/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170816.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 Wednesday, August 16, 2017, Vol. 20, No. 162 Headlines A U S T R A L I A ALPHA59 PTY: Second Creditors' Meeting Set for Aug. 22 BRISCONNECTIONS: Trial on Arup Dispute with Receivers Set Oct. DICK SMITH: Deloitte Faces Suit Over Financials Auditing FRENCH VILLA: Second Creditors' Meeting Set for Aug. 23 MANNAGUM ENTERPRISES: First Creditors' Meeting Set for Aug. 23 POSP HOLDINGS: Second Creditors' Meeting Set for Aug. 22 TORBEY INVESTMENTS: Second Creditors' Meeting Set for Aug. 22 WANDER MMO: First Creditors' Meeting Scheduled for Aug. 24 H O N G K O N G ASIA TELEVISION: Scheme Meeting Scheduled for September 12 I N D I A ALFA TRANSFORMERS: CRISIL Reaffirms B+ Rating on INR12.04MM Loan ALPHA EDUCATIONAL: CRISIL Assigns 'B' Rating to INR4MM Term Loan ANJANEYA JEWELLERY: CRISIL Cuts Rating on INR20MM Loan to 'B' ASHRO TEXTILES: CRISIL Lowers Rating on INR4.5MM Cash Loan to D AUGUSTAN TEXTILE: CRISIL Cuts Rating on INR8MM LT Loan to 'D' AVANI BUILDCON: CRISIL Assigns 'B' Rating to INR5MM Term Loan C. S. INFRA: CRISIL Lowers Rating on INR125MM Bank Loan to 'D' DHARANI HI-TECH: CRISIL Lowers Rating on INR1MM Bank Loan to 'D' DIANA HEIGHTS: CRISIL Reaffirms 'D' Rating on INR9MM Term Loan DOOTERIAH & KALEJ: CRISIL Assigns B- Rating to INR8.1MM LT Loan FRONTIER KNITTERS: CRISIL Cuts Rating on INR20MM Loan to 'D' HIMAVASINI MOTORS: CRISIL Cuts Rating on INR5MM Cash Loan to D IENERGIZER LIMITED: Moody's Hikes CFR to B3; Outlook Stable MALABAR ASSOCIATES: CRISIL Assigns 'B' Rating to INR8MM Loan METENERE LTD: CRISIL Cuts Rating on INR214.6MM Loan to 'D' MOHTA PLYWOOD: CRISIL Assigns 'C' Rating to INR.5MM Loan MUTHOOT AUTOMOTIVE: CRISIL Reaffirms B+ Rating on INR9MM Loan RAJEEV K: CRISIL Assigns 'B' Rating to INR4MM LT Loan REVIVE CONSTRUCTION: CRISIL Reaffirms B+ Rating on INR65MM Loan S.S MEDICAL: CRISIL Assigns 'C' Rating to INR6MM Cash Credit SATPAL STRIPS: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan SIDDHI SALES: CRISIL Assigns B+ Rating to INR9MM Packing Loan SMT MACHINES: CRISIL Reaffirms 'D' Rating on INR9MM Cash Loan SREE RAJYALAKSHMI: CRISIL Assigns 'B' Rating to INR7.5MM Loan SHREE SAIBABA: CRISIL Reaffirms 'D' Rating on INR8.8MM Term Loan SHRI KALYANIKA: CRISIL Lowers Rating on INR10MM Term Loan to D SRI AMBIKA: CRISIL Reaffirms B+ Rating on INR3.45MM Cash Loan SRI BALAJI: CRISIL Reaffirms 'B' Rating on INR15MM Bank Loan SRI MAHALAXMI: CRISIL Assigns B+ Rating to INR4MM Secured Loan SRI VENKATA: CRISIL Reaffirms B+ Rating on INR8.0MM Cash Loan SRI VENKATA SUBRA: CRISIL Ups Rating on INR17MM Loan to B+ SUPRIMA COSMO: CRISIL Assigns B+ Rating to INR8MM LT Loan SUSHIL KUMAR: CRISIL Assigns 'B' Rating to INR10MM Loan TATA CERAMICS: CRISIL Revises Rating on INR5.0MM Loan from 'D' TONZA PAPER: CRISIL Reaffirms B+ Rating on INR9.94MM Term Loan TRIDENT SUGARS: CRISIL Continues to Put C Ratings on Watch Dev. VAJRAKALPA COTTON: CRISIL Reaffirms B+ Rating on INR14MM Loan VENUS ENTERPRISES: CRISIL Assigns 'B' Rating to INR10MM LT Loan M A L A Y S I A MALAYAN BANKING: Fitch Affirms BB+ Tier 1 Securities Rating P H I L I P P I N E S WORLD PARTNERS: Placed Under PDIC Receivership S I N G A P O R E EZION HOLDINGS: Posts US$2.6MM 2nd Qtr Loss; Debt Revamp Starts MARCO POLO: Net Loss Widens to $304MM in 3rd Qtr Ended June 30 NAM CHEONG: Posts MYR2.02BB Net Loss in Second Qtr Ended June 30 SWISSCO HOLDINGS: Ernst & Young Appointed as Unit's Liquidators T H A I L A N D POLARIS CAPITAL: SEC Probes Following Surprise Receivership X X X X X X X X * Asian High-Yield Corps. Default Rate to Remain Low at End-2017 - - - - - ================= A U S T R A L I A ================= ALPHA59 PTY: Second Creditors' Meeting Set for Aug. 22 ------------------------------------------------------ A second meeting of creditors in the proceedings of Alpha59 Pty Ltd has been set for Aug. 22, 2017, at 11:00 a.m., at the offices of PCI Partners Pty Ltd, Level 8, 179 Queen Street, in Melbourne. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Aug. 21, 2017, at 5:00 p.m. Philip Newman and David Charles Quin of PCI Partners were appointed as administrators of Alpha59 on July 21, 2017. BRISCONNECTIONS: Trial on Arup Dispute with Receivers Set Oct. ------------------------------------------------------------- Bridget Carter at The Australian reports that the prolonged legal battle between the receivers of BrisConnections and Arup is once again heating up, with a trial in the Federal Court set for mid- October. The trial will proceed if the two parties cannot reach a settlement through mediation, which has recently been ordered by the Federal Court, The Australian says. According to the report, Arup is facing allegations over inaccurate forecasts for traffic volumes for the Brisbane AirportlinkM7 when it was constructed, and is being sued for as much as AUD2 billion. The project collapsed in receivership in 2013 and was sold to Transurban for about AUD2 billion in 2015, the report recalls. The Australian says the case is before Michael Lee in the Federal Court, who has ordered mediation to occur between the pair in the weeks before the trial. It comes after Los Angeles-based engineering design firm AECOM settled a major lawsuit over forecasts it made for Brisbane's Clem7 tunnel, The Australian notes. The report notes that AECOM was blamed for Rivercity's collapse into receivership in 2011, with AUD1.3 billion worth of debts, and its settlement involved a AUD280 million payment to creditors. The Australian relates that the toll road cost AUD2.2 billion to build but was sold for only AUD618 million in 2013 after it attracted only a fraction of the traffic engineers had forecast. BrisConnections receiver is PPB and should it be successful in its case, it would likely have major ramifications for Arup, which employs 1.500 staff in Australia and generates AUD360 million in annual revenue, The Australian says. About BrisConnections Group BrisConnections Group is the company behind the AUD4.8 billion Airport Link tunnel. AirportlinkM7 is the toll road linking Brisbane's CBD to the northern suburbs and the Brisbane Domestic and International Airport. David McEvoy, Christopher Hill and Michael Owen of PPB Advisory were appointed as Receivers and Managers to the BrisConnections Group, the owner and operator of the AirportlinkM7 toll road on Feb. 19, 2013. This follows the appointment of partners of McGrathNicol as Voluntary Administrators by the Board of BrisConnections Group. Yahoo!7, citing a release to the ASX, reported that BrisConnections went into administration citing low traffic levels and debts worth more than the tunnel. BrisConnections entered negotiations to restructure its debt, but the board was told lenders were not prepared to support the proposals, according to Yahoo!7. DICK SMITH: Deloitte Faces Suit Over Financials Auditing -------------------------------------------------------- Leon Spencer at ARN reports that Deloitte Touche Tohmatsu has been drawn into the legal battle being waged between the receivers of failed retailer, Dick Smith, and its former directors. ARN relates that Dick Smith Holdings' (DSH) receivers, Ferrier Hodgson, in conjunction with National Australia Bank (NAB) and HSBC -- two of Dick Smith's largest creditors -- mounted a legal action in March against former directors and executives of the collapsed electronics retailer in a damages claim worth millions. ARN relates that broadly speaking, the legal action alleges that Dick Smith's earnings in 2015 were inflated thanks to the use of a "rebate maximising" strategy that compelled managers to make stock purchasing decisions based on rebates instead of customer demand. ARN says the collapse of the retailer in early 2016, along with the closure of its stores, followed close behind a AUD60 million inventory write-down revealed in late 2015. The rebate-focused inventory buying policy was one of the one of the main triggers of the company's collapse, according to a subsequent creditors' report. According to ARN, the claim filed against the former directors, including former Dick Smith CEO, Nick Abboud, and former CFO, Michael Potts, allege that the company's directors and officers breached their duties to Dick Smith Holdings - as a publicly- listed company - through failures associated with a rebate-driven buying policy. "While under the control of its former directors and officers, DSH adopted a policy for the DSE Group of seeking to obtain and maximise certain types of rebates from suppliers," the receivers' claim against the former directors stated, ARN relays. "This policy led to the purchase of inventory on behalf of the DSE Group being driven by the rebates available, rather than being driven by current or likely future customer demand. "A substantial part of the inventory purchased because of this policy was unsaleable at all or for an appropriate margin within an appropriate timeframe because there was no or inadequate customer demand (Bad Stock)," the court documents allege. Ultimately, the receivers allege that, despite the potential problems arising from this so-called "Bad Stock", the company's directors and officers failed to put in place and implement any adequate procedures, practices or systems to monitor the purchase and impairment of inventory by the Dick Smith Group, according to ARN. Now, thanks to fresh cross-claims filed by representatives for at least two of the company's former executives, Abboud and Potts, the firm charged with auditing the retailer's financials in 2014 and 2015, Deloitte Touche Tohmatsu, has also been drawn into the line of fire. ARN, citing a cross-claim filed with the NSW Supreme Court on July 14, notes that if Abboud is found liable to the charges laid against him by Dick Smith Holdings' receivers, the former CEO's legal team will launch cross-claims against Deloitte for "damages and/or contribution". Until now, Deloitte's involvement in the case had remained relatively peripheral, and the firm had escaped being officially joined in the legal action. Now, with the latest cross-claims from the former directors' camp, the firm could see itself pulled front and centre in the ongoing legal battle, ARN says. ARN says Abboud's cross-claim against Deloitte broadly alleges that, during the period in question - specifically the 2014 and 2015 financial years - the firm, in its capacity as the auditor of Dick Smith's financial reports, did not raise major issues with the company's accounting treatment of supplier rebates or its associated inventory controls. "The representation is implied from Deloitte's description of the FY15 Audit Rebate Procedures . . . and the fact that Deloitte, having performed the FY15 Audit Rebate Procedures, did not identify and report any material deficiency in the controls and systems in place at DSH in respect of recording, calculating and recognising rebates," the court documents, as cited by ARN, stated. Ultimately, if the allegations against Deloitte made by Abboud's legal team can be established in court, it could open the door for the consulting firm to come under fire for at least some of the factors leading up to the electronics retailer's demise, ARN states. For its part, Deloitte remains confident of its position. "Deloitte stands behind its audit and will continue to do so," a spokesperson for Deloitte told ARN. "We won't comment further while the matter is before the court." About Dick Smith Dick Smith Holdings Limited Ltd was a retailer of consumer electronics products in Australia. As reported in the Troubled Company Reporter-Asia Pacific on Jan. 6, 2016, Dick Smith Holdings Ltd was placed in receivership on Jan. 5 following the appointment of Voluntary Administrators. Ferrier Hodgson partners James Stewart, Jim Sarantinos and Ryan Eagle were appointed Receivers and Managers over DSH and a number of associated entities. The appointment was made by a syndicate of lenders which hold security over the group. The TCR-AP, citing Otago Daily Times, reported on July 26, 2016, that the creditors of Dick Smith have voted in favor of liquidation. According to the report, administrator McGrathNicol will take over as liquidator of 10 companies within the Dick Smith group following the vote by creditors at a meeting in Sydney on July 25. ODT related that McGrathNicol will continue to focus on the exact reasons for Dick Smith's collapse, and who is to blame. FRENCH VILLA: Second Creditors' Meeting Set for Aug. 23 ------------------------------------------------------- A second meeting of creditors in the proceedings of French Villa Pty Ltd has been set for Aug. 23, 2017, at 3:30 p.m., at the offices of Worrells Solvency and Forensic Accountants, Suite 601B, Level 6, 91 Phillip Street, in Parramatta, NSW. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Aug. 22, 2017, at 5:00 p.m. Graeme Robert Beattie of Worrells Solvency was appointed as administrator of French Villa on July 19, 2017. MANNAGUM ENTERPRISES: First Creditors' Meeting Set for Aug. 23 -------------------------------------------------------------- A first meeting of the creditors in the proceedings of Mannagum Enterprises Pty Ltd will be held at the offices of Rodgers Reidy, Level 3, 326 Williams Street, in Melbourne, Victoria, on Aug. 23, 2017, at 11:00 a.m. Neil McLean of Rodgers Reidy was appointed as administrator of Mannagum Enterprises on Aug. 14, 2017. POSP HOLDINGS: Second Creditors' Meeting Set for Aug. 22 -------------------------------------------------------- A second meeting of creditors in the proceedings of POSP Holdings Pty Ltd has been set for Aug. 22, 2017, at 12:00 p.m., at the offices of PCI Partners Pty Ltd, Level 8, 179 Queen Street, in Melbourne. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Aug. 21, 2017, at 5:00 p.m. Philip Newman and David Charles Quin of PCI Partners were appointed as administrators of Alpha59 on July 21, 2017. TORBEY INVESTMENTS: Second Creditors' Meeting Set for Aug. 22 ------------------------------------------------------------- A second meeting of creditors in the proceedings of Torbey Investments Corporated Pty Ltd has been set for Aug. 22, 2017, at 11:00 a.m., at the offices of Veritas Advisory, Level 5, 123 Pitt 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. 21, 2017, at 4:00 p.m. David Iannuzzi and Steve Naidenov of Veritas Advisory were appointed as administrators of Torbey Investments on July 20, 2017. WANDER MMO: First Creditors' Meeting Scheduled for Aug. 24 ----------------------------------------------------------- A first meeting of the creditors in the proceedings of Wander MMO Pty Ltd will be held at the offices of SM Solvency Accountants, Level 8/490, Upper Edward Street, in Spring Hill, Queensland, on Aug. 24, 2017, at 11:00 a.m. Brendan J. Nixon and Leon Lee of Wander MMO were appointed as administrators of Wander MMO on Aug. 11, 2017. ================ H O N G K O N G ================ ASIA TELEVISION: Scheme Meeting Scheduled for September 12 ---------------------------------------------------------- The High Court of Hong Kong entered an order dated July 21, 2017, directing Asia Television Limited to convene a meeting of unsecured creditors for the purposes of considering and, if thought fit, approving a scheme of arrangement (the Scheme) proposed to be made between the Company and the unsecured creditors. The Scheme meeting will be held at 25-37 Dai Shing Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong, at 4:00 p.m. on Sept. 12, 2017. The Court has appointed Mr. Yat Kit Jong or, failing him, Mr. Man Chun So of PwC as Chairman of the Scheme Meeting and has directed the Chairman to report the result of the Scheme Meeting to the Court. Asia Television Limited is one of the two free television broadcasters in Hong Kong. It was established in 1957, the first Chinese television station in the world. ========= I N D I A ========= ALFA TRANSFORMERS: CRISIL Reaffirms B+ Rating on INR12.04MM Loan ---------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank loan facilities of Alfa Transformers Limited (Alfa) to 'CRISIL B+/Stable/CRISIL A4' Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4.00 CRISIL A4 (Reaffirmed) Cash Credit 12.04 CRISIL B+/Stable (Reaffirmed) Foreign Exchange Forward 0.13 CRISIL A4 (Reaffirmed) Letter of Credit 5.25 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility 3.08 CRISIL B+/Stable (Reaffirmed) CRISIL's ratings on the bank facilities of Alfa continue to reflect the company's modest financial risk profile marked by moderate networth and weak debt protection metrics. This rating weakness is partially offset by an established track record, and adequate technical competence, in the transformer industry. Key Rating Drivers & Detailed Description Weakness * Modest Financial Risk Profile: Alfa's financial risk profile is modest marked by its moderate net worth and weak debt protection metrics. The net worth remains moderate at around INR14.80 Crores as on March 31, 2017 due to moderate initial paid-up capital and moderate reserves; the latter is a result of small scale of operations and modest profitability margins * Exposure to risks inherent in tender-based business: ATL operates in a tender-based business. It faces competition not only from companies from other national-level, large players. Beside this, it also faces competition from many local and small unorganized players. As almost all the sales are tender based, revenue is dependent on its ability to bid successfully for tenders. Furthermore, the tender-based business model restricts the pricing power and hence profitability. The business risk profile may remain vulnerable to intense competition from other players over the medium term coupled with its continued ability to bid successfully for tenders Strengths * Established track record with adequate technical competence in the transformer industry:-Alfa has been in the transformer industry for more than 25 years. It manufactures distribution and power transformers and provides a gamut of related services, including consultancy and repair work. It has acquired technologies to manufacture specialised transformers, such as furnace, stabilised output, single-phase, and amorphous metal alloy transformers. Outlook: Stable CRISIL believes Alfa will continue to benefit over the medium term from its promoters' extensive industry experience and its technical expertise. The outlook may be revised to 'Positive' in case of sustainable increase in scale of operations and profitability, along with improvement in debt protection metrics and liquidity. Conversely, the outlook may be revised to 'Negative' in case of low revenue or profitability, or a stretched working capital cycle, leading to deterioration in the financial risk profile, particularly liquidity. Set up by Mr. D K Das in 1982, Alfa manufactures small distribution transformers and offers related technical assistance and services, including repair work. Its manufacturing units are in Bhubaneswar and Vadodara. Net Loss was INR51 lakhs on revenue of INR26.62 crore in fiscal 2016, against net loss of INR110 lakhs on revenue of INR25.83 crore in fiscal 2015. ALPHA EDUCATIONAL: CRISIL Assigns 'B' Rating to INR4MM Term Loan ---------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facilities of Alpha Educational Society. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3 CRISIL B/Stable Cash Term Loan 4 CRISIL B/Stable The rating reflects modest scale of operations and vulnerability to regulatory risks associated with educational institutions. These weaknesses are partially offset by extensive experience of the society's management in the education sector. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: The society's scale of operations is modest as reflected in revenues of about INR.20 Cr for fiscal 2017, largely on account of lower occupancy levels in engineering and arts & science colleges. * Vulnerability to regulatory risks associated with educational institutions: The various courses offered by Alpha have to comply with specific operational and infrastructure norms set by regulatory bodies and state authorities. Thus, the society needs to regularly invest in its workforce and infrastructure. Strengths * Extensive experience of the society's management in the education sector: Established in the year 1967, the society is reputed in Chennai for offering primary and secondary education under state board and central board of secondary education (CBSE). The society's management was able to diversify the revenues, over the past few years, by adding courses under arts & sciences and engineering. Outlook: Stable CRISIL believes that the society will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' in case of higher than expected growth in revenues or significant improvement in operating profitability leads to improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of an unexpected debt-funded capex and/or any adverse changes in the regulations thereby impacting its educational institutions. Alpha was established in 1967 and is currently engaged in operating two schools - Alpha CBSE School and Alpha Matriculation Higher Secondary School, along with two colleges - Alpha College of Engineering and Alpha Arts and Sciences. Both the schools are located in prime areas of Chennai and are managed by key members - Mrs Grace George and Mrs Suja George. For fiscal 2016, the society had reported deficit of INR2.04 crore on income of INR19.81 crore, against surplus of INR0.88 crore on income of INR21.6 crore for fiscal 2015. On provisional basis, the society had reported income of INR20.6 crore for fiscal 2017. ANJANEYA JEWELLERY: CRISIL Cuts Rating on INR20MM Loan to 'B' ------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility of Anjaneya Jewellery to 'CRISIL B/Stable' from 'CRISIL BB- /Stable. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL B/Stable (Downgraded from 'CRISIL BB-/Stable') The downgrade reflects stretched liquidity, reflected in high bank limit utilisation and insufficient cash accrual against large debt obligation. Financial risk profile also deteriorated because of high gearing and below-average debt protection metrics. The rating reflects AJ's weak financial risk profile because of high gearing and muted debt protection metrics, and exposure to intense competition in the jewellery retail business. These weaknesses are partially offset by the extensive experience of its promoters. Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile Financial risk profile is weak because of high gearing and average debt protection metrics. * Exposure to intense competition The firm faces intense competition from regional, and branded players such as Joyalukkas India Ltd, Lalitha Jewellery Mart Pvt Ltd, and Kalyan Jewellers, which have pan India presence and enjoy better economies of scale. Strength * Extensive experience of promoters The promoters have been in the gold retailing segment for over two decades. Outlook: Stable CRISIL believes AJ will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if there is a substantial and sustained improvement in profitability margins, or if capital structure improves significantly on the back of sizeable capital infusion from promoters. The outlook may be revised to 'Negative' if profitability margins decline sharply, or capital structure weakens further because of large, debt-funded capital expenditure or stretch in working capital cycle. Set up in 2005 as a partnership firm by MrVenkat Rao and family, AJ retails plain and diamond-studded gold jewellery at its showroom in Vijayawada, Andhra Pradesh. In fiscal 2017, net profit was INR1.79crore on an operating income of INR152.35crore, against a net loss of INR2.08crore on an operating income of INR210.88crore in fiscal 2016. ASHRO TEXTILES: CRISIL Lowers Rating on INR4.5MM Cash Loan to D --------------------------------------------------------------- CRISIL has downgraded its rating on the bank facilities of Ashro Textiles Private Limited (ATPL; part of Ashro group) to 'CRISIL D' from 'CRISIL BB-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 4.5 CRISIL D (Downgraded from 'CRISIL BB-/Stable') Long Term Loan 2.5 CRISIL D (Downgraded from 'CRISIL BB-/Stable') The downgrade reflects instances of delays by ATPL in servicing its scheduled debt obligations because of weak liquidity. The Ashro group also has below-average financial risk profile, an improving yet modest scale of operation and large working capital requirements. However it benefits from the extensive experience of its promoters in the ready-made garments (RMG) industry and reputed clientele. Analytical Approach For arriving at its ratings, CRISIL has combined the business and financial risk profiles of ATPL and RA Fashions Pvt Ltd (RAFPL). This is because these entities collectively referred to herein as the Ashro group, have a common management and have significant business and financial linkages. Key Rating Drivers & Detailed Description Weaknesses * Recent delays in debt servicing due to weak liquidity: The Ashro group has delayed in servicing its term debt obligations recently. Also the cash credit limits have remained overdrawn for over 30 days consecutively. The delays/irregularities are due to weak liquidity owing to large fund requirements and stretch in receivables from domestic customers. * Below average financial risk profile: The group's financial risk profile is below average marked by a modest networth and average gearing due to large working capital requirements and debt funded capex in the past. However, promoters have provided funding support to the group in the form of unsecured loans. * Modest scale of operations and working capital intensive operations: The group's scale of operations, although increasing are modest with an operating income of INR39 crores as on March 31, 2017. The scale has improved from INR26 crore in fiscal 2014 to present level. The operations are also working capital intensive driven by high inventory and debtors leading to gross current assets of over 200 days. Strengths * Extensive Experience of its promoters in the ready-made garments (RMG) industry-The group benefits from promoters' extensive experience of more than 3 decades in the readymade garments and fabric industry. * Reputed clientele: The group deals with reputed companies in India and in overseas markets. The group has been associated with reputed brands in Europe and America such as Mango, Zara, K-Mart etc. In FY17, the company has added Inditex's leading brand 'Bershke' in its scope which would help the company to ramp up its operations in the current year. The Ashro group was established by Mr. Ravinder Agarwal in 2011. Currently the operations of the group are managed by Mr. Ravinder Agarwal and his son Mr. Rohan Agarwal. Incorporated in 2011, ATPL is promoted by Mr. Ravindra Agarwal and his sons, Mr. Rohan Agarwal and Mr. Ashwin Agarwal. The company manufactures readymade garments and fabrics for both the export and domestic markets.. ATPL has a weaving unit in Wada (Maharashtra) and a stitching unit in Bengaluru. Incorporated in 2011 by Mr. Ravinder Agarwal, RAFPL manufactures readymade garments such as women's tops and men's t shirts for export and domestic markets. The group reported an estimated profit after tax of INR0.28 crore on total revenue of INR39.29 crore in fiscal 2017, as against INR0.45 crore and INR32.89 crore, respectively, in fiscal 2016. AUGUSTAN TEXTILE: CRISIL Cuts Rating on INR8MM LT Loan to 'D' ------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Augustan Textile Colours Private Limited to 'CRISIL D/CRISIL D' from 'CRISIL B-/Stable/CRISL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.34 CRISIL D (Downgraded from 'CRISIL A4') Cash Credit 6 CRISIL D (Downgraded from 'CRISIL B-/Stable') Long Term Loan 8 CRISIL D (Downgraded from 'CRISIL B-/Stable') Proposed Long Term 1.58 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL B-/Stable') Proposed Term Loan 5.00 CRISIL D (Downgraded from 'CRISIL B-/Stable') The ratings downgrade reflects instances of delay in servicing term debt; the delays were on account of weak liquidity from modest scale of operations. The ratings also reflect ATPL's small scale of operations, limited revenue diversity and exposure to intense competition in the textile industry. These weaknesses are partially offset by the industry experience of promoters. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations and exposure to competition: With stable revenue estimated around INR41.6 crore in fiscal 2017, scale of operations remains small, restricting benefits from economies of scale enjoyed by large entities. * Limited revenue diversity: ATPL dyes and bleaches fabric and yarn majorly for players in Tamil Nadu. Thus customer and geographical concentration in revenue profile is high. Strengths * Extensive experience of the promoters: Long-standing presence in the textile industry has helped maintain stable income over the years. Incorporated in 2005, Coimbatore-based ATPL undertakes printing, bleaching, and dyeing of fabric and yarn. The company reported loss of around INR5 crore on revenue of INR42.5 crore for fiscal 2016 against profit after tax of INR2.1 crore on revenue of INR46.3 crore the previous fiscal. AVANI BUILDCON: CRISIL Assigns 'B' Rating to INR5MM Term Loan ------------------------------------------------------------- CRISIL has assigned 'CRISIL B/Stable' rating to the long-term bank facilities of Avani Buildcon (AB). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 5 CRISIL B/Stable The rating reflects the firm's exposure to project implementation risks primarily off-take and funding given the initial stage of execution. The rating also factors in susceptibility to cyclicality in the real estate sector. These weaknesses are partially offset by the extensive experience of AB's partners in the real estate industry. Key Rating Drivers & Detailed Description Weakness * High project implementation risks: The project is in the initial phase of execution with 40% of the total cost incurred. Also with bookings yet to commence, off-take and funding risks are high. About 28% of the project is to be funded by customer payments, hence slower bookings or delay in inflow of advances may impact the project implementation and liquidity. * Susceptibility to cyclicality in the real estate sector: The real estate sector in India is cyclical and marked by sharp movements in prices and a highly fragmented market structure. The overall uncertain economic climate and changing regulatory environment exposes the firm to cyclicality in the sector. Strengths * Extensive experience of partners: The partners have been in the real estate industry for over two decades and have completed several projects in Nagpur, Maharashtra, leading to established presence. Outlook: Stable CRISIL believes AB will continue to benefit from the extensive experience of its partners. The outlook may be revised to 'Positive' if cash flows are higher-than-expected due to sizeable bookings and accelerated execution of projects. The outlook may be revised to 'Negative' if cash flow is low because of subdued response to project or if lower-than-envisaged flow of advances weakens financial risk profile. AB was established in April 2009 as a partnership firm by Mr Sanjeev Sharma and Mr Milind Bhalerao. The firm is engaged in real estate development and is currently undertaking 'Avani Heights' to be constructed on Wardha Road, Nagpur. In fiscal 2017, profit after tax was INR63 lakh on total sales of INR3.27 crore, against a profit after tax of INR12 lakh on total sales of INR4.55 crore in fiscal 2016. C. S. INFRA: CRISIL Lowers Rating on INR125MM Bank Loan to 'D' -------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of C. S. Infraconstruction Limited (CSIL) to 'CRISIL D/CRISIL D' from 'CRISIL BBB-/Stable/CRISIL A3'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 125 CRISIL D (Downgraded from 'CRISIL A3') Cash Credit 30 CRISIL D (Downgraded from 'CRISIL BBB-/Stable') Term Loan 5 CRISIL D (Downgraded from 'CRISIL BBB-/Stable') The downgrade reflects recent instances of delay in servicing debt, caused by pressure on liquidity, due to a stretch in the working capital cycle over the past three months. Bank limit utilisation averaged 85% in the 12 months through May 2017. Though the company had unencumbered cash balance of over INR40 crore as on March 31, 2017, delay in payment from customers, weakened the cash flow situation, leading to delay in servicing term debt, and over-utilisation of working capital limit. Key Rating Drivers & Detailed Description Weaknesses * Delay in debt servicing: There were recent instances of delay in servicing debt, owing to pressure on liquidity, caused by a stretched working capital cycle. * Geographical and customer concentration in revenue: The company mainly executes road and highway projects in UP, thus leading to geographic and segmental concentration. * Exposure to risks from intense competition and tender-based business: CSIL faces competition from both, companies based in the northern and eastern parts of the country, and other pan- India players. The tender-based business model further restricts the pricing power and hence, profitability. Strength * Moderate scale of operations, though highly volatile: The company operates on a moderate scale, as reflected in estimated revenue of INR403 crore in fiscal 2017, though far lower than INR495 crore reported in the previous fiscal,. Drop in revenue could be attributed to risks related to customer and geographical concentration. Established in 2002 as a partnership firm, Chhatrashakti Construction Company, by Mr. Uma Shankar Singh, the firm was reconstituted as a private limited company and renamed CSIL in 2009. The company undertakes civil construction works in UP, primarily construction of roads and bridges. Ms Pushpa Singh, Mr. Ramesh Singh, Mr. Saumen Bose, Mr. Ghurahu Singh, Mr. Bhuneswar Singh, Mr. Shyam Narayan Singh, Ms Pratima Singh, and Ms Priyanka Jain are the directors. For fiscal 2017, CSIL reported profit after tax (PAT) of INR32.26 crore on operating income of INR402.5 crore on a provisional basis, against INR32.41 crore and INR495.1 crore, respectively, in fiscal 2016. DHARANI HI-TECH: CRISIL Lowers Rating on INR1MM Bank Loan to 'D' --------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Dharani Hi-Tech Projects Private Limited (DHPPL) to 'CRISIL D/CRISIL D' from 'CRISIL C/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1 CRISIL D (Downgraded from 'CRISIL C') Overdraft 5 CRISIL D (Downgraded from 'CRISIL C') The rating downgrade reflects continuous overdrawl in the working capital facilities for more than 30 days on account of stretched receivables. The rating also reflects DHPPL's modest scale of operations in the civil construction industry and its below- average financial risk profile marked by a highly leveraged capital structure. These rating weaknesses are partially offset by the promoters' extensive experience in the civil construction industry. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations in a fragmented industry: DHPPL's revenues were estimated around INR31 crores in fiscal 2017, underpinning its small scale of operations in the industry marked by presence of numerous small and large companies, constraining its business risk profile. * Below-average financial risk profile: Financial profile is marked by small net worth and an aggressive capital structure because of its small scale of operations leading to modest accretion to reserves over the medium term. Strengths * Extensive experience of the promoter in civil construction segment: DHPPL's promoters have been executing civil contracts for more than 15 years and have established relationship with various government bodies like highways department, Public Works Department (PWD) and various municipalities leading to repeat orders from these customers. DHPPL, set up in 1995, was reconstituted as a private limited company in 2010. It operates in the civil construction industry. The company's day-to-day operations are managed by Mr. S Kamaraj and Mr. Senthamil Selvan. Profit after tax (PAT) was provisionally reported at INR1.05 crores on revenue of INR31.1 crores for fiscal 2016 against INR1.18 crores on net sales of INR39.9 crores, respectively in the previous fiscal. DIANA HEIGHTS: CRISIL Reaffirms 'D' Rating on INR9MM Term Loan -------------------------------------------------------------- CRISIL has been consistently following up with Diana Heights (DH) for obtaining information through letters and emails dated May 12, 2017 and July 12, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 9 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Diana Heights. 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 Diana Heights 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 reaffirmed the rating at 'CRISIL D'. DH was established as Diana Tourist Home in Athani (Kerala) in 2010. The firm got its present name in 2012. It is promoted by Kerala-based Mr. Jose G Mathew and family. The firm commenced operations in April 2010 as a restaurant-bar in Athani and started operating as a five star hotel since March 2015. DOOTERIAH & KALEJ: CRISIL Assigns B- Rating to INR8.1MM LT Loan --------------------------------------------------------------- CRISIL has assigned the 'CRISIL B-/Stable' rating to the long- term bank facilities of Dooteriah & Kalej Valley Tea Estates Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.5 CRISIL B-/Stable Long Term Loan 8.1 CRISIL B-/Stable The rating reflects the extensive experience of the promoters in the matured tea industry. This rating strength is partially offset by the small scale of operations, working capital intense operations, muted profitability, susceptibility to weather conditions, and the weak financial risk profile. Key Rating Drivers & Detailed Description Weakness * Working capital intensity in operations Operations are likely to remain working capital intensive in the medium term. Gross current assets ranged between 100 and 325 days over the three years ending March 31, 2017, mainly due to the large inventory requirement, given the seasonal nature of the product, and to cater to demand throughout the year. Payments from customers are received over 30-90 days, also leading to a stretch in the working capital cycle. * Small scale of operations and limited growth prospects Scale of operations remains small, as reflected in the annual production capacity of 4.5 lakh kilograms (kg) of tea. Growth prospects are constrained, as the domestic tea industry has reached a mature phase, and is growing at a slower pace. * Low profitability Profitability is likely to remain low in the medium term, on account of lower realisations from sale of tea, high labour cost, which is mostly fixed, and change in weather conditions, limiting the production. * Susceptibility to weather conditions As tea is a seasonal product, bad weather conditions and monsoons directly impact the plantation yield and consequently, tea production. With bulk of the costs being fixed, any change in yield can have a substantial effect on profitability. * Weak financial risk profile Operating losses incurred in the past have led to an erosion in networth estimated at negative INR 49.18 crores as on March 31, 2017. Gearing was negative at negative 1.58 times as on same date, owing to the negative networth and large working capital debt. Debt protection metrics may continue to be weak, due to low profitability, volatility in operating margin, and tightly matched cash accrual against the term debt. Strengths * Extensive experience of promoters The company operates three tea estates in Darjeeling- Dooteriah Tea Estate, Kalej Valley Tea Estates and Pashok Tea Estates, which meet 80% of the annual raw material. The three decade-long experience of the promoters and their established relationships with key auctioneers and customers, have helped the company sustain operations across various cycles. Outlook: Stable CRISIL believes DKVTE will continue to benefit from the extensive experience of its promoters in the tea industry. The outlook may be revised to 'Positive' if growth in revenue and profitability, strengthens the financial risk profile. The outlook may be revised to 'Negative' if a stretch in the working capital cycle or drop in cash accrual, weakens the financial risk profile, especially liquidity. DKVTE, incorporated in January 1983 is engaged in manufacture, supply and export of various kinds of tea, including green tea, and black tea. The company has three tea estates, Dooteriah, Kalej Valley and Pashok in Darjeeling. Profit after tax is estimated at INR 0.32 crores against revenues of INR 25.07 crores in fiscal 2017 against INR 0.72 crores and INR 18.31 crores respectively in previous fiscal. FRONTIER KNITTERS: CRISIL Cuts Rating on INR20MM Loan to 'D' ------------------------------------------------------------ CRISIL has downgraded its ratings on the bank facilities of Frontier Knitters Pvt Ltd (FKPL) to 'CRISIL D/CRISIL D' from 'CRISIL BB+/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.1 CRISIL D (Downgraded from 'CRISIL A4+') Export Packing Credit 20.0 CRISIL D (Downgraded from 'CRISIL A4+') Foreign Bill Discounting 16.0 CRISIL D (Downgraded from 'CRISIL A4+') Letter of Credit 1 CRISIL D (Downgraded from 'CRISIL A4+') Long Term Loan 27.5 CRISIL D (Downgraded from 'CRISIL A4+') Proposed Long Term Bank Loan Facility 1.2 CRISIL D (Downgraded from 'CRISIL A4+') Standby Line of Credit 3.7 CRISIL D (Downgraded from 'CRISIL A4+') The downgrade reflects delays in servicing term debt because of weak liquidity following stretch in receivables. The company also has customer concentration in revenue profile. However, FKPL benefits from its extensive experience of the promoters. Key Rating Drivers & Detailed Description Weakness * Stretch in liquidity: FKPL's operations is working capital intensive owing to delay in export receivables resulting in stretched liquidity * Customer concentration in revenue: Top three clients account for more than 80% of turnover. Though revenue concentration is expected to reduce with diversification, this will be gradual constraining the business risk profile Strengths * Extensive experience of the promoters The promoters have extensive experience in the textile industry. Mr Mohammed Thajutheen has been in the business for more than 2 decades. Established as a partnership firm in 1988 by Mr. Mohammed Thajutheen in Tiruppur, Tamil Nadu, and reconstituted as a private limited company in October 2010, FKPL manufactures and exports a wide range of knitted garments. Profit after tax (PAT) was INR3.1 crore on an operating income of INR146.8 crore in fiscal 2016, against a PAT of INR3.1 crore on an operating income of INR138.6 crore in fiscal 2015 HIMAVASINI MOTORS: CRISIL Cuts Rating on INR5MM Cash Loan to D -------------------------------------------------------------- CRISIL has been consistently following up with Himavasini Motors Private Limited (HMPL) for obtaining information through letters and emails dated January 20, 2017, and February 10, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL B/Stable') Proposed Long Term .16 CRISIL D (Issuer Not Bank Loan Facility Cooperating; Downgraded from 'CRISIL B/Stable') Term Loan 1.84 CRISIL D (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 HMPL. 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 HMPL 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 to 'CRISIL D' as the company has been delaying on its term loan repayments. HMPL was a founded in Krishnagiri (Tamil Nadu) in 2010. The company is promoted by Mr. Suresh Kumar and his family members, and runs a commercial vehicle showroom in the district. HMPL is an authorised dealer for commercial vehicles of Tata Motors Ltd. IENERGIZER LIMITED: Moody's Hikes CFR to B3; Outlook Stable ----------------------------------------------------------- Moody's Investors Service has upgraded iEnergizer Limited's corporate family and backed senior secured bank credit facility ratings to B3 from Caa1. The outlook on all ratings is stable. RATINGS RATIONALE "The ratings upgrade reflects the continued stable operating performance and the increase in headroom available under the company's bond covenants," says Saranga Ranasinghe, a Moody's Assistant Vice President and Analyst. For the financial year ending 31 March 2017 (FY17), iEnergizer reported an EBITDA of $36 million, marginally better than $34 million for FY16. The improved performance was driven by higher revenue from its real-time processing and back office services businesses, as well as the company's continuing cost-savings initiatives. It has established a track record of stability in operations since the reduction in revenue and earnings in FY15, due to the exit of two high margin customers. At the same time, given scheduled amortization of debt, iEnergizer reduced its total debt outstanding to $61 million in FY17 from $74 million in FY16. As such, the company's leverage improved to 2.3x from 2.6x at FY16. With the decrease in leverage, iEnergizer has been able to increase the headroom available under its loan covenant threshold of 2.85x. "Moody's expects further improvements in iEnergizer's credit metrics and an increase in covenant headroom, given quarterly scheduled principal amortizations and expected stability in revenues and earnings," adds Ranasinghe, who is also Moody's lead analyst for iEnergizer. Moody's expects the company to continue generating consistent positive free cash flows as it does not make dividend payments and has limited capital expenditure requirements. Available cash flows are applied towards scheduled debt repayments of around $3.4 million per quarter, and which iEnergizer has to make under the terms of its loan agreement. The upgrade in ratings also reflects the stability in the company's senior management following several departures. In February 2016, the company's board re-designated its founder and former CEO, Mr. Anil Aggarwal, as CEO and executive director, filling the position that had been vacant for 14 months. It also appointed Mr. Richard Day as CFO after the position was vacant for 7 months. The CEO and CFO office positions continue to be held by Mr. Aggarwal and Mr. Day respectively. In Moody's views, this stability in senior management will support the company's revenue and earnings growth and drive its improving trajectory. Following rating action, Moody's does not anticipate another rating action over the next 12-18 months. However, over the longer term, the ratings could be upgraded if the company further improves its operating performance by securing new contracts, such that EBITDA rises to over $45 million on a sustained basis and continues to generate positive free cash flow. At the same time, any ratings upgrade will also be contingent on the successful refinancing of the remainder of the term loan prior to maturity. The ratings could be downgraded if the company (1) loses any existing contracts and/or is unable to replace such contracts; (2) experiences a weakening operating performance, such that the last 12 months EBITDA falls below $28-30 million; (3) there is a reduction in headroom available under its covenants; and/or (4) refinancing is not addressed 12 months prior to loan maturity. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. iEnergizer Limited is an international Business Process Outsourcing (BPO) company, incorporated in Guernsey, and listed on the Alternative Investment Market (AIM) of the London Stock Exchange on September 14, 2010. iEnergizer is primarily engaged in call center operations, BPO services, content delivery services and back-office services (legacy operations). Following the acquisition of Aptara Inc. in 2012, for $150 million, iEnergizer expanded its business services to the provision of content process outsourcing solutions, delivering a comprehensive offering for the transformation and management of content, such as text, audio, video and graphic files. iEnergizer reported revenues totaling $146 million in the financial year ending March 31, 2017. MALABAR ASSOCIATES: CRISIL Assigns 'B' Rating to INR8MM Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank facilities of Malabar Associates (MA). The ratings reflect the firm's below-average financial risk profile, modest scale of operations in the highly fragmented construction industry and limited scalability of operations. These rating weaknesses are partially offset by the long-standing industry experience of its proprietor family. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 5 CRISIL A4 Cash Credit 8 CRISIL B/Stable Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile: MA's financial risk profile is below-average, marked by a modest net worth of INR4.96 crores as at March 31, 2017. Besides, MA's debt protection metrics are currently average with interest coverage and net cash accruals to total debt ratios estimated to be at 1.96 times and 0.20 times, respectively, as at March 31, 2017. MA's financial risk profile shall continue to remain below- average in the medium term. * Modest scale of operations in a highly fragmented industry: MA's scale of operations is modest, as reflected in its estimated revenues of INR12.33 crore in fiscal 2017. This is mainly due to tender-based nature of operations, which apart from limiting the scale of the firm also leads to volatility in its operating margin, as the same may vary across contracts. Besides, the civil construction industry is characterised by low entry barriers leading to high fragmentation and intense pricing pressures. CRISIL believes that the modest scale of operations and high fragmentation in the industry will continue to make MA vulnerable to significant business risk. * Limited scalability of operations: The firm undertakes all of its projects in Kerala, narrowing its operations to a limited geography. Also, it has presence only in the roads and bridges, with no revenue diversity by way of presence in other segments such as power, irrigation, etc. Any events such as slowdown in the infrastructure spending in Kerala or operational delays may affect the flow of orders for the firm and thus impact its revenue growth. Further, the firm faces a high degree of customer concentration as it undertakes contracts for Public Works Department (PWD) and Kerala State Road Transport Corporation (KSRTC) only. MA's operations shall continue to be constrained by its presence in a limited geography, lack of revenue diversity and high customer concentration. Strengths * Proprietor family's long-standing experience in the civil construction industry: The operations of MA are managed by Mr. Ahamed Kutty and his family members. The proprietor is an alumnus of National Institute of Technology, Calicut. The family's collective industry experience has enabled MA to bag projects frequently from PWD. MA currently has a healthy order book of around INR30 crores, to be executed over the next 15 to 18 months. The healthy order book provides the firm with clear revenue visibility for the immediate future. CRISIL believes that MA will continue to benefit over the medium term from its proprietor family's extensive industry experience and its strong revenue visibility. * High operating margins: MA's operating margin has remained in the range of 12 to 13 percent over the two years ended March 31, 2017, since all its work is undertaken for PWD and KSRTC, which offer better profitability as compared to private parties. The high margin is also supported by the fact that most of the work is undertaken by the firm itself, without any sub-contracting, and that the firm has its own machinery to execute the work. MA's operating margin is expected to remain at similar levels in the medium term. Outlook: Stable CRISIL believes that MA will continue to benefit over the medium term from the industry experience of its promoters in the civil construction industry. The outlook may be revised to 'Positive' if MA scales up its operations significantly and improves its working capital management resulting in improvement in the firm's liquidity. Conversely, the outlook may be revised to 'Negative' if there is a decline in MA's revenues and margins owing to delay in execution of various projects and or its working capital management deteriorates resulting in stretch in its liquidity or if the firm undertakes a large debt funded capex leading to weakening in its financial risk profile. Incorporated in 1998 and based out of Manjeri, Kerala, MA is engaged in execution of civil contracts, primarily roads and bridges for PWD and buildings for KSRTC in Kerala. The firm was founded and is managed by Mr. Ahamed Kutty and his family members. MA is estimated to report Profit after Tax (PAT) of INR0.80 crores on net sales of INR12.33 crores in fiscal 2017 as against reported PAT of INR0.93 crores on net sales of INR13.81 crores in fiscal 2016. METENERE LTD: CRISIL Cuts Rating on INR214.6MM Loan to 'D' ---------------------------------------------------------- CRISIL has downgraded its ratings on the bank loan facilities of Metenere Ltd to 'CRISIL D/CRISIL D' from 'CRISIL BBB+/Stable/CRISIL A2'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Buyer's Credit a 35 CRISIL D (Downgraded from 'CRISIL A2') Buyer's Credit b 127.5 CRISIL D (Downgraded from 'CRISIL A2') Buyer's Credit b 10.0 CRISIL D (Downgraded from 'CRISIL A2') Buyer's Credit c 53.0 CRISIL D (Downgraded from 'CRISIL A2') Cash Credit d1 89.50 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit 49 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit f 50 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit f 130 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit f 95 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit g 30 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit h 190 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit i1 117 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit j1 117 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit k 70 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit l 50 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit l 35 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit 47 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Cash Credit 5 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') Letter of Creditm1 75 CRISIL D (Downgraded from 'CRISIL A2') Letter of Creditm 65 CRISIL D (Downgraded from 'CRISIL A2') Letter of Creditm 40 CRISIL D (Downgraded from 'CRISIL A2') Letter of Creditm 15 CRISIL D (Downgraded from 'CRISIL A2') Letter of Credit 20 CRISIL D (Downgraded from 'CRISIL A2') Packing Credit in Foreign Currency 72 CRISIL D (Downgraded from 'CRISIL A2') Post Shipment Credit 26 CRISIL D (Downgraded from 'CRISIL A2') Proposed Long Term 122.9 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL BBB+/Stable') Proposed Short Term 84.5 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL A2') Term Loan 214.6 CRISIL D (Downgraded from 'CRISIL BBB+/Stable') The ratings downgrade reflect instances of delay in servicing term debt and continuous over-utilisation of the working capital limit for more than 30 days due to liquidity constraints. Key Rating Drivers & Detailed Description * Delay in servicing term debt, as confirmed by the company and the bankers. Metenere was set up by Mr. Raman Gupta and his family in 1997. The company began operations in lead recycling, and subsequently diversified into manufacturing tin products. In fiscals 2009 and 2010, a new capacity to manufacture aluminium was set up. Shrey Industries Pvt Ltd (SIPL), part of the Gupta group, was merged with Metenere, effective from April 1, 2012. SIPL manufactured aluminium billets/extrusions, rods, and alloys from aluminium scrap. Profit after tax and turnover was INR72.03 crore and INR3130 crore, respectively, in fiscal 2016, vis-a-vis INR65.95 crore and INR2,880 crore, respectively, in fiscal 2015. MOHTA PLYWOOD: CRISIL Assigns 'C' Rating to INR.5MM Loan -------------------------------------------------------- CRISIL has assigned its 'CRISIL C/CRISIL A4' ratings on the bank facilities of Mohta Plywood Industries Private Limited (MPIPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Packing Credit 6 CRISIL A4 Letter of Credit 4 CRISIL A4 Bill Discounting 13 CRISIL A4 Cash Credit 0.5 CRISIL C The rating reflects weak financial risk profile and intensive working capital operations. However these weakness are partially offset by extensive experience of promoters in the ready-made garment manufacturing industry. Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: Modest networth and moderate gearing (Rs 7.55 crore and 2.71 times) represent weak financial risk profile. Debt protection metrics is weak marked by interest coverage ratio of around 1.08 times for fiscal 2016. * Intensive working capital operations: Working capital-intensive operations on account of delay in receipt of payment from customers (226 days as on March 31, 2016) have resulted in high reliance on external debt and stretched liquidity leading to full utilization of bank limits. Gross current assets were at 242 days as on March 31, 2016. Strengths * Extensive experience of promoters: Business risk profile is strengthened by extensive industry experience of promoters in the ready-made garment manufacturing industry. Incorporated in 1981 and promoted by Mr. Pawandeep Sachdeva and family, MPIPL is engaged in manufacturing and exports of the ready-made garments. Company is also engaged in manufacturing and trading of plywood. Company reported net loss of INR0.03 crore on operating income of INR70.67 crore in fiscal 2016 against PAT of INR0.01 crore on operating income of INR73.69 crore in fiscal 2015. MUTHOOT AUTOMOTIVE: CRISIL Reaffirms B+ Rating on INR9MM Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Muthoot Automotive India Private Limited (MAPL) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Inventory Funding Facility 9 CRISIL B+/Stable (Reaffirmed) Standby Line of Credit 1 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect MAPL's modest scale of operation in the automotive dealership business, exposure to geographic concentration risk, and its below-average financial risk profile marked by weak capital structure. These rating weaknesses are partially mitigated by the promoters' extensive experience in automotive dealership business. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations, and geographic concentration in revenues: MAPL has a modest scale of operations as indicated by estimated revenue of INR98.6 crores in fiscal 2017 and the entire sale is from Kerala market leading to geographical concentration risk in revenue profile. Revenues are expected to gradually improve over the medium term, however, within the geography. * Below-average financial risk profile: Financial risk profile was below-average marked by modest net worth and high gearing levels. Gearing is expected to improve over the medium term with stable accretion to reserves. Debt protection metrics are weak with net cash accruals to total debt and interest coverage estimated around 0.08 time and 2.1 times, respectively for fiscal 2017. Strengths * Extensive experience of promoters in the industry: MAPL benefits from the extensive experience of the promoters in the automotive industry and their established relations with the principal. The promoter group has extensive entrepreneurial experience and have business interest in various industries including non-banking financial business, power generation, automobile dealership, real estate, and infrastructure development among others. Outlook: Stable CRISIL believes MAPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if substantial increase in revenue and cash accrual, leads to significant improvement in financial risk profile. Conversely, the outlook may be revised to 'Negative' if cash accrual is below expectation, or if large debt-funded capital expenditure, results in further weakening of financial risk profile. MAPL, incorporated in 2010, deals in Honda Cars (India) Limited's passenger cars. Operations are managed by Ms Remy Thomas Muthoot. The company is a part of the Muthoot Pappachan group, which has interests in diverse fields such as non-banking financial services, power generation, automobile dealership, and real estate and infrastructure development. Profit after tax (PAT) was estimated at INR0.66 crore on estimated revenue of INR98.6 crore for fiscal 2017 against loss of INR0.43 crore on net sales of INR103.6 crore in the previous fiscal. RAJEEV K: CRISIL Assigns 'B' Rating to INR4MM LT Loan ----------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Rajeev K (RK). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 4 CRISIL B/Stable Bank Guarantee 2 CRISIL A4 Cash Credit 4 CRISIL B/Stable The rating reflects below average financial risk profile and modest scale of operations and susceptibility to intense competition from large players. These rating weakness have been partially offset by experience of promoters in the civil construction industry. Key Rating Drivers & Detailed Description Weakness * Below average financial risk profile The firm has below average financial risk profile marked by moderate gearing of 1.5 times and modest net worth of INR2 crs as on March 31, 2017. RK has moderate debt protection metrics with net cash accrual to Total debt (NCATD) and interest coverage ratios of over 0.18 and 2.16 times, respectively, for 2016-17. CRISIL believes the financial risk profile may remain below average over the medium term constrained by modest net worth. * Modest scale of operations and susceptibility to intense competition from large players. RK is exposed to intense competition in the civil construction industry which is highly fragmented with the presence of large organized players and several unorganized players. The same is reflected by the modest turnover of INR6.5 cr. as on March 31, 2017. CRISIL believes that the small size will limit its ability to undertake projects of significant size, limit its bargaining power with its customers and the firm's revenue profile will remain more susceptible to down turns as compared to the larger players in the industry. Strengths * Experience of promoters in the civil construction industry RK benefits from the extensive experience of its promoter in the civil construction industry. The firm is promoted by Mr. Rajeev who has been associated with the civil construction industry for the past 2 decades. CRISIL believes that the business risk profile of RK will continue to benefit from the extensive experience of its promoters in the civil construction industry. Outlook: Stable CRISIL believes that RK will benefit over the medium term from the experience of its promoters in civil construction industry. The outlook may be revised to 'Positive', if RK increases its scale of operations and operating profitability significantly over the medium term in a sustainable fashion there by leading to an improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative', if the company undertakes any significant debt-funded capital expenditure or if its revenues and operating profitability decline or if its working capital cycle elongates or there are significant capital with drawls leading to deterioration in its financial profile. Set up in 2007, RK is a proprietorship firm involved in civil construction works like construction of roads, bridges and construction and maintenance for irrigation facilities in Kerala. The firm is being managed by Mr. Rajeev. For fiscal 2017, profit after tax (PAT) was INR0.43 crore on net sales of INR6.24 crore. Profit after tax (PAT) was INR0.3 crore on net sales of INR3.5 crore for fiscal 2016. REVIVE CONSTRUCTION: CRISIL Reaffirms B+ Rating on INR65MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Revive Construction Company India Private Limited (RCIPL) at 'CRISIL B+/Stable/CRISIL A4'. CRISIL had upgraded its rating on bank facilities to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL B- /Stable/CRISIL A4' on March 8, 2017. The upgrade reflected improvement in scale of operations and working capital management leading to higher cash accrual; and revenue visibility supported by a strong order book. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 35 CRISIL A4 (Reaffirmed) Overdraft 65 CRISIL B+/Stable (Reaffirmed) The ratings reflect RCIPL's modest scale of operations in the civil construction industry, large working capital requirements, and average financial risk profile. These weaknesses are partially offset by extensive experience of promoters in the civil construction business and their funding support. Analytical Approach Unsecured loans of INR 10 crs from promoters have been treated as neither debt nor equity as they are expected to remain in business over the medium term. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations in an intensely competitive industry: The company has booked modest scale of operation of around INR 81 crs in 2016-17 (refers to financial year, April 1 to March 31). The modest scale of operations restricts the company's ability to bid for large projects. Given the low entry barriers in the civil construction segment and the tender based nature of RCIPL's operations, the company faces intense competition from other players. Furthermore, the company's revenues are entirely tender based and thus are highly susceptible to the quantum of tenders floated by the customer and the ability to successfully bid for the same. * Working capital intensive operations: The company's operations are highly working capital intensive reflected in its high gross current assets (GCA) at around 220 days as on March 31, 2017, primarily on account of high debtors. However, this is partly assuaged by high credit period from suppliers. * Average financial risk profile: The company has average financial risk profile as reflected in its high gearing and average debt protection metrics. The company has a high gearing ratio of around 2.48 as on 31.03.2017 on account of high utilization of bank limits. RCIPL has average debt protection metrics marked by net cash accruals to total debt of 0.15 time and interest coverage ratio of 2.60 times estimated as on 31.03.2017. Strengths * Extensive experience of promoters: Extensive experience in the civil construction segment has enabled the promoters to successfully execute orders and established strong relationship with suppliers. * Funding from promoters: Liquidity is supported by need-based fund infusion by promoters in the form of unsecured loans. Outlook: Stable CRISIL believes RCIPL will benefit over the medium term from the extensive experience of its promoters in the civil construction industry. The outlook may be revised to 'Positive' if increase in cash accrual, fall in working capital requirement, or any equity infusion strengthens financial risk profile. The outlook may be revised to 'Negative' if financial risk profile deteriorates owing to lower revenue and profitability, or stretch in working capital requirement. Set up in 2009, by Mr. Abdul Rahuman Nasarudeen and his family, RCIPL undertakes civil construction works, related to laying and repair of roads. It is head quartered in Thiruvananthapuram, Kerala. Profit after tax was around INR 1.9 crs on estimated operating income of INR 81.2 crs in fiscal 2017, against profit after tax of INR 0.9 crs on operating income of INR 39.1 crs in fiscal 2016. S.S MEDICAL: CRISIL Assigns 'C' Rating to INR6MM Cash Credit ------------------------------------------------------------ CRISIL has revoked the suspension of its rating on the bank facilities of S.S Medical Systems (India) Private Limited (SSMSPL), and has assigned its 'CRISIL C/CRISIL A4' rating to the facility. CRISIL had, on August 24, 2016, suspended the ratings as SSMSPL had not provided the necessary information for a rating review. The company has now shared the requisite information, enabling CRISIL to assign a rating. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL A4 (Assigned; Suspension Revoked) Cash Credit 6 CRISIL C (Assigned; Suspension Revoked) The ratings reflect the company's stretched liquidity because of working capital-intensive operations resulting in near full utilisation of working capital limits. The ratings also reflect its small scale of operations in the highly competitive medical equipment industry, and weak financial risk profile because of high gearing and muted debt protection metrics. These weaknesses are partially offset by the extensive industry experience of its promoter. Key Rating Drivers & Detailed Description Weakness * Small scale of operations, and large working capital requirement: With operating income of INR7.5 crore in fiscal 2016, the company's scale remains small due to presence of many unorganised players in the industry. Furthermore, operations are working capital intensive, reflected in gross current assets of 745 days as on March 31, 2016, driven by large receivables and inventory. * Weak financial risk profile: Debt protection metrics are subdued, with interest coverage ratio at 1.3 times and net cash accrual to total debt ratio at 0.04 time for fiscal 2016. Gearing was high, at 3.3 time as on March 31, 2016, on account of large debt. Strengths * Promoter's industry experience and established customer base: Mr Monish Bhandari has experience of 15 years in the medical equipment industry, and has developed technical expertise and established strong relationships with customers. Established in 1975, SSMSPL manufactures and assembles medical equipment used in hospitals, pathologies, laboratories, at its unit at Bhimtal in Nainital. Net profit was INR0.04 crore on net sales of INR6.97 crore in fiscal 2016, against a net profit of INR0.08 crore on net sales of INR8.45 crore in fiscal 2015. SATPAL STRIPS: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Satpal Strips Pvt Ltd (SSPL; part of the Satpal group) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 3.5 CRISIL B+/Stable (Reaffirmed) Revenue, through modest, increased 33% in fiscal 2017 on account of correction in steel prices and increase in quantity sold. However, operating margin declined due to discounts offered to boost sales, and is expected to remain in the 3-3.5% range over the medium term. Business risk profile will remain constrained by small scale of operations and revenue concentration in Punjab, Delhi, and Haryana. Net cash accrual is sufficient against nil debt repayment, and minimal capital expenditure (capex) and incremental working capital requirements. Hence, dependence on bank borrowing is limited. Liquidity is also supported by need-based funding from promoters. Nevertheless, bank limit utilisation was around 88% for the 12 months ended May 2017 due to large working capital requirement. Analytical Approach For arriving at the rating, CRISIL has combined the business and financial risk profiles of SSPL and Satpal Metals Pvt Ltd (SMPL). This is because both the companies, together referred to as the Satpal group, are under a common management and have significant business and financial linkages. Also, SMPL sells products manufactured by SSPL while the entire raw material requirement of SMPL is met by SSPL. Key Rating Drivers & Detailed Description Strengths * Below-average financial risk profile: Gearing is moderate, debt protection metrics subdued, and networth small. With low profitability and large working capital requirement, financial risk profile is expected to remain below average over the medium term. * Small player in fragmented industry: With turnover of around INR90.59 crore in fiscal 2017 and installed capacity of 45,000 tonne per annum (tpa) of cold-rolled (CR) coils/strips and 27,000 tpa of electric resistance welding (ERW) pipes, the group remains a modest player in a competitive industry. Revenue is expected to witness moderate growth of 10-15% over the medium term. Despite healthy ramp-up in operations of the pipe and tube manufacturing unit within six months, modest scale will continue to limit ability to bargain with suppliers and customers, leading to limited pricing flexibility. * Susceptibility of operating margin to volatility in steel prices: Since steel prices are highly volatile, margin remains susceptible to any sharp movement in steel rates. This is compounded by large inventory of 30 days. The group does not have any long-term contract with suppliers for quantities and prices, thereby further constraining profitability. Strengths * Extensive experience of promoters and established customer base: Presence of more than 20 years in the steel industry has enabled the promoters to establish strong relationship with suppliers, distributors, and traders. The group manufactures a large variety of products under ERW pipes with sizes in the 41-88 millimetre range for the outer diameter. Outlook: Stable CRISIL believes the Satpal group will continue to benefit over the medium term from the extensive experience of its promoters and established client relationship. The outlook may be revised to 'Positive' in case of ramp up in revenue and profitability and improvement in financial risk profile, particularly liquidity, through higher cash accrual. The outlook may be revised to 'Negative' if liquidity weakens significantly because of low cash accrual or stretch in working capital cycle, or if any large, debt-funded capex affects capital structure. Incorporated in 2007 and promoted by Mr Amit Jain and Mr Atul Jain, SSPL manufactures cold-rolled coils, strips, and sheets. In fiscal 2011, promoters forward-integrated into manufacturing ERW pipes under SMPL. Facility is in Gobindgarh, Punjab. Profit after tax (PAT), on a standalone basis, is estimated at INR5 lakh on revenue of INR85.24 crore for fiscal 2017; PAT was INR1 lakh on revenue of INR64.56 crore for fiscal 2016. SIDDHI SALES: CRISIL Assigns B+ Rating to INR9MM Packing Loan ------------------------------------------------------------- CRISIL has revoked the suspension of its rating on the bank facilities of Siddhi Sales Corporation (SSC) and has assigned its 'CRISIL B+/Stable' rating to the bank facilities of SSC. CRISIL had suspended the rating on June 29, 2016, as the firm had not provided the necessary information required for a rating review. SSC has now shared the requisite information enabling CRISIL to assign the rating. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Packing Credit 9 CRISIL B+/Stable (Assigned; Suspension Revoked) Proposed Long Term 1 CRISIL B+/Stable (Assigned; Bank Loan Facility Suspension Revoked) The rating reflects SSC's below average financial risk profile marked by modest networth and low operating profitability. These weaknesses are partially offset by the benefits the firm derives from the extensive industry experience of partners. Key Rating Drivers & Detailed Description Weakness * Below average financial risk profile: Modest networth and high total outstanding liabilities to adjusted networth ratio (Rs 4 crore and 5.5 times respectively as on March 31, 2017) represent below average financial risk profile. Debt protection metrics is subdued with interest coverage ratio estimated at 1.2 times fiscal 2017. * Low operating profitability: Firm's operating profitability was low at 1.78% in fiscal 2017 against 2.06 % in fiscal 2016 on account of low value addition due to trading nature of business. Strengths * Extensive experience of Partners: The partners' extensive experience of more than three decades in the industry has helped SSC develop strong relations with its customers and suppliers. Outlook: Stable CRISIL believes SSC will benefit from extensive industry experience of promoters in trading industry. The outlook may be revised to positive in case of higher than expected increase in scale of operations or profitability leading to higher than expected cash accruals and or improvement in capital structure on account of capital infusion. The outlook may be revised to negative in case of lower than expected profitability or stretch in working capital cycle leading to deterioration in liquidity and capital withdrawal from promoters leading to deterioration in financial risk profile. SSC was established in 1985 as partnership firm by Mr. Rintu Pandya and his father. SSC is engaged in exports of cotton yarn. Firm reported profit after tax (PAT) of INR0.23 crore on net sales of INR108.37 crore for fiscal 2017 against PAT of 0.46 crore on net sales of INR102.98 crore in fiscal 2016. SMT MACHINES: CRISIL Reaffirms 'D' Rating on INR9MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of SMT Machines India Ltd (SMT) at 'CRISIL D'. The rating continues to reflect instances of delay in servicing term debt due to weak liquidity. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9 CRISIL D (Reaffirmed) Term Loan 0.2 CRISIL D (Reaffirmed) Working Capital Demand Loan 0.7 CRISIL D (Reaffirmed) Working Capital Term Loan 4 CRISIL D (Reaffirmed) The financial risk profile is weak because of subdued debt protection metrics and a modest networth. However, the company benefits from the extensive experience of its promoters in the industry and geographically diverse revenue profile. Key Rating Drivers & Detailed Description Weakness * Instances of delay in debt repayment servicing and overdrawals in cash credit facility: The liquidity profile of the company is stretched with GCA days of 371 days in fiscal 2017 driven by inventory pile-up (246 days) and delays in realising receivables (74 days), leading to high dependency on bank borrowing. Ability to service debt on time will depend to timely realisation of receivables, extent of inventory holding, and funding support from the promoters. * Weak financial risk profile: The networth was modest at INR8.61 crore as on March 31, 2017, and debt protection metrics weak, with interest coverage ratio of 1.1 time in fiscal 2017. * Small scale of operations: With an operating income of INR15.75 crore in fiscal 2017, the scale remains small in a competitive industry. Strength * Extensive industry experience of the promoters: The promoters have been in the industry for around three decades. Incorporated in 1992 and promoted by Mr. Surinder Kumar Mittal and his family, SMT (formerly, Aman Multilateral Pvt Ltd; name changed in the late 1990s) designs and manufactures equipment for steel rolling mill plants. SMT on provisional basis reported net profit of INR0.21 crore on operating income of INR15.75 crores in fiscal 2017 against the net profit of INR.4.01 crore on operating income of INR22.52 crore in fiscal 2016. SREE RAJYALAKSHMI: CRISIL Assigns 'B' Rating to INR7.5MM Loan ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facility of Sree Rajyalakshmi R & B Rice Mill (SRERBM). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.5 CRISIL B/Stable The rating reflects the firm's exposure to intense competition and to volatility in raw material prices, and dependence on monsoon. These weaknesses are partially offset by the extensive experience of its promoters and moderate working capital requirement. Key Rating Drivers & Detailed Description Weakness * Below average financial risk profile: The firm's financial risk profile is below average due to low net worth of INR.5 cr as on March 31,2017 with low gearing of 1.5 times as on March 31, 2017 .Debt protection as also sub-due metrics with interest coverage and NCATD of 1.5 and 0.07 ratio. CRISIL believes that the financial risk profile of the firm is expected to remain below average going ahead as well. * Working-capital-intensive operations: The SRERBM firm has high working capital requirements it has GCA of 66 days in FY 17 due to high inventory days of 70 as on March 31, 2017. The debtor of the firm gets credit period of around 7 days as on March 31,2017. Rice industry is highly intensive working capital intensive in nature as operations involve high inventory storage. Strengths * Extensive experience of promoters: Presence of more than 12 years of experience in the business of trading in rice, has enabled the promoters to establish strong relationship with customers and suppliers and understand market dynamics. CRISIL believes that the proprietor's extensive experience will help the firm sustain its business risk profile over the medium term. Outlook: Stable CRISIL believes SRERBM will benefit over the medium term from the extensive experience of its promoters and stable demand for rice. The outlook may be revised to 'Positive' if substantial ramp up in operations, improvement in profitability, and higher cash accrual lead to a better financial risk profile, especially liquidity. The outlook may be revised to 'Negative' if low cash accrual, stretch in working capital cycle, or any large, debt- funded capital expenditure weakens financial risk profile, particularly liquidity. Set up 2002 as a partnership firm by Mr. K.Ravi, Mr. K. Ramanamma, Mr. K. Rajeshwari, and Mr.B. Santhi , Mr. B.Vasantha SRERBM in processes steamed and raw rice at its facility in nellore, Andhra pradesh. The promoters have been in the rice milling business since 2002. For fiscal 2017, Estimated profit after tax (PAT) was INR0.5 crore on net sales of INR61 crore, against a PAT of INR0.4 crore on net sales of INR43 crore for fiscal 2016. SHREE SAIBABA: CRISIL Reaffirms 'D' Rating on INR8.8MM Term Loan ---------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of Shree Saibaba Jeevandhara Hospital India Private Limited to 'CRISIL D' from 'CRISIL D' Issuer Not Cooperating. CRISIL had, on May 30, 2017, reaffirmed the rating to CRISIL D and assigned 'issuer not co-operating' as Shree Saibaba Hospital had not provided the requisite information. The firm has now shared the requisite information, enabling CRISIL to assign ratings to its bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 8.8 CRISIL D (Removed from Issuer Not Cooperating; Rating Reaffirmed) The rating reflects instances of delay by the company in servicing its term debt. The delays have been caused by the company's weak liquidity, on account of low occupancy rate in the hospital resulting in low revenues. Key Rating Drivers & Detailed Description Weaknesses * Delay in repayment of term debt obligations: Shree Saibaba Hospital has repayment obligations of around INR.0.1 crore every month, which have been serviced with a delay. The delays have been caused because of stretch in the company's liquidity, which, in turn, is caused by low occupancy rate in the hospital. * Below-average financial risk profile: Shree Saibaba hospital funded its hospital project in a debt-to-equity ratio of 2:1. It had high gearing of around 5 times as on March 31, 2017, due to aggressive project funding and delayed start of the commercial operations. Despite start of term debt repayments, gearing is expected to remain high on account of low expected cash accruals and the company's plans to contract additional term debt for hospital equipment. Furthermore, due to the start-up nature of operations, the company's profitability is expected to remain low in the initial years. Low profitability, along with high debt levels, will lead to weak debt protection measures. CRISIL believes that Shree Saibaba hospital's financial risk profile will remain below average over the near to medium term on account of high existing debt levels and low profitability in the initial years of operations. Strength * Extensive experience of promoters in healthcare industry: The promoters of the company have extensive experience not only in medical profession but also in other business ventures. The Haldiwal family is already running a 40-bed hospital in Barwani since 1998. The operations and management of the hospital will be done under the guidance of Dr. Jagdish Chandra Yadav. Dr. Yadav has an MBBS and a diploma in medical radio diagnosis along with vast experience in the medical field. He had served as a medical officer at the Government Hospital, Barwani, for around 10 years and after that he started his own practice in 1992. Since 1992, he has been running a small hospital along with the clinic in Barwani. Furthermore, Barwani does not have any hospital as big as the proposed hospital. SSBJDHIPL was set up in 2012-13 (refers to financial year, April 1 to March 31) by Mr. Anand Haldiwal, Mr. Omprakash Haldiwal, Mrs. Rakhi Haldiwal, Dr. Jagdish Chand Yadav, Dr. Manoj Gurjar, and Dr. Vishal Yadav. The company runs a hospital in Barwani (Madhya Pradesh). It started operations in July 2014. Profit after tax (PAT) was negative INR0.04 crores on net sales of INR.4.33 crore in fiscal 2017, against PAT of INR.0.38 croreson net sales of INR.3.9 crore in fiscal 2016. SHRI KALYANIKA: CRISIL Lowers Rating on INR10MM Term Loan to D -------------------------------------------------------------- CRISIL has downgraded its rating to 'CRISIL D' from 'CRISIL B+/Stable' on the long term bank facility of Shri Kalyanika Promotors and Developers Private Limited (SKPDPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 10 CRISIL D (Downgraded from 'CRISIL B+/Stable') The rating downgrade reflects instances of delay by the company in servicing its interest obligations for the term loan. The delays have been caused by the company's weak liquidity, on account muted inflow of customer advances for its residential project. Key Rating Drivers & Detailed Description Weakness * Delay in repayment of interest obligations: SKPDPL has a term loan of INR.10 crores, the repayments for which are expected to start from 2019. However the interest obligations of the company are serviced with instances of delays. The delays have been caused because of weak liquidity profile of the company, which, in turn, is caused by muted inflow of customer advances for its residential project. * Vulnerability to risks and cyclicality inherent in the Indian real estate industry: SKPDPL is susceptible to risks pertaining to the real estate sector such as long gestation period of projects. Any time or cost overrun or delay in obtaining necessary approvals could affect the realisations and profitability of its projects. The demand for residential projects is affected by the level of interest rates and overall level of economic activity. Lower-than-expected customer interest in the ongoing projects, or any delays in implementation of these projects, could constrain the credit risk profile. * Project and geographical concentration risk: SKPDPL faces geographical concentration risks as it has only one ongoing project which is located in Jabalpur, exposing the company to fluctuations in the region's real estate market. The project demand is dependent on the level of economic activity in the Jabalpur market. Any slowdown in the real estate market in Jabalpur will impact the demand for the company's projects. Moreover, any revision in rates too will significantly affect the profitability margin. Strengths * Extensive experience of promoters in the real-estate business: SKPDPL's promoters have been in the real estate business for the past 35 years through well-known real estate development companies in Jabalpur. Mr Parwani has been involved in real estate business over the past three and a half decade in Madhya Pradesh. During these years, the promoters gained necessary experience and understanding of the real estate industry to undertake bigger projects. CRISIL believes that SKPDPL will continue to maintain its business risk profile over the medium term supported by the promoters' extensive experience in the real estate business. SKPDPL was set up in 2012-13 (refers to financial year, April 1 to March 31) by Mr. Anand Haldiwal, Mr. Omprakash Haldiwal, Mrs. Rakhi Haldiwal, Dr. Jagdish Chand Yadav, Dr. Manoj Gurjar, and Dr. Vishal Yadav. The company runs a hospital in Barwani (Madhya Pradesh). It started operations in July 2014. Profit after tax (PAT) was negative INR0.57crores on net sales of INR.0 crore in fiscal 2016, against PAT of negative INR.0.22 crores on net sales of INR.0 crore in fiscal 2015. SRI AMBIKA: CRISIL Reaffirms B+ Rating on INR3.45MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the bank facilities of Sri Ambika Rice Mill (SARM). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3.45 CRISIL B+/Stable (Reaffirmed) Working Capital Demand Loan 2.00 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect the firm's below-average financial risk profile, with modest net worth, moderate gearing and average debt protection metrics. The rating also factors in modest scale of operations, and exposure to intense competition in the rice milling industry. These weaknesses are partially offset by the extensive experience of the promoter in the rice milling industry. Analytical Approach For arriving at the ratings, CRISIL has treated unsecured loans of INR 1.85 crore (as on March 31, 2017) extended to SARM by its promoters as neither debt nor equity as the loans are expected to be retained in the business over the medium term. Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile: The firm's financial risk profile is below average with modest net worth of INR 3 cr and gearing of 1.6 times as on March 31, 2017. SARM is expected to have Net Cash Accruals to Total Debt (NCATD) and interest coverage ratios of over 0.10 and 1.95 times, respectively, for 2016-17. * Modest scale of operations and exposure to intense competition in the rice milling industry With estimated revenue of around INR16.5 cr. for 2017-18 (refers to financial year, April 1 to March 31) and installed milling capacity of 8 tonne per hour (tph), scale remains small in the intensely competitive rice processing industry that has large players with 50-70 tph capacity. Modest scale restricts pricing power and limits ability to bargain with customers, thereby affecting operating margin, which is estimated to be 8.1 percent in 2016-17. Profitability margin also remains exposed to competition. Strengths * Extensive experience of promoters: Presence of over two decades in the rice milling business has enabled the promoters to establish strong relationship with Food Corporation of India (FCI) and suppliers (farmers). Moreover, mill is strategically located in the middle of heavy paddy- growing areas. Also, since promoters are high net worth individuals, they have robust ties with the lending community. Outlook: Stable CRISIL believes SARM will continue to benefit over the medium term from the extensive industry experience of the promoter. The outlook may be revised to 'Positive' if significant and sustained increase in revenue and profitability, or substantial infusion of capital strengthens financial risk profile. Conversely, considerable weakening in the financial profile on account of decline in revenue and profitability, or any large capital expenditure or capital withdrawal, may drive a revision in outlook to 'Negative'. SARM mills and processes paddy into rice, rice bran, broken rice and husk. It is promoted by Mr. K. Ravindra Reddy and his family, and is based in Siguguppa, Bellary District (Karnataka). For fiscal 2017, SARM's estimated profit after tax (PAT) was INR0.29 crore on net sales of INR16.54 crore, against a PAT of INR0.28 crore on net sales of INR18.03 crore for fiscal 2016. SRI BALAJI: CRISIL Reaffirms 'B' Rating on INR15MM Bank Loan ------------------------------------------------------------ CRISIL has reaffirmed its ratings at 'CRISIL B/Stable/CRISIL A4' on the bank facilities of Sri Balaji Raw And Parboiled Rice Mills Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3 CRISIL A4 (Reaffirmed) Cash Credit 15 CRISIL B/Stable (Reaffirmed) Warehouse Financing 15 CRISIL B/Stable (Reaffirmed) The rating reflects Balaji's moderate scale of operations in the intensely competitive rice-milling industry and the susceptibility of the company's operating profitability to volatility in raw material prices and changes in government regulations. The rating also reflects it's weak financial risk profile because of low net worth, high gearing and weak debt protection metrics. These weaknesses are partially offset by the extensive experience of the promoters in the rice industry. Key Rating Drivers & Detailed Description Weakness * Moderate scale of operations in the intensely competitive rice- milling industry: Balaji's business risk profile is marginally constrained on account of its moderate scale of operations in the fragmented and intensely competitive rice milling industry. The company reported revenues INR97.12 crore for Fiscal 2016-17 (refers to financial year April 1 to March 31). Company's revenues are expected to increase but should remain moderate over the medium term. * Susceptibility of the firm's operating profitability to volatility in raw material prices and changes in government regulations: Raw material (Paddy) accounts for around 80-85% of the total cost exposing the company to the risk arising due to volatility in the same. Furthermore domestic rice industry is highly regulated because of which the company is exposed to the risk of any unfavorable change in the same. * Weak financial risk profile: Financial risk profile is weak marked by low net worth, high gearing and weak debt protection metrics. Net worth was low at around INR11.3 crore against a total debt outstanding of Rs27.25 crore resulting in high gearing of 2.4 times as on March 31 2017. Debt protection metrics was also weak as reflected in interest coverage ratio and net cash accruals to total debt of 1.06 times and 0.7% for the Fiscal 2016-17. Strengths * Extensive experience of promoters Balaji's promoters have been in the rice milling business for more than three decades. Balaji is the latest venture of the promoters who already have other group companies in the same line of business. Long standing experience of promoters has enabled the firm in establishing strong relationship with the suppliers and customers because of which the company has been able to ramp up its operations quickly. Outlook: Stable CRISIL believes Balaji will continue to benefit over the medium term from the promoters' extensive experience. The outlook may be revised to 'Positive' if substantial and sustainable improvement in revenue and profitability, or a sizeable equity infusion strengthens liquidity and financial risk profile. Conversely, the outlook may be revised to 'Negative' if a steep decline in profitability, or stretch in working capital cycle or large debt funded capital expenditure weakens the financial risk profile. Set up in June 2013 by Mr. Viswanadham and his family, Balaji mills and processes paddy into rice; it also generates by- products, such as broken rice, bran, and husk. The mill is in Vijayawada. Balaji reported profit after tax (PAT) of INR0.16 crore on revenues of around INR97.12 crore in fiscal 2017, against 0.12 crore and INR102.51 crore in fiscal 2016. SRI MAHALAXMI: CRISIL Assigns B+ Rating to INR4MM Secured Loan -------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank loan facilities of Sri Mahalaxmi Timbers (SMT). The ratings reflect modest scale of and working capital intensive operations in the intensely competitive timber industry. The ratings draw comfort from the extensive experience of partners. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Letter of Credit 3 CRISIL A4 Secured Overdraft Facility 4 CRISIL B+/Stable Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and intense competition: Scale of operations remains modest as reflected in revenue of INR16 crore for fiscal 2017. Furthermore, intense competition lowers the bargaining power with customers. * Working capital intensive operations: Operations are working capital intensive as indicated by high estimated gross current assets (GCA) of 226 days as on March 31, 2017, driven by high inventory holding requirement and credit offered to customers. Strength * Extensive experience of partners: The partners' two-decade long experience in the industry has helped the firm to establish healthy relationship with key suppliers in South East Asia. Outlook: Stable CRISIL believes SMT will benefit from the extensive industry experience of its partners. The outlook may be revised to 'Positive' if operations scale-up and profitability is stable, or efficient working capital management strengthens financial risk profile. The outlook may be revised to 'Negative' if decline in profitability or increase in working capital requirement strengthens financial risk profile. SMT is engaged in processing (i.e. cutting and sawing) and trading of timber in Bengaluru, Karnataka, The firm processes various types of wood including teak, hard and fine woods. The daily operations are managed by the partners - Mr. Bipin Patel and Mr. Praveen Patel. SMT booked Net Profit of INR21.8 lakhs on revenues of INR16 crores in fiscal 2017 against INR7.39 lakhs on revenues of INR8.5 crores in fiscal 2016 SRI VENKATA: CRISIL Reaffirms B+ Rating on INR8.0MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Sri Venkata Srinivasa Polymers Private Limited (SVSPL) at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.3 CRISIL A4 (Reaffirmed) Inland/Import Letter of Credit 2.0 CRISIL A4 (Reaffirmed) Open Cash Credit 8.0 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect SVSPL's working capital-intensive operations and below-average financial risk profile because of leveraged capital structure and weak debt protection metrics. These weaknesses are partially offset by the company's established regional position in the packaging industry, diversified customer base, and extensive experience of promoters. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations: Gross current assets were 319 days as on March 31, 2017, due to sizeable inventory of 208 days. * Below-average financial risk profile: Networth is small, capital structure leveraged, and debt protection metrics weak. Strengths * Established regional position and diversified customer base: The Company has strong brand recall in Andhra Pradesh's north- eastern part. Clientele is diverse, with top 10 customers accounting for less than 35% of sales. * Extensive experience of promoters: Presence of over two decades in the plastic packaging segment has enabled the promoters to establish strong relationship with suppliers and customers. Outlook: Stable CRISIL believes SVSPL will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if significant and sustained growth in revenue, better profit margins, and improvement in working capital cycle lead to sizeable net cash accrual and healthy debt protection metrics. The outlook may be revised to 'Negative' if financial risk profile weakens further due to stretched working capital cycle, decline in revenue and profitability, or large, debt-funded capital expenditure. Incorporated in 1996 in Rajam, Andhra Pradesh, SVSPL manufactures plastic packaging material. Operations are managed by the promoters Mr. Janardhana Rao Inuganti, Mr. Rajagopal Chelikani, and Mr. Ramakrishna Inuganti. In fiscal 2017, profit before tax (PBT) was INR36.41 lakh on net sales of INR21.9 crore, against a PBT of INR5.98 lakh on net sales of INR18.7 crore in fiscal 2016. SRI VENKATA SUBRA: CRISIL Ups Rating on INR17MM Loan to B+ ---------------------------------------------------------- CRISIL has upgraded its rating on long term bank facilities of Sri Venkata Subrahmanyeswara Modern Raw and Boiled Rice Mill (SVS) to 'CRISIL B+/Stable' from 'CRISIL B/Stable' while assigning the rating of 'CRISIL A4' to its short term bank facility Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3.84 CRISIL A4 (Reassigned) Long Term Loan 1.59 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Open Cash Credit 17 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects CRISIL's belief that firm's liquidity will improve with expected cash accruals, of around INR1 crore, annually, to be sufficient for the maturing debt obligations of around INR0.3 crore, annually, over the next two years. Liquidity is constrained on account of high bank limit utilization and current ratio of just above 1 time, estimated as on March 31 2017. The rating continues to reflect SVS's modest scale of operations in the intensely competitive rice-milling industry and the susceptibility of the firm's operating profitability to changes in government regulations and to volatility in raw material prices. The rating also reflects the firm's weak financial risk profile because of a below-average capital structure and subdued debt protection metrics. These weaknesses are partially offset by the extensive experience of the partners' in the rice industry and established relations with customers and suppliers. Analytical Approach For arriving at the ratings, CRISIL has treated unsecured loans extended by the promoters of SVS, as neither debt nor equity as these loans carry no interest rate and are likely to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: With estimated revenue of INR45.5 crore in 2016-17 (refers to financial year, April 1 to March 31), scale of operations remains modest in the intensely competitive rice milling industry that has many small and large players. This limits bargaining power with customers, which in turn constrains profitability and stretches receivables. * Susceptibility of operating margin to change in government regulation and volatility in raw material prices: Operating profitability was 5.64 percent in 2014-15 which dropped to around 4.4% in the Fiscal 2016. Operating margins in Fiscal 2017 are estimated to be in line with the margins of the Fiscal 2016. The domestic rice industry is highly regulated in terms of paddy prices, export/import policy for rice, and rice release mechanism, which affect credit quality of players. * Weak financial risk profile: Financial risk profile is weak marked by below-average capital structure and subdued debt protection metrics. Net worth is estimated to be at INR3.4 crore resulting in high gearing for the company. Though gearing is estimated to be low at 1.5 times as on March 31 2017 the same is on account of low cash credit utilization as on the same date. Debt protection metrics is constrained by low interest coverage ratio of 1.9 times (Estimated for the fiscal 2017). Strengths * Extensive experience of partners and established customer and supplier relationship: More than three decades of experience in the rice processing industry has enabled the promoters to establish strong relationship with customers (Wholesalers and retailers in Kerala) and suppliers. CRISIL believes that extensive experience of promoters will continue to benefit the firm over the medium term. Outlook: Stable CRISIL believes SVS will continue to benefit over the medium term from the extensive experience of its partners. The outlook may be revised to 'Positive' if substantial increase in revenue and profitability leads to a better financial risk profile, or if significant capital infusion improves capital structure. The outlook may be revised to 'Negative' if large, debt-funded capital expenditure or more-than-expected withdrawals further weaken financial risk profile. Set up in 1984 as a partnership firm, SVS mills and processes paddy into rice, rice bran, broken rice, and husk at its unit Kakinada, Andhra Pradesh. Operations are managed by Mr. Bhaskara Rao. SVS is estimated to report profit after tax (PAT) of INR0.25 crore on revenues of around INR45.4 crore in fiscal 2017, against INR0.16 crore and INR36.92 crore in fiscal 2016. SUPRIMA COSMO: CRISIL Assigns B+ Rating to INR8MM LT Loan --------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the long- term bank facilities of Suprima Cosmo- Tech (SCT). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 8 CRISIL B+/Stable Proposed Cash Credit Limit .65 CRISIL B+/Stable Cash Credit .85 CRISIL B+/Stable Long Term Loan .50 CRISIL B+/Stable The rating reflects the extensive experience of proprietor in manufacturing baby care and personal care products. Also, efficiently managed working capital cycle reduces dependence on working capital borrowings. These strengths are partially offset by modest scale, small networth, and stabilisation of debt-funded capital expenditure (capex) in the medium term. Key Rating Drivers & Detailed Description Strengths * Proprietor's extensive experience: Benefits from the proprietor's experience of over 15 years and strong relationships with customers and suppliers should continue to support the business risk profile. SCT is a 100% export- oriented unit and having approval for its products from more than 40 countries. * Efficiently managed working capital cycle Operations remain well managed, with gross current asset days of 65 as of March 2017, because of low debtor days of 30-50 days over the past fouryears and inventory at 15-20 days. Weakness * Modest scale With revenue of INR15.68crore in fiscal 2017, it is expected to remain at moderate levels in the medium term because SCT has more concentration on the export market, which is more profitable. * Average financial risk profile Gearing was moderate at 0.65 time as on March 31, 2017, but the financial risk profile remains constrained by small networth of Rs2.50 crore. * Stabilisation of debt-funded capex in the medium term SCT is currently undertaking a capex to fully automate its production facility. The capex of Rs10.00 crore is likely to be funded through bank borrowing of Rs8.00 crore. Stabilization of capex remains a key rating sensitivity factor. Outlook: Stable CRISIL believes SCT will continue to benefit over the medium term from the extensive experience of proprietor. The outlook may be revised to 'Positive' in case of substantial scaling up of operations, cash accrual, and profitability, while maintaining working capital cycle. The outlook may be revised to 'Negative' in case of unexpected capital withdrawals, decline in working capital management, revenue, profitability, and cash accrual. Established in 2001 as a proprietorship firm by Mr. Sunil Mahajan, SCT manufactures baby care and personal care products. It is a 100% export-oriented unit, exporting mainly to the US, Latin America, and South America. In fiscal 2017, net profit was INR1.50 crore and operating income was INR15.68 crore, against INR78lakhand INR14.31 crore, respectively, in fiscal 2016. SUSHIL KUMAR: CRISIL Assigns 'B' Rating to INR10MM Loan ------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facility of Sushil Kumar Munish Kumar. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Warehouse Receipts 10 CRISIL B/Stable The rating reflects the firm's low operating margin owing to trading nature, weak financial risk profile and susceptibility of operating margins to fluctuations in cotton prices and regulatory changes. These weaknesses are partially offset by the extensive experience of its partners and established relationship with suppliers and customers Key Rating Drivers & Detailed Description Weakness * Low operating profitability: SKMK primarily trades in cotton, and hence, the value addition is limited. Consequently, SKMK reported low operating margin of around 0.3 percent over the two years ended 2016-17. CRISIL expects SKMK's operating profitability to remain low at less than 1% over the medium term. * Weak financial risk profile: Financial risk profile is constrained by high TOL/TNW of 6.01 times as on March 31, 2017, and weak debt protection metrics, with interest coverage ratio at 1.31 times and net cash accrual to total debt ratio at 0.01 time for fiscal 2017. * Susceptibility of profitability to fluctuations in cotton prices and regulatory changes: Operating margins of cotton traders are susceptible to changes in cotton prices, which have been highly volatile in the past and are expected to remain so. This is because cotton prices depend on monsoon and are also affected by international demand. Strength * Extensive experience of partners: Presence of over two decades in the cotton trading segment has enabled the partners to understand local market dynamics and establish strong relationship with suppliers and customers. Outlook: Stable CRISIL believes SKMK will continue to benefit over the medium term from the experience of its promoters and established relationship with customers and suppliers. The outlook may be revised to 'Positive' in case of higher-than-expected revenue, while improving profitability and capital structure lead to higher accruals. The outlook may be revised to 'Negative' if decline in revenue or profitability or large, debt-funded capital expenditure further weakens financial risk profile. Based in Hissar (Haryana), SKMK is engaged in trading of cotton bales. The firm was incorporated in 2005 as a partnership firm by partners Mr.Sushil Kumar and his son, Mr. Munish Kumar. For fiscal 2017, the firm had a net profit of INR0.05 crore on net sales of INR128.28 crore on provisional basis, against a net profit of INR0.03 crore on net sales of INR80.80 crore in fiscal 2016. TATA CERAMICS: CRISIL Revises Rating on INR5.0MM Loan from 'D' -------------------------------------------------------------- CRISIL has revised its ratings on the bank facilities of Tata Ceramics Limited (TCL) from 'CRISIL BBB-/Stable/CRISIL A3' to 'CRISIL D/CRISIL D' and simultaneously upgraded the ratings to 'CRISIL BBB-/Stable/CRISIL A3'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.5 CRISIL A3 (Revised from 'CRISIL A3' to 'CRISIL D' and simultaneously upgraded to 'CRISIL A3') Export Packing Credit 18.5 CRISIL A3 (Revised from 'CRISIL A3' to 'CRISIL D' and simultaneously upgraded to 'CRISIL A3') Letter of Credit 4.5 CRISIL A3 (Revised from 'CRISIL A3' to 'CRISIL D' and simultaneously upgraded to 'CRISIL A3') Non-Fund Based Limit 13.0 CRISIL A3 (Revised from 'CRISIL A3' to 'CRISIL D' and simultaneously upgraded to 'CRISIL A3') Rupee Term Loan 5.0 CRISIL BBB-/Stable (Revised from 'CRISIL BBB-/Stable' to 'CRISIL D' and simultaneously upgraded to 'CRISIL BBB-/Stable') The rating revision to 'CRISIL D/CRISIL D', takes into account an instance of delay in repayment of a term loan instalment due on June 30, 2017, which was paid on July 21, 2017. The rating upgrade to 'CRISIL BBB-/Stable/CRISIL A3', from 'CRISIL D', reflects CRISIL's belief that the payment delay was a one-off event due to procedural reasons, and TCL's ability and willingness to meet debt obligation in a timely manner - the key parameters of credit risk evaluation - remain intact. Furthermore, the support from the Tata group remains unchanged. TCL missed the payment on account of procedural issues despite having adequate funds and flexibility of accessing funds from other group companies. The company has also undertaken to ensure timely servicing of debt obligations going forward and to strengthen its internal controls and instil higher financial discipline. The 'CRISIL BBB-/Stable/CRISIL A3' ratings factor in the financial flexibility, derived from being part of, the Tata group, and a longstanding customer relationship supported by good product quality. These strengths are partially offset by a weak financial risk profile because of high gearing and inadequate debt protection metrics, susceptibility to increase in raw material prices, and large working capital requirement. Key Rating Drivers & Detailed Description Strengths * Benefits derived from being a Tata group company The Tata group holds 88.4% stake in TCL - Tata International Ltd holds the largest stake of 40.5% followed by The Tata Power Co Ltd (Tata Power; 'CRISIL AA-/Stable/CRISIL A1+') along with its subsidiary Af-Taab Investment Co Ltd with 30.6% stake. The Tata group companies have extended financial, managerial, and operational support to TCL. In fiscal 2014, TCL issued preference shares of INR12 crore to the Tata group companies. Moreover, Tata Power, through its wholly owned subsidiary, has undertaken to provide interim financial support to TCL if required. In fiscal 2014, Mr Bhaskar Bhat, managing director of the Tata group's Titan Company Ltd ('CRISIL AA+/Stable/CRISIL A1+') was appointed as chairman of TCL. * Longstanding customer relationship, supported by good product quality The company manufactures bone china crockery of superior quality. Over more than two decades, it has established a healthy customer base, supported by its product quality. Its clientele includes Rashtrapati Bhavan, all Indian embassies overseas, and leading hotels such as Taj and ITC. TCL has also been supplying to global brands such as Wedgwood, Royal Doulton, and Churchill. The company has had dealings with these customers for several years, and has established itself as an important player in the value chain. Weaknesses * Weak capital structure and debt protection metrics TCL's financial risk profile is constrained by high gearing and inadequate debt protection metrics because of sizeable working capital debt. The net cash accrual to total debt and interest coverage ratios were at 0.08 time and 1.14 times, respectively, for fiscal 2017. * Vulnerability to increase in input prices The entire calcined bone ash requirement is imported from one supplier in the UK through annual contracts. While the company enters into volume-based contracts with the supplier, increase in raw material prices cannot be completely passed on to customers. Also, there is intense price competition because of surplus export from China, one of the lowest-cost producers of bone china crockery and tableware. * Large working capital requirement Gross current assets were at 213 days as on March 31, 2017, because of considerable inventory (176 days) to meet customer demand on time. Part of the inventory also pertains to second- quality stock. Outlook: Stable CRISIL believes TCL will continue to receive strong financial support from the Tata group. The outlook may be revised to 'Positive' if the financial risk profile improves significantly because of sustained increase in revenue and profitability. The outlook may be revised to 'Negative' if the financial risk profile weakens because of larger-than-expected, debt-funded capital expenditure or a subdued operating performance. TCL was set up in 1991 by the erstwhile Tata Oil Mills Company Ltd (merged with Hindustan Lever Ltd) and Kerala Ceramics Ltd. The company has a 100% export-oriented unit in Cochin Special Economic Zone for manufacturing tableware and crockery mixed with bone china. Apart from domestic sales, it exports mainly to the European Union. Net profit is estimated at INR0.3 crore and net sales at INR44.3 crore for fiscal 2017; net loss was INR3.2 crore and net sales of INR39.3 crore for fiscal 2016. TONZA PAPER: CRISIL Reaffirms B+ Rating on INR9.94MM Term Loan -------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Tonza Paper LLP at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1 CRISIL A4 (Reaffirmed) Cash Credit 5.5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.35 CRISIL B+/Stable (Reaffirmed) Term Loan 9.94 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect exposure to risks related to timely stabilisation of operations, and commensurate ramp-up in revenue, amid intense competition in the paper industry, and the average financial risk profile. These weaknesses are partially offset by extensive entrepreneurial experience of, and funding support received from, the promoters and favourable location of the plant and proximity to packaging customers. Analytical Approach For arriving at the ratings, CRISIL has treated as neither debt nor equity, unsecured loans received from TPL's promoters and their families. That is because the loans are expected to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weakness * Exposure to risks related to stabilisation, and ramp-up in revenue TPL commenced commercial operations at its newly established kraft paper manufacturing unit from July 2017. Timely stabilisation of operations, and commensurate ramp-up in revenue and operating profitability, during the initial phase of operations, remain critical. * Average financial risk profile Financial risk profile may remain average, owing to the debt- funded capital expenditure, with gearing expected to be in the range of 1.6-1.8 times in the medium term. * Intense competition and susceptibility to volatile waste paper prices The domestic kraft paper industry is hugely fragmented, with unorganised players accounting for bulk of the production. Though high customisation levels limit the threat of imports, presence of a large number of players has intensified competition. Further, revenue and profitability remain susceptible to volatility in waste paper prices. Strengths * Extensive experience of the promoters in the packaging industry: Benefits from the two decade-long presence of the promoters in the kraft paper, ceramic and packaging industry, their keen grasp over local market and business dynamics, and established relationships with suppliers and customers, will continue. * Favorable location of the plant and proximity to packaging customers The favorable location of the unit, at Morbi, Gujarat, will support growth in the medium term, as increasing number of ceramic tiles manufacturers in the vicinity, will drive demand for kraft paper. Outlook: Stable CRISIL believes TPL will benefit from the extensive entrepreneurial experience of its promoters and strategic location of the plant, over the medium term. The outlook may be revised to 'Positive' if timely stabilisation and ramp-up of operations generates higher cash accrual. The outlook may be revised to 'Negative' if a delay in ramp up of operations, leads to lower cash accrual, and weakens the financial risk profile, especially liquidity. TPL was established in 2016 by the partners, Mr Dinesh Detroja, Mr Jaykumar Detroja, Mr Narendra Nayakpara, Mr Baldev Nayakpara, Mr Girishkumar Detroja and their family members. The company has set up a 36,000 MTPA plant at Morbi, Gujarat for manufacturing kraft paper, mainly used in product packaging and corrugated boxes. Commercial production has commenced from July 2017. TRIDENT SUGARS: CRISIL Continues to Put C Ratings on Watch Dev. --------------------------------------------------------------- CRISIL rating on the bank facilities of Trident Sugars Limited (TSL) remains on 'Rating Watch with Developing Implications'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term 34.2 CRISIL C (Continues on Bank Loan Facility 'Rating Watch with Developing Implications') Rupee Term Loan 15.8 CRISIL C (Continues on 'Rating Watch with Developing Implications') On April 29, 2017, CRISIL had placed the ratings on the bank facilities of TSL on Rating Watch with Developing Implications. The rating action followed the announcement by Rajshree Sugars and Chemicals Limited (RSCL) confirming divestment of its entire stake in TSL to Natems Sugars Private Limited (NSPL). CRISIL will continue to follow up with NSPL's management to evaluate the extent of impact of any potential corporate action on its credit risk profile and will remove the ratings from watch and take a final rating action upon receiving adequate clarity and information. Analytical Approach The ratings continue to reflect TSL's below-average financial risk profile marked by high gearing and below average debt protection metrics, and the company's susceptibility to regulatory risks in the sugar industry. These rating weaknesses are partially offset by TSL's long-standing regional presence. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: The Company's financial risk profile continue to be weak marked by high gearing and subdued debt protection metrics. Substantial losses incurred in the past and sizeable debt has resulted in leveraged capital structure. Debt protection metrics remains subdued marked by interest coverage of 0.84 for fiscal 2017. Strength * Long-standing regional presence in Telanagana: TSL has a long standing presence in Zaheerabad, Telangana region. The plant currently has a crushing capacity of 3000 TCD (tonnes of cane per day). TSL's plant (crushing unit) is located close to sugar crane growing region. CRISIL believes that long standing presence in Telangana region and plant's proximity to crane growing regions will benefit TSL over the medium term. Based in Zaheerabad (Telanagana), TSL was incorporated in 2002 is into manufacturing of sugar and has a crushing capacity of 3000 TCD (tonnes of cane per day). For the fiscal 2017, TSL reported net loss of INR0.8 crores on income from operations of INR114 crore. The company reported net loss of INR4.96 crore on income from operations of INR143 crore for fiscal 2016. VAJRAKALPA COTTON: CRISIL Reaffirms B+ Rating on INR14MM Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating at 'CRISIL B+/Stable' rating on the long-term bank facility of Vajrakalpa Cotton (VC). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 14 CRISIL B+/Stable (Reaffirmed) CRISIL's ratings on the bank facilities of VC continue to reflect the firm's low operating efficiency, below average financial risk profile because of a small net worth, moderate gearing, and weak debt protection metrics, and working capital-intensive nature of operations. These rating weaknesses are partially offset by the extensive experience of VC's partner, and established relationship with customers. Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile: Financial risk profile is expected to remain below-average, with net worth and gearing likely to be at INR6.83 crore and 3.32 times, respectively, as on March 31, 2017. Debt protection metrics also should be below average, with net cash accrual to adjusted debt ratio of 0.03 time and interest coverage ratio of 1.39 times for fiscal 2017. * Moderate Working capital-intensive operations: Working capital requirement is moderate as reflected in gross current assets at 71 days as on March 31, 2017, driven by inventory of 37 days and debtors of 33 days. * Low margin Susceptibility to volatility in raw material prices: Operating margins of VC are low at 1 per cent and susceptible to changes in raw material prices as the players are unable to fully pass price increases to customers. Strengths * Promoters' extensive experience: VC's promoters have been in the Cotton industry for more than twenty years and have established strong relationships with customers and suppliers. Outlook: Stable CRISIL believes that VC will benefit from its promoter's extensive experience in the cotton ginning industry. The outlook may be revised to 'Positive' if there is a material improvement in operating profitability leading to improvement in its cash accruals and thereby the financial and liquidity profiles. Conversely, the outlook may be revised to 'Negative' if the company's operating margin decreases or its working capital management deteriorates, thereby weakening its liquidity profile. VC is a partnership firm established in 1999 and is engaged in the ginning & pressing of raw cotton, oil extraction and trading of cotton lint in Telangana. VC's profit after tax (PAT) was INR0.76 crore on total revenue of INR162.81 Cr for fiscal 2017, against a PAT of INR0.48 crore on total revenue of INR147.79 Cr for fiscal 2016. VENUS ENTERPRISES: CRISIL Assigns 'B' Rating to INR10MM LT Loan --------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facility of Venus Enterprises - Chennai (Venus). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 10 CRISIL B/Stable The rating reflects the firm's modest scale of operations in a highly fragmented industry and geographical concentration in revenue profile. These weaknesses are partially offset by the extensive experience of its proprietor in the manpower management services and established customer relationship. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations With estimated revenue of Rs20.7 crore for fiscal 2017, scale remains small. * Exposure to intense competition and geographical concentration in revenue profile The firm has to compete with many unorganised players in the manpower management services. Furthermore, revenue is concentrated in Chennai. Strengths * Extensive experience of proprietor Presence of around a decade in the manpower management services segment has enabled the proprietor to establish a robust market position. Outlook: Stable CRISIL believes Venus will benefit over the medium term from its proprietor's experience and established customer relationship. The outlook may be revised to 'Positive' if substantial improvement in scale of operations and profitability leads to large cash accrual. The outlook may be revised to 'Negative' if stretch in receivables puts pressure on liquidity. Set up as a proprietorship firm by Mr Pandurangan Murali in 2008, Venus provides manpower services to manufacturing and logistics companies. The firm is based in Chennai and has a workforce of 1200 workers (as on June 30, 2017). In fiscal 2017, provisional net profit was Rs0.75 crore on operating income of INR20.7crore; net profit was INR0.50 crore on an operating income of INR17.06 crore in fiscal 2016. =============== M A L A Y S I A =============== MALAYAN BANKING: Fitch Affirms BB+ Tier 1 Securities Rating ----------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of three Malaysian banks - Malayan Banking Berhad (Maybank), Hong Leong Bank Berhad (HLBB) and Export-Import Bank of Malaysia Berhad (MEXIM) - at 'A-'. The ratings are on Stable Outlook. KEY RATING DRIVERS IDRs AND VIABILITY RATINGS - MAYBANK AND HLBB Maybank's IDRs and Viability Rating are underpinned by its substantial franchise, which commands an 18% market share of Malaysia's banking system deposits and loans. The bank's strong company profile underpins its stable funding and liquidity and has helped deliver sound performance through economic cycles. Maybank's steady pre-provision earnings and balance-sheet buffers should help it weather the rise in its impaired loan ratio (end- 1Q17: 2.4%; end-2015: 1.9%), which has originated partly from its oil- and gas-related exposures regionally. HLBB's IDRs and Viability Rating are underpinned by its conservative risk appetite, which is reflected in its low impaired-loan ratio of 0.9% at end-March 2017, compared with the sector average of 1.6%, and steady funding and liquidity profile. The Stable Outlooks on the IDRs reflect Fitch's view that the banks' intrinsic credit profiles should stand resilient in the face of sustained moderate asset-quality pressure. Pockets of asset-quality risk remain for the overall economy; in the oil and gas sector, certain oversupplied commercial property segments and among more vulnerable lower-income household borrowers. However, Fitch expects any further deterioration to be manageable for the banks due to their diversified loan portfolios, stable underwriting standards and improved capitalisation over the previous few years, coupled with Fitch expectations of steady economic growth over the next one to two years. Malaysia's economy has proven resilient despite of a number of challenges, including a sharp oil-price correction, significant currency depreciation, weakened domestic sentiment and volatile capital flows. Fitch expects improving global growth to boost domestic economic activity in the near term. SUPPORT RATINGS AND SUPPORT RATING FLOORS - MAYBANK AND HLBB Maybank's and HLBB's Support Ratings and Support Rating Floors reflect Fitch's expectation of a high probability of sovereign support for both banks, if needed. Maybank's Support Rating of '2' and Support Rating Floor of 'BBB' reflect its extremely high systemic importance stemming from its large domestic market share and indirect state shareholding through various state-owned funds of around 60%-70%. HLBB's Support Rating of '2' and Support Rating Floor of 'BBB-' reflect its systemic importance as the fifth-largest local bank, accounting for around 9% of system-wide deposits, as well as its private ownership, unlike certain large Malaysian banks. DEBT RATINGS - MAYBANK AND HLBB The ratings on Maybank's senior notes and the medium-term note programmes (MTN) of Maybank and HLBB are at the same level as the banks' IDRs. This is because the notes and programmes constitute their direct, unconditional and unsecured obligations. Maybank's legacy Basel II-compliant subordinated notes are rated one notch below its Viability Rating, reflecting the note's subordinated status relative to claims from senior unsecured creditors and the absence of a going-concern loss-absorption mechanism. Maybank's Basel II-compliant hybrid securities are rated four notches below its Viability Rating to reflect the securities' deep subordination status, the presence of going-concern loss- absorption mechanisms and look-back provisions in the optional dividend deferral. IDR, SUPPORT RATING, SUPPORT RATING FLOOR AND SENIOR DEBT - MEXIM MEXIM's IDR, Support Rating Floor, senior debt and programme ratings are equalised with the Malaysian sovereign IDR at 'A-'. This reflects Fitch's view that the probability of extraordinary state support for MEXIM is extremely high, if necessary. MEXIM's unique policy mandate, full state ownership and past instances of support anchor Fitch expectations for an extremely high likelihood of state support. MEXIM is a development financial institution with a specific mandate to finance and support Malaysian export and import activities and overseas projects. MEXIM is small in relation to Malaysia's GDP and its domestic banking system, implying that the sovereign is very likely to have the ability to support the bank, if needed. RATING SENSITIVITIES IDRS AND VIABILITY RATINGS - MAYBANK AND HLBB There is little scope for the Long-Term IDRs of Maybank and HLBB to be upgraded for the foreseeable future, as they are on par with those of the Malaysian sovereign. A significant rise in risk appetite could lead to negative rating action, unless accompanied by an offsetting rise in loss- absorption buffers. Higher risk appetite may be evidenced through excessive loan growth, a significant shift in exposures towards higher-risk sectors or geographies or aggressive acquisition activity. A severe downturn in the operating environment, to the extent that it severely weakens the banks' profitability, capitalisation or funding and liquidity profiles, would also be negative for their ratings. SUPPORT RATINGS AND SUPPORT RATING FLOORS - MAYBANK AND HLBB A shift in the government's ability or propensity to provide extraordinary support to Maybank and HLBB would affect their Support Ratings and Support Rating Floors. This could arise from a change in the sovereign ratings or the introduction of senior debt bail-in requirements in line with developments in other jurisdictions globally - though Fitch views the latter to be a longer-term risk for the Malaysian banking system. DEBT RATINGS - MAYBANK AND HLBB The ratings on Maybank's senior notes and the MTN programmes of Maybank and HLBB are sensitive to changes in their respective IDRs, while the ratings on Maybank's Basel II subordinated notes and hybrid securities depend on changes in the bank's Viability Rating. IDR, SUPPORT RATING, SUPPORT RATING FLOOR AND SENIOR DEBT - MEXIM MEXIM's ratings are sensitive to changes in the sovereign's creditworthiness and ratings, and to any perceived weakening in the sovereign's propensity to support the bank. Its ratings may be notched down from the sovereign if Fitch believes the sovereign's propensity to support the bank has diminished, such as with a reduction of the bank's policy role or decrease in the sovereign's stake in the bank. However, Fitch does not expects such scenarios to occur in the near to medium term. The rating actions are as follows: Maybank - Long-Term Foreign-Currency IDR affirmed at 'A-'; Outlook Stable - Short-Term Foreign-Currency IDR affirmed at 'F2' - Long-Term Local-Currency IDR affirmed at 'A-'; Outlook Stable - Viability Rating affirmed at 'a-' - Support Rating affirmed at '2' - Support Rating Floor affirmed at 'BBB' - Senior notes (including the multicurrency MTN programme) affirmed at 'A-' - Basel II-compliant subordinated notes affirmed at 'BBB+' - Basel II-compliant hybrid Tier 1 securities affirmed at 'BB+' HLBB - Long-Term Foreign-Currency IDR affirmed at 'A-'; Outlook Stable - Short-Term Foreign-Currency IDR affirmed at 'F2' - Viability Rating affirmed at 'a-' - Support Rating affirmed at '2' - Support Rating Floor affirmed at 'BBB-' - MTN programme rating affirmed at 'A-' MEXIM - Long-Term Foreign-Currency IDR affirmed at 'A-'; Outlook Stable - Support Rating affirmed at '1' - Support Rating Floor affirmed at 'A-' - Senior debt (including the MTN and sukuk programmes) affirmed at 'A-' ===================== P H I L I P P I N E S ===================== WORLD PARTNERS: Placed Under PDIC Receivership ---------------------------------------------- The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) prohibited World Partners Bank (A Thrift Bank), Inc. from doing business in the Philippines. Under Resolution No. 1340 dated August 11, 2017, the MB directed the Philippine Deposit Insurance Corporation (PDIC) as Receiver to proceed with the takeover and liquidation of the bank. PDIC took over the bank on August 11, 2017. World Partners Bank is a five-unit thrift bank with Head Office located at #74 A. Mabini St., Brgy. Poblacion, San Pedro City, Laguna. Its four branches are located in Meycauayan and Sta. Maria in Bulacan, San Pablo City in Laguna, and Tanauan City in Batangas. Based on the General Information Sheet filed by the bank with the Securities and Exchange Commission as of December 31, 2016, World Partners Bank is owned by Ang Hortaleza Corp. (60.0%) and Rosalinda A. Hortaleza (40.0%). The Bank's Chairman is Rosalinda A. Hortaleza and its President is Leonora G. Sioco. Latest available records show that as of June 30, 2017, World Partners Bank had 22,613 deposit accounts with total deposit liabilities of PHP559.5 million. Total insured deposits amounted to PHP411.0 million equivalent to 73.5% of total deposits. PDIC assured depositors that all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of PHP500,000.00. Depositors with valid deposit accounts with balances of PHP100,000.00 and below shall be eligible for early payment and need not file deposit insurance claims, except accounts maintained by business entities, or when they have outstanding obligations with World Partners Bank or acted as co- makers of these obligations. Depositors have to ensure that they have complete and updated addresses with the bank. They may update their addresses until August 25, 2017 using the Mailing Address Update Forms to be distributed by PDIC representatives at the bank premises. For depositors who are required to file claims for deposit insurance, the schedule of claims settlement operations will be announced as soon as possible through posters in the bank premises and in other public places, the PDIC website, www.pdic.gov.ph, and PDIC's official Facebook account. PDIC also reminded borrowers to continue paying their loan obligations with the closed World Partners Bank and to transact only with designated PDIC representatives at the bank premises. For more information on the requirements and procedures for filing claims and settlement of loan obligations, all depositors and borrowers of the bank are enjoined to attend the Depositors-Borrowers' Forum which will be held in venues near the premises of the bank on August 23 to 25, 2017. Details will be posted in the bank premises and in other public places. Depositors may communicate with PDIC Public Assistance personnel stationed at the bank premises or call the PDIC Public Assistance Hotlines at (02) 841-4630 to (02) 841-4631, or send their e-mail to pad@pdic.gov.ph. Depositors outside Metro Manila may also call PDIC at its Toll Free Hotline at 1-800-1-888-PDIC (7342). Inquiries may also be sent via private message to the official PDIC Facebook account at www.facebook.com/OfficialPDIC. ================= S I N G A P O R E ================= EZION HOLDINGS: Posts US$2.6MM 2nd Qtr Loss; Debt Revamp Starts ---------------------------------------------------------------- The Business Times reports that Ezion Holdings stopped short of acknowledging it has kicked off debt restructuring when it called for a trading suspension on Aug. 14. It said that discussions have been ongoing with stakeholders including bank lenders and other creditors regarding its financing and capitalisation structure, the report relates. This is taking place as the group that was once touted as a potential survivor from this O&M downturn, posted its third consecutive quarterly loss, according to the Business Times. The Business Times discloses that the group slipped into the red for the third reporting season in a row with a net loss of US$2.57 million for the second quarter ended June 30, a reversal from a net profit of US$8.14 million for the year-ago period. Loss per share was 0.30 US cents compared to earnings per share of 0.38 US cents a year ago, the report says. According to the Business Times, the group blamed lower charter rates and fleet utilisation for service rigs and offshore support vessels for a 19.5% decrease in its Q2 revenue to US$67.38 million. It recognised that the charter rates and fleet utilisation have faced significant depression. This suggests the service rig or liftboat-focused O&M player has not been spared the brunt of demand destruction and overcapacity triggered by the 2014 oil price crash, contrary to earlier projections from some equity analysts, the report notes. Instead, Ezion said that a protracted downturn has presented "many challenges" to its cash flow and it warned that if such adverse conditions persist, its business fundamentals will come under threat, the Business Times relays. The Business Times notes that the group has seen its cash and cash equivalents almost halved to US$93.46 million as at June 30, 2017, on negative net cash flows from operating and investing activities, down from US$181.11 million a year ago. Net cash from operating activities was negative US$2.35 million for Q2 FY17 as trade and other payables surged to US$30.50 million from US$3.58 million. This compared unfavorably to US$28.25 million in positive net cash from operating activities for Q2 FY16, the Business Times discloses. Not helping matters were significant cash outflows from investing activities. Advance payments for purchase of plant and equipment ballooned to US$16.17 million from US$243,000 while US$11.45 million more was pumped in as investments in an associate. In the absence of US$20.4 million proceeds from disposal of assets held for sale during Q2 FY16, net cash from investing activities came up to negative US$40.31 million, the report states. As at June 30, 2017, non-current assets were also lower at US$2.39 billion, down from US$2.45 billion six months ago, due to depreciation charges on plant and equipment and lower values in the group's joint ventures, The Business Times says. According to the report, Ezion said that it intends to work together with all its stakeholders to discuss financing options in order to ride through to the next sectoral upswing. Singapore-based Ezion Holdings Limited engages in investment holding and provision of management services. The Company, along with its subsidiaries, specializes in the development, ownership and chartering of offshore assets to support the offshore energy markets. Its segments include Production and maintenance support, which is engaged in owning, chartering and management of rigs and vessels involved in the production and maintenance phase of the oil and gas industry; Exploration and development support, which is engaged in owning, chartering and management of rigs and vessels involved in the exploration and development phase of the oil and gas industry, and Others, which includes assets or investments involved in renewable energy and other oil and gas related industry. The Company owns a fleet of multipurpose self- propelled service rigs. It owns a fleet of service rigs in Southeast Asia for use in offshore oil and gas industry, and offshore wind farm industry. MARCO POLO: Net Loss Widens to $304MM in 3rd Qtr Ended June 30 -------------------------------------------------------------- The Straits Times reports that Marco Polo Marine saw widening losses in the third quarter, posting a $304.2 million net loss for the three months ended June 30, from a $6.4 million net loss the year before. Revenue stayed relatively flat year-on-year, at $9.1 million, the report says. The Straits Times relates that the ailing company has suspended trading of its shares since May 2017, as a debt refinancing and restructuring plan got underway. According to the report, Marco Polo Marine said it is in advance negotiations with potential investors to raise fresh funding. "The long-term prospects of the group, in particular, its ability to continue its business and operations in the next 12 months, are dependent on the ability of the group to achieve a successful refinancing and debt restructuring," Marco Polo, as cited by The Strait Times, said. But the board of directors noted that there is no assurance that the group may successfully complete its refinancing exercise or raise enough fresh funds to sustain operations for the next 12 months - especially with the gloomy outlook for the oil and gas and marine industries, the report relays. Loss per share stood at 91.81 cents, against 2.23 cents in the same period a year ago, while net liability value per share amounted to 44.8 cents, The Straits Times discloses. The Straits Times notes that Marco Polo Marine draws its revenue from two key segments - ship chartering and ship building and repair. While it has improved utilisation of its tugboat and barge fleet, the gain in turnover was offset by a decline in dry-dock and repair jobs, the report says. It noted that there is nothing due from customers in the present quarter, with net liabilities having ballooned to $150.8 million against assets of $158.8 million as at Sept 30, 2016, adds The Straits Times. Singapore-based Marco Polo Marine Ltd (SGX:5LY) -- http://www.marcopolomarine.com.sg/-- engages in marine logistics services. The Company's segments include Ship chartering services, which relates to charter hire activities, and Ship building and repair services, which relates to ship building and ship repair activities. Its shipping business consists of offshore support and marine logistics services, and relates to the chartering of offshore supply vessels (OSVs), which include anchor handling tug supply vessels (AHTS) for deployment in the regional waters, including the Gulf of Thailand, Malaysia, Indonesia and Australia, as well as the chartering of tugboats and barges to customers, which are engaged in the mining, commodities, construction, infrastructure and land reclamation industries. Its shipyard business relates to ship building, as well as the provision of ship maintenance, repair, outfitting and conversion services that are carried out through its shipyard in Batam, Indonesia. NAM CHEONG: Posts MYR2.02BB Net Loss in Second Qtr Ended June 30 ---------------------------------------------------------------- The Straits Times reports that beleaguered Nam Cheong posted a whopping second quarter net loss of MYR2.02 billion (SGD652 million), reversing from a profit of MYR3 million previously. This was due to massive asset impairment and write-down totalling MYR2 billion for the three months ended June 30, the report says. According to the report, this can be broken down to the following: * Asset impairment and write-down amounting to MYR1.88 billion; * Impairment on investment in associate of MYR54.4 million; and * Impairment on amounting owing by jointly controlled entities totalling MYR61.8 million. The Straits Times says the accumulated losses have wiped out shareholders' equity, plunging the group into a net liability position. As at end June, Nam Cheong's net liability per share amounted to 33.4 sen, compared to net asset value of 65.3 sen as at Dec. 31, the report discloses. Loss per share was 96.56 sen against earnings of 0.14 sen previously. The only bright spot was a 29% rise in revenue to MYR151.2 million, the report notes. According to the Straits Times, revenue from the shipbuilding segment increased by 17% to MYR133.7 million, mainly due to the sale and delivery of two vessels. The report relates that the vessel chartering revenue recorded an increase of 4185 to MYR17.6 million, mainly due to the addition of three vessels to the chartering fleet during the quarter. Prospects remain bleak, the report notes. According to the report, the outlook for the oil and marine sector remains weak and the group anticipates heavy going in vessel sales and shipbuilding. It has deferred the schedule of deliveries of its vessels currently under construction, both at customers' requests and also at its own initiative. The Straits Times relates that Nam Cheong said it has also taken steps to review its options to restructure its businesses, operations and balance sheet. It has had ongoing discussions with its principal lenders on restructuring of debts, The Straits Times notes. Last week, its wholly-owned subsidiary, Nam Cheong Dockyard, was served a writ of summons by AmBank in Kuala Lumpur for MYR70.4 million, the report adds. Nam Cheong Ltd is an investment holding company. The Company and its subsidiaries operate as an offshore marine company. It operates through two segments: Shipbuilding and Vessel chartering. The Company's business is the construction and supply of offshore support vessels (OSVs) used in the offshore oil and gas exploration and production, and oil services industries, including safety standby vessels, anchor handling tug supply (AHTS) vessels, accommodation work barges and maintenance work vessels. AHTS vessels are designed to provide anchor handling for offshore drilling rigs, tow offshore drilling rigs, barges and other types of OSVs. Accommodation Work Barges are vessels designed to house and accommodate crew. Maintenance Work Vessel are vessels designed as a platform for the loading and unloading of cargo. Platform Supply Vessel is designed for the transportation of supplies and equipment to and from offshore oil and gas support production platforms and offshore drilling rigs. SWISSCO HOLDINGS: Ernst & Young Appointed as Unit's Liquidators ---------------------------------------------------------------- Reuters reports that Swissco Holdings Ltd announced provisional liquidation of Scott and English Energy Pte. Ltd. According to Reuters, Swissco said the unit made a statutory declaration that S&E cannot by reason of its liabilities continue its business. Aaron Loh Cheng Lee & Lee Meng Yen Angela of Ernst & Young solutions were appointed as joint and several provisional liquidators of S&E effective Aug. 11, Reuters relates. In April 2017, a Singapore court approved the application made by Swissco to be placed under judicial management after the debt- ridden company failed to receive support from its major creditors, Seatrade Maritime reported. Swissco Holdings Limited (SGX:ADP), along with its subsidiaries -- http://swissco.net/html/index.php-- is a Singapore-based integrated oil and gas service provider. The Company provides drilling rigs, accommodation jackups and vessel chartering services for the oil and gas industry. The Company's segments are Drilling, which includes drilling rig chartering; Offshore support vessels (OSV), which includes vessel chartering (such as sale of out-port-limit services), ship repair and maintenance services, maritime related services (such as sale of vessels) and OSV related investment activities; Service assets, which includes accommodation and service rig chartering, and Others segment, which includes corporate activities. Its OSV segment owns and operates a fleet of over 40 offshore support vessels that provide a range of offshore chartering services for the marine, offshore oil and gas, and civil construction industries. Its subsidiaries include Swissco Energy Services Pte Ltd, Swissco Offshore (Pte) Ltd and Seawell Drilling Pte Ltd. =============== T H A I L A N D =============== POLARIS CAPITAL: SEC Probes Following Surprise Receivership ----------------------------------------------------------- The Nation reports that the Securities and Exchange Commission (SEC) is investigating Polaris Capital after the listed company received an order from the Central Bankruptcy Court on August 3 to enter receivership, deputy secretary-general Prakid Punyashthiti said on Aug. 7. According to the report, Mr. Prakid said the SEC is investigating the matter as the company received the court's bankruptcy order without having notified the stock-exchange authorities of its intention to enter receivership, which is a move affecting all Polaris Capital shareholders. The company had also failed to provide more information about its financial results for 2016 despite the regulator's request that it do so early this year, he added, The Nation relates. "We are investigating the company and will take legal action [as necessary]. When we have more information, we will disclose it to the public as soon as possible," the report quotes Mr. Prakid as saying. Polaris Capital Public Company Limited, formerly known as Wattana Capital Public Company Limited, is a Thailand-based company engaged in property development for sale business. The Company and its subsidiaries operate two business segments: property development business and rent, services and sale of property business for housing, townhouses, home offices and condominiums. The Company's projects include Grand Living Nara Rangsit, Maneekraam Ville, Poonsin Privacy Plus and Clover Ladprao 83. Its subsidiaries comprise Top Line Living Co., Ltd., Nantapop Co., Ltd., Tangerine Property Co., Ltd. and Platinum Executive Co., Ltd. =============== X X X X X X X X =============== * Asian High-Yield Corps. Default Rate to Remain Low at End-2017 ---------------------------------------------------------------- Moody's Investors Service says that the default rate for Asian high-yield non-financial corporates will remain low, registering 2.9% at end-2017. "The low projected default rate reflects broad-based global growth, the recovery of commodity prices, and Moody's expectations of cautious monetary tightening in major economies, including the US, China and EU," says Clara Lau, a Moody's Group Credit Officer. "And, the gradual normalization of monetary policy in these major economies will support near-term market liquidity," adds Lau. "Meanwhile, a buoyant bond market since the start of 2017 has allowed many Asian companies to raise funds to meet their refinancing and capital needs; thereby easing liquidity pressure and lowering default risks." Moody's analysis is contained in its just-released report titled "Default Report - Asian high-yield non-financial corporates' default rate to remain low at end-2017," and is authored by Lau. On metals & mining companies which were major default contributors in the past two years , Moody's report says that easing pressure on such businesses because of the bottoming out of commodity sectors and recovery in commodity prices will help keep the overall default rate low. Moody's points out that the Asian trailing 12-month non-financial high-yield corporate default rate was at 1.5% at end-June 2017. This result was lower than the 4.9% at end-June 2016, and in line with the default trend in Moody's global and US portfolios. Moody's global and US speculative-grade default rates fell to 3.2% and 3.8% at end-June 2017 from 4.7% and 5.5% at end-June 2016. In Europe, the default rate stayed flat at 2.7% at end-June 2017 versus 2.6% the year before. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2017. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. *** End of Transmission ***