ('IND D'), and associate concerns JBF RAK LLC, JBF Global Europe BVBA and JBF Bahrain SPC, together referred to as JBF Group to arrive at the ratings. The downgrade reflects Ind-Ra's belief of inadequate cash flow post commencement of Purified Terephthalic Acid (PTA) plant and the resultant tight liquidity position following the commencement of loan repayment in April 2018 on account of low expected margins due to weak demand. RATING SENSITIVITIES Positive: Stabilisation of cash flows post the commencement of PTA plant leading to a timely debt servicing could result in a positive rating action. COMPANY PROFILE Incorporated in FY11, JBF Petro was set up to execute JBF group's backward integration project of a 1.25mtpa petrochemical plant for manufacturing PTA in Mangalore. As per management, the project achieved commercial operation date in April 2017. KANDAGIRI SPINNING: CARE Cuts Rating on INR49.18cr Loan to B+ ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Kandagiri Spinning Mills Limited (KSML), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 49.18 CARE B+; Stable Revised From CARE BB- Short-term Bank Facilities 2.50 CARE A4 Reaffirmed Long/Short-term Bank Facilities 1.10 CARE B+; Stable/CARE A4 Revised from CARE BB-/ CARE A4 Fixed deposit 14.01 CARE B+(FD) Revised from CARE BB-(FD) Detailed Rationale and Key Rating drivers The revision in the ratings assigned to the bank facilities and fixed deposits of KSML factor in the deterioration in the operational & financial performance of the company marked by decline in revenues during the past two years ended March 2017 and loss reported during FY17 (refers to the period April 1 to March 31). The ratings are also constrained by the highly leveraged capital structure, weakening financial risk profile and debt service parameters, high working capital intensive nature of operations and inherent volatility associated with the raw material and its impact on profitability. The rating, however, draws support from KSML's established track record along with the promoters' vast experience in the textile industry and the company's long-standing relationship with the customers with diverse product offerings. Going forward, ability of KSML to increase revenues, report profits, manage raw material prices and working capital efficiently would be the key rating sensitivities. Detailed description of key rating drivers Key Rating Weakness Decline in operational performance during past two years with net loss reported in FY17: The operating income declined by 46.2% to INR78.26 in FY17 from INR144.9 crore in FY16 on account of decline in production and sales volume due to the high procurement price of cotton during the year. During FY17, the company sold 13 windmills of aggregate capacity 10.25MW for around INR27 crore including profit of INR15.45 crore from the sale of the assets. Including the profit from the above sale of assets, the company reported loss after tax of INR11 crore in FY17. KSML also reported cash loss of INR3.9 crore during FY17. Weakening financial risk profile in FY16: The net worth of the company decreased to INR8.3 crore as on March 31, 2017 from INR19.03 crore as on March 31, 2016 with losses incurred during FY17. The capital structure weakened during FY17 with overall gearing moderated to 8.04x as on March 31, 2017 from 4.78x as on March 31, 2016. The promoters have provided financial support to the company in the form of unsecured fixed deposits which has increased to INR11.34 crore as on March 31, 2017 from INR10.93 crore as on March 31, 2016. Weak liquidity position with working capital intensive nature of operations: The working capital cycle of KSML increased from 110 days in FY16 to 146 days in FY17 with the increase in inventory holding. The current ratio stood below unity for the past three years ended FY17 on account of larger amount of debt maturing within the year and higher working capital borrowings. The average working capital utilization stood high at of 95% in the last 12 months ended May, 2017. Volatile raw material prices impacting profitability: Cotton, the key raw material consumed by KSML has exhibited high volatility in its prices in the past and in turn impacts the profitability of the company. The purchase price per kg of cotton for the company has increased from to INR93/kg in FY16 to INR118/kg which is 26.88% higher than FY16. The profitability of spinning mills largely depend on the prices of cotton and cotton yarn, which are governed by various factors such as area under cultivation, monsoon, export quota fixed by the government, international demand-supply situation, etc. Key Rating Strengths KSML's long-standing track record and promoter's vast experience: KSML has a long-standing track record of operations for around four decades. The company was originally promoted by late Mr. S P Ratnam, Mr. K R Manicka Mudaliar, Mr. S P Sambandam, Mr. L Manicka Mudaliar and Mr. A Ganesa Mudaliar, all of whom belong to the same family who were traditionally yarn merchants. Mr. R Selvarajan (s/o. Mr. S P Ratnam), Managing Director, who has four decades of experience in the manufacture and trade of yarn, takes care of the day-today operations of KSML. He is ably assisted by his son Mr. S Vijayshankar who is the Joint Managing Director and Chief Financial Officer of KSML. Diverse product offerings: The product diversity comes from the company's manufacturing capability to produce cotton yarns in the count range of 20s to 100s catering to the market of both hosiery and weaving manufacturers. The company also produces carded, combed, auto- coned, ring doubled, two for one (TFO), compact spun, reverse twist yarns which are customized products. KSML was originally incorporated in 1976 in Salem, Tamil Nadu, under the name of 'The Ammapet Sizing Mills Private Limited'. The company took its current name in 1978 and became a public limited company in 1995. KSML is engaged in textile spinning with an aggregate capacity of 67,338 spindles (as on March 31, 2017) spread across three units in Salem. KHUKHRAIN BUILDERS: CRISIL Reaffirms B+ Rating on INR5.56MM Loan ---------------------------------------------------------------- CRISIL has been consistently following up with Khukhrain Builders (KB) for obtaining information through letters and emails dated February 8, 2017 and April 08, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 6.5 CRISIL A4 (Issuer Not Cooperating; Rating Reaffirmed) Overdraft 5.56 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Khukhrain Builders. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Khukhrain Builders is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB' category or lower. Based on the last available information, CRISIL has reaffirmed the rating at CRISIL B+/Stable /CRISIL A4'. KB is a Delhi based firm in the civil construction business'especially involving laying water and sewerage lines. The firm was started in 1979 and is currently managed by Mr. Sunil Anand and his son Mr. Piyush Anand. M L RICE: CARE Assigns B+ Rating to INR24.50cr LT Loan ------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of M L Rice Mills (MLR), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 24.50 CARE B+; Stable Assigned Detailed Rationale and key rating drivers The rating assigned to the bank facilities of MLR is constrained by its small and stagnant scale of operations, weak financial risk profile characterised by low profitability margins, weak debt coverage indicators and working capital intensive nature of operations. The rating is further constrained by susceptibility to foreign exchange fluctuation risk, volatility of raw material prices and monsoon dependant operations, constitution being a partnership firm and its presence in a fragmented industry with high government regulation. The rating, however, derives strength from experienced partners along with long track record of operations, favorable location of plant and moderate capital structure. Going forward, the ability of the firm to scale-up its operation while improving its profitability margins would remain the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Small and stagnant scale of operations along with low profitability margins: The firm's scale of operations has remained small marked by total operating income (TOI) of INR66.71 crore in FY16 (refers to the period April 01 to March 31). Additionally, the scale of operations stood stable during last two financial years due to absence of incremental demand from customers. Furthermore, the profitability margins of the firm stood low marked by PBILDT margin and PAT margin of 4.35% and 0.33%, respectively, in FY16. Weak debt coverage indicators: The debt coverage indicators remained weak with the total debt to GCA at 45.96x for FY16 and interest coverage ratio at 1.22x in FY16. Working capital intensive nature of operations: The operating cycle of the firm stood elongated at 192 days for FY16. The average utilization of the cash credit limit remained at ~75% for the last 12-month period ended May 2017. Susceptibility to foreign currency fluctuation: With initial cash outlay for sales in domestic currency and sales realization in foreign currency, the firm is exposed to the fluctuation in exchange rates. The firm does not hedge its exports receivable, exposing it to sharp appreciation in the value of rupee against foreign currency which may impact its cash accruals. Susceptibility to fluctuation in raw material prices and monsoon dependent operations: Agro-based industry is characterized by its seasonality, due to its dependence on raw materials whose availability is affected directly by the vagaries of nature. Adverse climatic conditions can affect their availability and leads to volatility in raw material prices. Any sudden spurt in the raw material prices may not be passed on to customers completely owing to firm's presence in highly competitive industry. Fragmented nature of industry coupled with high level of government regulation: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. Partnership nature of constitution: MLR's constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of partners. Key Rating strengths Experienced partners along with long track record of operations: MLR was established in 1983 and its day-to-day operations are looked after by the partners jointly. Mr. Janak has an industry experience of more than four decades through his association with MLR and group concerns, Mohan Lal Janak Raj (MLJR) and ML0. Mr. Ashok Kumar has an industry experience of nearly two decades and both Mr. Ashu Girdhar and Mrs Sudesh Rani have an industry experience of 15 years through their association with MLR only. Location advantages: MLR's manufacturing unit is located in Fazilka, Punjab. The area is one of the hubs for paddy/rice, leading to its easy availability of raw material. The presence of MLR in Punjab gives it an advantage over competitors operating elsewhere in terms of easy availability of the raw material as well as favorable pricing terms. Moderate capital structure: The capital structure of the firm stood moderate with overall gearing ratio of 1.87x as on March 31, 2016. M L Rice Mills (MLR) was established in October 1983 as a partnership firm by Mr. Janak Raj and his brothers. The firm is currently being managed by Mr. Janak Raj and his wife, Mrs Sudesh Rani and their sons, Mr. Ashok Kumar and Mr. Ashu Girdhar, sharing profit and losses in the ratio 2:2:3:3. The firm is engaged in the processing of paddy at its manufacturing facility located in Fazilka, Punjab, with an installed capacity of processing 36,000 tonnes of paddy per annum as on March 31, 2016. MLR sells basmati and non-basmati rice directly to various rice wholesalers and retailers based in Punjab, Haryana, Odisha, Uttar Pradesh, Kerala, Tamil Nadu, Gujarat, Delhi, etc. The firm also exports its finished products to Australia and gulf countries like Dubai, Oman, Iraq, etc. [income from exports constituted ~15% of the total sales in FY16]. The firm sells its products under the brand name of "7 Days" and is also ISO: 22000 certified firm. The raw material, ie, paddy, is procured directly from grain market and from commission agents based majorly in Punjab and Haryana. Besides this, partners are also associated with two group concerns, namely, Mohan Lal Janak Raj (MLJR) which is engaged in the trading of paddy, wheat, etc, on commission basis since 1975 and M.L. Overseas (MLO) which is engaged in milling of rice on job work basis since 2001. In FY16, MLR has achieved a total operating income (TOI) of INR66.71 crore with PAT of 0.22 crore as against a total operating income of INR67.26 crore with PAT of INR0.21 crore in FY15. In FY17 (Provisional), the firm has achieved TOI of INR74.00 crore. MAHAPRABHU RAM: CARE Assigns 'D' Rating to INR4.0cr ST Loan ----------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Mahaprabhu Ram Mulkh Hi-Tech Education Society (MRMH), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 2.55 CARE D Assigned Short-term Bank Facilities 4.00 CARE D Assigned Detailed Rationale and key rating drivers The rating takes into account the delays in debt servicing by MRMH due to its weak liquidity. Detailed description of the key rating drivers Key Rating Weaknesses Ongoing delay in debt servicing: There are regular delays in servicing the principal amount and interest for term loans and there are instances of over utilization of overdraft limit. On an average, the society clears the dues with-in one and a half months. The delays are on account of weak liquidity as the society is unable to generate sufficient funds in a timely manner leading to cash flow mismatches. Mahaprabhu Ram Mulkh Hi-Tech Educational Society (MRMH) got registered under the Society Registration Act- 1860 in 2005 and is currently being managed by Mr. Roshan Lal Jindal, Mrs Ritu Jindal, Mr. Mukesh Jindal, Mrs. Tamanna Jindal, Mrs Saroj Garg, Mr. Rajneesh Jindal and Mr. Rohit Sharma as the trustees. The society was formed with an objective to provide higher education in the field of engineering, computer science and management. The society has established five separate colleges, namely, Shree Ram Mulkh Institute of Management and Technology, Shree Ram Mulkh Institute of Engineering and Technology, Shree Ram Mulkh College of Technical Education, Shree Ram Mulkh College of Education and Shree Birkha Ram College of Education. All the colleges of MRMH are in Village Kohra-Bhura (Bhurewala), Haryana. The different courses offered are duly approved by AICTE (All India Council of Technical Education). MRMH is also affiliated to Kurukshetra University, Kurukshetra (KUK). In FY16 (refers to the period April 01 to March 31), MRMH has achieved a total operating income (TOI) of INR10.32 crore with surplus of INR0.06 crore as against total operating income of INR 10.45 crore with surplus of INR0.24 crore in FY15. In FY17 (Provisional), the society has achieved TOI of INR10.50 crore. MAHESHWAR MULTITRADE: CARE Reaffirms B+ Rating on INR12.68cr Loan ----------------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Maheshwar Multitrade Private Limited (MMPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 12.68 CARE B+; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of MMPL continues to be constrained on account of modest scale of operations, thin profitability margins, leveraged capital structure and weak debt coverage indicators. The rating is further constrained due to seasonality associated with availability of trading material resulting in working capital intensive nature of business along with exposure to material price fluctuation risk and presence in highly fragmented industry. The rating continues to draw support from the experience of the promoters for around three decades, support from group concern along with long-term association with diversified clientele. The ability of the entity to increase its scale of operations with improvement in profitability and capital structure while managing its working capital requirements efficiently are the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced promoters: The directors of MMPL are the members of the Banchode family. The directors are Mr. Shivanand Banchode, Mr. Shrikant Banchode, Mr. Sudhakar Banchode, Mr. Ganesh Banchode and Mr. Shashikant Banchode. Mr. Shrikant Banchode and Mr. Sudhakar Banchode have been managing MMPL since 2010 and have been managing MOM (Maheshwar Oil Mill) since the past three decades. Due to extensive experience of the management in the industry, the company is likely to be benefited from established healthy relationship with key customers. Support from associate concerns: MMPL is the group's expansion in the edible oils segment and benefits from the established track record of its associate firm, MOM. MMPL utilizes the marketing and distribution network of MOM. The company sells its products through a distribution network that includes the company's depots and dealers in the states of Maharashtra, Karnataka and Kerala. The widespread dealership network of MOM is being used by MMPL, which gives the products of MMPL a wide reach. As a result, off take is likely to remain high with low marketability risk for the product. Diversified clientele: With the promoters' extensive industry experience coupled with marketing effort, the company has been able to establish strong relationship with its customers. The major customers of MMPL include Bodke Oil Mills, Kamani Oil Company, S.K. Oil Industries and others. MMPL has long-standing relationship with these players, who possess respectable position in their respective industries. Because of the reputed clientele, the credit risk remains low. In the past MMPL has been able to get repeat orders from these clients, with regular proceeds from them. Key Rating Weaknesses Modest scale of operations with thin profitability: The total operating income of the company remained modest and has been increasing at a CAGR of 60.61% during last three years ending FY17 (Provisional; refers to the period April 1 to March 31).However, the profitability margins of the company remained thin owing to trading nature of business and competitive nature of industry. Leveraged capital structure and weak debt coverage indicators: The high debt profile as against low tangible net worth resulted in leveraged capital structure of the company. Moreover, with increase in total debt and low cash accruals, the debt coverage indicators of the company deteriorated and remained weak. Working capital intensive nature of operations: MMPL's operations continues to remain working capital intensive in nature due to upfront payments to farmers and extended credit period offered to its customers(due to increase in competition) resulting in higher utilization of working capital borrowings. Further being an agricultural commodity, the pricing and distribution of grains and pulses are exposed to climatic and agriculture-related risks as well as government policies. Presence in a fragmented industry: MMPL is one of the relatively smaller players engaged in the business of trading and marketing of edible oil. Edible oil industry is characterized by intense competition from established larger players and also fragmented unorganized players, which may exert pressure on pricing and consequently margins of the company. Due to the fragmented nature and low entry barriers in the industry, profitability margins are low. Established in 2010, MMPL is engaged in the trading and manufacturing of edible oils. MMPL belongs to the Maheshwar group of Kolhapur. MMPL is promoted by the Banchode family who has also setup another group entity Maheshwar Oil Mills (MOM) (a partnership firm) which was incorporated in 1992, and is engaged in the manufacturing of edible oils along with trading of the same. The partners in MOM are also the shareholders and directors in MMPL. The product profile of MMPL comprises groundnut oil, ground nut seed, makkachuni, cattlefeed, palm oil and cotton seed oil. MMPL procures groundnut oil and groundnut seeds from (Maheshwar Oil Mill) MOM, while supplier base for other products are outside parties based in Maharashtra. MEGHA AGROTECH: Ind-Ra Ups Issuer Rating to BB+, Outlook Stable --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Megha Agrotech Private Limited's (MAPL) Long-Term Issuer Rating to 'IND BB+' from 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR45 mil. (reduced from INR50 mil.) Fund-based facilities upgraded with IND BB+/Stable rating; and -- INR5 mil. Non-fund based facilities assigned with IND A4+ rating. KEY RATING DRIVERS The upgrade reflects an improvement in MAPL's scale of operations and comfortable credit metrics. According to provisional financials for FY17, revenue was INR618 million (FY16: INR426 million, FY15: INR416 million). The increase in revenue was driven by a rise in the number of orders received from long- standing customers. In FY17, interest coverage (operating EBITDA/gross interest expense) was 9.88x (FY16: 4.05x; FY15: 2.54x) and net leverage (adjusted net debt/operating EBITDAR) was 0.39x (1.93x; 1.27x). The improvement in credit metrics was mainly on account of an improvement in EBITDA margin to 7.9% in FY17 from 5.7 % in FY16. The ratings reflect fluctuating EBITDA margin of 5.2%-7.9% over FY13-FY17 on account of a decline in employee costs and other administrative expenses. The ratings, however, continue to be supported by MAPL's comfortable liquidity position, indicated by an average maximum utilisation of fund-based limits of 71.39% for the 12 months ended June 2017. The ratings are also supported by the managing director's long track record and operating experience of around two decades in the irrigation industry. RATING SENSITIVITIES Positive: A substantial improvement in the scale of operations, along with a stable profitability and credit metrics staying at the current levels, will be positive for the ratings. Negative: Any substantial decline in the scale of operations and profitability, along with deterioration of current credit metrics, will be negative for the ratings. COMPANY PROFILE Incorporated in 1997, MAPL is engaged in the manufacturing and trading of drip irrigation and sprinkler irrigation equipment, which is applicable for agriculture, horticulture and sericulture purposes. It has manufacturing sites in Karnataka and Telangana. MAPL booked INR190 million in revenue for April-June 2017. MILAN GINNING: CRISIL Cuts Rating on INR20MM Cash Loan to 'B' ------------------------------------------------------------- CRISIL has been consistently following up with Milan Ginning Pressing Private Limited (MGP; part of the Milan Grou) for obtaining information through letters and emails dated January 27, 2017 and April 5, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL B/Stable (Issuer Not Co-operating; Downgraded from 'CRISIL BB+/Stable') Proposed Long Term 0.4 CRISIL B/Stable (Issuer Not Bank Loan Facility Co-operating; Downgraded from 'CRISIL BB+/Stable') Term Loan 1 CRISIL B/Stable (Issuer Not Co-operating; Downgraded from 'CRISIL BB+/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Milan Ginning Pressing Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Milan Ginning Pressing Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable' For arriving at the rating, CRISIL has combined the business and financial risk profiles of MGP, KR Solvent (KRS), and Sustainable Spinning and Commodities Private Limited (SSCPL). This is because the three entities, together referred to as the Milan group, have common promoters and management, and are engaged in similar lines of business. MGP, incorporated in 1995, gins cotton at its facilities in Surendranagar (Gujarat). The company is promoted and managed by Mr. Husen Ali Yusuf Ali Narsinh. KRS, set up in 2011, extracts cotton oil by processing cotton seeds. SSCPL, incorporated in 2012, is engaged in cotton spinning. MITTAL FIBERS: Ind-Ra Moves Issuer Rating to B+ Not Cooperating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated M/s Mittal Fibers' (MF) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR60 mil. Fund-based working limits migrated to non- cooperating category with IND B+(ISSUER NOT COOPERATING) rating; and -- INR7.04 mil. Long-term loans migrated to non-cooperating category with IND B+(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on June 27, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE MF was established by Sanjay Agarwal in 2007. The firm is engaged in the ginning and pressing of cotton at Shahada, Maharashtra. It operates 36 ginning and one pressing machines. The firm also has an oil mill. The proprietor has another firm which is engaged into similar kind of activities in Khetia, Madhya Pradesh. N.E. TRADE: Ind-Ra Assigned 'B+' Issuer Rating, Outlook Stable -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned N.E. Trade & Transport (NETT) a Long-Term Issuer Rating of 'IND B+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR100 mil. Fund-based limit assigned with IND B+/Stable rating; and -- INR400 mil. Non-fund-based limit assigned IND A4 rating. KEY RATING DRIVERS The ratings reflect NETT's small scale of operations and moderate credit metrics. According to provisional financials for FY17, revenue was INR133 million (FY16: INR410 million), interest coverage (operating EBITDA/gross interest expense) was 1.5x (3.0x) and net financial leverage (total adjusted net debt/operating EBITDAR) was negative 0.1x (1.9x). The decline in revenue was mainly due to lower tenders received from its only client Food Corporation of India. Interest coverage deteriorated due to a decline in profitability to 6.7% in FY17 from 9.5% in FY16. Meanwhile, net financial leverage improved on account of high cash and cash equivalents. The ratings also reflect the proprietorship nature of the organisation. The ratings, however, are supported by NETT's moderate liquidity profile, indicated by an average utilisation of about 60% during the 12 months ended May 2017. RATING SENSITIVITIES Negative: Deterioration in credit metrics will lead to a negative rating action. Positive: Improvement in the scale of operations, along with credit metrics, will lead to a positive rating action. COMPANY PROFILE Incorporated in 2010, NETT is engaged in the transportation of foodgrains in north-east India through a fleet of 74 trucks. The company caters to only Food Corporation of India. It is managed by Ms Neena Saikia. OREN HYDROCARBONS: Ind-Ra Downgrades LT Issuer Rating to 'D' ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has downgraded Oren Hydrocarbons Private Limited's (OHPL) Long-Term Issuer Rating to 'IND D' from 'IND BBB+'. The Outlook was Negative. The instrument-wise rating actions are: -- INR292.5 mil. (increased from INR22.6 mil.) Term loans (Long- term) due on May 2020 downgraded with IND D rating; -- INR1,720 mil. Fund-based working capital limits (Long- term/Short-term) downgraded IND D rating; and -- INR474.5 mil. Non-fund-based working capital limits (Short- term) downgraded with IND D rating. KEY RATING DRIVERS The downgrade reflects instances of delays witnessed in debt servicing by OHPL due to tight liquidity position. The same is on account of an elongation of its working capital cycle to 199 days in FY17 as per provisional financials (FY16: 142 days) and a decline in the operational performance with revenue decreasing to INR4,064.6 million (INR4,595.7 million) primarily on account of a slowdown witnessed in the oil industry due to lower oil prices. Also, there were disruptions in operations during demonetisation which were further aggravated by the Vardha cyclone in Chennai in December 2016. RATING SENSITIVITIES Positive: Timely servicing of debt obligations for three consecutive months would be positive for the ratings. COMPANY PROFILE Incorporated in 1990, OHPL primarily manufactures and trades mud chemicals used in drilling fluids in the oil and gas industry. The company reported operating EBITDA of INR431.0 million in FY17P (FY16: INR 478.7 million) and net profit of INR76.2 million (INR181.7 million). At FYE17, OHPL had debt of INR2,528.0 million (FYE16: INR2,216.3 million) and cash & equivalents of INR125.3 million (INR189.7 million). P.S.T. ENGINEERING: Ind-Ra Gives BB+ LT Issuer Rating ----------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned P. S. T. Engineering Construction (PST) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR100 mil. Fund-based working capital facilities assigned with IND BB+/Stable/IND A4+ rating; and -- INR50 mil. Non-fund-based working capital facilities assigned with IND A4+ rating. KEY RATING DRIVERS The ratings reflect PST's moderate scale of operations and EBITDA margins, and modest order book indicating low revenue visibility. As per FY17 provisional financials, revenue was INR1.73 billion (FY16: INR1.77 billion) and EBITDA margins were 8.6% (7.8%). All contracts executed by PST had a price escalation clause, safeguarding its margins from input price volatility. As of June 2017, the firm had an order book of INR1.4 billion (0.85x of FY17P revenue), to be executed by September 2018. PST recorded revenue of INR340.2 million during 3MFY18. The ratings are constrained by PST's partnership form of organisation and exposure to a significant customer concentration risk as its operations are largely concentrated in and around Tamil Nadu. The ratings also factor in PST's moderate liquidity position with around 90% utilisation of fund-based facilities during the 12 months ended June 2017. Net working capital cycle was 47 days in FY17P (FY16: 23 days) on account of extended debtor days inherent to the industry in which it operates. However, the ratings are supported by PST's comfortable credit metrics with net leverage (total Ind-Ra adjusted net debt/operating EBITDAR) of 1.5x in FY17P (FY16: 1.1x) and EBITDA interest coverage (operating EBITDA/gross interest expense) of 26.1x (213.9x). The firm had an interest-free unsecured debt on its balance sheet from its associate company in FY15 and FY16, which was partly repaid in FY17. The ratings are also supported by PST's promoters' more than two decades of experience in the civil construction business. RATING SENSITIVITIES Positive: A sustained growth in the revenue and operating EBITDA margins with net leverage sustaining below 2.5x will lead to a positive rating action. Negative: Deterioration in the liquidity position on account of stretched working capital cycle and/or a decline in the EBITDA margins on a sustained basis would be negative for the ratings. COMPANY PROFILE Incorporated in 1995 as a partnership firm by Mr. S. Thennarasu and family, PST began operations in 1999. PST is engaged in civil construction work such as building of colleges and hospitals. It is registered as Class I civil contractor with Public Works Department in Tamil Nadu. RAYAT EDUCATIONAL: CARE Assigns 'C' Rating to INR20cr LT Loan ------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Rayat Educational & Research Trust (RERT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 20.00 CARE C; Stable Assigned Facilities (Fund Based) Detailed Rationale The rating assigned to the bank facilities of RERT is constrained by its small & declining scale of operations and high reliance of the business on the working capital borrowings. The rating is further constrained by the limited reach of the trust, high level of regulations in the educational sector and increasing competition. The rating, however, derives strength from the experienced trustees & competent teaching staff, wide spectrum of courses offered and well-established infrastructure. Going forward, the ability of the trust to profitably scale-up its operations along with managing the working capital requirements efficiently will remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small and declining scale of operations: Even though the institute has been operational from 2001, the scale of operations continue to be small as indicated by the total operating income of INR30.20 crore in FY16, which declined from INR33.29 Cr. in FY14. This was on mainly account of decrease in student enrollment. High reliance on the working capital borrowings: The overdraft limit availed by the trust has remained fully utilized on an average for the 12 months period ended May-2017. High level of regulation in the educational sector in India: The education industry remains a highly regulated industry with constant intervention from the central government and other regulatory bodies. These factors have a significant impact on the revenue and profitability of the institutions. Increasing competition and limited reach: All the institutes of the RERT are in Ropar i.e., single location of Punjab which limits the penetration level for the Trust to tap opportunities. Further, due to increasing focus on technical education in India, a number of colleges have been opened up in the close proximity. This exposes the revenue of RERT to competition from other universities in and around Ropar. Key Rating Strengths Experienced trustees with competent teaching staff: The Trust is managed by Mr. Gurvinder Singh Bahra and Mr. Nirmal Singh Rayat as Chairman and President respectively. Both Mr. Gurvinder Singh Bahra and Mr. Nirmal Singh Rayat have total work experience of more than two decades in the education sector. RERT has also employed experienced and qualified teaching staff including PhD holders and research scholars to support the academic requirements of the institutions. Solvency position: The trust had a comfortable solvency position marked by overall gearing ratio and total debt to GCA ratios of 0.62x and 4.65x, respectively, as on March 31, 2016. Wide spectrum of courses and well-established infrastructure: The availability of graduate, post graduate and school programs with diversified courses helps RERT to attract more students by reducing dependence on any one discipline. In addition to the well-established basic infrastructure, the various facilities offered at the colleges and school include laboratories, computer centers including smart classes, conference halls, video conferencing, multimedia projectors, libraries, etc. Rayat Educational & Research Trust (RERT) was established in 2001. RERT is a part of Punjab based Rayat-Bahara group. Currently, the trust is running one campus having six colleges and two schools located in Ropar, Punjab. The Trust was established by Mr. Gurvinder Singh Bahra (Chairman) and Mr. Nirmal Singh Rayat (President) with an objective to provide education in the field of engineering and technology, management and pharmacy. SABOO TOR: Ind-Ra Raises Issuer Rating to 'BB+', Outlook Stable --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Saboo Tor Private Limited's (STPL) Long-Term Issuer Rating to 'IND BB+' from 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR180 mil. (increased from INR105 mil.)Fund-based limits upgraded with IND BB+/Stable rating; and -- INR19.5 mil. Non-fund based limits assigned with IND A4+ rating. KEY RATING DRIVERS The upgrade reflects the improvement in STPL's scale of operations and profits due to a higher demand for TMT bars, resulting in an improvement in credit metrics. However, the scale of operations and credit metrics remain moderate. Also, EBITDA margins did not show any improvement as the company was not able to charge a higher price for the goods produced due to competition. According to the FY17 provisional financials, revenue was INR840 million (FY16: INR713 million), EBITDA was INR46 million (INR39 million), interest coverage was 2.1x (1.4x) and net leverage (net debt/operating EBITDA) was 3.7x (4.3x). Margins remained stable at low levels of 5.5% during FY16-FY17 as the company passed on fluctuations in the raw material prices to its customers. The upgrade also reflects STPL's better liquidity position, as reflected in its average 60% utilisation of its fund-based working capital limit during the 12 months ended June 2017 as against the earlier levels of around 100%. However, STPL's cash conversion cycle remains long, despite a reduction to 88 days in FY17 (FY16: 99 days), mainly due to a long inventory holding period and high receivable days. The ratings, however, remain supported by over two decades of experience of STPL's founders in trading and manufacturing iron and steel products. RATING SENSITIVITIES Positive: A substantial increase in the scale of operations along with improvement in its liquidity and overall credit profile will be positive for the ratings. Negative: Deterioration in the overall credit metrics of the entity will be negative for the ratings COMPANY PROFILE STPL is a part of the Saboo Group of Industries, incorporated in1991. STPL manufactures TMT bars and angles at its 24,000 metric tonnes per annum manufacturing unit in Kalamb, which is at the border of Haryana and Himachal Pradesh. The company is managed by Raj Kumar Saini. SHREE BABA: CRISIL Lowers Rating on INR125MM Cash Loan to 'B' ------------------------------------------------------------- CRISIL has been consistently following up with Shree Baba Naga Food Stuff Limited (SBN) for obtaining information through letters and emails dated October 18, 2016 and November 21, 2016 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 125 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Shree Baba Naga Food Stuff Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Shree Baba Naga Food Stuff Limited is consistent with 'Scenario 2' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable'. For arriving at its rating, CRISIL has combined the business and financial risk profiles of SBN and BN Global Pvt Ltd (BNG). This is because the two entities, together referred to as the BN group, are in the same line of business, and have a common management in addition to financial and operational linkages. SBN and BNG are promoted by Mr. Varun Chadha, Mr. Ankush Chadha, and Mr. Deepak Chadha. The companies' mill and process basmati rice for sale in the export and domestic markets. SBN was incorporated in 2007, while BNG was incorporated in 2014 to take over the assets and liabilities of partnership firm, BN Exports. SHREE NARSHINGHA: CARE Assigns 'B' Rating to INR8.85cr Loan ----------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Shree Narshingha Cold Storage Private Limited (SNCSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 8.85 CARE B; Stable Assigned Short-term Bank Facilities 0.15 CARE A4 Assigned Detailed Rationale and key rating drivers The ratings assigned to the bank facilities of SNCSPL are constrained by its small scale of operation, regulated nature of industry, seasonality of business with susceptibility to vagaries of nature, risk of delinquency in loans extended to farmers, working capital nature of operations, high leverage ratios and competition from other players. The ratings, however, derive comfort from its experienced promoters, long track record of operation and proximity to potato growing area. Ability of the company to increase the scale of operations with improvement in profit margins and to manage working capital effectively will remain as the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operations: SNCSPL is a small player in the cold storage industry marked by total operating income of INR1.75 crore with a PAT of INR0.07 crore in FY16. Further, during FY17, the company has booked turnover of INR1.77 crore as maintained by the management. Regulated nature of industry: In West Bengal, the basic rental rate for cold storage operations is regulated by the state government through West Bengal State Marketing Board. The rent of these cold storages is decided by taking into account political considerations, not economic viability. Due to severe government intervention, the cold storage facility providers cannot enhance rental charge commensurate with increased power tariff and labour charge. Seasonality of business with susceptibility to vagaries of nature: SNCSPL's operation is seasonal in nature as potato is a winter season crop with its harvesting period commencing in March. The loading of potatoes in cold storages begins by the end of February and lasts till March. Additionally, with potatoes having a perceivable life of around eight months in the cold storage, farmers liquidate their stock from the cold storage by end of season i.e., generally in the month of November. The unit remains non-operational during the period from December to January. Furthermore, lower agricultural output may have an adverse impact on the rental collections as the cold storage units collect rent on the basis of quantity stored and the production of potato is highly dependent on vagaries of nature. Risk of delinquency in loans extended to farmers: Against the pledge of cold storage receipts, SNCSPL provides interest bearing advances to the farmers & traders. Before the closure of the season in November, the farmers & traders are required to clear their outstanding dues with the interest. In view of this, there exists a risk of delinquency in loans extended, in case of downward correction in potato or other stored goods prices, as all such goods are agro commodities. Working capital intensive nature of business: SNCSPL is engaged in the cold storage services; accordingly its operation is working capital intensive. The company allows credit of around a month to its customers and accordingly the requirement of working capital remains high and therefore the average utilization of fund based limit remained at about 90% during the last 12 months ended May 31, 2017. High leverage ratios: The capital structure of the company remained leveraged marked by debt equity of 1.54x and overall gearing of 2.85x as on March 31, 2016. The debt equity ratio improved as on March 31, 2016 due to schedule repayment of term loans. Moreover the overall gearing deteriorated as on March 31, 2016 owing to higher utilization of fund based limit and the same remained high at 2.85x as on March 31, 2016. Competition from other local players: In spite of being capital intensive, the entry barrier for new cold storage is low, backed by capital subsidy schemes of the government. As a result, the potato storage business in the region has become competitive, forcing cold storage owners to lure farmers by providing them interest bearing advances against stored potatoes which augments the business risk profile of the companies involved in the trade. Key Rating Strengths Experienced promoter and long track record of operations: The company is into cold storage business since 2004 and thus has a track record of operations of around 13 years. Furthermore the key promoters; Mr. Mohan Lal Poddar has more than four decades of experience in cold storage industry, looks after the overall management of the company. He is supported by other promoter Mr. Sushil Kumar Poddar who also has around two decades of experience in this line of business. The promoters are supported by a team of experienced professionals. Proximity to potato growing area: SNCSPL's storing facility is situated at Medinipore, West Bengal which is one of the major potato growing regions of the state. The favorable location of the storage unit, in close proximity to the leading potato growing areas provides it with a wide catchment and making it suitable for the farmers in terms of transportation and connectivity. SNCSPL was incorporated in September 2003 and presently managed by Mr. Mohan Lal Poddar and Mr. Sushil Kumar Poddar. The company has commenced operations at its cold storage unit from March 2004. The cold storage facility of SNCSPL is located at Medinipore, West Bengal with aggregated storage capacity of 14000 metric ton. SHUBHSHREE ENGINEERING: Ind-Ra Assigns 'BB+' LT Issuer Rating ------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Shubhshree Engineering And Constructions Private Limited (SECPL) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is Stable. Instrument- wise rating actions are: -- INR60 mil. Fund-based facilities assigned with IND BB+/Stable/IND A4+ rating; -- INR50 mil. Non-fund-based facilities assigned with IND A4+ rating; and -- INR90 mil. Proposed non-fund based facilities* assigned with Provisional IND A4+ rating. *The rating is provisional and shall be confirmed upon the sanction and execution of loan documents for the above facilities by SECPL to the satisfaction of Ind-Ra. KEY RATING DRIVERS The ratings reflect SECPL's small scale of operations and moderate credit metrics. As per FY17 provisional financials, revenue grew to INR336 million (FY16: INR305 million) on account of increased orders from new and existing customers. As of June 2017, the company had an order book of INR1,224 million (3.6x of FY17P revenue), to be executed by FY19. EBITDA margin expanded to 15.3% in FY17P (FY16: 11.3%) owing to a reduction in direct expenses. Consequently, EBITDA interest coverage (operating EBITDA/gross interest expense) improved to 8.4x in FY17P (FY16: 7.7x), Net financial leverage (total adjusted net debt/operating EBITDA) was stable at 1.1x (1.1x). Ind-Ra expects the credit metrics to improve further based on timely execution of orders. However, the ratings are supported by SECPL's comfortable liquidity position with 76% utilisation of fund-based limits during the 12 months ended June 2017. The ratings also benefit from the promoters' over two decades of experience in the industrial construction business. RATING SENSITIVITIES Positive: A substantial improvement in the revenue and order book position leading to a sustained improvement in the credit metrics will be positive for the ratings. Negative: Failure to maintain a healthy order book impacting revenue visibility or a decline in the EBITDA margin leading to a sustained deterioration in the credit metrics will be negative for the ratings. COMPANY PROFILE Incorporated in July 2013, SECPL is engaged in industrial project construction, planning and implementation, construction management and project commissioning in Aurangabad, Maharashtra. SMT. MOHINI: CARE Assigns B+ Rating to INR7.27cr LT Loan -------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Smt. Mohini Devi Lekhraj Odhrani Charitable Trust (SMD), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7.27 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of SMD is primarily constrained on account of its financial risk profile marked by continuous deficit during last three financial years ended FY17 (refers to the period April 1 to March 31), leveraged capital structure, stressed liquidity position and project implementation risk for initializing new department of Ear Nose and Throat (ENT). The rating is, further, constrained on account of reputational risk and its presence in the highly regulated and competitive healthcare industry. The rating, however, favorably takes into account the vast experience of the promoters and management personnel with long track record of operations in the healthcare industry and its continuous growth in total operating income (TOI) in last three financial years ended FY17. The rating further derives strength from diversified revenue streams, moderate occupancy level and continuous infusion of funds by the promoters. Detailed description of the key rating drivers Key Rating Weakness Financial risk profile marked by continuous net losses, leveraged capital structure and stressed liquidity position SBID margin of the trust has witnessed continuous improvement in last four financial years ended FY17. Despite continuous improvement in SBID margin, it has registered deficit in last four financial years ended FY17 owing to higher depreciation expenses. SMD has registered deficit of INR0.76 crore in FY17. The capital structure of the hospital stood highly leveraged mainly due to higher unsecured loans from promoters and relatives and continuous net losses. Debt coverage indicators stood moderate with total debt to GCA stood at 8.02 times as on March 31, 2017, the interest coverage ratio of the hospital stood healthy at 6.98 times as on March 31, 2017. The liquidity position stood stressed with below unity level of current and quick ratio as on March 31, 2017, and full utilization of its overdraft limit during last 12 months ended May 2017. Project implementation risk The trust undertaken an expansion project for starting new department of Ear Nose and Throat (ENT) and has envisaged total project cost of INR2.55 crore to be funded through term loan of INR1.45 crore, INR0.60 crore from internal accruals and remaining through the unsecured loans. However, it has not achieved financial closure. Till May 19, 2017, it has incurred INR0.70 crore towards the project which was funded through internal accruals and unsecured loans. The project is expected to be completed by July 2017. Reputational risk Healthcare is a highly sensitive sector where any mishandling of a case or negligence on part of any doctor and/or staff of the unit can lead to distrust among the masses. Thus, all the healthcare providers need to monitor each case diligently and maintain standard of services in order to avoid the occurrence of any unforeseen incident. They also need to maintain high vigilance to avoid any malpractice at any pocket. Fragmented nature of industry leading to high competition with vigilant regulatory bodies The healthcare sector is highly fragmented with few players in the organized sector. Barring a few, most of the organized sector players have one or two hospitals only. All these lead to high level of competition in the business. Furthermore, healthcare sector is highly regulated and kept under the close vigilance of various regulatory bodies in India like, Ministry of Health & Family Welfare, Central Drug Standard Control Organization, etc. Key Rating Strengths Experienced management in the hospital industry with continuous infusion of funds in the trust The management of hospital has vast experience in the same line of business and is well qualified. Mr. Ashok Odhrani, Chairman, looks after overall affairs of the trust. Furthermore, trustees of the hospital are assisted by well qualified doctors, consultants and second-tier management. Further, the promoters of the trust are continuously infusing unsecured loans to support its operations and to meet working capital requirements. Established track record of operations of running hospital having experienced staff and healthy occupancy level SMD was running hospital since 1985 and hence, has a track record of more than two decades for running multi-specialty hospital successfully and offers services in cardiology, urology, nephrology and neurology. The hospital is a 100-bed multispecialty hospital and the occupancy rate of the hospital remained moderately healthy at 60- 70% in last three financial years ended FY17. The hospital has well qualified and experienced 11 in-house doctors, 20 visiting doctors, 73 nursing staff and 54 supporting staff with doctor's average experience of 20 years. The occupancy rate stood moderate at 60% in FY16 and improved to 70% in FY17. Diversified revenue stream attributing growth in Total Operating Income (TOI) Trust generates income from diversified revenue streams such as donations from trustees, Research center, ayurvedic division, homeopathic division, medical store running under Monilek Pharmacy, Monilek Hospital and Monilek heartcare division. Total operating income of the trust has witnessed an increasing trend and grew at a compounded annual growth rate (CAGR) of 19.83% from past three financial year ended FY17. SMD was formed in 1985 by Mr. Lekhraj Odhrani, Mr. Ashok Odhrani and Mr. Narendra Odhrani along with a group of practicing medical consultants. SMD is operating a multi and super-specialty hospital, under the name of "Monilek Hospital and Research Center" at Jaipur having 100 beds which includes general wards, private rooms and Intensive-Care Units (ICU), etc. The hospital provides specialized services related to various medical specialties viz. cardiology, urology, nephrology and neurology. SOVA SOLAR: Ind-Ra Hikes Issuer Rating to 'BB+'; Outlook Stable --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Sova Solar Limited's (SOSL; formerly Sova Power Limited) Long-Term Issuer Rating to 'IND BB+' from 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR115 mil. Fund-based limits upgraded with IND BB+/Stable rating; -- INR54.6 mil. (reduced from INR67.60 mil.) Working capital term loan due on March 2020 upgraded with IND BB+/Stable rating; -- INR8.9 mil. (reduced from INR26.4 mil.)due on Funded interest term loan March 2018 upgraded with IND BB+/Stable rating; and -- INR150 mil. Non-fund-based limits affirmed with IND A4+ rating. KEY RATING DRIVERS The upgrade reflects the significant growth in SOSL's revenue in FY17 to moderate levels, on back of an increase in the number of work orders. However, EBITDA and credit metrics improved only slightly due to a fall in margins, mainly due to an increase in raw material expenses. Also, the customer concentration has been high, as around 80% of the order book is from Larson & Tubro Limited. According to the FY17 provisional financials, revenue was INR1,057 million (FY16: INR593 million), operating EBITDA was INR51 million (INR42 million), EBITDA margins were 4.9% (7.1%), interest coverage (operating EBITDA/ gross interest expense) was 1.7x (1.1x) and net leverage (net debt/ operating EBITDA) was 5.5x (6.6x). The upgrade also reflects the improvement in the outstanding order book to INR1,599.9 million (1.5x of FY17 revenue) to be executed by end-FY18 from INR233.69 million earlier. The ratings continue to reflect SOSL's moderate liquidity, as seen in the 71.4% average utilisation of its working capital limits for the 12 months ended June 2017. The net cash cycle days improved to 61 days in FY17 (FY16: 111 days) on back of a decline in receivable days. The ratings continue to be supported by the company's promoters' around a decade of experience in the solar business. RATING SENSITIVITIES Positive: An improvement in the order book leading to substantial visibility of revenue growth leading to improvement in profitability may lead to positive rating action. Negative: A decline in the profitability leading to deterioration in the credit profile would lead to a negative rating action. COMPANY PROFILE SOSL was formed in 2009 by the promoters of SOVA GROUP for manufacturing crystalline solar photovoltaic modules. The company has an 18MV solar capacity in Durgapur, West Bengal, India. Apart from the production of modules, SOSL provides complete engineering, procurement and construction solutions. SRI LAKOSHA: CRISIL Reaffirms 'B' Rating on INR3MM Loan ------------------------------------------------------- CRISIL has been consistently following up with Sri Lakosha Polymer Private Limited (SLPPL) for obtaining information through letters and emails dated March 06, 2017 and March 22, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Letter of Credit 19 CRISIL A4 (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term 2.2 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) Term Loan 3.3 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Sri Lakosha Polymer Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Sri Lakosha Polymer Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has downgraded the long term rating to 'CRISIL B/Stable and reaffirmed the short term rating at CRISIL A4'. SLPPL, promoted in 1998 by Mr. Sridharan (joint managing director) and his wife, Mrs. S Lalitha (joint managing director), trades in polymer products. The company imports these products from countries such as Saudi Arabia, Kuwait, and Malaysia and sells to traders and plastic manufacturers in Tamil Nadu. The company's administrative office is in Tirupur. SUSTAINABLE SPINNING: CRISIL Cuts Rating on INR44.5MM Loan to 'B' ----------------------------------------------------------------- CRISIL has been consistently following up with Sustainable Spinning and Commodities Private Limited (SSCPL; part of Milan group)) for obtaining information through letters and emails dated February 8, 2017 and April 05, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3 CRISIL A4 (Issuer Not Cooperating; Downgraded from 'CRISIL A4+') Cash Credit 8 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB+/Stable') Proposed Long Term 9.5 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Downgraded from 'CRISIL BB+/Stable') Term Loan 44.5 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB+/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Sustainable Spinning and Commodities Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Sustainable Spinning and Commodities Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable/CRISIL A4' For arriving at the rating, CRISIL has combined the business and financial risk profiles of Milan Ginning Pressing Pvt Ltd (MGP), KR Solvent (KRS), and SSCPL. This is because the three entities, together referred to as the Milan group, have common promoters and management, and are engaged in similar lines of business. MGP, incorporated in 1995, gins cotton at its facilities in Surendranagar (Gujarat). The company is promoted and managed by Mr. Husen Ali Yusuf Ali Narsinh. KRS, set up in 2011, extracts cotton oil by processing cotton seeds. SSCPL, incorporated in 2012, is engaged in cotton spinning. SWATI MENTHOL: CRISIL Lowers Rating on INR120MM Loan to 'B' ----------------------------------------------------------- CRISIL has been consistently following up with Swati Menthol and Allied Chemicals Limited (SMACL) for obtaining information through letters and emails dated March 16, 2017, among others, apart from telephonic communication. However, the issuer has remained non-cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3 CRISIL A4 CRISIL A4 (Issuer Not Cooperating; Downgraded from 'CRISIL A3+') Cash Credit 27 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BBB/Negative') Export Packing Credit 120 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BBB/Negative') Foreign Bill Purchase 25 CRISIL B (Issuer Not Cooperating; Downgraded from 'CRISIL BBB/Negative') Letter of Credit 25 CRISIL A4 CRISIL A4 (Issuer Not Cooperating; Downgraded from 'CRISIL A3+') Proposed Export 30 CRISIL A4 CRISIL A4 (Issuer Packing Credit Not Cooperating; Downgraded from 'CRISIL A3+') Proposed Long Term 16 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Downgraded from 'CRISIL BBB/Negative') Standby Line of Credit 29 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BBB/Negative') Term Loan 20 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BBB/Negative') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company'. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of SMACL. This restricts CRISIL's ability to take a forward-looking view on the credit quality of the entity. CRISIL believes that the information available for SMACL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information' consistent with CRISIL B category rating or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable/CRISIL A4' from 'CRISIL BBB/Negative/CRISIL A3+' SMACL was set up in 1990 by Mr. S K Gupta as a private limited company. It was reconstituted as a public limited company in 2001. It currently has two manufacturing plants located in Rampur (Uttar Pradesh) and are engaged in manufacturing of Menthol and allied products, Pine and Aroma chemicals. SMACL manufactures 53 products, including Menthol Crystals, Peppermint oil, Terpineol, Terpinyl Acetate, Dihydromyrcenol, Eucalyptus oil and several other aroma chemicals, all of which find application in several industries including Pharmaceuticals, Food, Oral care, Flavor, Fragrances, Tobacco, Cosmetics, and Paint. TDI INFRATECH: CRISIL Reaffirms B- Rating on INR164.5MM Term Loan ----------------------------------------------------------------- CRISIL's ratings on the bank facilities of TDI Infratech Limited (TDI) continue to reflect its weak financial risk profile, especially liquidity, due to large debt contracted to fund projects, slow realisation of receivables, large funding for upcoming projects, and vulnerability to inherent risks and cyclicality in the Indian real estate sector. These weaknesses are partially offset by its promoters' extensive industry experience and their funding support. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 20 CRISIL A4 (Reaffirmed) Overdraft 25 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility 0.5 CRISIL B-/Stable (Reaffirmed) Term Loan 164.5 CRISIL B-/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile, especially liquidity: TDI has weak liquidity due to delayed payments by customers. The company has two township projects at Mohali (TDI City I and TDI City II) in Punjab, and one in Panipat, Haryana. As on March 31, 2017, the company had receivables of INR132 crore in TDI City I, INR661 crore in TDI City II, and INR874 crore in the Panipat project. Large cost of new projects will keep liquidity constrained, and timely inflow of customer advances will remain a rating sensitivity factor. * Susceptibility to inherent risks and cyclicality in the real estate sector: The real estate industry is subject to multiple property laws and government regulations, which affect project tenure and constrain players' scale of operations. Strengths * Extensive industry experience of the promoters and their funding support: TDI is part of the TDI group, which was established in 1975. Its promoters have been in the construction and development business for more than four decades, and have knowledge of the real estate market in northern India. The promoters have supported the company by infusing funds when required. The networth as on March 31, 2017 was at INR183 crore. Outlook: Stable CRISIL believes TDI will continue to benefit from its promoters' extensive industry experience and funding support. The outlook may be revised to 'Positive' if sizeable customer advances lead to better cash inflow, or significant fund infusion eases pressure on liquidity. The outlook may be revised to 'Negative' if liquidity deteriorates because of low or delayed customer advances, or simultaneous and aggressive launch of new projects. Incorporated in 1999 and promoted by members of the Taneja family, TDI undertakes real estate development in Punjab and Haryana. The company is developing two townships in Mohali and one in Panipat, and is likely to launch a new project in Sonipat, Haryana. Net profit is estimated at INR6.17 crore on net sales of INR207.65 crore in fiscal 2017, against a net profit of INR4.26 crore on net sales of INR207.14 crore in fiscal 2016. VEDANTA RESOURCES: S&P Rates New US$-Denom. Sr. Unsec. Notes B+ --------------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issue rating to a proposed issue of U.S. dollar-denominated senior unsecured notes by Vedanta Resources PLC (foreign currency: B+/Stable/--). The rating is subject to S&P's review of the final issuance documentation. S&P said, "We believe the proposed issuance will partly refinance Vedanta Resources' debt maturities over the next 12-15 months. The company plans to use the proceeds to partly refinance its bank loans, and to fund a tender offer for its outstanding bonds due 2019 and 2021. The proposed notes, therefore, would not have any impact on Vedanta Resources' cash flow leverage ratios, though they will improve the liquidity position and extend the average debt maturity. "Since our upgrade of Vedanta Resources on Jan. 16, 2017, the company's operating and financial performance is largely on track to meet our expectations for fiscal year ending March 31, 2018. The company's operating performance during the first quarter of fiscal 2018 was softer than our expectations. However, we expect performance to recover over next few quarters with the restarting of affected units in the power business and a ramp-up at the aluminum business. "The operational issues at Vedanta Resources' aluminum and power operations, higher raw material costs, and unfavorable currency movements contributed to a weaker performance relative to our expectations in the first quarter of fiscal 2018. Sustained strong prices and good production at the zinc operations with higher EBITDA from the oil business supported cash flows in the first quarter. Overall, we believe Vedanta Resources' fund from operations (FFO) to debt will likely approach 10%-11% by end fiscal 2018, from 5.9% in fiscal 2017. Sustained high zinc prices and a ramp-up of aluminum operations with solid profitability will be essential for the company to reach these ratio levels. We could raise the rating if we expect Vedanta Resources' ratio of FFO to debt will be above 12% on a consistent basis." Vedanta Resources completed a merger of its subsidiaries Cairn India and Vedanta Ltd. S&P said, "In our view, the merger will improve the cash flow fungibility within Vedanta Ltd. by simplifying the group structure to some extent. However, it will not change Vedanta Resources' financial metrics or materially improve cash flow fungibility between Vedanta Ltd. and the holding company Vedanta Resources." VETRIVEL EXPLOSIVES: CRISIL Cuts Rating on INR31.45MM Loan to D --------------------------------------------------------------- CRISIL has removed its ratings on the bank facilities of Vetrivel Explosives Private Limited from 'Rating Watch with Negative Implications', and has downgraded the ratings to 'CRISIL D/CRISIL D' from 'CRISIL B/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4 CRISIL D (Removed from 'Rating Watch with Negative Implications'; Downgraded from 'CRISIL A4') Cash Credit 15 CRISIL D (Removed from 'Rating Watch with Negative Implications'; Downgraded from 'CRISIL B') Letter of Credit 4 CRISIL D (Removed from 'Rating Watch with Negative Implications'; Downgraded from 'CRISIL A4') Term Loan 31.45 CRISIL D (Removed from 'Rating Watch with Negative Implications'; Downgraded from 'CRISIL B') On December 23, 2016, CRISIL had downgraded the ratings to 'CRISIL B/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+' and placed the rating on 'Watch with Negative Implications'. The rating action followed weakening of financial risk profile, especially liquidity due to temporary suspension of the company's license by the chief controller of Explosives from the Petroleum and Explosives Safety Organisation following an accident in the factory on December 1, 2016, and the lack of clarity in the timeline for restarting of operations and stabilization of operating performance. The rating is being removed from watch as there is currently a delay in meeting debt obligations and the explosive division continues to remain shutdown The rating downgrade reflects delays in servicing term debt because of weak liquidity following the shutdown of the explosive division. The ratings also reflect a modest scale of operations in the intensely competitive civil explosives segments. This rating weaknesses are partially offset by the extensive industry experience of the promoters Key Rating Drivers & Detailed Description Weakness * Modest scale of operations in an intensely competitive segment: There is intense competition in the domestic civil explosives business because of a large number of players in a fragmented industry. Strengths * Extensive experience of promoters: The promoters have an experience of around 17 years in the civil explosives business benefitting the company's business profile VEPL was set up as a partnership firm in Salem, Tamil Nadu, in 1999, and was reconstituted as a closely held private limited company in 2000. Till fiscal 2013, it only manufactured civil explosives. Since fiscal 2014, post-merger with Sivasakthi Hotels, it has been operating a 4-star hotel in Salem. Profit after tax (PAT) was INR4.3 crore on operating income of INR139.8 crore in fiscal 2016, as against a PAT of INR1.8 crores on operating income of INR113.6 crores in fiscal 2015 VISHNU CARS: Ind-Ra Migrates Issuer Rating to 'B' Not Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Vishnu Cars Pvt Ltd's (VCPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR200 mil. Fund-based working limits migrated to non- cooperating category with IND B(ISSUER NOT COOPERATING) rating; and -- INR66.03 mil. Long-term loans migrated to non-cooperating category with IND B(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on 28 June 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE VCPL was incorporated in 2005 as the authorised dealer for Hindustan Motors Ltd. In 2010, the company switched to the dealership of Maruti Suzuki India Limited. It has five showrooms, seven service centres and one stockyard in Chennai. ========= J A P A N ========= TOSHIBA CORP: Creditors Involved in Workout Push for Bankruptcy --------------------------------------------------------------- Kosaku Narioka, Takashi Mochizuki and Peter Landers of The Wall Street Journal report that a number of creditors and others involved in Toshiba Corp.'s restructuring are pushing for a Toshiba bankruptcy filing as the best path to rebirth after its effort to raise money through a chip-unit sale stalled. People involved in talks over Toshiba's workout, including business partners, lawyers and people with ties to the company's main bankers, said bankruptcy is worth serious study, the Journal relates. Some of them said it is the best available option and that they are advocating it in discussions with Toshiba or creditors. They said a bankruptcy filing by Toshiba, the core of an industrial conglomerate, could free it of burdens that include lingering liabilities from the March bankruptcy of its Westinghouse Electric Co. nuclear unit in the U.S., the Journal relays. According to the Journal, Toshiba's chief executive, Satoshi Tsunakawa, said at a recent news conference that seeking debt relief through the courts isn't an option. A Toshiba spokesman reiterated last week that the company has "no specific plan" to seek bankruptcy protection, the Journal 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: Ordered to Notify WD of Any Deal to Sell Chip Unit ---------------------------------------------------------------- The Japan Times reports that a request to block Toshiba Corp. from raising much-needed cash by selling a flash-memory venture was taken off the table in a California court on July 28. The report says Toshiba and Western Digital agreed to an order recommended by a state court judge who asked the companies to collaborate on an agreement instead of dueling over an injunction requested by Western Digital. Toshiba said the agreement requires the company to publicly announce the signing of any deal to sell the venture and provide Western Digital two weeks' notice before any such sale closes, according to the report. The notice would give Western Digital time to react to a sale in court or with an arbitration panel, the report relates. "We are very pleased to have reached this mutually acceptable understanding which is effective for a very limited time and which recognizes Toshiba's right to negotiate and sign a definitive agreement for the sale of its memory business," Toshiba Corp. Senior Executive Vice President Yasuo Naruke said in a release announcing the stipulated agreement, the Japan Times relays. Toshiba expected that such a deal would take months to consummate, the report says. The agreement is to remain in effect until 60 days after an international arbitration panel has been created to consider the matter, the Japan Times notes. The report says while the battle playing out in a San Francisco court has captured attention, the clash between the companies is expected to be resolved in arbitration. "We don't expect to close a deal during the period addressed in the order," the report quotes Toshiba as saying in a released statement. "Toshiba therefore remains focused on preparing for the ICC (Chamber of Commerce) arbitration process, which we believe is the appropriate venue to address these issues." According to the report, the hearing on July 28 was held to consider a request by Western Digital for an injunction stopping Toshiba from selling interests in three NAND flash-memory joint ventures operated with Western Digital's SanDisk subsidiaries. The report relates that Toshiba was free to continue negotiations for the sale of the chip division as the matter made its way to likely arbitration in an international forum. Western Digital said in a release that the agreement protects SanDisk's interests while waiting to face off with Toshiba in international arbitration. "Our ongoing discussions with Toshiba and its stakeholders have been constructive, and we will continue to work to seek a solution that is in the best interests of all parties," Western Digital, as cited by the Japan Times, said in a release. Toshiba has a negative net worth, and a second consecutive failure to erase it may result in its delisting from the Tokyo Stock Exchange, the report discloses. The Japan Times notes that the chip unit sale is seen as key to Toshiba's turnaround. Western Digital, which jointly runs a key chip plant in Japan with Toshiba, opposes the sale. According to the report, Toshiba's CEO had blasted the U.S. firm's bid for a court injunction as "unfair interference." Toshiba later said it has filed a JPY120 billion ($1 billion) lawsuit against its U.S. partner over the disputed deal, adds The Japan Times. 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 ==================== SOLID ENERGY: Regulatory Approval Clears Way for Liquidation ------------------------------------------------------------ Solid Energy said on July 28 that BT Mining Limited has received approval from the Overseas Investment Office for the purchase of the Stockton export coal operation and the two Waikato mines, Rotowaro and Maramarua, and looks forward to settling the transaction at the end of August. Solid Energy Chief Executive Tony King said that this milestone represents the last major transaction in the company's asset sale process and effectively signals the beginning of the company's wind down process as it heads into solvent liquidation. "Once the sale of these assets to BT Mining is concluded we will be progressively completing remaining operational and administrative activities by December 2017 prior to the company going into liquidation by March 2018," said Mr. King. Mr. King said that the liquidation of Solid Energy has been the planned outcome since the company entered a Deed of Company Arrangement with creditors in September 2015. That arrangement has seen the company's land, mines and other assets sold to a range of purchasers. About Solid Energy Solid Energy New Zealand Ltd is New Zealand's largest coal mining company and an investor in research and commercialisation of sustainable forms of energy that use coal, coal seam gas, biomass, biodiesel and solar. Solid Energy's core mining business includes hard coking coal, primarily for export to steel mills throughout Asia, and thermal coal for the Huntly power station and other domestic customers in the steel, dairy and cement industries. As reported in the Troubled Company Reporter-Asia Pacific on Aug. 13, 2015, the Board of Solid Energy New Zealand Limited (SENZ) has placed the company and all associated companies into voluntary administration, a process which allows the company to continue trading while creditors consider the best way forward. KordaMentha partners, Brendon Gibson and Grant Graham have been appointed Administrators. Creditors of the Solid Energy Group on September 17 approved a Deed of Company Arrangement (DOCA) with the Group. ==================== S O U T H K O R E A ==================== DAEWOO ENGINEERING: KDB Picks 2 Candidates to Manage Sale --------------------------------------------------------- Yonhap News Agency reports that the state-run Korea Development Bank (KDB) said on July 24 it has picked Bank of America Merrill Lynch and Mirae Asset Daewoo as candidates to lead and manage the planned sale of its controlling stake in Daewoo Engineering & Construction Co. According to Yonhap, KDB will select a lead manager after negotiating prices and other terms with the two candidates before making a formal announcement of the sale of its 50.75 percent stake in the builder by the end of September. The stake owned by the lender is valued at some KRW1.65 trillion (US$1.47 billion) and is held by a private equity fund owned by KDB, the report discloses. In 2010, KDB, a key creditor of Kumho Asiana Group, purchased Daewoo Engineering to help the debt-ridden parent group restructure its finances, Yonhap recalls. Kumho Asiana's two subsidiaries -- Kumho Tire and Kumho Industrial -- have been under a debt restructuring program since early 2010 due to a severe cash crunch sparked by the group's purchase of Daewoo Engineering in 2006, says Yonhap. Headquartered in Seoul, South Korea, Daewoo Engineering & Construction Co. -- http://www.daewooenc.com/-- has become a world leader in civil engineering, housing construction, power and industrial plant development, architectural services, and construction of liquid natural gas facilities. In addition to large-scale domestic projects, Daewoo has more recently built gas plants in Nigeria, a hospital in Libya, and the Trump World Tower in New York, to name a few. KUMHO TIRE: Creditors OK Kumho Asiana's Proposal in Brand Dispute ----------------------------------------------------------------- Yonhap News Agency reports that creditors of Kumho Tire Co. have decided to accept the offer by the tiremaker's parent group in a brand dispute with the Chinese buyer, clearing the final hurdle in the sale of South Korea's No. 2 tiremaker, an official the main creditor said on July 28. In March, China's Qingdao Doublestar Co. signed a KRW955 billion (US$852 million) deal to acquire a 42 percent stake in Kumho Tire, but the process of acquisition hit a snag over how much Kumho Tire should pay for the use of the Kumho brand name, Yonhap relates. Yonhap notes that Kumho Asiana Group, Kumho Tire's parent group, has demanded that Kumho Tire pay 0.5 percent of its sales as a brand usage fee to Kumho Asiana Group for 20 years. Under the agreement approved by more than 75 percent of creditors of Kumho Tire, the tiremaker is required to pay 0.2 percent of its sales as a brand usage fee to Kumho Asiana Group for 20 years, an official of the state-run Korea Development Bank, according to Yonhap. Yonhap relates that the official also said the creditors would give 0.3 percent of Kumho Tire's sales to Kumho Tire, which then pay the money to Kumho Asiana Group. Given that Kumho Tire has annual sales of about KRW3 trillion, the difference of 0.3 percentage point was estimated to be some KRW9 billion, Yonhap reports citing creditor bank officials. The official said the creditors' decision would remove obstacles in the sale of Kumho Tire to Qingdao Doublestar, Yonhap reports. Kumho Tire was placed under a creditor-led workout program in 2009 after its parent company was hit by a liquidity problem following its takeover of Daewoo Engineering and Construction Co. =========== T A I W A N =========== TAIWAN FINANCE: Fitch Affirms 'bb+' Viability Rating ---------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) on six Taiwanese bills finance companies (BFCs): International Bills Finance Corporation (IBF), China Bills Finance Corporation (CBF), Grand Bills Finance Corporation (Grand), Taching Bills Finance Corporation (Taching), Dah Chung Bills Finance Corporation (Dah Chung) and Taiwan Finance Corporation (TFC). At the same time, Fitch has affirmed the ratings of Waterland Financial Holdings (Waterland Financial) and Waterland Securities Corporation (Waterland Securities), which are driven by and equalised with the ratings of IBF, the principal operating subsidiary of the group. The Outlooks are all Stable. A full list of rating action is provided at the end of this commentary. KEY RATING DRIVERS IDRS AND NATIONAL RATINGS The IDRs and National Ratings of IBF, CBF, Grand, Taching and Dah Chung are driven by their standalone credit profiles, which are reflected in their Viability Ratings. The Stable Outlooks underline Fitch's expectation that these BFCs will maintain satisfactory capital strength and adequate liquidity relative to their large commercial paper guarantees and fixed-income investments and to manage unexpected losses in their bond investments if interest rates rise abruptly. TFC's IDRs and National Ratings reflect potential institutional support from its largest shareholders - Mega International Commercial Bank Company Limited, IBF and Cathay United Bank - which is reflected in its Support Rating. The Stable Outlook is based on Fitch's belief that shareholder support is not likely to weaken in the near to medium term. The 'bbb' Viability Ratings of IBF and CBF reflect the companies' strong market positions in Taiwan's bills finance sector, generally consistent risk appetite over economic cycles and sound capitalisation. The ratings also take into account the sector's inherently weak business model, which has limited business scope, high concentration risk, complete wholesale funding and susceptibility to market volatility. The 'bbb-' Viability Ratings of Dah Chung, Grand and Taching are based on the companies' modest franchises in guarantee and fixed- income market making, more variable risk appetite over economic cycles and higher concentrations in repo counterparties. Their focus on creditworthy corporates and maintenance of sound capital buffers helps mitigate the associated risks. TFC's lower Viability Rating of 'bb+' considers its smaller franchise and higher growth risk against other rated BFCs. The company is a price taker in the guarantee business and lacks a competitive niche. That being said, TFC's capitalisation is adequate relative to its risk profile. Fitch expects the BFCs' profitability to moderate in 2017 and 2018 on the basis of no major changes in the central bank policy rate. Spreads are likely to narrow as some of the higher-yield bonds mature and abundant system liquidity pressures guarantee pricing. Rated BFCs reported an average return on assets of 0.8% in 2016, slightly down from 0.9% in 2015, due to modest foreign- exchange losses and lower equity trading gains. Fitch expects the BFCs' growth of risk assets to slow in 2017- 2018, given capitalisation constraints. The pressure on spreads amid the low interest-rate environment has led to the BFCs increasing their exposure to guarantees and fixed-income investments to hold up their earnings. As such, the average regulatory capital ratio and Fitch Core Capital ratio of rated BFCs have declined to around 13.8% at end-2016, from 14.4% and 14.7%, respectively, at end-2015. The companies aim to maintain their regulatory capital ratios at around 13%-14%. The risk of rapid guarantee exposure increases in 2016 is mitigated by the BFCs' focus on established, creditworthy borrowers and their adequate collateralisation and provisioning. The reserves of rated BFCs covered 1.4% of total guarantees at end-2016. Meanwhile, interest-rate risk exposures remain modest. The impact of a 100bp rate hike would have been 11.3% of rated BFCs' equity at end-2016. WATERLAND FINANCIAL AND WATERLAND SECURITIES The rating of Waterland Financial and the Stable Outlook are aligned with those of IBF, based on the high level of integration between the two companies and the parent's modest leverage and sound standalone liquidity. The rating of Waterland Securities and the Stable Outlook are aligned with that of Waterland Financial, reflecting the obligatory support from the holding parent under Taiwan's Financial Holding Company Act and huge reputational risk to the parent in case of subsidiary default. SUPPORT RATING AND SUPPORT RATING FLOOR IBF's and CBF's '4' Support Ratings and 'B+' Support Rating Floors reflect a limited probability of government support, if needed, due to their low systemic importance. The Support Ratings and Support Rating Floors of Grand, Taching and Dah Chung reflect Fitch's view that state support cannot be relied on due to their lack of systemic importance. TFC's Support Rating is driven by Fitch's expectation that its bank shareholders would provide support to the company, if needed. RATING SENSITIVITIES IDRS AND NATIONAL RATINGS The IDRs and National Ratings of IBF, CBF, Grand, Taching and Dah Chung are sensitive to the same factors affect their Viability Ratings. A change in Fitch's assessment of the ability or propensity of TFC's largest shareholders to provide support is likely to result in a change in its IDRs and National Ratings. VIABILITY RATINGS IBF's and CBF's Viability Ratings have limited upside due to their concentrated business model and modest franchise compared with similarly rated domestic banks. An upgrade for Dah Chung, Grand, Taching and TFC could be considered if the companies meaningfully improve their franchise, demonstrate a more consistent risk appetite through economic cycles and moderate concentration risk in credit and liquidity. Negative rating action may result from weakened capital strength due to further aggressive growth in the guarantee book or market risk, but this is not Fitch base-case scenario. WATERLAND FINANCIAL AND WATERLAND SECURITIES Waterland Financial's ratings are driven by the financial strength of its principal operating subsidiary, IBF. Any weakening of IBF's credit profile or Waterland Financial's standalone liquidity and leverage could pressure its ratings. Waterland Securities' ratings will move in tandem with the ratings of its parent, Waterland Financial. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Ratings and Support Rating Floors of IBF, CBF, Grand, Taching and Dah Chung are sensitive to changes in assumptions around the propensity of the government to provide timely support. TFC's Support Rating may be downgraded if the willingness or ability of its large bank shareholders to extend support was deemed to have deteriorated. The rating actions are: IBF: Long-Term IDR affirmed at 'BBB'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb' Support Rating affirmed at '4' Support Rating Floor affirmed at 'B+' Waterland Financial: Long-Term IDR affirmed at 'BBB'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb' Waterland Securities: Long-Term IDR affirmed at 'BBB'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' CBF: Long-Term IDR affirmed at 'BBB'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb' Support Rating affirmed at '4' Support Rating Floor affirmed at 'B+' Dah Chung: Long-Term IDR affirmed at 'BBB-'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' Taching: Long-Term IDR affirmed at 'BBB-'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' Grand: Long-Term IDR affirmed at 'BBB-'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bbb-' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' TFC: Long-Term IDR affirmed at 'BBB-'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable National Short-Term Rating affirmed at 'F1(twn)' Viability Rating affirmed at 'bb+' Support Rating affirmed at '2' =============== X X X X X X X X =============== REPUBLIC OF FIJI: S&P Affirms B+ Sovereign Rating, Outlook Stable ----------------------------------------------------------------- On July 27, 2017, S&P Global Ratings affirmed its long-term foreign and local currency sovereign ratings on the Republic of Fiji at 'B+'. S&P also affirmed its short-term rating on Fiji at 'B'. The outlook is stable. Fiji's transfer and convertibility is 'B+'. RATIONALE S&P said, "The rating affirmation on Fiji reflects our view of the country's weak institutional settings, limited monetary policy flexibility, income levels, and weakening fiscal metrics constrain the government's credit-standing. Mitigating these weaknesses are the government's falling interest costs and its sound external position. "Cyclone Winston's effect on the economy and fiscal balance is likely to be temporary, and we expect Fiji's credit quality to remain stable. On Feb. 20, 2016, tropical Cyclone Winston caused major damage and disruptions to the economy, with a significant proportion of the damage being to private property, including housing, rather than government-owned infrastructure. The cyclone damaged roads, agriculture, and the sugar industry. The central business district in Suva and key tourism areas around Nadi avoided the brunt of the cyclone and incurred relatively limited damage to key infrastructure. "We forecast real economic growth to rise to 3.8% in 2017 as the economy recovers from Cyclone Winston. This will help drive Fiji's GDP per capita to more than US$5,400 by the end of 2017 and improve the country's economic outlook in the medium-term. Reconstruction works, Fiji National Provident Fund's assistance (worth about FJ$260 million in total), government assistance, and donor and multilateral agency aid will support economic growth and offset the temporary the effect on the agriculture and sugar industries. Growth slowed to about 2.0% in fiscal 2016, following Cyclone Winston and capacity constraints during the reconstruction effort. "We forecast the government's fiscal position to weaken in 2018 after performing better than expected in 2016. The 2017-2018 budget announced several large spending initiatives that will be only partially offset by higher tax receipts, driving Fiji's deficit to more than 6% of GDP. We forecast public sector reforms, including higher wages; tertiary education spending; and infrastructure spending to increase total expenditure by more than 40% in 2018 from a year earlier. Part of this increase reflects re-profiling of expenditure from 2017 to 2018. To fund this, the government forecasts total receipts will increase about 26% in 2018 with higher tax and VAT receipts, custom duties, dividends and asset sales. "We forecast fiscal deficits to average about 4% of GDP for the next three years, resulting in the annual change in general government debt rising to about 3.5% of GDP between 2017 and 2019 as Fiji funds infrastructure and operating expenses, including higher public service wages. This will increase net general government debt to 46% of GDP in 2018, which is about two years later than we previously expected. Interest expenditure will average about 9% of revenues, down from more than 10% in the past. Falling interest costs reflect improved market pricing on the refinancing of the government's international bond in 2015, and a higher proportion of concessional borrowings from the Asian Development Bank and World Bank than in the past." Shortcomings in infrastructure and basic services, and the urgent need for reconstruction after Cyclone Winston constrain the government's budgetary flexibility, especially because the increase in receipts that the government has forecast for 2018 will be more than offset by higher recurring expenditure. Fiji's external metrics remain supportive of the sovereign ratings. External liquidity--measured by gross external financing needs as a percentage of current account receipts and usable reserves--is likely to average about 93% between 2017 and 2019. Meanwhile, external borrowings (measured by narrow net external debt) are likely to rise to 10% of CAR in 2018. S&P said, "We expect tourism to support Fiji's services receipts and external position as current account deficits remain at similar levels to 2016. The current account widened in 2016, when imports rose because of reconstruction activity and goods exports such as sugar and timber fell in the aftermath of Cyclone Winston. During 2016, foreign aid and inward remittances sent to support relatives funded a large proportion of the current account deficit. Official reserves remain comfortable at more than US$900 million (equal to about four months of import coverage). Weighing on external metrics is Fiji's high reliance on foreign financing, as indicated by its much greater level of net external liabilities relative to narrow net external debt. This could make Fiji more susceptible to shifts in foreign investor sentiment. "We regard the Reserve Bank of Fiji's ability to support sustainable economic growth while attenuating economic or financial shocks to be constrained. The pegged currency arrangements restrict the country's monetary flexibility. This policy requires the authorities to focus on exchange-rate stability at the expense of stability in domestic prices and economic growth. A lack of effective monetary policy transmission to the economy, which is a result of Fiji's underdeveloped financial system, further limits flexibility." Extensive foreign-exchange restrictions are a further hindrance, though they have gradually eased in recent years as Fiji has rebuilt its official reserves. The political state in Fiji appears to have stabilized since democratic elections were held in 2014. This is reflected in improved relations with the international community, including donor agencies. The effectiveness of policymaking remains mixed, with limited checks and balances. While the quality and timeliness of data are improving, there are still some deficiencies in this area. OUTLOOK S&P said, "The stable outlook reflects our expectations that the Fijian government will ensure that Cyclone Winston has only a temporary effect on the nation's fiscal position and economy and will safeguard the country's external position and reserve levels. "We could lower the ratings within the next 12 months if the government's fiscal position weakens substantially beyond our forecasts, resulting in net debt rising toward 60% of GDP. A downgrade also could occur if the political and policy environment becomes unpredictable, causing a decline in domestic and foreign investor confidence, and the withdrawal of donor and multilateral support. "We might raise our ratings if Fiji's economic growth remains strong, enabling the government to replace lost capital after Cyclone Winston, while improving its fiscal position. At the same time, an upgrade would be predicated on the government reducing its foreign-exchange restrictions and maintaining a healthy level of reserves. "In accordance with our relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable (see 'Related Criteria And Research'). At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee agreed that no assessment had changed. All other key rating factors were unchanged. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action (see 'Related Criteria And Research'). RATINGS LIST Ratings Affirmed Republic of Fiji Sovereign Credit Rating B+/Stable/B Transfer & Convertibility Assessment Local Currency B+ Republic of Fiji Senior Unsecured B+ ********* 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. 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