/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170831.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, August 31, 2017, Vol. 20, No. 173 Headlines A U S T R A L I A A & S ARNOTT: First Creditors' Meeting Set for Sept. 8 BRIGHTSTAR CONSULTING: First Creditors' Meeting Set for Sept. 7 GEOEXCHANGE CONTRACTING: 2nd Creditors' Meeting Set for Sept. 6 HUA CHENG: 14 Buyers in Limbo After Firm Defaults on AUD35MM Loan OSTWALD BROS: First Creditors' Meeting Set for Sept. 6 PREMIUM AFFORDABLE: First Creditors' Meeting Set for Sept. 6 QUEENSLAND NICKEL: Sale On Hold, But Interest Continues C H I N A MIE HOLDINGS: S&P Cuts CCR to SD on Completion of Exchange Offer MIE HOLDINGS: S&P Ups CCR to CCC- on Completion of Exchange Offer I N D I A AANANDA LAKSHMI: CRISIL Reaffirms 'D' Rating on INR18.87MM Loan AANCHAL CEMENT: Ind-Ra Migrates BB+ Rating to Not Cooperating AVON TUBETECH: CRISIL Lowers Rating on INR29.5MM Loan to D BHAGYODAYA MOTORS: CRISIL Reaffirms 'B' Rating on INR15MM Loan BHALKESHWAR SUGARS: CRISIL Assigns 'D' Rating to INR12.5MM COSMO FERRITES: CRISIL Lowers Rating on INR11.84MM Loan to B+ COSMO GRANITES: CRISIL Assigns B+ Rating to INR30MM Term Loan DAGA AUTO: Ind-Ra Migrates BB- Rating to Not Cooperating DEVI CONSTRUCTION: CRISIL Lowers Rating on INR9MM Cash Loan to B- DHANSHREE SEEDS: CRISIL Reaffirms 'D' Rating on INR21.39MM Loan DOLBI'S GRANITE: Ind-Ra Migrates D Rating to Not Cooperating FARIDABAD STEEL: Ind-Ra Affirms BB Issuer Rating, Outlook Stable GAWAR CONSTRUCTION: Ind-Ra Withdraws WD Commercial Paper Rating GRACE SUPPLIERS: Ind-Ra Migrates BB- Rating to Not Cooperating JAGRUTESHWAR METALS: CRISIL Reaffirms B Rating on INR5.5MM Loan KAMADHENU JEWELLERY: CRISIL Assigns B Rating to INR5.0MM Loan KIRUBHA EXPORTS: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan KPM PROCESSING: Ind-Ra Affirms 'BB' Issuer Rating, Outlook Stable MADHOOR BUILDWELL: CRISIL Lowers Rating on INR14MM Loan to 'D' MAHAVEER COTTS: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan MEP INFRASTRUCTURE: CRISIL Cuts rating on INR2.52BB Loan to D PARKASH PULSES: Ind-Ra Affirms B Issuer Rating, Outlook Stable PATEL MOTORS: Ind-Ra Migrates BB Issuer Rating to Not Cooperating PRASANNA EDUCATION: CRISIL Reaffirms D Rating on INR10MM LT Loan R H SOLVEX: Ind-Ra Migrates BB+ Rating to Not Cooperating RAI INFRASTRUCTURE: CRISIL Reaffirms B Rating on INR7.60MM Loan REBELL JEWELS: CRISIL Assigns B+ Rating to INR8MM Cash Loan SCORODITE STAINLESS: CRISIL Lowers Rating on INR23MM Loan to D SHESHADRI INDUSTRIES: CRISIL Reaffirms D Rating on INR34.54M Loan SHITAL GEMS: Ind-Ra Migrates D Rating to Issuer Not Cooperating SHREE MANIBHADRA: CRISIL Reaffirms 'D' Rating on INR53MM Loan SHRI KARVIR: CRISIL Reaffirms B+ Rating on INR12MM Cash Loan SPENTIKA CERAMIC: CRISIL Reaffirms 'B' Rating on INR6MM LT Loan SUNCO ENTERPRISES: CRISIL Assigns B+ Rating to INR7MM Cash Loan SURYAVANSHI SPINNING: CRISIL Reaffirms D Rating on INR14.33M Loan SWARUP INTERNATIONAL: CRISIL Reaffirms B+ Rating on INR3.1MM Loan VENKATA SAI: Ind-Ra Migrates D Rating to Issuer Not Cooperating VENTURE IMPEX: CRISIL Assigns B+ Rating to INR9.9MM Cash Loan VIDHATRI MOTORS: CRISIL Reaffirms 'B+' Rating on INR7.50MM Loan VINIT FABRICS: Ind-Ra Moves 'BB' Issuer Rating to Not Cooperating YAK GRANITE: CRISIL Lowers Rating on INR6MM Cash Loan to 'C' * RBI Sends Second List of 40 Defaulters to be Referred to NCLT J A P A N TOSHIBA CORP: Western Digital Not to Seek Veto Power in Deal TOSHIBA CORP: May Not Finalise Chip Unit Sale By Aug. 31 Deadline TSUKUBA BRAINS: Cord Blood from Bankrupt Group Resold to Clinics N E W Z E A L A N D MERCER GROUP: Posts NZ$6.9MM Net Loss in Year Ended June 30 P H I L I P P I N E S CEBU AIR: Egan-Jones Hikes Sr. Unsec. Debt Rating to BB+ - - - - - ================= A U S T R A L I A ================= A & S ARNOTT: First Creditors' Meeting Set for Sept. 8 ------------------------------------------------------ A first meeting of the creditors in the proceedings of A & S Arnott Pty Ltd trading as Morpeth Sourdough will be held at Level 1, 14 Watt Street, in Newcastle, NSW, on Sept. 8, 2017, at 10:00 a.m. Bradd William Morelli of Jirsch Sutherland was appointed as administrator of A & S Arnott on Aug. 29, 2017. BRIGHTSTAR CONSULTING: First Creditors' Meeting Set for Sept. 7 ---------------------------------------------------------------- A first meeting of the creditors in the proceedings of Brightstar Consulting Group Pty Ltd will be held at the offices of AMB Insolvency, Level 1, 6 Allison Street, in Bowen Hills, QLD, on Sept. 7, 2017, at 11:00 a.m. Anne Marie Barley of AMB Insolvency was appointed as administrator of Brightstar Consulting on Aug. 28, 2017. GEOEXCHANGE CONTRACTING: 2nd Creditors' Meeting Set for Sept. 6 --------------------------------------------------------------- A second meeting of creditors in the proceedings of Geoexchange Contracting Pty Ltd has been set for Sept. 6, 2017, at 11:30 a.m., at the offices of Chartered Accountants Australia and New Zealand, Level 10, 60 Marcus Clarke Street, in Canberra. 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 Sept. 5, 2017, at 12:00 p.m. Henry Peter Mckenna and Sule Arnautovic of Jirsch Sutherland were appointed as administrators of Geoexchange Contracting on Aug. 3, 2017. HUA CHENG: 14 Buyers in Limbo After Firm Defaults on AUD35MM Loan ----------------------------------------------------------------- Su-Lin Tan at Australian Financial Review reports that at least 14 buyers who bought apartments off the plan in a tower in Sydney's south-west are facing the loss of their investment after the developer defaulted on a loan from a British Virgin Island lender, backed by a Chinese bank. AFR says the default raises questions about the protection for foreign and migrant buyers rushing to buy in Australia and the role of "shadow" lenders who are increasingly stepping in to lend in sectors vacated by mainstream Australian banks. According to AFR, the home buyers, mostly Mandarin speakers, all with Chinese names, are considering legal action after Hua Cheng International Holdings Group, the developer of the 100-unit Royal Plaza property in Woodville Street, Hurstville, defaulted on a loan to Chinese-backed Super Vision Resources. In July, Super Vision appointed Ernst & Young and Hall Chadwick as receiver and liquidator, who have now seized the 14 apartments that were purchased off the plan at a big discount, as well as about another 16 unsold apartments, AFR recalls. The buyers, who spoke on condition of anonymity, are now concerned the receiver could auction off the apartments to pay the lender, says AFR. AFR notes that when the 14 buyers paid for their discounted apartments back in 2013, the strata plan for the property had not been registered. While they paid for them in full, they have not received title and did not complete the transactions. Some of the buyers said they hired lawyers before they bought the apartments and despite being warned not to buy them, they did. Others bought the units without legal advice. Lawrence Xu, the chief executive of Hua Cheng, said in an interview in Mandarin that he was unable to get development and construction finance from the big four local banks but found AUD35 million from British Virgin Islands registered Super Vision, according to the report. They agreed on an interest rate of 15 per cent. Super Vision is a subsidiary of the state-owned Chinese financial services firm, China Orient Asset Management Corporation, based in Beijing, AFR says. The report says Mr. Xu blamed the lender for the default. He said that after he ran into cost overruns he renegotiated funding from Super Vision but the funds arrived 5 months late, resulting in construction delay and slow settlement of apartments. "They want to enter the housing market in Australia, but they don't really understand the rules and regulations or the way development works here," the report quotes Mr. Xu as saying. "The timing of the additional funding was critical to the development. They even sent people over here to observe the project. But they took months to approve the loan, there were so many layers. "I made numerous trips to Beijing and Hong Kong and each time we agreed in principal, they changed their minds." AFR relates that Mr. Xu also said the numerous changes in staff at Super Vision meant there was no paper trail of the commitment to fund. The Australian Financial Review tried to contact China Orient Asset Management Corporation but did not get a response. To help pay down the loan to Super Vision, Hue Cheng said that in 2013 it sold 14 two-bedroom apartments at a discounted price of AUD450,000 each to Chinese buyers paid for upfront, the report says. The normal sale price was AUD650,000 to AUD700,000 each, the sales agent appointed to sell the units at the time, World Square Property Group said. One of the directors at the agency also bought units. The buyers said they were looking at the role of both the lender and the developer in this imbroglio, adds AFR. OSTWALD BROS: First Creditors' Meeting Set for Sept. 6 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Ostwald Bros. Civil Pty Ltd, Ostwald Bros. Pty Ltd, and Ostwald Construction Materials Pty Ltd will be held at All Seasons Function Centre, 302 North Street, in Toowoomba, QLD, on Sept. 6, 2017, at 2:00 p.m. Derrick Craig Vickers and Sam Andrew Marsden of PricewaterhouseCoopers were appointed as administrators of Ostwald Bros. on Aug. 25, 2017. PREMIUM AFFORDABLE: First Creditors' Meeting Set for Sept. 6 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of Premium Affordable Living 2 Pty Ltd will be held at the offices of Deloitte Financial Advisory Pty Ltd, 8 Brindabella Circuit, Brindabella Business Park, in Canberra Airport, ACT, on Sept. 6, 2017, at 11:00 a.m. Ezio Senatore of Deloitte Financial was appointed as administrator of Premium Affordable on Aug. 27, 2017. QUEENSLAND NICKEL: Sale On Hold, But Interest Continues ------------------------------------------------------- The Australian reports that the prospect of Clive Palmer selling his Queensland Nickel refinery has been put on hold for a month, but there's speculation a number of potential buyers are already looking at the asset. The Yabulu nickel refinery near Townsville has been mired in controversy under Mr. Palmer's ownership and was put into administration and closed last year, the report says. The Australian says the refinery was given a replacement value of AUD5.27 billion just two years ago but that has since been reduced to AUD790 million over the past few months. According to the report, liquidation firm PPB Advisory is overseeing the process and also trying to convince the Queensland Supreme Court to freeze AUD200 million worth of assets belonging to Mr. Palmer. Supreme Court judge John Bond was told this week that the Yabulu refinery needed to spend at least AUD50 million on upgrades to get it running again. The Australian relates that independent experts also estimated that a sale could take at least six months. But deal-makers think a number of potential buyers could be keen and would have already run the numbers on Yabulu, given the high-profile nature of the court case. In a twist that would be a case of turning back time, there is talk that South32 could look at Yabulu. It knows the asset well, given BHP owned the company until 2009. When the refinery shut last year, 800 jobs were cut in the region around Townsville, The Australian says. According to The Australian, the two other potential buyers would probably cause a headache for the Foreign Investment Review Board if a bid was to emerge. There is talk that the Russian group Norilsk Nickel, now known as Nornickel, could look at Yabulu. It has operated in Australia before, The Australian notes. In 2013, the company decided to sell its Australian assets, which included the Thunderbox mine and enrichment plan as well as the Lake Johnston, Cawse and Avalon nickel assets. It also offloaded the Black Swan and Silver Swan production facilities to Poseidon Nickel. The company says it still holds the development licence for the Honeymoon Well deposit in WA. The Russians buying a nickel refinery business from Mr. Palmer would pose a tricky political conundrum for the Coalition government, relates The Australian. China's largest nickel producer Jinchuan Group is also being mentioned as an interested party, and resources investments were named recently by China's State Council as an area where the foreign restrictions would not be exercised too strictly. About Queensland Nickel Headquartered in Townsville, Australia, Queensland Nickel engages in the production and marketing of nickel and cobalt. It owns and operates the Palmer Nickel and Cobalt Refinery in Queensland, Australia. It is owned by businessman and politician Clive Palmer. The Company experienced financial difficulties and Palmer sought assistance from the Queensland Government in late 2015 but was rejected. The Company's ownership was later transferred to a new company named Queensland Nickel Sales Pty Ltd in a joint venture between two of Clive Palmer's companies, QNI Resources Pty Ltd and QNI Metals Pty Ltd, with the directorship going to Palmer's nephew Clive Theodore Mesnick. On January 19, 2016, the Company entered into voluntary administration. John Park, Stefan Dopking, Kelly-Anne Trenfield and Quentin Olde of FTI Consulting were appointed as voluntary administrators of the Company. FTI as administrators issued a report in early April 2106 that the Company "incurred debts of AUD771 million after going insolvent in November [2015]." On April 22, 2016, the Companies' creditors voted for liquidation. FTI went from being administrators to liquidators at the second creditors meeting in April. ========= C H I N A ========= MIE HOLDINGS: S&P Cuts CCR to SD on Completion of Exchange Offer ---------------------------------------------------------------- On Aug. 28, 2017, S&P Global Ratings lowered its long-term corporate credit rating on MIE Holdings Corp. to 'SD' from 'CC'. S&P said, "At the same time, we lowered our issue rating on the company's outstanding senior unsecured notes to 'D' from 'CC'. MIE is a China-based oil and gas producer. S&P said, "We lowered the ratings because MIE has completed an exchange offer for its senior unsecured notes due 2018 and 2019. The company repurchased at a discount US$18.3 million of the 2018 notes and US$160.1 million of the 2019 notes. We view the transaction as a distressed exchange because investors received less than that promised for the original securities." Under the upgraded terms of the offer, MIE has provided a cash tender offer of US$700 per US$1,000 of the principal amount for its outstanding 6.875% senior notes due 2018. The offer includes US$10 per US$1,000 of the principal amount of the notes as a consent payment for eliminating all of the restrictive covenants contained in the 2018 indenture, and certain of the related events of default with respect to the 2018 notes. MIE also made a cash tender offer of US$450 per US$1,000 of the principal amount and an extra US$200 as an early tender payment for its outstanding 7.50% senior notes due 2019. Certain noteholders did not consent to the exchange, leaving approximately US$181 million of the 2018 notes and US$316 million of the 2019 notes outstanding. MIE used a secured US$147 million facility from a financial institution for the distressed exchange payment. MIE HOLDINGS: S&P Ups CCR to CCC- on Completion of Exchange Offer ----------------------------------------------------------------- S&P Global Ratings said it raised its corporate credit rating on MIE Holdings Corp. to 'CCC-' from 'SD' and raised the issue ratings on its notes to 'CCC-' from 'D'. This follows the completion of an exchange offer to holders of the company's 2018 and 2019 notes. S&P said, "Our ratings on MIE reflect our view that the company's non-repayment risk in the next six months remains high, in the absence of unanticipated significantly favorable changes in the company's circumstances. MIE's capital structure is still unsustainable, despite the recent completion of its exchange offer." MIE's overall debt level remains high because the company used a secured facility granted by a financial institution to make the distressed exchange payment. Following the completion of this transaction, US$181 million and US$316 million remain outstanding for the 2018 and 2019 notes, respectively. S&P said, "We believe MIE could continue to face a material liquidity deficit over the next 12 months. While company's secured facility has longer-term maturity than its existing notes, this does not alleviate MIE's near-term liquidity pressure. "After the exchange offer, we estimate MIE has about Chinese renminbi (RMB) 300 million cash on hand. The company generated positive operating cash flow on stronger oil prices in the first half of 2017, however we anticipate operating cash flows will remain weak because we do not expect oil prices to increase significantly over the next 12 months. The company's US$181 million senior notes are due in February, 2018. "The negative outlook reflects our view that there is a high likelihood that the company could default on its 2018 notes, in the absence of unanticipated significantly favorable changes in the company's circumstances. MIE's debt leverage remains unsustainable and liquidity pressure is high. "We could lower our rating on MIE if we believe a default on the company's notes is virtually certain, or if the company announces a debt restructuring plan which we view as distressed exchange. "We could upgrade the company if its liquidity improves such that we do not see non-repayment risk on a six-month horizon." ========= I N D I A ========= AANANDA LAKSHMI: CRISIL Reaffirms 'D' Rating on INR18.87MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL D' rating to the bank facilities of Aananda Lakshmi Spinning Mills Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 14.29 CRISIL D (Reaffirmed) Long Term Loan 18.87 CRISIL D (Reaffirmed) Proposed Long Term Bank Loan Facility 4.84 CRISIL D (Reaffirmed) The rating reflects current delays by ALSML in servicing its debt. The delays have been caused due to ALSML's weak liquidity. The ratings reflects weak financial risk profile marked by modest net worth, high gearing and weak debt protection metrics. The rating also reflects susceptibility of operating margin to volatility in raw material prices. However, it benefits from extensive experience of ALSML's promoters in the textile industry. Key Rating Drivers & Detailed Description Weakness * Delay in debt servicing SIL has been delaying in repayment of interest and principal amount of its term loan facility. The same is on account of company's weak liquidity. * Weak financial risk profile The company's financial risk profile is weak marked by modest net worth, high gearing and weak debt protection metrics. Net worth, as on March 31 2017, on account of accumulated losses. Debt protection metrics is weak on account of operating losses in Fiscal 2017. CRISIL believes that financial risk profile will remain weak over the medium term. * Susceptibility of operating margin to volatility in raw material prices Raw material costs accounted for around 68 per cent of ASLML's revenue in 2016-17 Cotton prices have been highly volatile in past which exposes the company to the risk arising due to any change in cotton prices. Strengths * Extensive industry experience of promoters Extensive experience of promoters of more than 35 years has helped the company in building strong customer and supplier relationships. Established relationship with customers and suppliers help the company in uninterrupted raw material procurement and repeated orders from customer. CRISIL believe that extensive industry experience of promoter will continue to benefit the company over the medium term. ALSML's, incorporated in 2013, is engaged in cotton yarn spinning. Manufacturing unit is located at Bhongir. The company is promoted by Mr. D.K Agarwal. ALSML reported net losses of INR16.22 crore on revenue of INR37.95 crore in fiscal 2017, against INR8.9 crore and INR82.6 crore in fiscal 2016. AANCHAL CEMENT: Ind-Ra Migrates BB+ Rating to Not Cooperating ------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Aanchal Cement Limited's (ACL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR100 mil. Fund-based working capital limit migrated to non- cooperating category with IND B+(ISSUER NOT COOPERATING) rating; and -- INR132.19 mil. Non-fund-based working capital limit migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on July 27, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 2010, ACL is engaged in chicken processing in Kolkata, West Bengal. AVON TUBETECH: CRISIL Lowers Rating on INR29.5MM Loan to D ---------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Avon Tubetech Private Limited (ATPL) to 'CRISIL D/CRISIL D' from 'CRISIL BB+/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1 CRISIL D (Downgraded from 'CRISIL A4+') Bill Discounting 2 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Buyer's Credit 21.5 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Overdraft 19.5 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Term Loan 29.5 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Working Capital 1.5 CRISIL D (Downgraded Demand Loan from 'CRISIL BB+/Stable') The downgrade reflects delays in servicing debt obligations on account of its stretched liquidity position. The ratings reflects ATPL below-average financial risk profile because of below-average debt protection metrics and high term debt repayment obligation and working capital-intensive operations leading to weak liquidity profile. These rating weakness are partially offset by established market position of ATPL in the cold drawn welded (CDW) tubes industry aided by longstanding experience of the promoters and a well-diversified revenue profile. Key Rating Drivers & Detailed Description Weakness * Delay in debt servicing: There have been instances of delay in debt servicing because of stretched liquidity. That's primarily due to working capital intensive operations which is reflected in estimated high gross current days (GCA) of 192 days as on March 2017. Liquidity is likely to remain under pressure over the medium term because of working capital intensive operations. * Large working capital requirement: Gross current assets are estimated at 192 days due to large inventory and receivables of 90 days and 85 days, respectively, as on March 31, 2017 adds to the working capital intensity. Working capital requirement will remain large over the medium term. * Average financial risk profile: Financial risk profile is expected to remain average, with net worth and gearing likely to be at INR38.92 crore and 1.44 times, respectively, as on March 31, 2017. Debt protection metrics also estimated to be average, with net cash accrual to adjusted debt ratio of 0.12 time and interest coverage ratio of 1.95 times for fiscal 2017. Strengths * Extensive experience of partners: The promoters have an extensive experience of over 22 years in the Cold drawn welded (CDW) tubes industry. This has helped them in establishing a strong customer base as well as setting up relations with local suppliers. Their experience has also helped them gain a sound understanding of the market dynamics. ATPL was set up in 1995 as a proprietorship firm and was reconstituted as a private limited company in 2000. The key promoters, Mr. Ashwani Mahajan and his brother, look after operations. The company manufactures ERW, CDW, and CDS tubes for diversified end-user industries such as cycles, automobiles, earthmovers, and allied engineering. Its manufacturing facilities are in Faridabad, Haryana. BHAGYODAYA MOTORS: CRISIL Reaffirms 'B' Rating on INR15MM Loan -------------------------------------------------------------- CRISIL's ratings on the bank facilities of Bhagyodaya Motors Private Limited (BMPL; part of the Bhagyodaya group) continue to reflect the Bhagyodaya group's below-average financial risk profile marked by high total outside liabilities to tangible net worth (TOLTNW) ratio and weak debt protection metrics, and exposure to intense competition in the automobile dealership segment. These rating weaknesses are partially offset by the Bhagyodaya group's established position in the automobile dealership market for Tata Motors Ltd (TML; rated 'CRISIL AA/Positive/CRISIL A1+') in north Karnataka. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 15 CRISIL B/Stable (Reaffirmed) Channel Financing 1.75 CRISIL A4 (Reaffirmed) Long Term Loan .85 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.85 CRISIL B/Stable (Reaffirmed) Standby Line of Credit 1.00 CRISIL B/Stable (Reaffirmed) Analytical Approach For arriving at the ratings, CRISIL has combined the business and financial risk profiles of BMPL and Bhagyodaya Trokhos Pvt Ltd (BTPL). This is because the two companies, together referred to as the Bhagyodaya group, are in the same line of business, under the same management, and have significant operational linkages. Key Rating Drivers & Detailed Description Weaknesses * Below-average financial risk profile The Bhagyodaya group's financial risk profile is weak, marked by a high total outside liabilities to tangible net worth (TOLTNW) ratio and weak debt protection metrics. CRISIL believes that the group's financial risk profile is expected to remain weak due to its working capital intensive operations and high reliance on external bank debt. * Susceptibility to intense competition in automobile dealership segment The Bhagyodaya group's operations are concentrated in the North Karnataka region, where it has all its sales outlets and service centres. This exposes the group to geographical concentration as any deterioration in the economy of the region will impact automobile sales, which would affect automobile dealers such as the Bhagyodaya group. Furthermore, the group has only Tata Motors Ltd (TML) dealership, and has weak bargaining power in its transactions with TML. CRISIL believes that the Bhagyodaya group's business risk profile will remain constrained over the medium term on account of its exposure to risks related to geographical and supplier concentration, and to intense competition in the automobile dealership segment. Strengths * Established position in automobile dealership market for TML in North Karnataka The promoters of the Bhagyodaya group have over a decade of experience in the automobile dealership business. Over these years, the group has been able to build a strong brand image among its customers in North Karnataka. It is the exclusive dealer for TML's passenger cars and LCVs in three districts of North Karnataka. CRISIL believes that the Bhagyodaya group will benefit from its established position as TML's dealer in the North Karnataka region, over the medium term. Outlook: Stable CRISIL believes that the Bhagyodaya group will continue to benefit over the medium term from its established position in the automobile dealership market for TML in North Karnataka. The outlook may be revised to 'Positive' if the group's volumes and operating margin improve substantially or in case of any significant equity infusion by the promoters, resulting in improvement in its capital structure and debt protection metrics. Conversely, the outlook may be revised to 'Negative' if the Bhagyodaya group's revenue and profitability decline significantly, or if the group undertakes a large debt-funded capital expenditure programme, resulting in deterioration in its capital structure and cash accruals. Set up in 1998 as a partnership firm, BMPL was reconstituted as a private limited company in 2002. The company is the exclusive authorised dealer for TML's passenger car in three districts - Bellary, Koppal, and Raichur (all in Karnataka).BTPL was incorporated in 2006. The company is the exclusive authorised dealer for TML's light commercial vehicles (LCVs) in Bellary, Koppal, and Raichur. Profit after tax (PAT) and net sales are estimated at INR0.29 crore and INR110 crore, respectively, for fiscal 2017; PAT was INR0.14 crore on net sales of INR113 crore for the previous fiscal. BHALKESHWAR SUGARS: CRISIL Assigns 'D' Rating to INR12.5MM ---------------------------------------------------------- CRISIL has assigned its 'CRISIL D' rating to the bank facility of Bhalkeshwar Sugars Limited (BSL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 12.5 CRISIL D The rating reflects instances of delay in repayment of the company's term debt obligations on account of weak liquidity. The rating also factors in weak financial risk profile, large working capital requirement and susceptibility to cyclicality and regulatory changes in the sugar industry. However, these weaknesses are partially offset by the entrepreneurial experience of its promoters. Key Rating Drivers & Detailed Description Weakness * Delays in repayment of term debt obligations: Delays in repayment of term debt obligations on account of weak liquidity'insufficient cash accrual against term debt obligations. * Weak financial risk profile: Financial risk profile is weak on account of aggressive capital structure and subdued debt protection metrics. Gearing, at over 4 times as on March 31, 2017, is expected to deteriorate further on account of ongoing debt-funded capital expenditure. Thus, debt protection metrics particularly interest coverage ratio has remained subdued about 0.14 times during fiscal 2017. * Large working capital requirement: Operations are working capital intensive as reflected by high gross current assets of over 500 days as on March 31, 2017. * Cyclicality and regulatory changes in the sugar industry The sugar industry is highly regulated in terms of cane prices, export/import policy for sugar, and sugar release mechanisms. This affects the credit quality of players in the industry. The revenue of BSL has declined to about INR62 crore during FY 2017 against INR117 crore in the preceding year on account of shortage of raw materials. Strength * Entrepreneurial experience of the promoters The rating factors the entrepreneurial experience of the promoters. Incorporated in 2000, Karnataka-based BSL is promoted by Mr. Prakash Khandre. It manufactures sugar and has a cane crushing capacity of about 2500 tonne per day (TPD) and a 14 megawatt co- generation power plant. It is undertaking a debt-funded capital expenditure plan to enhance the sugar crushing capacity up to 4000 TPD and setting up distillery units with total capacity of 60 kilo litres per day. Commercial operation of the distillery is expected to commence from January 2018. The company has reported loss of INR15 crore on net sales of INR62.0 crore in fiscal 2017, against loss of INR0.4 crore on net sales of INR117.2 in fiscal 2016. COSMO FERRITES: CRISIL Lowers Rating on INR11.84MM Loan to B+ ------------------------------------------------------------- CRISIL has downgraded its ratings on bank facilities of Cosmo Ferrites Limited (CFL) to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.5 CRISIL A4 (Downgraded from 'CRISIL A4+') Cash Credit 6.62 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Export Packing Credit 5 CRISIL A4 (Downgraded from 'CRISIL A4+') Letter of Credit 8 CRISIL A4 (Downgraded from 'CRISIL A4+') Proposed Bank 0.5 CRISIL A4 (Downgraded Guarantee from 'CRISIL A4+') Proposed Cash Credit 9.79 CRISIL B+/Stable (Downgraded Limit from 'CRISIL BB-/Stable') Proposed Term Loan 6.75 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Standby Line of 1 CRISIL B+/Stable (Downgraded Credit from 'CRISIL BB-/Stable') Term Loan 11.84 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') The rating downgrade reflects the below-average financial risk profile and liquidity, driven by weaker performance in fiscal 2017, and first quarter of fiscal 2018, primarily due to delay in commercialization of the light emitting diodes (LED) lamps unit. Drop in demand, following demonetization and implementation of Goods and Service tax (GST) regime, has also affected performance. Huge debt of INR3.13 crore in fiscal 2018, and subdued profitability along with instances of cash losses, weakened liquidity, also reflected in full utilization of bank limit. This is, however, mitigated by continuous and strong support via inter-corporate deposits from promoter-owned companies. Operating margin of 0.8% was reported in the first quarter of 2018, against 10% expected by CRISIL, for fiscal 2018. Profitability was largely hit by absence of the high-margin job work contracts, related to LED. Operating margin is expected to improve over the coming quarters, driven by a ramp-up in the LED division. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations Revenue of INR66.7 crore reported for fiscal 2017, reflects the small scale of operations, mainly constrained by competition from China. Establishment of the coils unit and ramp up of the LED unit will enable forward integration and support revenue growth, going forward. Ramp-up of the coil and LED verticals, along with renewed focus of the government through EESL (Energy Efficiency Services Ltd) on LED lighting, will also be a key growth driver. * Weak financial risk profile Financial risk profile is marked by weak debt protection metrics, stemming from subdued profitability. Return on capital employed (RoCE) is expected to be in the range of 4-5% in the near term. Networth is expected to be moderate around INR20 crore, with gearing seen at 2.5-2.7 times in the near term. Strengths * Established presence in the soft ferrites industry and longstanding client associations The company's three decade-long presence in the soft ferrite industry and established position in overseas markets, will continue to support the business risk profile. Export market is dominated by reputed players such as EPCOS AG and TDK Ferrites Corporation, besides Chinese manufacturers. The company has strategically chosen to manufacture soft ferrites, which are used by manufacturers of low-volume, high-value products such as transformers, bulbs, mobile phones, and solar equipment. Strong clientele, comprising over 200 customers, and diversification into exports and other end-user industries, partially offset risk of downturn in any particular industry. Outlook: Stable CRISIL believes CFL will continue to benefit from its established position in the soft ferrites industry and healthy client relationships. The outlook may be revised to 'Positive,' if substantial cash accrual leads to an improvement in liquidity and financial risk profile. The outlook may be revised to 'Negative' if profitability continues to be low, or if any large, debt- funded capex, further weakens the financial risk profile, especially liquidity. CFL was set up by Mr. Ashok Jaipuria in 1986. He is also the founder-promoter of Cosmo Films Ltd, and manufactures bi-axially- oriented polypropylene films. CFL manufactures soft ferrites and coils at its facility near Shimla, and caters to a wide customer base, comprising distributors manufacturers of transformers, compact fluorescent lights, mobile phones, wireless chargers, and inductive heaters. COSMO GRANITES: CRISIL Assigns B+ Rating to INR30MM Term Loan ------------------------------------------------------------- CRISIL has revoked the suspension of its ratings on the long-term bank facilities of Cosmo Granites Private Limited (CGPL) and assigned its 'CRISIL B+/Stable' rating to the facilities. CRISIL had suspended the rating on March 6, 2014, as CGPL had not provided the information required for a rating review. The firm has now shared the requisite information, enabling CRISIL to assign a rating to its bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL B+/Stable (Assigned; Suspension Revoked) Term Loan 30 CRISIL B+/Stable (Assigned; Suspension Revoked) The rating reflects a moderate scale of operations, revenue generation vulnerable to fluctuation in demand from end-user segments, moderate operating profitability which is susceptible to fluctuations in raw material prices and foreign exchange (forex) rates, and a below-average financial risk profile. These weaknesses are partially offset by an established market position in the premium floor tile retail segment and the extensive industry experience of the promoters. Key Rating Drivers & Detailed Description Weakness * Moderate scale of operations; revenue generation vulnerable to fluctuation in demand from end-user segments: Scale of operations is moderate, as reflected in revenue of INR61.57 crore in fiscal 2017. Revenue has been highly volatile in the past. Revenue dropped to INR47.99 crore in fiscal 2015 from INR85.73 crore in the previous fiscal mainly on account of a slump in demand from the residential and commercial construction segment. Growth in income levels and changing consumer tastes would remain key variables for business operations. * Moderate operating profitability, susceptible to fluctuations in raw material prices and forex rates: The operating profitability margin was 16.49% in fiscal 2017, up from 12.48% in fiscal 2016. The margin has been volatile in the past because of fluctuations in the price of granite/marble and in forex rates. * Below-average financial risk profile: Financial risk profile is constrained by weak gearing and debt protection metrics. Owing to significant reliance on working capital debt and substantial term loans taken for capital expenditure (capex) funding, gearing was weak at 2.47 times as on March 31, 2017. Debt protection metrics were weak, as reflected in interest coverage ratio of 1.39 times and net cash accrual to adjusted debt ratio of 0.06 time in fiscal 2017. These weaknesses were partially offset by a moderate networth of INR20.9 crores as on March 31, 2017. Strengths * Established market position in the premium floor tile retail segment: The company provides diverse flooring solutions across granite, marble, and wood, along with allied services for window fashioning and bathroom solutions under a single roof. The product offerings are positioned for the lifestyle segment customers. The company provides a wide mix of colours and generics under its brand, Cosmo. It has had a healthy relationship with international suppliers over the past 20 years. The supplier base is large and spans various countries including Turkey, Spain, Italy, Egypt, and Greece. * Extensive industry experience of the promoters: The promoters Mr. D H Sarath Kumar, Mr. D Venkaatesh, and Mr. D N'have an experience of more than two decades in retailing flooring materials: granite, marble, and wood. This has resulted in a strong regional market position, a longstanding relationship with suppliers and principals, and a diverse customer base. Outlook: Stable CRISIL believes CGPL will continue to benefit over the medium term from its promoters extensive industry experience and established market position in the premium floor tile retail segment. The outlook may be revised to 'Positive' in case of sustained growth in revenue and stability in operating profitability, leading to significantly better cash accrual and capital structure. Conversely, the outlook may be revised to 'Negative' in case the company's financial risk profile weakens, most likely because of low cash accrual, a stretched working capital cycle, or larger-than-expected debt-funded capital expenditure. Incorporated in 1992, CGPL imports and retails flooring materials such as marble, granite, wood, and ceramic tiles. The company reported a profit after tax (PAT) of INR1.42 crores on revenue of INR61.5 crores in fiscal 2017, vis-a -vis PAT of INR(0.68) crores on revenue of INR50.23 crores in fiscal 2016. DAGA AUTO: Ind-Ra Migrates BB- Rating to Not Cooperating -------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Daga Auto Distributors' Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR50 mil. Fund-based limits migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on June 9, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 1990, Daga Auto Distributors is an authorised distributor of spare parts for Tata Motors Limited's passenger cars. It also distributes spare parts for Eicher Motors Limited's trucks and buses. The firm is owned and promoted by the Daga family, based in Kolkata. DEVI CONSTRUCTION: CRISIL Lowers Rating on INR9MM Cash Loan to B- ----------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Devi Construction Company (DCC) to 'CRISIL B-/Stable' from 'CRISIL B+/Stable', and reaffirmed the 'CRISIL A4' rating on the short-term facility. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4 CRISIL A4 (Reaffirmed) Cash Credit 9 CRISIL B-/Stable (Downgraded from 'CRISIL B+/Stable') The downgrade reflects CRISIL's belief that the firm's liquidity will remain subdued as cash accrual is expected to be insufficient to meet debt obligation over the medium term. The firm has extended loans and advances of INR14.97 crore (increased from INR7.89 crore as on March 31, 2016) to promoters and relatives, which was almost half of its networth as on March 31, 2017. These loans, if not recovered on time, will keep liquidity under pressure. Also, large working capital requirement has significantly increased dependence on bank limit, which is utilised at an average of 93% over the 12 months through May 2017. With revenue of INR260.82 crore in fiscal 2017, scale remains modest. The firm had orders of INR96.69 crore as on July 31, 2017 (revenue of INR60 crore already booked in the first four months of the fiscal), to be completed in 6 months, providing low near- term revenue visibility. Revenue is expected to decline 14% in fiscal 2018. Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile The financial risk profile is constrained by high total outside liabilities to tangible networth ratio of 3.35 times as on March 31, 2017, and subdued debt protection metrics reflected in interest coverage and net cash accrual to adjusted debt ratios of 1.72 times and 0.07 time, respectively, in fiscal 2017. CRISIL expects the financial risk profile to remain below average over the medium term, on account of sizeable working capital debt and continued moderate accretion to reserves. * Working capital-intensive operations Gross current assets are estimated at 113 days as on March 31, 2017, driven by sizeable receivables and low inventory of 82 days and 13 days, respectively. The rest of GCAs comprise security deposits for projects, and cash and bank balance. Operations are likely to remain working capital intensive over the medium term, thereby constraining financial flexibility. * High geographical and customer concentration in revenue: The operations are concentrated in Rajasthan, making the firm dependent on local tenders and vulnerable to changes in the state government's policies. The limited revenue diversity is accentuated by project concentration in its order book, majorly from Jaipur Development Authority, and from private players in Rajasthan. Lack of revenue diversity and geographical concentration restrict growth potential. Strengths * Extensive experience of the promoters in the construction industry Key promoter, Mr. Krishna Yadav, has experience of nearly three decades in the civil construction industry, which has enabled the firm to develop strong relationships with government departments and private developers, and raw material suppliers. Outlook: Stable CRISIL believes DCC will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if liquidity improves through recovery of loans and advances to promoters, or if cash accrual is higher than expected, and if efficient working capital management improves the financial risk profile, particularly liquidity. The outlook may be revised to 'Negative' if a decline in revenue and profitability, or stretched working capital cycle, or large, debt-funded capital expenditure, weakens the financial risk profile, particularly liquidity. The firm, established in 1983, is a civil contractor and undertakes projects such as construction of roads and bridges, and improvement, widening, and straightening of roads, for government departments and private players. Operations are concentrated in Rajasthan as the firm is headquartered in Jaipur, and are managed by Mr. Krishna Yadav and his son Mr. Abhijeet Yadav. The firm is an 'AA' class contractor. DHANSHREE SEEDS: CRISIL Reaffirms 'D' Rating on INR21.39MM Loan --------------------------------------------------------------- CRISIL has been consistently following up with Dhanshree Seeds Private Limited (DSPL, part of Manibhadra group) for obtaining information through letters and emails dated May 24, 2017 and June 9, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 21.39 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Term Loan 1.11 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 Dhanshree Seeds Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Dhanshree Seeds Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' Rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D'. For arriving at its ratings, CRISIL has combined the business and financial risk profiles of DSPL and Shree Manibhadra Food Product Pvt Ltd (SMFPL). This is because both the companies, together referred to as the Manibhadra group, are in a similar line of business, have a common management, and have extended cross guarantees for each other's bank loan facilities. Incorporated in 2012 by Mr. Prakash Shah, DSPL is into processing of non-basmati rice with its processing unit based in Moriya (Gujarat). The total processing capacity of unit is 5 tonnes per hour. SMFPPL, incorporated in 2010, is promoted by Ahmedabad-based Mr. Prakash Shah and his family members and relatives. The company processes non-basmati rice. DOLBI'S GRANITE: Ind-Ra Migrates D Rating to Not Cooperating ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has migrated Dolbi's Granite Exports Private Limited's (Dolbi's Granite) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR50 mil. Fund-based working capital limits (long-term) migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating; -- INR37 mil. Term loan (long-term) migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating; and -- INR15 mil. Non-fund-based working capital limits (short-term) migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating; Note: ISSUER NOT COOPERATING: The ratings were last reviewed on March 28, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Dolbi's Granite was established in 2001 in Virugambakkam, Chennai, Tamil Nadu. The company trades (domestically as well as internationally), quarries and processes granite. FARIDABAD STEEL: Ind-Ra Affirms BB Issuer Rating, Outlook Stable ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Faridabad Steel Mongers Pvt Ltd.'s (FSMPL) Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable. The instrument-wise rating action is: -- INR500 mil. Fund-based limits affirmed with IND BB/Stable/IND A4+ rating. KEY RATING DRIVERS The ratings reflect FSMPL's modest revenue growth in FY17. Revenue grew 1% yoy to INR5.23 billion in FY17. While the blended realisations per tonne grew 13.5% yoy to INR36,878, an 11% yoy fall in sales volumes to 141,775 MT limited the scale-up in revenue. A steady increase in steel prices post the announcement of the minimum import price policy in February 2016 facilitated the improvement in realisations. A fairly tepid steel demand with steel consumption growing 3% yoy in FY17 (FY16: 4.3% yoy) and demonetisation particularly impacted sales in 3QFY17 and thus sales volumes. A pick-up in steel demand in FY18 and steady realisations could lead to reasonable revenue growth in FY18. FY17 financials are provisional in nature. The ratings also reflect FSMPL's continued stable-but-low EBITDA margins (FY17: 1.63%; FY16: 1.65%). The trading nature of operations has resulted in low margins for FSMPL. Ind-Ra expects the company to maintain its margins in the 1.5-1.8% range. The ratings are constrained by FSMPL's weak credit metrics. Net leverage (net debt/EBITDA) increased to 8.57x in FY17 (FY16: 7.5x) due to an increase in debt to INR735 million (INR640 million). Gross coverage (EBITDA/gross interest expenses) was largely unchanged at 1.51x in FY17 (FY16: 1.50x) with EBITDA and the interest expenses not experiencing much change. FSMPL had availed a short-term loan in March 2017 to procure additional inventory as its off-take during February 2017 was on the lower side and higher volume had to be procured in March to secure quantity discounts and fulfil the volume target. FSMPL's perception of higher prices prevailing in February 2017 led to the deferment of purchase orders. The loan was repaid during June 2017 through working capital proceeds. Ind-Ra expects the net leverage to witness some improvement in FY18, through the interest coverage would remain in the 1.45x-1.55x range. FSMPL's operations are highly working capital intensive with the net cycle being in the range of 50-60 days and the average maximum working capital utilisation being 94% over the 12 months ending June 2017. The net cycle increased to 59 days in FY17 (FY16: 52 days) mainly because of higher inventory holding of 52 days (36 days) at year end. A shorter receivable period (FY17: 32 days; FY16: 37 days) and higher payable days (35 days; 21 days) helped in containing the increase in the net cycle. The ratings, however, continue to be supported by FSMPL's diversified customer base with the top 10 customers accounting for below 15% of the sales in FY17. Also, its promoter has over 30 years of experience in the steel trading business. RATING SENSITIVITIES Positive: A sustained rise in the profitability, leading to an improvement in the credit metrics, along with an improvement in the liquidity position, could lead to a positive rating action. Negative: A decline in the revenue and profitability, resulting in deterioration in the credit metrics or liquidity, could lead to a negative rating action. COMPANY PROFILE Incorporated in June 2009, FSMPL was initially set up by Mr. Yogesh Gupta as a partnership firm named SP Industries. It was converted into a private limited company later that year. The company is a memorandum of understanding customer of Steel Authority of India Limited (SAIL: 'IND AA-'/Negative) and trades in hot rolled coils, hot strip mill plates and plate mill plates. GAWAR CONSTRUCTION: Ind-Ra Withdraws WD Commercial Paper Rating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has withdrawn Gawar Construction Ltd's (GCL) commercial paper (CP) rating as follows: -- INR500 mil. CP withdrawn with WD rating. KEY RATING DRIVERS Ind-Ra is no longer required to maintain the rating as there is no debt outstanding against the rated instrument. This is consistent with The Securities and Exchange Board of India's circular dated March 31, 2017 for credit rating agencies. Last published rationale for GCL can be accessed here. COMPANY PROFILE GCL was incorporated in 1997 as a partnership concern and was converted into a limited company in 2008. It has an established track record in executing infrastructure road projects in north India. The company has been engaged in civil construction, mainly roads (80%-85%), bridges (10%-15%) and government buildings (5%) for over 17 years. Its registered office is located in Hissar and corporate office is located in Gurgaon. GRACE SUPPLIERS: Ind-Ra Migrates BB- Rating to Not Cooperating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Grace Suppliers Private Limited's (GSPL) Long-Term Issuer Rating to the non- cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR230 mil. Fund-based working capital limit migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating; and -- INR10 mil. Term loan migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on June 21, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE GSPL is a franchise holder of Titan Industries Limited's jewellery brand Tanishq since 2002. It has a showroom in Jamshedpur with a product portfolio including rings, earrings, necklaces, bangles, gold coins, among others. It is managed by Mr. Anil Agarwal. JAGRUTESHWAR METALS: CRISIL Reaffirms B Rating on INR5.5MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long- term bank facilities of Jagruteshwar Metals Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit .45 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 2.05 CRISIL B/Stable (Reaffirmed) Term Loan 5.5 CRISIL B/Stable (Reaffirmed) The rating reflects small scale and early stage of operations in the intensely competitive and fragmented stone crushing industry, and weak financial risk profile. These weaknesses are partially offset by experience of promoters and assured demand from the group company. Analytical Approach For arriving at the rating, CRISIL has not consolidated the financial and business risk profiles of the group company, Om Shivam Buildcon Pvt Ltd, because the two companies have different lines of business and no common director. Key Rating Drivers & Detailed Description Weaknesses * Small scale and early stage of operations in intensely competitive industry Revenue was modest at INR8.27 crore in fiscal 2017 due to the early stage of operations and intense competition. * Weak financial risk profile High gearing and average debt protection metrics may constrain financial risk profile over the medium term. Strengths * Experience of promoters Benefits from the promoters' experience should help stabilise the newly started operations and continue to support the business. * Assured demand from group companies Revenue flow is likely to remain steady over the medium term as 25-30% of total revenue is derived from the group company while orders from other construction players are also increasing. Outlook: Stable CRISIL believes JMPL will benefit over the medium term from experience of promoters and assured demand from the group company. The outlook may be revised to 'Positive' if revenue and profitability increase substantially. Conversely, the outlook may be revised to 'Negative' if stretch in working capital cycle or large, debt-funded capital expenditure weakens financial risk profile. JMPL, incorporated in 2014, crushes stones. It is managed by Mr. Kapse and family and has a registered office in Nagpur, Maharashtra. Net loss was Rs1.49 crore on operating income of INR8.27 crore in fiscal 2017, against INR0.29 crore and INR2.15 crore, respectively, in fiscal 2016. KAMADHENU JEWELLERY: CRISIL Assigns B Rating to INR5.0MM Loan ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank loan facilities of Kamadhenu Jewellery Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 7.5 CRISIL A4 Cash Credit 5.0 CRISIL B/Stable The ratings reflect a modest scale of operations in an intensely competitive industry and exposure to volatility in gold prices, and a weak financial risk profile because of a small networth and weak gearing. These weaknesses are partially offset by the extensive industry experience of the promoters. Key Rating Drivers & Detailed Description Strengths * Modest scale of operations in an intensely competitive industry and exposure to volatility in gold prices: The company is in nascent stages of operations, as it was established in April 2016. It reported modest revenue of INR29.37 crore in fiscal 2017, its first year of operations. Owing to modest scale of operations and exposure to intense competition in the gold jewellery retailing industry, bargaining power with customers and suppliers is limited, leading to pressure on the operating margin. Operating margin also remains susceptible to volatility in gold prices. * Weak financial risk profile: Financial risk profile is constrained by modest networth and weak gearing on March 31, 2017. Significant reliance on debt to fund working capital requirement and proposed capital expenditure of INR3 crore, expected to be funded by a term loan of INR2.5 crore, are expected to keep the capital structure weak over the medium term. Debt protection metrics were weak: the interest coverage ratio was 0.53 times and the net cash accrual to adjusted debt ratio (0.19) time in fiscal 2017. Strength * Extensive industry experience of the promoters: The promoters, Mr. Vivek Sharma and Mr. Vinod Sharma, set up the company in April 2016. Prior to that, they operated a proprietary firm, Kamadhenu Jewellers; this firm was set up in 1970 and has a retail store in Avadi, Chennai. They thus have an experience of over 40 years in the industry. Outlook: Stable CRISIL believes KJPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' in case of an improvement in the scale of operation while steady operating profitability is maintained, leading to higher cash accrual. The outlook may be revised to 'Negative' if liquidity deteriorates due to significant debt-funded capex, a stretched working capital cycle, or a decline in revenue or profitability leading to lower-than-expected cash accrual. Based in Chennai, KJPL manufactures and retails gold jewellery. The company was established by Mr. Vivek Sharma and Mr. Vinod Sharma in April 2016. Net loss was INR0.83 crore on total revenue of INR29.37 crore in fiscal 2017 (Fiscal 2017 was its first year of operations). KIRUBHA EXPORTS: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the bank facility of Kirubha Exports at 'CRISIL B+/Stable. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B+/Stable (Reaffirmed) The rating reaffirmation reflects the modest scale of operations in the intensely competitive cashew industry, and below average financial risk profile. These weaknesses are partially offset by its promoter's extensive industry experience and established relationships with customers. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in the intensely competitive cashew industry Business risk profile remains constrained on account of small scale of operations - revenue was INR50.3 crore in fiscal 2017 on provisional basis. Furthermore, limited differentiation in the technology involved in the processing of cashew nuts leads to intense competition in both the organised and unorganised segments. * Below-average financial risk profile: Financial risk profile remains below-average, owing to high total outside liabilities to tangible networth of 5.9 times estimated as on March 31, 2017. Limited operating profitability and high dependence on working capital debt has resulted in modest debt protection metrics--interest coverage ratio was at 1.7 times estimated as on fiscal 2017. Strength * Extensive experience of the proprietor and established relationships with customers. Benefits from the proprietor's two decade-long experience in the industry and established relationships with customers, resulting in steady order flow should support business risk profile. Outlook: Stable CRISIL believes KE will continue to benefit over the medium term from its promoter's extensive industry experience. The outlook may be revised to 'Positive' in case of considerable increase in revenue and profitability, leading to higher cash accrual and better financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of low revenue or profitability, or weakening of working capital management, or large, debt-funded capital expenditure, weakening financial risk profile, particularly liquidity. Set up in 2011, KE processes raw cashew nuts and sells cashew kernels. Its facility in Kanyakumari (Kerala) can process 12 metric tonne per day (TPD) of cashew kernels. Mr. Vimal Kumar manages the operations. On a provisional basis, net profit was INR0.7 crore on net sales of INR50.3 crores in fiscal 2017; net profit was INR0.5 crore on net sales of INR45.5 crore in fiscal 2016. KPM PROCESSING: Ind-Ra Affirms 'BB' Issuer Rating, Outlook Stable ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed KPM Processing Mill Private Limited's (KPM) Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR90 mil. Fund-based working capital limits affirmed with IND BB/Stable rating; -- INR109.93 mil. (reduced from INR153.16 mil.) Long-term loans due on May 2019-April 2021 affirmed with IND BB/Stable rating; and -- INR10.97 mil. (reduced from INR22.5 mil.) Non-fund-based limits affirmed with IND A4+ rating. KEY RATING DRIVERS The ratings have been affirmed despite an improvement in revenue and credit metrics, as Ind-Ra expects credit metrics to deteriorate in FY18-FY19, given the management plans to incur significant capex funded through secured and unsecured debt. The ratings reflect KPM's improved-but-moderate scale of operations and continued tight liquidity profile. Revenue rose to INR516 million in FY17 (provisional) (FY16: INR444 million), driven by an increase in orders from existing customers. KPM's utilisation of fund-based limits was 98% during the last 12 months ended July 2017. The ratings also reflect a high customer concentration risk, considering the contribution of the top five customers to revenue increased to 47% in FY17 from 43% in FY16. The ratings, however, are supported by comfortable credit metrics. In FY17, interest coverage (operating EBITDA/gross interest expense) was 4.4x (FY16: 3.6x) and net financial leverage (adjusted net debt/operating EBITDA) was 2.2x (2.4x). The improvement in credit metrics was due to a comfortable EBITDA margin of 21.6% (FY16: 23.9%), which declined owing to rise in operating expenses. Moreover, its promoters have two decades of experience of in fabric dyeing. RATING SENSITIVITIES Negative: A sustained deterioration in the liquidity profile would lead to a negative rating action. Positive: A sustained improvement in the scale of operations and credit metrics would lead to a positive rating action. COMPANY PROFILE KPM was registered on November 19, 2010 under the Companies Act, 1956. The company has set up a 12,000kg/day fabric dyeing unit in Tirupur, Tamil Nadu. The company is promoted by P Sekaran, N Chandra Sekaran and Thamilselvi. MADHOOR BUILDWELL: CRISIL Lowers Rating on INR14MM Loan to 'D' -------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Madhoor Buildwell Private Limited (MBPL) to 'CRISIL D/CRISIL D' from 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4.5 CRISIL D (Downgraded from 'CRISIL B+/Stable') Cash Credit 14 CRISIL D (Downgraded from 'CRISIL B+/Stable') Proposed Working 14 CRISIL D (Downgraded from Capital Facility 'CRISIL A4') Rupee Term Loan 7.5 CRISIL D (Downgraded from 'CRISIL B+/Stable') The downgrade reflects delays in servicing of interest, on account of weak liquidity resulting from large working capital requirement. The ratings reflect a modest scale, and working capital-intensive nature, of operations with large inventory requirement for real estate activities. These weaknesses are partially offset by the extensive experience of the promoters in the civil construction and real estate development industry. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: With an estimated operating income of INR27.78 crore for fiscal 2017, the scale remains modest. Despite moderate orders in hand in the civil construction business, the overall scale is expected to remain small over the medium term. * Large working capital requirement: Gross current assets are estimated at 767 days due to large inventory and receivables of 380 days and 500 days, respectively, as on March 31, 2017. In addition, the large inventory in the real estate division adds to the working capital intensity. Working capital requirement will remain large over the medium term. Strength * Extensive industry experience of the promoters: A presence of over two decades in the construction industry has enabled the promoters to maintain a healthy relationship with clients and get repeat orders from them. Furthermore, the promotes has experience of about two decades in Nashik's real estate industry with more than 150 projects completed in and around Nasik. MBPL is engaged in Real estate development and undertakes Civil Contraction activities in Nasik since 1994. The founder promoter and Chairman, Late Mr. Ratilal Shivdas Patel was in construction business since the past five decades. Now business is run by his three sons Mr. Pradip Ratilal Patel, Mr. Arvind Ratilal Patel, and Mr. Chetan Ratilal Patel. On a provisional basis, net profit was INR1.32 crore on net sales of INR27.78 crore in fiscal 2017; net profit was INR1.35 crore on net sales of INR27.20 crore in fiscal 2016. MAHAVEER COTTS: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan --------------------------------------------------------------- CRISIL's rating on the long-term bank facility of Mahaveer Cotts Strings Private Limited (MCSPL) continues to reflect MSCPL's below-average financial risk profile, marked by small net worth, high gearing and weak debt protection metrics. The rating also factors in the company's small scale and working-capital- intensive nature of operations. These rating weaknesses are partially offset by the extensive experience of MCSPL's promoters in the cotton ginning industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6 CRISIL B/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weaknesses * Below average financial risk profile MSCPL financial risk profile is weak marked by small net worth, high gearing and weak debt protection metrics. Due to working capital intensive operations and low accretion to reserves, the financial risk profile of the company is expected to remain below average going ahead as well. * Small scale of operations in highly fragmented industry The cotton ginning industry is largely unorganised with the presence of several small players. In addition, the entry barriers are low because of low capital and technology intensity and low differentiation in end product. This has led to a highly fragmented industry structure with intense competition amongst the players. Company's scale continues to remain small as reflected in operating income of INR26 cr in 2016-17. Strengths * Extensive experience of promoters in cotton industry and established relations with suppliers The promoter of MCSPL has been in the cotton industry for more than 40 years through its group firm Mahaveer Ginning Factory. The company benefits from the extensive experience of its promoter and his understanding of the dynamics of the local market, and established relationships with its suppliers and customers. CRISIL believes that MCSPL will continue to benefit from the extensive industry experience of its promoter, resulting in sustained revenue growth over the medium term. Outlook: Stable CRISIL believes that MCSPL will continue to benefit over the medium term from its promoters' extensive industry experience and their funding support. The outlook may be revised to 'Positive' if significant long term fund infusion from the promoters shores up the company's liquidity. Conversely, the outlook may be revised to 'Negative' if the company's financial risk profile weakens further, most likely because of increased working capital borrowings, or if any change in government policy adversely impacts its operations. MSCPL was set up in 2008 by Mr. Kamalchand Jain and his family. The company, based in Bhikangaon district (Madhya Pradesh), produces cotton bales by ginning and pressing raw cotton (kapas). Profit after tax (PAT) and net sales are estimated at INR0.3 crore and INR26 crore, respectively, for fiscal 2017; PAT was INR0.1 crore on net sales of INR29 crore for the previous fiscal. MEP INFRASTRUCTURE: CRISIL Cuts rating on INR2.52BB Loan to D ------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of MEP Infrastructure Pvt Ltd (MEP Infra) to 'CRISIL D' from 'CRISIL BB-(SO)/Negative'. The ratings are based on limited interaction with the company. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term 7.51 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL BB-(SO)/Negative') Term Loan 2525.49 CRISIL D (Downgraded from 'CRISIL BB-(SO)/Negative') The downgrade reflects delays in servicing the rated debt on account of its stretched liquidity position with lower than expected toll collections. The company has large debt and high exposure to group companies, and is exposed to volatility in traffic and changes in government policies. Furthermore, the rating factors in MEP Infra's exposure to group companies which remained high at INR598 crore as on March 31, 2016, and is expected to increase over the medium term. However, it benefits from good traffic potential of the project, and extensive experience of promoter group in managing toll-based road projects. Key Rating Drivers & Detailed Description Weakness * Delays in debt servicing MEP Infra has delayed in servicing its debt obligations with lower than expected toll collections. Although, liquidity in the form of debt servicing reserve account has been maintained in the form of fixed deposit of around INR53 cr, it is inadequate to meet the current overdue debt servicing obligations. * Large debt, and high exposure to group companies MEP Infra had debt of INR2,488 crore as on March 31, 2016, of which, INR2,121 crore was raised for making upfront payment to Maharashtra State Roads Development Corporation Ltd (MSRDC) for the grant of concession. Thus, despite stable revenue, MEP Infra has limited cash flow cushion available to meet its large debt servicing obligations. Furthermore, the exposure to group companies remained high at INR598 crore as on March 31, 2016, which has increased over the past one year. * Vulnerability of cash flows to volatility in traffic and changes in government policies MEP Infra is exposed to the risk of volatility in traffic volumes because of a slowdown in economic activity. Furthermore, any change in government policy such as recent announcement by Ministry of Road Transport and Highways exempting tolling on highways starting November 8, 2016, till midnight of December 2, 2016, could impact cash flows. Any such policy changes or adverse traffic movement remains a key rating sensitivity factor. Strengths * Good traffic potential and fixed periodic toll rate revision Mumbai, being the financial and commercial hub of the country, attracts a steady stream of traffic. Traffic mainly consists of passenger vehicles, over 60% of the revenue comes from passenger cars, which largely comprises commuters staying on the outskirts of Mumbai and travelling to and fro for work. Furthermore, toll rates are pre-defined in concession agreement, thus MEP Infra faces limited risk of unexpected variation in toll rates. * Extensive experience of promoter group in managing toll-based road projects The promoter group of MEP Infra has extensive experience in managing toll-based road projects. MEP Infrastructure Developers Ltd (MEPIDL) has completed 116 projects, with an aggregate of 218 toll plazas and 1,349 lanes, and has experience of over 14 years in this business in 12 states in India. MEP Infra was incorporated in January 2010 as a subsidiary of MEPIDL. It holds a 16-year concession from MSRDC, beginning in November 2010, for toll collection at the five Mumbai entry points (Vashi, Mulund, Lal Bahadur Shastri, Dahisar, and Airoli); operations and maintenance (O&M), including periodic and special maintenance of 27 flyovers in Mumbai; and capacity augmentation of three toll plazas. Before the awarding of this concession to MEP Infra, MEPIDL was the toll collector for the Mumbai entry points since 2002. The company has raised claims from MSRDC towards demonetisation and cost incurred towards change in scope. PARKASH PULSES: Ind-Ra Affirms B Issuer Rating, Outlook Stable -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Parkash Pulses' (PP) Long-Term Issuer Rating at 'IND B'. The Outlook is Stable. The instrument-wise rating action is: -- INR100 mil. (reduced from INR150 mil.) Fund-based working capital limits affirmed with IND B/Stable/IND A4 rating. KEY RATING DRIVERS The affirmation reflects PP's continued weak credit profile and low operating profitability due its presence in a highly commoditised business of pulses with susceptibility to seasonal trends. As per FY17 provisional financials, revenue declined to INR1,195 million (FY16: INR1,658 million) owing to the government's intervention on maximum inventory holding limit of pulses to eliminate mediators and stockists; however, the limit was withdrawn in July 2017. EBITDA margin was 0.81% in FY17P (FY16: 0.66%). Net financial leverage (adjusted debt/operating EBITDA) deteriorated to 6.18x in FY17P (FY16: 4.61x) on account of an increase in total debt for working capital purposes. However, gross interest coverage (operating EBITDA/gross interest expense) improved to 1.57x in FY17P (FY16: 1.36x) on account of a decrease in finance cost due to lower utilisation of fund-based working capital limits. However, the ratings are supported by PP's comfortable liquidity position with 34.53% average utilisation of working capital limits during the 12 months ended July 2017. The ratings also remain supported by the company's founders' over 25 years of experience in the pulses trading business, and the company's established relationships with customers. RATING SENSITIVITIES Negative: Any further decline in revenue or EBITDA margin leading to deterioration in the overall credit metrics could be negative for the ratings. Positive: An improvement in the revenue or EBITDA margins, leading to improvement in the overall credit metrics could be positive for the ratings. COMPANY PROFILE Established in 2009 in New Delhi, PP is a proprietorship firm engaged in the trading of pulses. Mr. Sunil Kumar and Mr. Sanjay Kumar are the proprietors. PATEL MOTORS: Ind-Ra Migrates BB Issuer Rating to Not Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Patel Motors (Indore) Private Limited's (PMPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR410 mil. Fund-based working capital limits migrated to non-cooperating category with IND BB(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Aug. 11, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE PMPL was incorporated in 1985 as a partnership entity. At inception, it had taken an authorised dealership from Tractors and Farms Equipment Limited. In 1993, the firm was reconstituted as a private limited company. In 1994, the company became a dealer for Eicher Motors Limited's light and medium commercial vehicles. In 1997, PMPL acquired an authorised dealership for the passenger vehicles of Maruti Suzuki India Limited, formerly Maruti Udyog Limited. The company has 15 showrooms and 12 workshops, and runs a driving school in Indore. PRASANNA EDUCATION: CRISIL Reaffirms D Rating on INR10MM LT Loan ---------------------------------------------------------------- CRISIL ratings on bank facilities of Prasanna Education Trust (PET) continue to reflects the delays in servicing of its debt obligations due to its weak liquidity. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan 10 CRISIL D (Reaffirmed) CRISIL ratings also continue to reflect PET has modest scale of operations and weak financial risk profile marked by a small net worth and high gearing, and exposure to risks related to the regulatory framework governing educational institutions. These rating weaknesses are partially offset by the extensive experience of PET's trustees in the education sector and expected benefit from the newly incorporated Ayurvedic College and hospital. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations Despite being in operation for more than a decade now, the collection of the trust were small at INR6.2 cr in 2015-16. PET faces stiff competition from many established engineering colleges in Mangalore and Dakshina Kannada district including National Institute of Technology Karnataka, MIT Manipal and Canara Engineering College. * Weak financial risk profile CRISIL believes that the trust financial risk profile is expected to remain weak due to small net worth, high gearing and continued weak liquidity. Strengths * Established regional position in education sector, with variety of course offerings: PET has a reputation of being a quality education provider with good infrastructural facilities. PET offers courses in a variety of disciplines such as engineering, ayurvedic medicine, commerce, management etc. CRISIL believes that the company will benetit from its established regional position in education sector. Set up in 2003, the PET has been running 10 institutions that imparts education from primary to higher standards. The trust is managed by Mr. K. Gangadhara Gowda, former Minister, Government of Karnataka and his family. The trust also runs the Prasanna Ayurvedic College and Hospital. Profit after tax (PAT) and net sales are estimated at INR1.5 crore and INR62 crore, respectively, for fiscal 2016; PAT was INR2.1 crore on net sales of INR47 crore for the previous fiscal. R H SOLVEX: Ind-Ra Migrates BB+ Rating to Not Cooperating --------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated R.H. Solvex Private Limited's (RHSPL) Long-Term Issuer Rating to the non- cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR100 mil. Fund-based Limits migrated to non-cooperating category with IND BB+(ISSUER NOT COOPERATING) rating; -- INR71.80 mil. Term Loan migrated to non-cooperating category IND BB+(ISSUER NOT COOPERATING) rating; and -- INR0.30 mil. Non-fund-based limits migrated to non- cooperating category with IND A4+(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on July 28, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in September 2010, RHSPL is promoted by Harman Prasad Agrawal, Meena Agrawal, Rohit Agrawal and Rahul Agrawal. The company has a solvent extraction plant, which has a production capacity of 250 tonnes per day (TPD), and a 50TPD edible oil refining unit in Seoni (Madhya Pradesh). The company is engaged in the manufacturing of deoiled soya cakes and refined soybean oil. It sells refined oil under the brand Nutririch. RAI INFRASTRUCTURE: CRISIL Reaffirms B Rating on INR7.60MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its long-term rating on the bank facilities of Rai Infrastructure (Rai) at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.6 CRISIL B/Stable (Reaffirmed) Term Loan 2.29 CRISIL B/Stable (Reaffirmed) The rating reflects the firm's modest scale of operations in the intensely competitive agro- commodity trading business and below- average financial risk profile because of small net worth, high total outside liabilities to tangible net worth ratio and muted debt protection metrics. These weaknesses are partly offset by the extensive experience of Rai's proprietor. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations The firm is engaged in the agro commodity milling business of dal having capacity of 35 tonne per day (tpd), Rai provides minor value addition by undertaking grading and sorting of grains. The firm's scale of operation is modest as reflected in its turnover of around INR43 as on march 31,2017. CRISIL believes that firm's modest scale of operations will continue to impinge on its business risk profile over the medium term. * Below-average financial risk profile The firm's financial risk profile is below average marked by low net worth of INR3 cr and high gearing of 4 times as on March 31, 2017. With low accretion of reserves and high reliance on external debt.CRISIL believes that the firm is expected to maintain its below average financial risk profile over the medium term. Strengths * Promoters' extensive experience in agro commodity industry The promoter of the firm Mr. Ramlal Rai (aged 46) years possesses vast experience of 20 years in the field of Dal Mill. He has established relationship with vendors, brokers etc. and has very good reputation in the market. The promoter is presently running a Dal Mill in the name of 'Shri KR Trading Co.' in Kareli since 2004. CRISIL believes that the experience of the proprietor will help the firm in scaling up the revenues quickly because of established relationships and good reputation in the market. Outlook: Stable CRISIL believes that Rai will benefit over the medium term from the extensive experience of its proprietor. The outlook may be revised to 'Positive' if there is a substantial and sustained improvement in revenue and profitability margins, or if net worth increases significantly with sizeable equity infusion from the proprietor. Conversely, the outlook may be revised to 'Negative' if profitability margins decline sharply or if capital structure weakens further because of large debt-funded capital expenditure or stretch in working capital cycle. Established in 2010 as a proprietorship firm by Mr. Ramlal Rai, Rai trades and processes pulses and grains. The firm is based in Kareli district, Madhya Pradesh. Profit after tax (PAT) and net sales are estimated at INR0.22 crore and INR43 crore, respectively, for fiscal 2017; PAT and net sales were INR0.17 crore and INR48 crore, respectively, for fiscal 2016. REBELL JEWELS: CRISIL Assigns B+ Rating to INR8MM Cash Loan ----------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' on long term bank facility of Rebell Jewels and Gifting Private Limited (RJPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B+/Stable The ratings reflect RJPL's initial stage of operation and below- average financial risk profile. These weaknesses are partially offset by promoters' extensive industry experience of the promoters. Key Rating Drivers & Detailed Description Weakness * Initial stage of operations: Commercial operations commenced in May 2017. Timely stabilization and ramp up of scale of operation is yet to be seen. * Below average financial risk profile: Owing to initial stage of operations, financial risk profile is expected to remain below- average with weak capital structure. Strengths * Extensive experience of promoters in trading business: Benefits from the promoters' two-decade experience in the industry should support business risk profile. Outlook: Stable CRISIL believes that RJPL will continue to benefit from the extensive experience of its promoters, over the medium term. The outlook may be revised to 'Positive' if the company's financial risk profile improves driven by improvement in cash accruals, efficient working capital management, or capital infusion by the promoters. Conversely, the outlook may be revised to 'Negative' in case the company's financial risk profile, particularly its liquidity, deteriorates due to substantially low cash accruals or sizeable working capital requirements. Incorporated in May 2017, RJPL, is engaged in manufacturing and trading of imitation jewellery and trading of gift items. RIPL has commenced its operation since May 2017. The company is promoted by Mr. Rajes Shantilal Jain and his brother in law Mr. Hasmukh Bhimraj Bagrecha; who have been in this business for over two decades. SCORODITE STAINLESS: CRISIL Lowers Rating on INR23MM Loan to D -------------------------------------------------------------- CRISIL has been consistently following up with Scorodite Stainless India Private Limited (SSPL) for obtaining information through letters and emails dated April 12, 2017, and May 4, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL A4') Cash Credit 23 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL B+/Stable') Letter of Credit 9 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL B+/Stable') Term Loan 5 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 Scorodite Stainless India Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Scorodite Stainless India Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information and discussion with banker, CRISIL has downgraded the rating to 'CRISIL D/CRISIL D' on account of non-servicing of interest/instalments. Incorporated in 2006, SSPL is promoted by the Rajasthan-based Sanghvi brothers. The activities were earlier being carried out under Sanghvi Metal Corporation, which was established in 1979. SSPL manufactures, trades in, and exports stainless steel, and duplex, super duplex, welded, and seamless carbon steel pipes, tubes, and 'U' tubes. SHESHADRI INDUSTRIES: CRISIL Reaffirms D Rating on INR34.54M Loan ----------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL D' rating to the bank facilities of Sheshadri Industries Limited (SIL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 16.46 CRISIL D (Reaffirmed) Long Term Loan 34.54 CRISIL D (Reaffirmed) The rating reflects current delays by SIL in servicing its debt. The delays have been caused due to SIL's weak liquidity. The ratings reflects weak financial risk profile marked by modest net worth, high gearing and weak debt protection metrics. The rating also reflects susceptibility of operating margin to volatility in raw material prices. However, it benefits from extensive experience of SIL's promoters in the textile industry. Key Rating Drivers & Detailed Description Weakness * Delay in debt servicing SIL has been delaying in repayment of interest and principal amount of its term loan facility. The same is on account of company's weak liquidity. * Weak financial risk profile The company's financial risk profile is weak marked by modest net worth, high gearing and weak debt protection metrics. Net worth was negative, as on March 31 2017, on account of accumulated losses. Debt protection metrics was weak owing to operating losses in the Fiscal 2017. Financial risk profile is expected to remain weak over the medium term. * Susceptibility of operating margin to volatility in raw material prices Raw material costs accounted for around 68 per cent of ASLML's revenue in 2016-17 Cotton prices have been highly volatile in past which exposes the company to the risk arising due to any change in cotton prices. Strengths * Extensive industry experience of promoters Extensive experience of promoters of more than 35 years has helped the company in building strong customer and supplier relationships. Established relationship with customers and suppliers help the company in uninterrupted raw material procurement and repeated orders from customer. SIL, incorporated in 2013, is engaged in cotton yarn spinning unit located at Rajna (Madhya Pradesh) and garment manufacturing plant. The company is promoted by Mr. J.K Agarwal. SIL reported net losses of INR16.55 crore on revenue of INR57.93 crore in fiscal 2017, against INR2.84 crore and INR102.1 crore in fiscal 2016. SHITAL GEMS: Ind-Ra Migrates D Rating to Issuer Not Cooperating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Shital Gems Pvt. Ltd.'s (SGPL) Long-Term Issuer Rating to 'IND D' from 'IND B+' while simultaneously migrating the ratings to the non- cooperating category. The Outlook was Stable. The issuer did not participate in the surveillance exercise despite continuous requests and follow-ups by the agency. Thus, the rating is on the basis of best available information. The rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR220 MIL. Fund-based working capital limits (Long- term/Short-term) downgraded and migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on best available information KEY RATING DRIVERS The downgrade reflects SGPL's delays in debt servicing during the 12 months ended July 2017 due to tight liquidity position. SHREE MANIBHADRA: CRISIL Reaffirms 'D' Rating on INR53MM Loan ------------------------------------------------------------- CRISIL has been consistently following up with Shree Manibhadra Food Product Private Limited (SMFPL; part of Manibhadra group) for obtaining information through letters and emails dated May 24, 2017 and June 9, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 53 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Letter of Credit 5 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Term Loan 2.5 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 Shree Manibhadra Food Product Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Shree Manibhadra Food Product Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D/CRISIL D'. For arriving at its ratings, CRISIL has combined the business and financial risk profiles of SMFPL and Dhanshree Seeds Pvt Ltd (DSPL). This is because both the companies, together referred to as the Manibhadra group, are in a similar line of business, have a common management, and have extended cross guarantees for each other's bank loan facilities. SMFPPL, incorporated in 2010, is promoted by Ahmedabad-based Mr. Prakash Shah and his family members and relatives. The company processes non-basmati rice. Incorporated in 2012 by Mr. Prakash Shah, DNSDPLis into processing of non-basmati rice with its processing unit based in Moriya (Gujarat). The total processing capacity of unit is 5 tonnes per hour. SHRI KARVIR: CRISIL Reaffirms B+ Rating on INR12MM Cash Loan ------------------------------------------------------------ CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on the bank facilities of Shri Karvir Nivasini Mahalaxmi Ispat Private Limited (SKPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.18 CRISIL A4 (Reaffirmed) Cash Credit 12 CRISIL B+/Stable (Reaffirmed) Letter of Credit 3 CRISIL A4 (Reaffirmed) The rating reflects susceptibility to cyclical nature of demand from end-user industries and weak financial risk profile. These weaknesses are partially offset by experience of promoters. Analytical Approach For arriving at theratings, CRISIL has treated unsecured loans extended to SKPL by promoters as neither debt nor equity as these loans have lower-than-market interest rate and should remain in the business. Key Rating Drivers & Detailed Description Weakness * Susceptibility to demand from end-user industries SKPL's profitability is linked to the overall fortunes of the steel industry. The steel industry is inherently cyclical in nature with strong correlation with overall gross domestic product growth with primary end-user segments such as infrastructure and real estate. * Weak financial risk profile Moderate gearing and below average debt protection metrics are likely to constrain financial risk profile over the medium term. Strengths * Promoters' experience Benefits from the promoters' experience (over three decades) should continue to support the business. Outlook: Stable CRISIL believes SKPL's business risk profile will continue to benefit over the medium term from the experience of promoters. The outlook may be revised to 'Positive' if revenue and profitability increase significantly while maintaining capital structure and working capital cycle. Conversely, the outlook may be revised to 'Negative' if continued decline in profitability, leading to low cash accrual, or stretch in working capital cycle weakens liquidity. Incorporated in 1994 and promoted by Mr. Gandhi and family along with Mr. Malani, SKPL manufactures thermo-mechanically-treated bars. Its manufacturing facility is in Kolhapur (Maharashtra). Operations are managed by Mr. Malani. SPENTIKA CERAMIC: CRISIL Reaffirms 'B' Rating on INR6MM LT Loan --------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Spentika Ceramic Private Limited (SCPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee .8 CRISIL A4 (Reaffirmed) Cash Credit 4.5 CRISIL B/Stable (Reaffirmed) Long Term Loan 6 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.2 CRISIL B/Stable (Reaffirmed) The ratings continue to reflect the extensive experience of the company's promoters in the ceramics industry, and the proximity of its manufacturing facilities to raw material and labour sources. These strengths are partially offset by modest scale of operations in the highly competitive ceramics industry, and large working capital requirement. Key Rating Drivers & Detailed Description Strengths * Extensive industry experience of the promoters: The promoters' experience in the ceramics industry through group companies has enabled them to understand nuances of business and establish a healthy customer base, thus supporting the company's revenue. * Availability of raw material and labour: SCPL is based in Morbi, which is the hub of the ceramics industry in India and accounts for 60-70% of the country's ceramic tiles output. Consequently, raw material and labour are easily available, thus reducing the company's overhead. Weaknesses * Modest scale of operations: The company's scale has increased, but remains modest due to initial phase of operations and intense competition in the ceramics industry. * Large working capital requirement: Gross current assets were at 230 days as on March 31, 2017. Outlook: Stable CRISIL believes SCPL will continue to benefit from its promoters' extensive experience in the ceramics industry. The outlook may be revised to 'Positive' if a significant increase in revenue and profitability leads to larger-than-expected cash accrual. The outlook may be revised to 'Negative' if revenue or accrual is lower than expected due to reduced profitability, or if its financial risk profile weakens because of a stretch in working capital cycle or substantial debt-funded capital expenditure. SCPL is a private limited company set up in February 2011 at Lakaddhar, Gujarat. It is promoted by Mr. Pareshbhai Detroja, Mr. Harshadbhai Raiyani, Mr. Jagjeevanbhai Rangpariya, and Mr. Dharmendrabhai Detroja. Mr. Pareshbhai Detroja, Mr. Dharmendrabhai Detroja, and Mr. Raj Boda are directors in the company. It manufactures digital glazed wall tiles with capacity of 38000 tonne per annum. Profit after tax was INR0.07 crore on net sales of INR14.40 crore in fiscal 2016, against INR0.11 crore and INR17.77 crore in fiscal 2015. SUNCO ENTERPRISES: CRISIL Assigns B+ Rating to INR7MM Cash Loan --------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' ratings to the long term bank facilities of Sunco Enterprises (SE). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL B+/Stable The ratings reflect SE's moderately high working capital requirements. This rating weakness is partially offset by its average financial risk profile and extensive experience of promoters in the automobile industry. Key Rating Drivers & Detailed Description Weakness * Working capital intensive nature of operations: The company has working capital intensive nature of operations reflected in its high Gross Current Asset days at 184 days as on March 31st, 2017. Strengths * Extensive experience of Promoters: The promoters of SE have a track record of around three decades. The promoter's lineage has an established customer relation through the company has helped SE to scale up its operations. * Average financial risk profile marked by moderate gearing ratio and comfortable debt protection metrics: The company has an average financial risk profile marked by moderate gearing ratio at 1.01 times for March 2017 and comfortable debt protection metrics for the same period. Outlook: Stable CRISIL believes that SE will benefit from its promoters' extensive industry experience over the medium term. The outlook may be revised to 'Positive' if improvement in scale of operations and profitability resulting in higher cash accruals and efficient working capital management leads to improvement in financial profile. Conversely, the outlook may be revised to 'Negative' in case of pressure on the firm's financial risk profile, particularly its liquidity emanating from lower cash accruals or larger working capital requirements or any large debt funded capex. SE, set up in 1970s, is a Mumbai based partnership firm engaged in exporting of various spare parts of 2 wheelers, 3 wheelers and 4 wheelers. The firm trades for TATA Leyland, Mercedes, Bajaj, TVS and etc. SE reported a profit after tax (PAT) of INR43 lacs on operating income of INR14.43 Crores for fiscal 2017, vis-a-vis INR6 lacs and INR4.83 crores, respectively in fiscal 2016. SURYAVANSHI SPINNING: CRISIL Reaffirms D Rating on INR14.33M Loan ----------------------------------------------------------------- CRISIL has reaffirmed its ratings at 'CRISIL D/CRISIL D' to the bank facilities of Suryavanshi Spinning Mills Limited (SVSML). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.66 CRISIL D (Reaffirmed) Cash Credit 14.33 CRISIL D (Reaffirmed) Corporate Loan 10.43 CRISIL D (Reaffirmed) Long Term Loan 9.75 CRISIL D (Reaffirmed) Proposed Long Term Bank Loan Facility 4.83 CRISIL D (Reaffirmed) The ratings reflect current delays by SVSML in servicing its debt. The delays have been caused by SVSML's weak liquidity. The ratings reflect weak financial risk profile marked by modest net worth, high gearing and weak debt protection metrics. The ratings also reflect susceptibility of operating margin to volatility in raw material prices. However, it benefits from extensive experience of SVSML's promoters in the textile industry. Key Rating Drivers & Detailed Description Weaknesses * Delays in debt servicing SVSML has been delaying in repayment of interest and principal amount of its term loan facility. The same is on account of company's weak liquidity. * Weak financial risk profile The company's financial risk profile is weak marked by modest net worth, high gearing and weak debt protection metrics. Net worth was negative on account of accumulated losses over the period. Debt protection metrics was weak due to operating losses in the Fiscal 2017 * Susceptibility of operating margin to volatility in raw material prices Raw material costs accounted for around 66 per cent of SSML's revenue in 2016-17. Cotton prices have been highly volatile in the past which exposes the company to the risk arising due to any sharp fluctuation in prices. Strength * Extensive industry experience of promoters Extensive experience of promoters of more than 35 years has helped the company in building strong customer and supplier relationships. SVSML, incorporated in 1978, is engaged in cotton yarn spinning located at Rajna (Madhya Pradesh). SVSML manufactures Polyester, polyester-viscose Blended Yarns and Medical Textiles Products. The company is promoted by Mr. B.N Agarwal. SVSML reported net losses of INR12.8 crore on revenue of INR65.8 crore in fiscal 2017, against INR4.2 crore and INR101.7 crore in fiscal 2016. SWARUP INTERNATIONAL: CRISIL Reaffirms B+ Rating on INR3.1MM Loan ----------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Swarup International (SI) at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bill Discounting 3.1 CRISIL B+/Stable (Reaffirmed) Packing Credit 2.5 CRISIL A4 (Reaffirmed) The ratings continue to reflect the firm's modest scale in the intensely competitive stone processing industry, and large working capital requirement. These weaknesses are partially offset by its promoters' extensive experience, and moderate financial risk profile because of moderate debt protection metrics. Key Rating Drivers & Detailed Description Weakness * Modest scale: With revenue of INR19.56 crore in fiscal 2017, scale remains small in the intensely competitive stone processing segment that has many unorganised players due to low entry barriers. * Working capital-intensive operations: Gross current assets were at 136 days as on March 31, 2017, due to stretched receivables of 120-180 days; inventory is likely to be at 20-30 days. Against this, payables were at 30-60 days. Gross current assets are expected to remain at similar levels over the medium term. Strengths * Partners' extensive experience: Presence of over a decade in the stone processing industry has enabled the partners to understand market dynamics and establish healthy relationships with customers and suppliers. * Moderate financial risk profile: Financial risk profile is supported by interest coverage and net cash accrual to total debt ratios estimated at 1.60 times and 0.08 time, respectively, for fiscal 2017. Outlook: Stable CRISIL believes SI will continue to benefit over the medium term from the partners' extensive experience. The outlook may be revised to 'Positive' in case of substantial and sustained increase in revenue, along with stable profitability, or considerable rise in networth because of sizeable equity infusion. The outlook may be revised to 'Negative' if there is steep decline in profitability, or significant weakening of capital structure due to stretch in working capital cycle. Established in 2005 as a partnership between Mr. Rajesh Jhunjhunwala, Mr. Gaurav Jhunjhunwala, Mr. Himanshu Gupta, and Ms Nirmal Gupta, SI's facilities are in Kota, Rajasthan. On a provisional basis, the company is estimated to report profit after tax of INR0.19 crore on revenues of INR19.6 crores in 2016- 17. It recorded profit after tax (PAT) of INR0.21 crore on revenues of INR18.6 crores in 2015-16. VENKATA SAI: Ind-Ra Migrates D Rating to Issuer Not Cooperating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Venkata Sai Ispat Industries Pvt Ltd's (VSIIPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR120 mil. Fund-based working capital limits (Long-term) migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating; and -- INR50 mil. Term loan (Long-term) migrated to non-cooperating category with IND D(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on June 20, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 2008, VSIIPL is a Bangalore-based manufacturer of sponge iron. VENTURE IMPEX: CRISIL Assigns B+ Rating to INR9.9MM Cash Loan ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' ratings to the long term bank facilities of Venture Impex (VI). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9.9 CRISIL B+/Stable Proposed Long Term Bank Loan Facility 5.1 CRISIL B+/Stable The ratings reflect VI's average financial risk profile marked by moderate gearing levels and moderate debt protection metrics and the extensive experience of promoters in the electrical industry. These rating strengths are partially offset by the moderately high working capital operations. Key Rating Drivers & Detailed Description Weakness * Working capital intensive nature of operations: The company has working capital intensive nature of operations reflected in its high Gross Current Asset days at 154 days as on March 31st, 2017. Strengths * Extensive experience of Promoters: The promoters of VI have a track record of around 2 decades. The promoter's lineage has an established customer relation through the company has helped VI to scale up its operations. * Average financial risk profile marked by moderate gearing ratio and comfortable debt protection metrics: The company has an average financial risk profile marked by moderate gearing ratio at 1.5 times for March 2017 and comfortable debt protection metrics for the same period. Outlook: Stable CRISIL expects VI to continue to benefit from the long standing experience of the promoters. The outlook may be revised to 'Positive' in case of significant improvement in the firm's financial risk profile driven by higher than expected cash accruals or capital infusion along with efficient working capital management. Conversely, the outlook may be revised to 'Negative' in case of larger than expected working capital requirements or lower than expected cash accruals resulting in pressure on the liquidity profile of the firm. Venture Impex (VI) a proprietorship concern of Mr. Vikrant Aggarwal is engaged in trading in petroleum products such as different types of lubricant and fuels since 2001. The products are majorly lubricants and fuels. VI reported a profit after tax (PAT) of INR15 lacs on net sales of INR72 Crores for fiscal 2017, vis-a -vis INR8 lacs and INR67.78 crores, respectively in fiscal 2016. VIDHATRI MOTORS: CRISIL Reaffirms 'B+' Rating on INR7.50MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Vidhatri Motors Private Limited (VMPL) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 0.75 CRISIL B+/Stable (Reaffirmed) Inventory Funding Facility 7.50 CRISIL B+/Stable (Reaffirmed) Term Loan 1.75 CRISIL B+/Stable (Reaffirmed) The rating reflects a below-average financial risk profile because of a modest networth, high gearing, and weak debt protection metrics, and exposure to intense competition in the automobile (auto) distribution industry. These rating weaknesses are partially offset by the extensive industry experience of the promoter. Key Rating Drivers & Detailed Description Weaknesses * Below-average financial risk profile That's due to a modest networth, aggressive gearing, and weak debt protection metrics. The financial risk profile is likely to remain below average over the medium term because of high reliance on external debt to fund working capital requirement. * Exposure to intense competition: The auto dealership sector is intensely competitive with a large number of players present across passenger car segments. The company faces intense competition from dealers of other established players including Maruti Suzuki India Ltd (MSIL; rated 'CRISIL AAA/Stable/CRISIL A1+'), Tata Motors Ltd (TML), and Hyundai Motors India Ltd (HMIL) as well as from the unorganised used-car market. The business risk profile will remain constrained by exposure to risks relating to geographic concentration and intense competition in the auto dealership segment Strengths * Extensive industry experience of the promoter The promoter, Mr. M L Kantharaj Urs, began operations by acquiring a dealership of Daewoo Motors India Pvt Ltd for almost 11 year. A group company, VMPL has been a dealer for TML automobiles in Karnataka for almost 10 years, and has also successfully added Fiat dealership, post the split of the Tata and Fiat agreement in fiscal 2015. Outlook: Stable CRISIL believes VAPL will continue to benefit from the industry experience of its promoter. The outlook may be revised to 'Positive' in case of an increase in scale of operations and profitability, leading to improvement in the financial risk profile. The outlook may be revised to 'Negative' if the financial risk profile weakens further because of a stretched working capital cycle, and/or any debt-funded capital expenditure. Incorporated in 2012, VMPL is a dealer of passenger vehicle manufacturer Renault India Ltd in Mysuru, Karnataka. The company has a showroom and a workshop in Hinkal, Mysuru. Profit after tax (PAT) and net sales are estimated at INR0.21 crore and INR42 crore, respectively, for fiscal 2017; PAT was INR0.20 crore on net sales of INR40 crore for the previous fiscal. VINIT FABRICS: Ind-Ra Moves 'BB' Issuer Rating to Not Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Vinit Fabrics Private Limited's (VFPL) Long-Term Issuer Rating to the non- cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR45 mil. Fund-based working limits migrated to non- cooperating category with IND BB(ISSUER NOT COOPERATING) rating; and -- INR28.52 mil. Long-term loans migrated to non-cooperating category with IND BB(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on July 28, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE VFPL, established by Vishwanath Munigilal Agarwal in 2010 as a closely held public limited entity, was converted into a private limited company in May 2016. The company has been operational since November 2013 and is engaged in dyeing and printing of fabrics. YAK GRANITE: CRISIL Lowers Rating on INR6MM Cash Loan to 'C' ------------------------------------------------------------ CRISIL has downgraded its rating on the long-term bank facilities of Yak Granite Industries Private Limited (YGIPL) to 'CRISIL C' from 'CRISIL B-/Stable' and reaffirmed the short-term facilities at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee .25 CRISIL A4 (Reaffirmed) Cash Credit 6.00 CRISIL C (Downgraded from 'CRISIL B-/Stable') Letter of Credit 0.25 CRISIL A4 (Reaffirmed) Proposed Long Term 1.50 CRISIL C (Downgraded from Bank Loan Facility 'CRISIL B-/Stable') The downgrade reflects CRISIL's belief that the financial risk profile, particularly liquidity, will remain under pressure over the medium term owing to insufficient cash accrual to meet long- term debt repayment obligation. In addition, the bank limit has remained extensively utilised in the 12 months through January 2017, indicating high working capital intensity of operations. The ratings reflect a modest scale of operations, and working capital-intensive operations, and a below-average financial risk profile because of weak gearing and debt protection metrics. These weaknesses are partially offset by the extensive experience of the promoter in the granite processing industry and an established customer relationship. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: With revenue of INR23.29 crores in fiscal 2017, the scale remains small in the competitive granite processing industry that has many players. This limits the ability to exploit benefits of economies of scale and restricts bargaining power with customers. Despite expected improvement, revenue is likely to remain at a similar level over the medium term. * Working capital-intensive operations: Gross current assets were more than 510 days, because of sizeable inventory of 153 days and stretched receivables of 347 days, as on March 31, 2017. The company is exposed to significant debtor risk, with debtors greater than 6 months of INR13.67 crores as on March 31, 2017. Consequently, the bank limit was fully utilised over the past one year. Operations are expected to remain working capital intensive over the medium term. * Below-average financial risk profile: Owing to a small scale of operations and moderate operating profitability, accretion to reserves is limited, resulting in a modest networth of INR6.54 crore as on March 31, 2017. The gearing was weak at 3.23 times as on March 31, 2017, due to high long-term debt, significant working capital debt, and a modest networth. The gearing is likely to remain weak over the medium term. Debt protection metrics were subdued as reflected in interest coverage ratio of 1.79 times and net cash accrual to total debt ratio of 0.09 time, in fiscal 2017. The metrics are expected to remain subdued over the medium term. Strength * Extensive industry experience of promoter and an established customer relationship: The promoter, Mr. Badri Narayanan, has an experience of more than four decades in the granite processing industry. This has resulted in an established relationship with customers. Also, operating profitability has been moderate at 10.83-17.99% in the four fiscals through 2017. Set up in 1982 by Mr. Badri Narayan, YGIPL processes rough granite blocks, monuments, and granite slabs. Operations are managed by Mr. Narayan. The company reported profit after tax (PAT) of INR0.49 crores on revenue of INR23.29 crores in fiscal 2017, vis-a-vis PAT of INR0.46 crores on revenue of INR24.87 crores in fiscal 2016. * RBI Sends Second List of 40 Defaulters to be Referred to NCLT --------------------------------------------------------------- Moneycontrol.com, citing CNBC-TV18, reports that the Reserve Bank of India has sent the second list of over 40 large corporate defaulters that include Videocon, JP Associates, IVRCL and Visa Steel, among others, to be referred to the National Company Law Tribunal (NCLT). Among other loan defaulting companies -- Uttam Galva, Castex, Jayswal Neco, Ruchi Soya, Nagarjuna Oil & Orchid Chemicals, East Coast Energy, SEL Manufacturing, Soma Enterprises, Asian Colour, Ispat Coated and Unity Infraprojects -- are among the fresh list identified by the central bank to be referred to the NCLT under the Insolvency and Bankruptcy Code (IBC). Most of the companies on the list are said to be from infrastructure and power sectors, the report notes. The total defaulter list may have 35-40 accounts and State Bank of India alone gets a list of 25-26 accounts, CNBC-TV18 sources added. In June, the central bank had identified 12 large stressed accounts to be taken to the NCLT. Each of these companies owed over INR5,000 crore with a total of around INR175,000 crore, accounting for 25 percent of the bad loans in the Indian banking system. ========= J A P A N ========= TOSHIBA CORP: Western Digital Not to Seek Veto Power in Deal ------------------------------------------------------------ The Japan Times reports that Western Digital Corp. will not seek veto power in Toshiba Corp.'s chip unit -- which it aims to jointly buy with other investors -- in order to avoid lengthy antitrust scrutiny, sources said on August 29. Toshiba and Western Digital, which are partners in a flash memory venture, are close to reaching a deal over Toshiba's sale of its chip unit, Toshiba Memory Corp, The Japan Times relates. The development comes after a bitter feud over whether the Japanese firm needs the U.S. partner's consent for the deal. According to the report, Western Digital, a joint investor in Toshiba's Yokkaichi flash memory plant in Mie Prefecture, is set to buy JPY150 billion ($1.3 billion) of the chip firm's convertible bonds. Western Digital's voting rights will be limited to roughly 15 percent when it converts the bonds, the sources said. While the two companies plan to take the chip unit public in roughly three years, Western Digital's stake will still be limited to no more than one-third of all shares, even if the U.S. firm goes ahead with plans to buy additional shares, meaning it will not have veto power over management issues, the sources said, The Japan Times relays. The report relates that Toshiba and Western Digital are still discussing when the U.S. firm will buy additional shares in the chip firm, the sources said. Toshiba President Satoshi Tsunakawa and Western Digital Chief Executive Officer Steve Milligan held talks August 28 and reached a broad agreement on the sale of Toshiba Memory. Toshiba is expected to announce the agreement today, August 31, the report says. Ties between the two companies had soured after Western Digital took Toshiba to court, claiming that the unit sale without its consent would breach their joint venture contract, the report recalls. Western Digital, the government-backed Innovation Network Corp. of Japan, the Development Bank of Japan and U.S. fund Kohlberg Kravis Roberts & Co. is set to offer JPY1.9 trillion for Toshiba Memory, the Japan Times notes. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on June 19, 2017, S&P Global Ratings said it has kept its 'CCC-' long-term and 'C' short-term ratings on Toshiba Corp. on CreditWatch with negative implications. The long- and short-term ratings on Toshiba have remained on CreditWatch with negative implications since December 2016, when S&P also lowered the long- term ratings because of a likelihood that the company might recognize massive losses in its U.S. nuclear power business. S&P kept them on CreditWatch negative when it lowered the long- and short-term ratings in January 2017 and when S&P lowered the long- term ratings in March 2017. The ratings remain on CreditWatch, reflecting S&P's view that creditor banks' support for Toshiba together with the company's liquidity levels warrant continued close monitoring because its plan to sell its memory business has yet to materialize and additional losses or financial burdens might still arise in connection with its U.S. nuclear power business. S&P continues to hold the view that without unanticipated, significantly favorable changes in Toshiba's circumstances, the company might become unable to fulfill its financial obligations in a timely manner or might undertake a debt restructuring S&P classifies as distressed in the next six months. TOSHIBA CORP: May Not Finalise Chip Unit Sale By Aug. 31 Deadline ----------------------------------------------------------------- Reuters reports that Toshiba Corp may not seal a $17.5 billion deal to sell its memory chip unit by a self-imposed Aug. 31 deadline due to disagreements over details of an offer by the bidders, people familiar with the matter said late on August 29. Talks with a consortium led by Western Digital Corp were in final stages, with the head of the U.S. firm in Japan to hammer out details, the sources said, requesting anonymity because they were not authorised to speak with media, Reuters relates. The two sides, however, could not yet agree on specifics such as the size of Western Digital's future stake in the business, they said, while adding the two sides would continue negotiating, Reuters says. A Toshiba spokesman said the company could not comment on details of the talks. A Western Digital representative declined to comment, Reuters notes. According to Reuters, Toshiba has been trying to sell the unit for months to pay down debt and cover the impact of over $6 billion in liabilities linked to U.S. nuclear arm Westinghouse. Reuters relates that Toshiba wants to close the sale by the end of the fiscal year in March to ensure it does not report negative net worth, or liabilities exceeding assets, for a second year running. This could result in a delisting from the Tokyo Stock Exchange. Given regulatory approvals could take six months, the company has been hoping to reach a deal by the end of August to ensure it can close the sale in time, Reuters says. In addition to Western Digital, the consortium includes U.S. private equity firm KKR & Co and the state-backed Innovation Network of Japan and Development Bank of Japan. Sources have said the group was offering around JPY1.9 trillion ($17.5 billion) for the business. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on June 19, 2017, S&P Global Ratings said it has kept its 'CCC-' long-term and 'C' short-term ratings on Toshiba Corp. on CreditWatch with negative implications. The long- and short-term ratings on Toshiba have remained on CreditWatch with negative implications since December 2016, when S&P also lowered the long- term ratings because of a likelihood that the company might recognize massive losses in its U.S. nuclear power business. S&P kept them on CreditWatch negative when it lowered the long- and short-term ratings in January 2017 and when S&P lowered the long- term ratings in March 2017. The ratings remain on CreditWatch, reflecting S&P's view that creditor banks' support for Toshiba together with the company's liquidity levels warrant continued close monitoring because its plan to sell its memory business has yet to materialize and additional losses or financial burdens might still arise in connection with its U.S. nuclear power business. S&P continues to hold the view that without unanticipated, significantly favorable changes in Toshiba's circumstances, the company might become unable to fulfill its financial obligations in a timely manner or might undertake a debt restructuring S&P classifies as distressed in the next six months. TSUKUBA BRAINS: Cord Blood from Bankrupt Group Resold to Clinics ---------------------------------------------------------------- The Mainichi Shimbun reports that the cord blood of at least 800 people that was stored by a private cord blood bank in Ibaraki Prefecture that went bankrupt in 2009 was resold via brokers to clinics nationwide. Clinics around Japan have been administering cord blood to patients without notifying the Health, Labor and Welfare Ministry in advance, touting its anti-cancer and cosmetic effects. The report says the ministry is poised to file criminal complaints over the unauthorized use of the cord blood. The Mainichi Shimbun learned about the resale from the 64-year- old former president of the company that originally stored approximately 1,500 people's cord blood, and multiple other sources close to the case. The former president, along with her relatives, founded the cord blood bank Tsukuba Brains in 1998 with the cooperation of a now deceased University of Tsukuba professor. The company began its program of storing cord blood from the general public in November 2002. However, the costs of the liquid nitrogen freezing equipment and construction of the facility were enormous, and the company eventually turned to investment funds for assistance. Still, company finances failed to improve, and in response to a petition from creditors, the Mito District Court's Tsuchiura branch decided to begin bankruptcy proceedings for Tsukuba Brain in October 2009, the report recalls. At the time, the cord blood bank had in its possession cord blood from 500 people that had been provided free of charge by hospitals, as well as that of its 1,000 or so customers. In early 2010, a company that some of the creditors set up was chosen to take possession of the cord blood, and the cord blood of about 1,000 people was transferred there. This company is believed to have resold cord blood to brokers. Looking back, the former president of Tsukuba Brains says, "I think the creditors' main objective from the very beginning was to get their hands on the cord blood." According to the report, a joint investigative squad of Ehime, Ibaraki, Kyoto and Kochi prefectural police is trying to pinpoint the routes through which the cord blood was resold and is set to launch a full-scale investigation into allegations that clinics across Japan violated the law on the safety of regenerative medicine. The health ministry, meanwhile, is poised to bring a criminal suit against multiple clinics suspected to have administered cord blood to patients without submitting treatment plans to the ministry for review prior to beginning treatment, The Mainichi Shimbun says. The Mainichi Shimbun relates that police at the investigative headquarters believe that the cord blood of some 800 people that came from Tsukuba Brains was resold via a clinic in the city of Kyoto, and was administered to patients in multiple clinics in cities such as Tokyo and Osaka without prior notification to authorities. In April, authorities raided a facility over a suspected violation of the law on the safety of regenerative medicine. And in June, the health ministry issued an emergency order based on the same law, temporarily prohibiting 11 clinics nationwide from administering cord blood to their patients, which they had done in the name of cancer treatment and for cosmetic reasons, charging patients amounts from a little over 1 million yen to several million yen. Cord blood is found in the umbilical cord and placenta. It is abundant in blood-forming stem cells, and is said to be effective in treating leukemia and other blood-related illnesses, The Mainichi Shimbun discloses. The law on the safety of regenerative medicine that went into force in 2014 stipulates that medical practitioners consult a panel approved by the health ministry when using another person's cord blood for regenerative medical purposes, and submit a treatment plan to the ministry prior to starting treatment, the report notes. ==================== N E W Z E A L A N D ==================== MERCER GROUP: Posts NZ$6.9MM Net Loss in Year Ended June 30 ----------------------------------------------------------- Mercer Group Limited (MGL) has reported a net before tax loss of NZ$4.65 million for the full year to June 30, 2017. As forecast at the half year MGL generated positive EBITDA, albeit minimal, for the second half of the year being reported, signalling the start of the long awaited turnaround. The company said "While the annual result is not where we need or want it to be, the efforts of the past year have been focused on fundamental change to our operations and strategy: 1. Improved H&S, resulting in tertiary qualification from ACC 2. Successful rights issue undertaken in November 2016 3. Acquisition of Haden & Custance in December 2016 4. The completion of significant restructuring across the group 5. Positive normalised EBITDA for the second half of the financial year "We now consider MGL as a holding company with three separate business units, operating independently of each other: 1. Haden & Custance ('H&C') - the design and supply of automated and robotic bulk materials handling equipment and systems for the bulk cheese, butter and online fulfilment sectors. This also includes the Titan, AiCo and Beta ranges (previously within Mercer Stainless). 2. S-Clave - the disruptive medical sterilisation technology that is in the final stages of commercialisation. 3. Mercer Stainless - fabricator of stainless steel equipment for the dairy, wine and food sectors, predominantly in New Zealand. Financial Performance "Operating revenue of NZ$26.6 million was 14% up on prior year. The revenue contribution from H&C for the machines business was 30%, this included seven months trading for H&C. Revenue for the stainless fabrication business was NZ$21.6 million down 12% from prior year. Post the restructure of the fabrication business it is now operating off a smaller cost base due to downsizing our New Plymouth site. "Reported EBITDA was a loss of NZ$3.5 million vs prior year loss NZ$3.2 million. However, normalised EBITDA was loss a NZ$0.56 million for FY17 vs NZ$3.46 million for prior year, and as noted above, was positive for the second half of the financial year. "The past year has seen the completion of the restructuring announced twelve months ago and saw wages and salaries reduced by over NZ$1.9 million year on year (given timing of staff reductions, this figure is more when annualised). The acquisition and integration of H&C into the MGL's operations brought about short term additional cost and disruption to the businesses. However, H&C has resulted in estimated annual cost savings of NZ$1.2 million most of which are staff related and more importantly H&C has improved efficiency in our operating platforms for the future. "Titan costs and operational issues have been stabilised with a complete restructuring of resources supporting the brand. The impairment of Titan inventory of NZ$1.16 million was necessary after an assessment and the transfer of all Titan stock to H&C. There was also a NZ$250,000 impairment of Titan goodwill to reflect the lower value of future revenues. "MGL borrowings reduced by NZ$2.3 million during the year. Banking facilities have been rolled over with core bank debt increasing by NZ$1.1 million due to the acquisition of Haden & Custance (note, Gresham Finance was repaid NZ$3.5 million). MGL also utilised a NZ$1.5 million temporary overdraft facility with a limit step down of NZ$0.5 million by October 31 and the balance of the limit expiring by 31 March 2018. MGL has a financial banking covenant based on achieving a level of EBITDA, the covenant is tested at December 31. Covenant compliance depends on H&C achieving forecast sales, which it is currently on track to do. "The reported after-tax loss of NZ$6.9 million includes a NZ$2.1 million expense for deferred tax adjustments, which is the result of derecognising tax loss assets that resulted from shareholder continuity changes at the time of the rights issue. MGL retains an off balance sheet future tax benefit of NZ$2.85 million that can be recognised in future years when expected taxable profits are available to offset them against. "The balance sheet position has improved although we note that the deferred tax adjustment in 'Non-Current Assets' lines masks this. As explained above the off balance sheet tax asset can be capitalised in the future periods when expected taxable profits are available. Haden & Custance Haden & Custance (www.hadencustance.com) specialises in the design and supply of automated robotic material handling systems that prepare bulk cheese and butter for processing. H&C's principal focus is the US where it has an established customer base of tier one cheese and butter companies, an installed base of systems and a reputation for delivering high quality solutions on time, that work. There is a significant growth opportunity in H&C's core business as the industry fundamentals are strong (cheese production increasing in the US by c.3% per annum), companies strategically want more automation in their plants given acute labour shortages in the US, the installed base provides a positive references, and the ROI of H&C systems is compelling. In addition to the core sectors, H&C are currently working with a large global online retailer to design an automated system for their fulfilment centres. If this is successful, it will be a material short term growth opportunity that will require investment in our support services in the US market. We will keep the market updated on this exciting development. The Mercer machines (Titan, AiCo and Beta) has now been transferred to H&C and have a better platform from which to improve and grow. This is based on; (i) the core capability set of the H&C team being mechanical, electrical and controls design, an area where Mercer Stainless did not have the appropriate resource or skill set; and (ii) an outsourced business model that is leading to build cost savings. "As reported at the half year, given the poor performance of Titan over a long period, we have undertaken a full review of the technology. This was driven by John Kelsey, our new Titan product manager who joined H&C from a large global slicing company. While we are still of the view that the Titan technology is good and the sectors it sells into are growing, the legacy of the previous installations, many of which resulted in returned machines, remain. Given the new team and operating structure we remain committed to Titan and the long term opportunity it represents but note that growth will be more moderate than previously forecast in the short term. "More encouragingly, the AiCo line of packaging equipment has a strong pipeline of opportunities in both the red meat and horticultural sectors. Both the AiCo and Beta range of equipment have benefited from the move to H&C with reduced build costs. "In the year ahead H&C are focused on execution of their existing sales pipeline, developing the online fulfilment systems and building the presence in the US. H&C currently has one person based in Green Bay, Wisconsin but are planning on increasing this number and increasing the presence of our NZ based team in the US. While the opportunity for H&C is strong, the business is a capital equipment business that is susceptible to delays in orders which is difficult from a working capital perspective. Subject to adequately resourcing the H&C team, it is our belief that H&C can grow to NZ$50 million revenue in the next two to three years. S-Clave "We continue to make solid progress with the S-Clave. As announced at the half year, we considered capital raising options for the S-Clave, but ultimately made the decision that we should further develop the technology before revisiting capital structures. "Key to the final development to a commercialised product is our partnership with our Australian sterilisation company Atherton's, who have proved to be a highly credible and positive influence on the development. Critically, working with Atherton's has meant that we will now be able to sell the S-Clave as a retro-fit to existing Atherton's autoclaves, which reduces the upfront cost to customers, and simplifies the approval process. We are now finalising the sealing process of the container with testing of prototypes being undertaken currently. This has been slower than we would like due to the complexities of the process and time taken to manufacture the prototypes (they need to be 3D printed out of high temperature resistant plastics). We expect the final testing to be complete within the next three months after which we will invest in the required tooling with a view to launching the S-Clave in the calendar year 2018. "Mercer and Atherton's have recently presented the S-Clave to a number of hospitals and medical clinics in Australia. The feedback has been very positive and we have four major hospitals and one private hospital group that have requested to be included in the initial roll out of the S-Clave. We are currently looking to recruit a senior Australian based commercialisation officer to work with Atherton's to drive the roll out of the S-Clave. "We have agreed in principal terms with Atherton's for the roll out of the S-Clave in Australia. We will update the market on these terms once finalised and documented. "While the development process for the S-Clave has been slower than we would have envisaged, we have not seen anything to date that changes our view that the S-Clave represents a significant opportunity for MGL. The market feedback has been strong and we have the right partner in Atherton's for an initial launch in Australia. We still have a relationship with the large US based sterilisation company, who now have a non-exclusive license rather than exclusive, which provides us with more flexibility in our international market strategy. Mercer Stainless "The Mercer Stainless fabrication business had a strong second half of the financial year. The acquisition of H&C and subsequent moving of the Mercer machines out of the business has allowed the business to focus on its core strengths - the fabrication of stainless steel equipment for the dairy, wine and food sectors. "The Marlborough earthquake in late 2016 opened up the opportunity to enter the wine sector. The wine sector has grown significantly over the past 20 years with exports reaching NZ$1.6 billion in the year to March 2017 and the industry has a goal of reaching NZ$2 billion of exports by 2020. We have now undertaken work for a number of the top wine companies including Penrod Ricard and Villa Maria and plan on continuing to build our presence in the sector. It provides much needed diversity to the dairy sector which Mercer Stainless was too reliant. While that diversification is essential for a business like Mercer Stainless, dairy remains a significant sector for us. Investment in dairy this year has increased, which has seen good workflows through both our Christchurch and New Plymouth facilities, and the medium term outlook for the sector is strong. "As outlined above, we are continuing to seek to diversify the Mercer Stainless business away from an over reliance on dairy, which is cyclical. We will be improving the front end sales function in the business with cultural change and a more market focused approach. The key to the success of Mercer Stainless is full workshops and while we have started the new financial year well with good workloads, we have to originate more work for the remainder of the financial year. "We were pleased to win the contract to build the replacement 500m3 silo for Fonterra at Edendale which was delivered in August 2017. We continue to work closely with Fonterra and the industry on new designs and codes for the manufacture of tanks for the dairy industry. There is nothing further to update as regards insurance claims from the Edendale collapse at this point. Outlook "We are forecasting a continuation of the improved operating performance for the 2018 financial year. H&C has a strong pipeline, but it is subject to order timing delays so the focus is on executing on the opportunities in front of it and building momentum in the market. We are focused on launching the S-Clave in Australia this financial year which will be a significant milestone for the group. Mercer Stainless is currently busy and has a decent outlook for the current financial year. "At a strategic level, we are comfortable with the businesses. Robotics and automation (H&C) and medical technology (S-Clave) are highly relevant in today's world and we now have a settled structure and platform from which to grow in both of these spaces. "Execution of the growth plans may well require further capital, which we are constantly reviewing. In addition, while each of the three businesses has opportunities as described, we will also remain open to further possible and relevant acquisitions and partnerships." About Mercer Group Mercer Group Limited (NZE:MGL) -- http://www.mercers.co.nz/-- engages in the designing and manufacturing of technology solutions and the fabrication of stainless steel products. The Company operates in segments, which include Stainless Fabrication; Mercer Technologies, and Corporate. The Stainless Fabrication segment includes the fabrication workshops in Christchurch and New Plymouth. The Stainless Fabrication segment designs and supplies food processing and packaging equipment, including Titan Slicers, Aico and Beta range. The Stainless Fabrication segment also undertakes fabrication for the dairy sector. The Mercer Technologies segment holds the S-clave technology, which the Company is commercializing. The Company offers various services, which include consultation; installation; commissioning; emergency; maintenance services; calibration; validation; auditing, and spares requirements. The Company's subsidiaries include Mercer Stainless Limited, Mercer Technologies Limited and Mercer Middle East Limited. ===================== P H I L I P P I N E S ===================== CEBU AIR: Egan-Jones Hikes Sr. Unsec. Debt Rating to BB+ -------------------------------------------------------- Egan-Jones Ratings Company, on July 9, 2017, raised the local currency and foreign currency senior unsecured ratings on debt issued by Cebu Air Inc to BB+ from B+. Cebu Air, Inc., operating as Cebu Pacific, is a Philippine low- cost airline based on the grounds of Ninoy Aquino International Airport, Pasay City, Metro Manila, in the Philippines. ********* 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. 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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. 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. 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