/raid1/www/Hosts/bankrupt/TCRAP_Public/170915.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
Friday, September 15, 2017, Vol. 20, No. 184
Headlines
A U S T R A L I A
AVIXIA PTY: Second Creditors' Meeting Set for Sept. 22
BBY LTD: Creditors Baulk at Insolvent Trading Settlement
EMPIRE OIL: Production Assets Under Receivership
FLEXDRIVE ROTOMOULDING: First Creditors' Meeting Set for Sept. 22
LIBERTY SERIES 2015-1: S&P Raises Class F Notes Rating to BB (sf)
MESOBLAST LIMITED: Itescu Acquires AUD1MM in Tamit Shares
QUEENSLAND NICKEL: Clive Palmer Calls Himself as Witness
RIB FORCE: First Creditors' Meeting Set for Sept. 22
WORKFORCE HIRE: Second Creditors' Meeting Set for Sept. 22
* Australian RMBS Delinquencies Rising, Moody's Says
C H I N A
YIHUA ENTERPRISE: Moody's Assigns B2 Corporate Family Rating
I N D I A
ADHUNIK INDUSTRIES: Ind-Ra Lowers Long Term Issuer Rating to 'D'
ALI AGENCY: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
BALAJI INTERNATIONAL: CARE Moves B+ Rating to Not Cooperating
DEVI CONSTRUCTION: CRISIL Reaffirms B- Rating on INR9MM Loan
BORAX MORARJI: CRISIL Puts B Ratings on Watch Positive
CAMELLIA CLOTHING: CRISIL Reaffirms B- Rating on INR8MM Cash Loan
CHANDAK MARBLES: CARE Reaffirms B+/A4 Rating on INR9cr Loan
CHIDDARWAR CONSTRUCTION: Ind-Ra Puts 'BB-' LT Issuer Rating
COMET EXPORTS: CRISIL Lowers Rating on INR4.0MM LT Loan to B-
CORRTECH INTERNATIONAL: CARE Reaffirms D Rating on INR7.50cr Loan
DEMBLA TIMBER: Ind-Ra Migrates B Issuer Rating to Not Cooperating
DEVENDRA AUTOCOM: CRISIL Reaffirms B+ Rating on INR1.9MM Loan
DWARIKAMAYEE BHANDAR: Ind-Ra Downgrades LT Issuer Rating to 'D'
FEPL ENGINEERING: CARE Moves 'D' Rating to Not Cooperating
G AND T INDUSTRIES: CRISIL Assigns B+ Rating to INR4MM Cash Loan
G KUMARAVEL: CRISIL Reaffirms 'B' Rating on INR6.5MM Cash Loan
GALVA DECOPARTS: Ind-Ra Assigns BB+ LT Issuer Rating
GRACE SUPPLIERS: Ind-Ra Upgrades LT Issuer Rating to 'BB'/Stable
GRAMCO INFRATECH: CARE Reaffirms 'B' Rating on INR9.82cr Loan
HARRIN POULTRY: CARE Assigns B+ Rating to INR11cr LT Loan
JAIN OVERSEAS: Ind-Ra Moves 'D' Issuer Rating to Not Cooperating
KERAFIBERTEX INTERNATIONAL: Ind-Ra Affirms BB+ LT Issuer Rating
KOHENOOR INDUSTRIES: Ind-Ra Downgrades LT Issuer Rating to 'D'
LIKHITA ENERGY: CARE Revises Rating on INR14.50cr Loan to B+
LINERS INDIA: CRISIL Reaffirms B- Rating on INR12.50MM Loan
M.M. IMPORT: CRISIL Puts 'B' Issuer Not Cooperative Rating
M.S. SOLVENT: CARE Reaffirms 'B' Rating on INR7.50cr LT Loan
MAA KALIKA: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
MADHAV STORES: Ind-Ra Moves 'B+' Issuer Rating to Non-Cooperating
MAHAVIR ENTERPRISES: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
MPL AUTOMOBILES: CRISIL Reaffirms B- Rating on INR25MM Loan
MPL MOTORS: CRISIL Reaffirms B- Rating on INR2.5MM Loan
PANINI GRANITES: CRISIL Raises Rating on INR7.7MM LT Loan to B-
PHOOLTAS TRANSRAIL: CRISIL Lowers Rating on INR44MM Loan to 'D'
PRUDHVI INFRA: CARE Hikes Rating on INR22.50cr LT Loan to BB-
RAKESH MARBLE: CRISIL Puts B Rating to Issuer Not Cooperating
RAVI REALCON: CRISIL Puts B Loan Rating to Issuer Not Cooperating
RELIANCE COMMS: Ericsson Files Insolvency Case Against Firm
ROYALE MANOR: Ind-Ra Migrates BB Issuer Rating to Not-Cooperating
SAM INDUSTRIAL: CARE Moves B+ Rating to Not Cooperating
SHRI RASBIHARI: CARE Assigns B+ Rating to INR8.84cr LT Loan
SHRI SALASAR: CRISIL Assigns B+ Rating to INR30MM Term Loan
SHUKAN MICRO: CRISIL Reaffirms 'B' Rating on INR7.2MM Term Loan
SORENTO GRANITO: CARE Reaffirms B+ Rating on INR17.75cr Loan
SPEEDCRAFTS LIMITED: CRISIL Cuts Rating on INR24MM Loan to 'D'
SPEL SEMICONDUCTOR: CRISIL Hikes Rating on INR45MM Loan to 'C'
SRI BALAJI: CRISIL Reaffirms 'B' Rating on INR15MM Cash Loan
SRI VINAYAGA: CRISIL Assigns 'D' Rating to INR22.5MM LT Loan
SUBIZZ TRAVEL: CARE Moves B+ Rating to Not Cooperating
TEXCEL INTERNATIONAL: CRISIL Puts B Issuer Not Cooperating Rating
VRAJ REALTORS: CRISIL Reaffirms B+ Rating on INR8MM LT Loan
WINSOME INTERNATIONAL: Ind-Ra Moves D Rating to Not-Cooperating
N E W Z E A L A N D
BLUE CHIP: Robt Jones Ordered to Refund NZ$750K to Northern Crest
WESTPAC BANKING: S&P Rates Add'l Tier 1 Capital Securities 'BB+'
P A K I S T A N
PAKISTAN MOBILE: S&P Affirms 'B' CCR After Tower Infra Divestment
S I N G A P O R E
MMI INTERNATIONAL: Fitch Withdraws B+ Long-Term IDR
PRECISION CAPITAL: Moody's Lowers CFR to B3; Outlook Negative
S O U T H K O R E A
KUMHO ASIANA: To Give Up Mgt Rights of Unit if Restructuring Fail
- - - - -
=================
A U S T R A L I A
=================
AVIXIA PTY: Second Creditors' Meeting Set for Sept. 22
------------------------------------------------------
A second meeting of creditors in the proceedings of Avixia Pty.
Ltd. has been set for Sept. 22, 2017, at 3:30 p.m., at
Boardroom of Chifley Advisory
Suite 1903,Level 19
31 Market Street
SYDNEY NSW 2000
AND
The Offices of Servcorp
Brookfield Place
11/125 Georges Terrace
PERTH WA 6000
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. 21, 2017, at 4:00 p.m.
Gavin Moss and Henry Kwok of Chifley Advisory were appointed as
administrators of Avixia Pty on Aug. 31, 2017.
BBY LTD: Creditors Baulk at Insolvent Trading Settlement
-------------------------------------------------------
Sarah Danckert at The Sydney Morning Herald reports that
liquidators to collapsed stockbroking house BBY from KPMG may
have to front court after creditors voiced concerns about the
settlement of an insolvent trading claim being used on fees.
The multimillion-dollar settlement agreement between the company
and its former directors - including former tennis great Ken
Rosewall - was brokered in recent months but failed to win over
all creditors at a recent meeting, SMH relates.
According to the report, the liquidators have proposed to use the
proceeds of the out-of-court settlement to cover its fees and the
fees of litigation funder IMF Bentham.
Instead, some creditors believe the proceeds of the settlement
should be used to pay out a final dividend of 5õ to 10õ in the
dollar and the liquidators should forgo a percentage of their
fees, the report relays.
The final settlement number is unknown but is believed to be less
than AUD30 million, SMH notes.
KPMG partner Stephen Vaughan declined to comment as the matter is
ongoing, the report says.
BBY collapsed in 2015, becoming one of the largest stockbrokers
to fall over in recent history.
According to liquidators, BBY's shortfall of client money is
AUD23 million and some of that shortfall was "a result of misuse
of client funds," SMH states.
The investigations by liquidators have included public
examinations into the affairs of the company, which revealed then
managing director Glenn Rosewall had used the services of psychic
and vibrational healer Nevine Rottinger to help him make crucial
investment decisions, according to SMH.
Liquidators have also alleged BBY may have been trading while
insolvent for more than a year before being placed into
administration, the report adds.
About BBY Ltd
Founded in 1987, BBY Limited is a boutique investment firm that
offers brokerage and financial advisory services. The company
provides merger and acquisition, initial public offering, private
placement, equity trading, and market and business research
services. Additionally, it offers capital raising, restructuring,
due diligence, valuation, relationship management, and clearing
services.
On May 18, the directors of BBY Limited have appointed KPMG as
Voluntary Administrators. The appointment comes after a number
of run-ins with regulators over its capital requirements and
failing to repay an intraday loan to St George Bank, according to
The Sydney Morning Herald.
KPMG found that clients faced a combined shortfall in their
accounts of AUD16 million, SMH disclosed.
EMPIRE OIL: Production Assets Under Receivership
------------------------------------------------
BusinessNews reports that the Empire Oil & Gas subsidiary that
controls its core Red Gully assets is in the hands of receivers
after Mineral Resources on Sept. 13 sent the gas producer a
default notice.
The report relates that the facility, located in the Perth Basin,
produces about 1 percent of Western Australia's domestic gas
usage, or 10 terajoules per day.
Mineral Resources provided Empire with a AUD15 million working
capital facility in August last year, which gave MinRes first
ranking as a creditor over a number of assets held by Empire's
production subsidiary, BusinessNews discloses.
Empire Oil and Gas NL is an Australia-based company engaged in
oil and gas exploration and production. The Company is an onshore
conventional gas and condensate producer and explorer. The
Company has assets in Perth Basin in Western Australia. The
Company's oil and gas producing assets are located in Red Gully
Gas and Condensate Processing Facility (Red Gully Processing
Facility) is in the Perth Basin. The Company's producing assets
at Red Gully are located approximately 150 kilometers from the
city of Perth. The Red Gully Processing Facility has produced and
delivered over 7,800 Terrajoules (TJ) of gas. It is the holder of
the onshore acreage in the prospective Perth Basin with its
production licenses and permits covering approximately 9,000
square kilometers. The Red Gully Processing Facility is located
in the Shire of Gingin, approximately 150 kilometers from the
city of Perth. It holds nine exploration permits and two
production licenses in the Perth Basin.
FLEXDRIVE ROTOMOULDING: First Creditors' Meeting Set for Sept. 22
-----------------------------------------------------------------
A first meeting of the creditors in the proceedings of Flexdrive
Rotomoulding Pty Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Level 15, 114 William Street, in
Melbourne, Victoria, on Sept. 22, 2017, at 10:30 a.m.
Matthew Kucianski and Ivan Glavas of Worrells Solvency were
appointed as administrators of Flexdrive Rotomoulding on Sept.
12, 2017.
LIBERTY SERIES 2015-1: S&P Raises Class F Notes Rating to BB (sf)
----------------------------------------------------------------
S&P Global Ratings raised its ratings on five classes of small-
ticket commercial mortgage-backed, floating-rate, pass-through
notes issued by Liberty Funding Pty Ltd. in respect of Liberty
Series 2015-1 SME. At the same time, S&P affirmed its ratings on
two classes of notes.
Liberty Series 2015-1 SME is a securitization of loans to
commercial borrowers, secured by first-registered mortgages over
Australian commercial or residential properties originated by
Liberty Financial Pty Ltd.
The ratings reflect:
-- S&P said, "Our view of the credit risk of the underlying
collateral portfolio and the credit support provided for the
rated notes, which is commensurate with that credit risk. Our
analysis of credit risk is based on our "Principles Of Credit
Ratings" criteria; however, where factors that affect
borrower performance are similar to those for residential
mortgage loans, we have applied similar assumptions (refer to
Liberty Series 2015-1 SME, published Sept. 15, 2015). Credit
support for the rated notes is provided in the form of
subordination."
-- The transaction has continued to pay down sequentially since
close, increasing the level of subordination to all rated
note classes. The class A1 and class A2 notes have
subordination in excess of 2.5 times the assessed level of
credit support.
-- The transaction benefits from a number of structural
mechanisms, including a liquidity facility that is equal to
3.0% of the outstanding balance of notes, with a floor of
A$750,000. The transaction also benefits from a A$1,000,000
guarantee fee reserve account funded at close. The reserve
can be used to cover current losses or used as liquidity
support for required payments.
-- The underlying pool of assets has weighted-average seasoning
of 49 months and a weighted-average current loan-to-value
ratio of 61.1%. The asset pool consists of 679 consolidated
loans as of July 31, 2017, with pool composition consisting
primarily of assets backed by residential property (54.4%)
and commercial property (40.4%).
-- Arrears are currently tracking within our expectations, with
loans more than 90 days in arrears equating to 1.5% of the
current pool as of July 31, 2017. No loans were in arrears at
transaction close.
-- Approximately 45.7% of the pool is interest-only. Of this
amount, 15.0% are bullet loans, with the final bullet loan
scheduled to mature in 2021.
-- The transaction passes S&P's stressed cash-flow modeling
scenarios at the rating levels, having the ability to make
timely interest and ultimate payment of principal.
RATINGS RAISED
Class To From
B AAA (sf) AA (sf)
C AA (sf) A (sf)
D A (sf) BBB (sf)
E BBB (sf) BB (sf)
F BB (sf) B (sf)
RATINGS AFFIRMED
Class Rating
A1 AAA (sf)
A2 AAA (sf)
MESOBLAST LIMITED: Itescu Acquires AUD1MM in Tamit Shares
---------------------------------------------------------
Mesoblast Limited gives ASX the following information under
listing rule 3.19A.2 and as agent for the director for the
purposes of section 205G of the Corporations Act.
Mesoblast disclosed that on Sept. 4, 2017, Silviu Itescu, a
director of the Company, acquired 714,286 ordinary shares of
Tamit Nominees Pty Ltd for AUD1,000,000.40 (AUD1.40 per share).
Mr. Itescu is the sole director and shareholder of Tamit
Nominees.
As a result, Mr. Itescu now directly holds 67,756,838 and
indirectly holds 1,202,090 Tamit ordinary shares, or a total of
68,958,928 Tamit ordinary shares.
Prior to this transaction, Mr. Itesco directly held 67,756,838
and indirectly held 487,804 ordinary shares of Tamit Nominees.
A full-text copy of the regulatory filing is available at:
https://is.gd/jPlBaE
About Mesoblast Ltd.
Melbourne, Australia-based Mesoblast Limited (ASX:MSB;
Nasdaq:MESO) develops cell-based medicines. The Company has
leveraged its proprietary technology platform, which is based on
specialized cells known as mesenchymal lineage adult stem cells,
to establish a broad portfolio of late-stage product candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular diseases, immune-mediated and
inflammatory disorders, orthopedic disorders, and
oncologic/hematologic conditions.
Mesoblast Limited reported a net loss before income tax of
US$90.21 million for the year ended June 30, 2017, compared to a
net loss before income tax of US$90.82 million for the year ended
June 30, 2016.
As of June 30, 2017, Mesoblast had US$655.68 million in total
assets, US$138.92 million in total liabilities and US$516.76
million in total equity.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" opinion on the consolidated financial statements for the
year ended June 30, 2017, noting that Company has suffered
recurring losses from operations that raise substantial doubt
about its ability to continue as a going concern.
QUEENSLAND NICKEL: Clive Palmer Calls Himself as Witness
--------------------------------------------------------
Sarah Elks at The Australian reports that Clive Palmer has called
Clive Palmer as a witness in the Queensland Supreme Court, as he
fights a liquidators' bid to freeze AUD200 million of his assets.
According to the report, taxpayer-funded liquidators PPB Advisory
argue there is a serious risk of Mr. Palmer shifting his wealth
offshore, frustrating attempts to repay creditors of his
collapsed Queensland Nickel.
The Australian says the former federal MP is representing himself
against special purpose liquidators PPB Advisory, and has just
put himself in the witness box.
"I am going to call myself," Mr. Palmer told the court, notes the
report.
The hearing on Sept. 14 was the first of two scheduled days
before Justice John Bond, the report notes.
According to The Australian, Mr. Palmer is being cross-examined
by barrister Shane Doyle QC, for the liquidators, about the
events that led to Townsville company Queensland Nickel being
placed into voluntary administration on January 18, 2016.
There have already been tense words exchanged. Mr. Palmer said he
did not believe it was inevitable the company would be placed in
administration.
He appeared to contradict in sworn evidence what he had said in a
sworn affidavit tendered to the court, about a debt demand from
rail company Aurizon, the report relays.
Mr. Doyle: "That is not true, Mr. Palmer."
Mr. Palmer: "Well, that's my evidence."
The Australian relates that Mr. Palmer then tried to claim
administrators were appointed when he was asleep, without his
knowledge.
Mr. Doyle: "Are you seriously suggesting . . . administrators
were appointed to (Queensland Nickel), because of insolvency,
without your knowledge?" The Australian relays.
Mr. Palmer: "The appointment of the administrators took place
while I was asleep in bed."
Mr. Doyle warned him about his evidence.
The Australian adds that Mr. Palmer said his nephew Clive Mensink
and his executive Daren Wolfe were in his house on the Gold Coast
having discussions before Mr. Palmer went to bed at 9:00 p.m.
Mr. Doyle: "Did you know administrators were going to be
appointed?"
Mr. Palmer: "No."
He later said he knew there was a prospect of Queensland Nickel
being placed in administration, the report relates.
A two-day hearing had been scheduled to take place in late August
but this was pushed back after lawyers for the liquidators asked
for more time to go through more than 3000 pages of freshly-filed
material, The Australian notes.
The hearing continues, says The Australian.
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.
RIB FORCE: First Creditors' Meeting Set for Sept. 22
----------------------------------------------------
A first meeting of the creditors in the proceedings of Rib Force
Inflatables Pty Ltd will be held at the offices of BDO, Level 10,
12 Creek Street, in Brisbane, Queensland, on Sept. 22, 2017, at
11:00 a.m.
Helen Newman and Andrew Fielding of BDO were appointed as
administrators of Rib Force on Sept. 12, 2017.
WORKFORCE HIRE: Second Creditors' Meeting Set for Sept. 22
----------------------------------------------------------
A second meeting of creditors in the proceedings of Workforce
Hire Pty. Ltd. has been set for Sept. 22, 2017, at 12:30 p.m., at
the offices of Australian Institute of Company Directors Adelaide
Westpac House, Level 23, 91 King Street, in Adelaide, SA.
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. 21, 2017, at 4:00 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Workforce Hire on
July 6, 2017.
* Australian RMBS Delinquencies Rising, Moody's Says
----------------------------------------------------
Moody's Investors Service says that high household debt and
record low wage growth are increasing the vulnerability of
Australian residential mortgage-backed securities (RMBS),
although healthy GDP growth in 2017 and 2018 should support
performance.
"Moody's forecasts Australia's real GDP to grow by around 2.5% in
2017 and 2.7% in 2018, which is below trend but still at a level
that -- along with stable labour market conditions over the next
few years -- should support RMBS performance," says Ilya Serov, a
Moody's Associate Managing Director.
"Nevertheless, mortgage loans originated in the past 12 months at
the peak of the recent house price cycle and at worsening
affordability levels will suffer the greatest losses in the event
of a negative shock or interest rate increase," adds Serov.
Serov was speaking on the release of Moody's report "RMBS --
Australia: Delinquencies rising, issuance strong".
The report is a review of the Australian RMBS sector, covering
the macroeconomic environment, regulatory developments, rating
actions and new issuance and performance trends.
Australian household debt rose to a record high of 190% of annual
gross disposable income in Q1 2017, continuing an upward trend
that has resulted in a 23 percentage point increase in the ratio
since March 2013. At the same time, annual wage growth dropped to
just 1.9% in May 2017, the lowest on record, reflecting the
transition in the economy away from higher paying mining-related
jobs to lower paying jobs in the services economy.
The combination of low wage growth and dramatic house price
increases over recent years has resulted in a deterioration in
housing affordability, which Moody's says has increased the risks
for less seasoned mortgage loans and RMBS backed by such loans.
On the regulatory front, the Australian Prudential Regulation
Authority (APRA) in March 2017 introduced new measures to curb
growth in interest-only mortgages -- a credit positive given the
riskier nature of such loans.
A total of AUD16.6 billion of Australian RMBS was issued across
21 transactions in 1H 2017, compared with AUD24.5 billion in
2016.
Meanwhile, the 30+ days delinquency rate for Australian prime
RMBS was 1.67% at June 30, 2017, up from 1.50% at March 31, 2017
and 1.50% at June 30, 2016. Loans more than 90 days in arrears
accounted for the majority of the increase.
Moody's rated eight RMBS transactions in Australia in 1H 2017,
comprising four prime RMBS transactions and four prime and non-
conforming RMBS transactions with a total issuance amount of
AUD6.0 billion.
Moody's upgraded the ratings of 39 tranches of notes from four
prime and eight non-confirming RMBS transaction in 1H 2017.
=========
C H I N A
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YIHUA ENTERPRISE: Moody's Assigns B2 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has assigned a first-time B2 corporate
family rating (CFR) to Yihua Enterprise (Group) Co., Ltd.
The rating outlook is stable.
RATINGS RATIONALE
"The B2 rating reflects Yihua's established track record and the
stable EBITDA and cash flow generation from its listed furniture
manufacturing business," says Stephanie Lau, a Moody's Vice
President and Senior Analyst.
Yihua only partially owns its core businesses. At end-March 2017,
Yihua owned 29.02% of Yihua Lifestyle Technology Co., Ltd. and
37.08% of Yihua Healthcare Co., Ltd. However, it consolidates
100% of the two businesses into its financials, due to the extent
of management control for both companies.
Yihua Lifestyle has been a leading manufacturer of furniture and
wood flooring with its own brands since 1996. Its adjusted EBITDA
registered RMB1.2-RMB1.4 billion per annum during the fiscal year
ended December 31, 2015 (FY2015) and also for FY2016, while its
operating cash flow was kept at around RMB1 billion over the same
two years.
Moody's expects that Yihua Lifestyle will generate around RMB1
billion in adjusted EBITDA over the next 12-18 months.
"Moody's also expects that the group's wholly-owned property
development and financial investment businesses will improve its
business diversity, revenue growth, and operating cash flow,"
adds Lau, who is also Moody's Lead Analyst for Yihua.
The group holds 4.0 million sqm of saleable, low-cost land in its
land bank in Shantou, and for which it currently has no
outstanding land premium. Moody's estimates that Yihua will
achieve contracted sales of around RMB1.5-RMB2.0 billion over the
next 12-18 months, which will provide good earnings
profitability.
And, Moody's expects its financial investment portfolio will add
around RMB400-RMB500 million of recurring cash flow over the next
12-18 months. Such a dividend income stream registered around
RMB270-RMB400 million per annum in FY2014-2016. At end-March
2017, its portfolio of listed securities had an estimated market
value of around RMB6.05 billion.
The rating also considers Yihua's diversified access to funding
through its subsidiaries - Yihua Lifestyle and Yihua Healthcare -
which are listed on the Shanghai and Shenzhen stock exchanges,
respectively. Yihua also has a proven track record of onshore
bond issuance for both the group and Yihua Lifestyle since 2007.
On the other hand, the rating factors in Yihua's status as a
private company, and which consequently has less transparency and
lower levels of corporate governance than publicly listed
companies.
The rating also considers potential execution and expansion
risks, mainly from its healthcare segment. Yihua's 37.08%-owned
subsidiary, Yihua Healthcare, made RMB2.0 billion worth of
acquisitions in FY2016. Moody's expects that this segment will
require higher capital funding relative to its other existing
business segments, which may raise leverage risk for the group.
Accordingly, Moody's expects that the company's adjusted EBITDA -
accounting for the full consolidation of Yihua Lifestyle and
Yihua Healthcare - will grow to around RMB2.6-RMB2.7 billion over
the next 12-18 months from around RMB2.4 billion in 2016,
propelled by higher revenue from its furniture business,
improvements in its healthcare business, and a more significant
contribution from its property development business.
Moody's expects that Yihua's leverage will fall from the 9.5x in
FY2016's, because Moody's believes that the company will
demonstrate more prudence in acquisitions and stronger levels of
operating cash flow; thereby reducing its funding needs. As such,
its debt leverage - as measured by adjusted debt/EBITDA - will
fall from the post-acquisition level of 9.5x in FY2016 and
improve to around 6.5x-7.0x over the next 12-18 months. Such a
leverage metric positions the company at the single B rating
level.
Yihua's rating also reflects the company's partial shareholding
in Yihua Lifestyle and Yihua Healthcare. Yihua's ability to call
freely on the cash of its core subsidiaries is uncertain, because
its subsidiaries are regulated under public listing rules. Cash
leakage to minority shareholders will also somewhat reduce
Yihua's access to Yihua Lifestyle's profits.
On the other hand, such risks are partly mitigated by the holding
company's possession of the largest shareholdings in both listed
subsidiaries, and where it has strong board control via majority
representation.
Yihua's liquidity is sufficient. The holding company's
unrestricted cash of RMB108 million, short-term investment
portfolio and around RMB1.2 billion of estimated annual operating
cash inflow - representing cash dividends from its furniture and
healthcare subsidiaries, operating cash flow from its property
business, and recurring investment cash flow - projected as at 31
March 2017, are sufficient to cover its capex, acquisition needs,
and short-term debt maturities at the holding company level over
the next 12 months.
Its onshore bond issuance - totaling RMB1.0 billion and completed
in May 2017 - has also improved its liquidity. If Yihua issues
any senior unsecured notes at the holding company level, holders
of such notes will be exposed to subordination risk, due to the
high level of debt at the operating company level. Any ratings on
such notes could be subject to notching from the group's
corporate family rating.
The stable rating outlook reflects Moody's expectation that Yihua
will grow earnings and cash flow, as well as gradually
deleverage, while maintaining stable profitability and a
disciplined approach to acquisitions. Moody's also assumes that
Yihua will remain the largest shareholder in its two key
subsidiaries, Yihua Lifestyle and Yihua Healthcare.
The rating could be upgraded, if the company improves its
earnings, while maintaining stable operations and a conservative
acquisition strategy. Specifically, Moody's would consider
upgrading the rating if Yihua maintains an adjusted debt/EBITDA
below 5.0x and adequate liquidity.
On the other hand, the rating could be downgraded, if the company
fails to deleverage, or experiences a deterioration in its
operating trends and financial profile. Specifically, downgrade
pressure will emerge, if adjusted debt/EBITDA exceeds 7.5x on a
sustained basis and liquidity becomes inadequate. A material
decline in its shareholding of Yihua Lifestyle and Yihua
Healthcare or operating cash flow could also pressure its rating.
The principal methodology used in this rating was Business and
Consumer Service Industry published in Octoebr 2016.
Yihua Enterprise (Group) Co., Ltd. (Yihua), established since
April 1995, is a diversified, private company that operates in
four key segments: furniture manufacturing, healthcare, property
development and financial investment.
The main fields of business for furniture manufacturing and
healthcare are managed by Yihua Lifestyle Technology Co., Ltd.
and Yihua Healthcare Co. Ltd. Both segments are respectively
listed on the Shanghai and Shenzhen stock exchanges. At end-March
2017, Yihua held a 29.02% stake in Yihua Lifestyle and 37.08%
shareholding in Yihua Healthcare.
Yihua was founded in 1995 and is based in Shantou. The company's
chairman is Mr. Shaoxi Liu. Mr. Liu, along with Mr. Shaoshen Liu
(brother of the chairman), Mr. Zhuangqing Liu (son of the
chairman), owned a 100% effective shareholding in Yihua at 31
March 2017.
=========
I N D I A
=========
ADHUNIK INDUSTRIES: Ind-Ra Lowers Long Term Issuer Rating to 'D'
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Adhunik
Industries Limited's (AIL) Long-Term Issuer Rating to 'IND D'
from 'BBB-'. The Outlook was Stable. The instrument-wise rating
actions are:
-- INR59.4 mil. Long-term loan due on September 2017 downgraded
with IND D rating;
-- INR905.5 mil. Fund-based working capital limit (Long-term)
downgraded with IND D rating;
-- INR560 mil. Non-fund-based working capital limit (Short-term)
downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects a delay in debt servicing in August 2017
due to a decline in AIL's financial flexibility. Adhunik group
has common bankers and AIL's associate companies Adhunik Alloys &
Power Limited (AAPL), Adhunik Metaliks Limited, Zion Steel
Limited and Orissa Manganese & Minerals Ltd have been referred to
and accepted by the National Company Law Tribunal under the
Insolvency and Bankruptcy Code, 2016.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could result in a positive rating action.
COMPANY PROFILE
AIL is a Kolkata-based company manufacturing rolled products
mainly thermos-mechanically treated bars, rounds and wire rods at
its plant located in Durgapur, West Bengal.
ALI AGENCY: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Ali Agency's
(Ali) Long-Term Issuer Rating to 'IND D' from 'IND BBB-'. The
Outlook was Stable. The instrument-wise rating action is:
-- INR197 mil. Fund-based limit (long-term) downgraded with
IND D rating.
KEY RATING DRIVERS
The downgrade reflects overutilisation of fund-based limits for
over 30 days during July 2017 owing to a weak liquidity position
due to an increase in working capital requirements.
RATING SENSITIVITIES
Positive: The utilisation of fund-based limit within the
sanctioned limit for at least three consecutive months would lead
to a positive rating action.
COMPANY PROFILE
Ali is a part of Jajodia group, headed by Mr. Pawan Kumar
Jajodia. Ali is a proprietorship firm, engaged in the trading of
pulses, sugar and edible oil.
BALAJI INTERNATIONAL: CARE Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
CARE has been seeking information from Balaji International to
monitor the rating(s) vide e-mail communications/ letters dated
June 30, 2017 and numerous phone calls. However, despite CARE's
repeated requests, the firm has not provided the requiste
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. Further, Balaji International has
not paid the surveillance fees for the rating exercise as agreed
to in its Rating Agreement. In line with the extant SEBI
guidelines CARE's rating on Balaji International's bank
facilities will now be denoted as CARE B+/CARE A4; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2 CARE B+; Issuer not
Facilities Cooperating
Short-term Bank 8 CARE A4; Issuer not
Facilities cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on June 8, 2016, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Small and declining scale of operations: The scale of operations
of the firm has been fluctuating on y-o-y basis marked by total
operating income and gross cash accruals of INR97.25 crore and
INR1.05 crore, respectively, during FY15 (refers to the period
April 1 to March 31). The total operating income increased to
INR146.93 crore in FY14 as against INR136.85 crore in FY13 on
account of higher orders from the overseas customers and
stability in the prices of paddy. However, in FY15 the same
reduced to INR97.25 crore on account of fluctuation in the price
of paddy due to which the firm procured fewer paddies from the
local grain market and thereby selling/exporting rice in lower
quantity. Also the intense competition in the market affected the
sale of rice. Furthermore, in FY16, as per unaudited results, the
firm achieved total operating income of INR35 crore due to slow
down and intense competition in the market.
Low profitability margins, leveraged capital structure and weak
debt coverage indicators: The PBILDT margin of the firm improved
marginally but continues to remain low at 4.78% in FY15 as
against 4.63% in FY14 on account of low value addition and its
presence in highly fragmented and competitive industry. The PAT
margin of the firm remained weak and in line with PBILDT margin
at 0.30% in FY15.
The capital structure of the firm remained leveraged in past
three years (FY13-FY15). The overall gearing remained leveraged
at 3.93x as on March 31, 2015, although it improved from 8.56x as
on March 31, 2014 on account of reduction in working capital
borrowings as on March 31, 2015.
The debt coverage indicators of the firm remained weak in FY15 on
account of high reliance on external borrowings during the year
coupled with low profitability. The interest coverage and total
debt to GCA of the firm stood weak at 1.29x and 20.41x,
respectively, for FY15 as against 1.25x and 33.76x, respectively,
for FY14.
Working capital intensive nature of operations: The operations of
the firm are working capital intensive in nature marked by
operating cycle of 138 days in FY15. The firm was expecting
higher orders from the overseas market in FY15 but the same did
not materialize resulting in elongation in inventory period to
194 days for FY15. The firm offers credit period of around 60
days to its customers owing to high competition resulting in an
average collection period of 54 days in FY15. It procures the
paddy mainly on cash basis and from few suppliers it gets payable
period of around 3 months. The working capital limits of the firm
were fully utilized during the past 12 months ended April 30,
2016.
Fragmented and competitive nature of industry: The commodity
nature of the product makes the industry highly fragmented, with
numerous players operating in the unorganized sector with very
less product differentiation. Furthermore, the concentration of
rice millers around the paddy growing regions makes the business
intensely competitive.
Foreign exchange fluctuation risk: The firm is mainly focused in
the export market and its export contribution to total sales
stood at ~89% for FY15. The raw material is completely procured
from the domestic markets. With initial cash outlay for
procurement in domestic currency and significant part of sales
realization in foreign currency, the firm is exposed to the
fluctuation in exchange rates. Though the firm hedges foreign
exchange fluctuation risk of up to 80% by entering into forward
contracts, the remaining 20% is unhedged. This exposes it to
sharp fluctuations in the foreign exchange rates which may impact
its profitability. The firm has availed packing credit in foreign
currency which acts as hedge against foreign exchange fluctuation
risk with initial outlay being in the same currency as the
currency in which sales are made and payment is received.
However, the risk is not mitigated completely because of time lag
between payment to creditors of raw material and realization of
receivables.
Regulatory risk: The Government of India (GoI) every year decides
a minimum support price (MSP) of paddy which limits the
bargaining power of the rice millers over the farmers. The
millers can sell rice at the market rates in the open market only
after they fulfill the levy quota. Frequent changes in the
government policies regarding imposition of ban on export and
minimum export price are an inherent risk for all the non-basmati
rice processors.
Business susceptible to the vagaries of nature: Rice being mainly
a 'kharif' crop is cultivated from June-July to September-
October, and the peak arrival of crop at major trading centers
starts in October. The output is highly dependent on the monsoon.
Unpredictable weather conditions could affect the domestic output
and result in volatility in the price of rice.
Key Rating Strengths
Experienced partners in processing of rice: The operations of the
firm are currently being managed by Mr. Amar Nath and Mr. Kailash
Chander. Mr. Amar Nath, father of Mr. Kailash Chander has an
experience of around 60 years through familyrun business and
group entity. He is also the partner in Shiv Shankar Rice Mills.
Mr. Kailash Chander has an experience of around 30 years in rice
trading and processing industry. He is also the proprietor of
Balaji Overseas.
Favorable manufacturing location: The firm is mainly engaged in
milling and processing of rice at Haryana. Haryana is one of the
highest producers of paddy in India, which ensures easy
availability of paddy. Furthermore, owing to its location, the
firm is able to cut on the freight component for procurement of
raw materials.
Haryana-based Balaji International was established as a
partnership firm in 1989 by Mr. Amar Nath, Mr. Kailash Chander,
Mrs. Achla Rani and Mrs. Parveen Kumari sharing profits and
losses in equal ratio. The firm is engaged in the milling and
processing of basmati rice with an installed capacity of 6 metric
ton per hour (MTPH) at its manufacturing unit located in
Kurukshetra Road, Sandholi, Pehowa. The firm procures raw
material (paddy) from local grain markets through commission
agents in Haryana and Uttar Pradesh. The firm mainly exports its
product to Middle East countries such as Jordan, Saudi Arabia,
Dubai, Kuwait, etc. The firm also sells its product domestically
to brokers and traders located in Haryana, Delhi and West Bengal
under the brand name "Sargam" and "Khushi". The by-product of
paddy, viz, husk, rice bran, and 'phak' is also sold in the
domestic market. The firm has three associate concerns, namely,
Balaji Overseas, Shiv Shankar Rice Mills and Ishan International,
all engaged in milling of rice.
DEVI CONSTRUCTION: CRISIL Reaffirms B- Rating on INR9MM Loan
------------------------------------------------------------
CRISIL's ratings on the bank facilities of Devi Construction
Company (DCC) continue to reflect firm's below average financial
risk profile, working capital-intensive operations, and high
geographical and customer concentration in revenue. These rating
strengths are partially offset by extensive experience of the
promoters in the construction industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4 (Reaffirmed)
Cash Credit 9 CRISIL B-/Stable (Reaffirmed)
CRISIL had on August 24, 2017 downgraded its rating on the long-
term bank facility of DCC to 'CRISIL B-/Stable' from 'CRISIL
B+/Stable', and reaffirmed the firm's short-term rating at
'CRISIL A4'.
Key Rating Drivers & Detailed Description
Weaknesses
* 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.
Strength
* 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.
BORAX MORARJI: CRISIL Puts B Ratings on Watch Positive
------------------------------------------------------
CRISIL has placed its ratings on the bank loan facilities of
Borax Morarji Limited (Borax) on 'Rating Watch with Positive
Implications'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Placed on 'Rating
Watch with Positive
Implications')
Cash Credit 9 CRISIL B (Placed on 'Rating
Watch with Positive
Implications')
Letter of Credit 19.5 CRISIL A4 (Placed on 'Rating
Watch with Positive
Implications')
Proposed Long Term .22 CRISIL B (Placed on 'Rating
Bank Loan Facility Watch with Positive
Implications')
The rating action follows the announcement by the company of its
amalgamation with its group company, Dharamsi Morarji Chemical
Company Limited (DMCC), with all its assets and liabilities. The
scheme shall be subject to approvals by various stake holders and
regulatory authorities. CRISIL has placed its rating on watch
with positive implications factoring healthier financial risk
profile of DMCC.
CRISIL is in discussion with the management to evaluate the
impact of the amalgamation on the credit risk profile of the
company, and will take a final rating action once it obtains
clarity on this transaction.
The ratings continue to reflect a weakened business risk profile
because of low profitability and working capital-intensive
operations, and a below-average financial risk profile due to a
negative networth, a highly leveraged capital structure,
inadequate debt protection metrics, and stretched liquidity.
These weaknesses are partially offset by an established market
position in the boron chemicals segment, the extensive experience
of the promoters, and their financial support.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak business risk profile
Net sales were INR54.2 crore, while there were operating and net
losses in fiscal 2017, because of low capacity utilisation. There
is intense competition in the boron industry on account of
imports. This restricts the players from passing on any increase
in input prices completely to customers or retaining any benefit
of lower input cost. As a result, profitability margins are
susceptible to volatility in raw material prices. Furthermore,
operations are working capital intensive, as reflected in gross
current assets of 149 days as on March 31, 2017, driven by
sizeable inventory and receivables.
The business risk profile is likely to remain constrained over
the medium term by susceptibility of the operating margin to
volatility in raw material prices and fluctuations in foreign
exchange rates, and by highly working capital-intensive
operations.
* Below-average financial risk profile
The networth was negative, the gearing high, and debt protection
metrics inadequate. The negative networth as on March 31, 2017,
was because of net losses over the five fiscals through 2017.
Furthermore, because of working capital-intensive operations,
debt was high at INR28.3 crore, including unsecured loans of
about INR6.5 crore, as on March 31, 2017. The financial risk
profile is likely to remain constrained by sharply declining
profitability.
Strengths
* Established brand and extensive industry experience of the
promoters, along with their financial support
Borax has been in the business of manufacturing boric acid since
1964, and is a leading player in the Indian market. Its
promoters, members of the Goculdas family, have an experience of
over a decade in the specialty chemicals industry and have
represented the company in various trade exhibitions and forums.
It started operations with the manufacture of boric acid, and
presently also manufactures borax and its derivatives and
specialty boron chemicals. These products are used in the fields
of electronics, pharmaceuticals, ceramics, glass, leather,
chemical solvents, and photographic and textile chemicals. The
promoters continue to provide funding support in the form of
unsecured loans.
The company is likely to benefit from the continued financial
support from its promoters and their extensive industry
experience.
Borax, listed on the Bombay Stock Exchange, and commenced
operations in 1964. Operations are managed by Mr. Bimal Goculdas.
It manufactures boric acid, borax, borax derivatives, and other
specialty boron chemicals. The company also has a windmill in
Kutch, Gujarat. For fiscal 2017, the company reported PAT loss of
INR4.65 crore on revenue of INR54.25 crore as against PAT of
INR4.56 crore on revenues of INR41.86 crore for fiscal 2016.
CAMELLIA CLOTHING: CRISIL Reaffirms B- Rating on INR8MM Cash Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facility
of Camellia Clothing Limited (CCL) at 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B-/Stable (Reaffirmed)
The rating reflects a marginal decrease in sales, but a better
working capital cycle in fiscal 2017. The margins and networth
are likely to improve, backed by orders from existing customers,
over the medium term. The working capital cycle is expected to be
maintained while profits would be ploughed back into the
business.
Analytical Approach
CRISIL has treated unsecured loans of INR21 crore extended by the
promoters as neither debt nor equity. That's because the loans
are non-interest bearing, subordinate to bank debt, and expected
to be retained in the business for over three years.
Key Rating Drivers & Detailed Description
Strengths
* Average financial risk profile:
The networth was low due to past losses. The debt protection
metrics were weak: the interest coverage ratio was 1.6 times and
the net cash accrual to total debt ratio 0.003 time as on
March 31, 2017.
* Low operating profitability:
The operating profitability margin improved to 2.5% in fiscal
2017 from a negative 24.64% in fiscal 2016 due to rationalisation
of operational expenses. However it remains low due to intense
competition.
Strength
* Extensive experience of the promoters in the readymade garments
industry:
The promoters have been in the textile business for more than two
decades. This has helped to gain a good understanding of the
textile industry, and establish a healthy relationship with
customers, suppliers, agents, and job workers. They have a good
rapport with customers, including Lifestyle, Amazon, Myntra, and
Tata Westside, from which around 77.5% of the revenue is
generated. The company also developed an in-house brand,
Customique, under which it exports customised shirts to
Switzerland, Canada, and Australia. Exports comprised 8-20% of
total sales during the three fiscals through 2017.
Outlook: Stable
CRISIL believes CCL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of growth in revenue and profitability,
resulting in an improvement in the financial risk profile. The
outlook may be revised to 'Negative' if a decline in margins, an
increase in working capital requirement, or large, debt-funded
capital expenditure weakens the financial risk profile.
CCL, incorporated in 1991, is promoted by Mr. Harish Mittal and
his wife, Ms Deepa Mittal. The closely held company, based in
Bengaluru, manufactures shirts for various domestic brands. It
also exports customised shirts under its brand, Customique.
Net loss was INR59 lakh on revenue of INR24.45 crore in fiscal
2017, against a net loss of 0.05 lakh on revenue of INR25.19
crore in fiscal 2016.
CHANDAK MARBLES: CARE Reaffirms B+/A4 Rating on INR9cr Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Chandak Marbles Private Limited (CMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 9.00 CARE B+; Stable/CARE A4
term Bank Facilities Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings of CMPL continue to remain constrained on account of
its presence in the highly competitive marble industry and its
financial risk profile marked by modest scale of operations with
thin profitability, weak capital structure and moderate liquidity
position. The ratings are, further, constrained on account of the
risk associated with availability of raw material, vulnerability
of margins to fluctuations in foreign exchange rates and linkage
to the cyclical real estate sector.
The ratings, however, favorably take into account the experience
of the promoters with established track record of operations in
the marble industry and the location advantage with ease of
availability of raw material and labor.
The ability of the company to increase its scale of operations,
improve profitability and capital structure along with better
management of working capital would be the key rating
sensitivity.
Detailed description of the key rating drivers
Key Rating Weakness
Weak financial risk profile marked by thin profitability margins,
leveraged capital structure and moderate liquidity position
As per provisional result of FY17, TOI of the company has
declined by 13.80% over FY16 mainly on account of demonetization
that led to lower demand from real estate sector.
CMPL generates major income from trading division of marble and
granites which leads to no value addition in the product and
hence, the profitability of the company remained thin marked by
PBILDT and PAT margin of 5.41% and 0.86% respectively as per
provisional result of FY17.
The capital structure of the company stood highly leveraged with
an overall gearing of 4.32 times as on March 31, 2017. Further,
debt coverage indicators stood weak with total debt to GCA stood
high at 29.81 times and interest coverage ratio stood at 1.30
times in FY17.
The business of CMPL is working capital intensive in nature
marked by high operating cycle at 146 days in FY17 owing to
higher inventory holding period and collection period. Owing to
this, current ratio stood moderate at 1.18 times as on March 31,
2017 and quick ratio stood below unity at 0.61 times as on
March 31, 2017.
Risk associated with availability of raw material and foreign
exchange fluctuation
The quality of raw material (i.e. granite block, sandstone, lime
stone, marble etc.) has a high degree of heterogeneity since it
is a natural resource extracted from mines. The availability of
the appropriate quality and quantity of the raw material depends
upon the mining operations as marbles and stones are natural
products with limited reserves. Further, the CMPL's profitability
margins are susceptible to fluctuation in foreign exchange
fluctuations, as the company import more than 50% of raw material
requirement and it does not have any active hedging policy.
Presence in a highly competitive marble industry and linkage to
cyclical real estate sector
Currently size of the Indian Marble Industry is INR20, 000 crore
and it is considered to be highly fragmented with presence of
large number of organized and unorganized player. The entry
barriers to the industry are very low and the operating margin is
susceptible to new capacity additions in the industry. The
industry is primarily dependent upon demand from real estate and
construction sector across the globe. The real estate industry is
cyclical in nature and is exposed to various external factors
like the disposable income, interest rate scenario, etc. Any
adverse movement in the macro-economic factors may affect the
real estate industry and in turn business operations of CMPL.
Key Rating Strengths
Experienced promoters with established track record of operations
in the marble industry
Overall operations of CMPL are managed by Mr. Ramesh Chandak
along with his family members and have around more than three
decades of experience in the marble industry. Mr. Rakesh Chandak,
director, who has more than a decade of experience in the
industry. Mr. Puneet Chandak, finance manager, has a decade of
experience and looks after finance & marketing function of the
company.
Location advantage with ease of availability of raw material and
labour
CMPL's processing facility of marbles is situated in Rajasthan
which has the largest reserve of marbles in India with estimated
reserves of 1,100 million tons accounting of more than 91% of the
total marble reserves of the country. Further, skilled labour is
also easily available by virtue of it being situated in the
marble belt of India.
Kishangarh (Rajasthan) based Chandak Marbles Private Limited
(CMPL) was incorporated in 1991 by Mr Ramesh Chandak along with
his family members. CMPL is engaged in the business of processing
of marble blocks as well as trading of finished marble slabs,
granites and tiles.
CHIDDARWAR CONSTRUCTION: Ind-Ra Puts 'BB-' LT Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Chiddarwar
Construction Company Private Limited (CCCPL) a Long-Term Issuer
Rating of 'IND BB-'. The Outlook is Stable. The instrument-wise
rating actions are:
-- INR120 mil. Fund-based working capital limit assigned with
IND BB-/Stable/IND A4+ rating;
-- INR30 mil. Non-fund based working capital limit assigned with
IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect CCCPL's small scale of operations and
volatile EBITDA margin. According to the FY17 provisional
financials, revenue grew to INR401 million in FY17 (FY16: INR301
million), driven by the timely completion of orders. The revenue
grew at a CAGR of 18.58% during FY13-FY17. Management expects a
further increase in top line as the company has outstanding
orders of INR966.3 million (2.4x of FY17 revenue), which will be
executed by March FY19. EBITDA margin fluctuated in the range of
17.0%-23.6% over FY13-FY17 and declined to 17.0% in FY17 (FY16:
19.1%) due to the execution of low-margin projects. The
management expects the EBITDA margin to remain in a similar line
for FY18 as the company continues to focus on low-margin
projects.
The ratings also reflect CCCPL's weak credit metrics, with
interest coverage (operating EBITDA/gross interest expense) of
1.9x in FY17 (FY16: 1.8x; FY15: 1.7x) and net leverage (adjusted
net debt/operating EBITDA) of 3.4x (3.5x; 4.1x). The marginal
improvement in metrics was on account of an improvement in the
EBITDA.
The ratings factor in CCCPL's moderate liquidity position with
the use of the fund-based facilities being 89.09% on an average
during the 12 months ended July 2017.
The ratings are supported by the company's promoters' two-decade-
long experience in the manufacturing and services industries.
RATING SENSITIVITIES
Positive: Substantial revenue growth and stable EBITDA margin,
leading to an improvement in the credit metrics could be positive
for the ratings.
Negative: A decline in the revenue and profitability leading to
deterioration in the credit metrics will be negative for the
ratings.
COMPANY PROFILE
Set up in 1988, CCCPL executes road construction work for the
central government (70%) and the Maharashtra government (30%).
CCCPL concentrates only in the Maharashtra region. The company is
classified as class 1A contractor. The management is led by two
directors Mr. Sanjay Arvind Chiddarwar and Mrs. Rashmi Sanjay
Chiddarwar. CCCPL recorded revenue of INR95 million in 4MFY18.
COMET EXPORTS: CRISIL Lowers Rating on INR4.0MM LT Loan to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facilities
of Comet Exports Pvt. Ltd. (Comet) to 'CRISIL B-/Stable' from
'CRISIL B/Stable' while reaffirming its rating on the short term
bank facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Discounting
Bill Purchase 3.6 CRISIL A4 (Reaffirmed)
Packing Credit 9.77 CRISIL A4 (Reaffirmed)
Proposed Long Term 4.00 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B/Stable')
Term Loan .63 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects a deterioration in the business and
financial risk profile, driven by declined demand, especially
from European markets. Operating income progressively declined to
INR7.1 crore in fiscal 2017 from INR21.1 crore in fiscal 2014.
Debt protection metrics also deteriorated, with interest coverage
falling to 1.4 times in fiscal 2017, from 2.1 times in the
previous fiscal. Estimated inventory holding increased to over
700 days in fiscal 2017 from 442 days in the previous fiscal due
to delays in acceptance of goods by clients due to challenging
economic conditions.
The rating reflects the small scale of operations & high
geographic concentration risk and working capital intensive
operations. The rating weaknesses are partially offset by
extensive experience of partners in home decorative business.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations and high geographic concentration
risk: The firm earns around 65% of its revenue from European
markets increasing its geographical risk and its estimated
revenue in fiscal 2017 was INR7.1 crore.
* Working capital intensive operations: The firm has estimated
GCA days of 647 days and estimated inventory days of 706 days in
fiscal 2017. Firm's bank limits have remained almost fully
utilized over the 12 months ended March 2017.
Strengths
* Extensive experience of partners in home decorative business:
The firm has been in business for more than two decades
highlighting the partners' extensive experience and relationships
with customers and suppliers in the industry.
Outlook: Stable
CRISIL believes that Comet will continue to benefit from the
extensive experience of its partners in the home decorative
business. The outlook may be revised to Positive if the firm's
financial risk profile improves significantly, most likely
because of substantial growth in its revenue or infusion of
capital or by significant improvement in working capital
management. Conversely, the outlook may be revised to Negative in
case of deterioration in its working capital management or low
operating margin leading to weak debt protection metrics.
Comet, a partnership firm set up in 1996, manufactures home
furnishing articles such as doormats and decorative articles such
as flower vases, lanterns, and wall lamps. The firm manufactures
mats made of materials such as coir, rubber, polyvinyl chloride,
jute, and steel. Comet has two manufacturing units, one in
Alleppey (Kerala) and the other in Moradabad (Uttar Pradesh).
CORRTECH INTERNATIONAL: CARE Reaffirms D Rating on INR7.50cr Loan
-----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Corrtech International Private Ltd (CIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 7.50 CARE D Reaffirmed
Long Term/Short
Term Bank Facilities 7.00 CARE D/CARE D Reaffirmed
Detailed Rationale& Key Rating Drivers
The ratings assigned to the bank facilities of CIPL continue to
take into account ongoing delays in servicing of its debt
obligations, resulting from stressed liquidity on account of high
working capital requirements and past losses.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delays in debt servicing: Debt servicing of CIPL is
irregular as reflected by delays in servicing of its term loan
principal & interest and devolvement in letter of credit.
Liquidity position of the company is stressed due to elongated
working capital cycle and past losses.
Incorporated in 1983, CIPL was promoted by Mr I. S. Mittal, a
technocrat and subsequently, his sons took over the management.
CIPL engaged in oil and gas pipeline construction, cathodic
protection systems and horizontal directional drilling. The
manufacturing facilities of CIPL are located at Changodar near
Ahmedabad in Gujarat. As per Audited result for FY17 (refer to
the period from April 1 to March 31), CIPL reported net profit of
INR4.56 crore after losses in last three consecutive years (FY14-
FY16). As on June 1, 2017, CIPL has orders in hand of more than
INR700 crore which are expected to be executed in next 15-24
months which provides good revenue visibility.
DEMBLA TIMBER: Ind-Ra Migrates B Issuer Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Dembla Timber
Company Private Limited's (DTCPL) 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 action is:
-- INR30 mil. Fund-based working capital limits migrated to non-
cooperating category with IND B(ISSUER NOT COOPERATING)/IND
A4(ISSUER NOT COOPERATING) rating; and
-- INR166.1 mil. Non-fund-based limits migrated to non-
cooperating category migrated to non-cooperating category
with IND A4(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 22, 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 2003, DTCPL is engaged in purchasing and
processing of Malaysian timber wood from Singapore and
New Zealand. The company imports logs and process according to
customers' demands and specifications.
DEVENDRA AUTOCOM: CRISIL Reaffirms B+ Rating on INR1.9MM Loan
-------------------------------------------------------------
CRISIL has upgraded its rating on the long term bank facilities
of Devendra Autocom Private Limited (DAPL) to 'CRISIL B+/Stable'
from 'CRISIL B/Stable/Issuer Not Cooperating' and reaffirmed its
'CRISIL A4' rating on the company's short term facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.1 CRISIL A4 (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Export Packing Credit 1.9 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/Issuer
Not Cooperating')
Letter of Credit 1.5 CRISIL A4 (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Overdraft 2.5 CRISIL A4 (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
The upgrade reflects co-operation of the company through sharing
of requisite information. CRISIL had, on July 26, 2017,
downgraded the long term rating to 'CRISIL B/Stable (Issuer not
co-operating)', from 'CRISIL B+/Stable' as the client was not co-
operating for the rating exercise. The company has now shared
requisite information, enabling CRISIL to assign a revised rating
to the banking facility.
The ratings reflect the small scale of operations in a highly
fragmented industry, and susceptibility to fluctuations in raw
material prices. These weaknesses are partially offset by
extensive experience of promoters in the auto components and
ancilliary industry, and its above-average financial risk profile
because of adequate networth and comfortable gearing.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations in a highly fragmented industry:
The automotive components industry is highly fragmented, and has
many small, medium, and large players. DAPL's small scale,
reflected in revenue of INR17.25 crore in fiscal 2017, constrains
its bargaining power with suppliers and customers, thereby
limiting its ability to negotiate a favourable credit period and
to pass on increase in raw material prices to customers. This has
resulted in large working capital requirement and volatile
operating margin over the years. CRISIL believes the company's
business risk profile will remain constrained because of its
small scale of operations, over the medium term.
* Susceptibility to fluctuations in raw material prices:
DAPL's basic raw materials are iron and steel components which
have volatile prices. Because of competition in the automotive
sector, original equipment manufacturers are reluctant to pass on
cost increase entirely to customers, and consequently, downstream
vendors such as DAPL have to bear a sizeable part of the increase
in raw material prices. As a result, the company's operating
profitability was volatile in the four fiscals ended March 31,
2017. CRISIL believes DAPL's operating margin will remain
vulnerable to any increase in raw material prices over the medium
term.
Strengths
* Extensive experience of promoters in the Auto components and
ancilliary industry:
DAPL is promoted by Mr. K Vasudevan and his wife Ms. Indira
Vasudevan, who have experience of more than five decades in the
industry. The company, set up in 1965, has established strong
business relationships with customers and suppliers over the
years. It is the sole distributor of test benchers of Hartridge
Ltd and fuel injection components of Turbo Technics Ltd in India,
and derives 75% of its revenue from manufacturing and the balance
from dealership. The promoters' extensive experience has helped
establish strong relationships with key stakeholders.
* Above-average financial risk profile
The financial risk profile is supported by adequate networth,
comfortable gearing, and comfortable debt protection metrics.
Networth was INR9.79 crore and gearing was 0.51 time as on
March 31, 2017, because of limited reliance on working capital
facilities. Interest coverage ratio was 2.75 time and net cash
accrual to adjusted debt ratio was 0.2 time in fiscal 2017.
Outlook: Stable
CRISIL expects DAPL to continue to benefit over the medium term
on the back of its extensive industry experience of its
promoters. The outlook may be revised to 'Positive' if the firm
improves its scale of operation while maintaining operating
profitability leading to improvement in accruals. Conversely, the
outlook may be revised to 'Negative', if the firm's liquidity
risk profile deteriorates due to significant debt funded capex or
elongation in working capital cycle or if the scale or
profitability of the firm declines leading to lower than expected
accruals.
Established in 1965, DAPL manufactures fuel injection parts such
as feed pumps, primers, piston cooling parts, hydraulic rods, and
fuel injection pipes, which are used in heavy vehicles and two-
wheelers.
The company reported a profit after tax (PAT) of INR 0.12 crore
on revenue of INR 17.61 crores in fiscal 2017, vis-a-vis PAT of
INR 0.19 crore on revenue of INR 20.60 crores in fiscal 2016.
DWARIKAMAYEE BHANDAR: Ind-Ra Downgrades LT Issuer Rating to 'D'
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Dwarikamayee
Bhandar's (DB) Long-Term Issuer Rating to 'IND D' from 'IND BBB-
'. The Outlook was Stable. The instrument-wise rating action is:
-- INR95 mil. Fund-based limit (Long term) downgraded with IND D
rating.
KEY RATING DRIVERS
The downgrade reflects DB's overuse of the fund-based limits for
more than 30 days during July 2017 due to a weak liquidity
position, because of an increase in working capital requirements.
RATING SENSITIVITIES
Positive: Use of the fund-based limits within sanctioned limits
for at least three consecutive months would lead to a positive
rating action.
COMPANY PROFILE
DB is a part of Jajodia group, headed by Mr. Pawan Kumar Jajodia.
DB is a partnership firm, engaged in the trading of pulses, sugar
and edible oil. All entities are engaged into the same business
activity.
FEPL ENGINEERING: CARE Moves 'D' Rating to Not Cooperating
----------------------------------------------------------
CARE has been seeking information from FEPL Engineering Private
Limited (FEPL) to monitor the ratings vide e-mail
communications/letters dated May 4, 2017, May 18, 2017, June 7,
2017, July 10, 2017, August 3, 2017, August 4, 2017, August 7,
2017, and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The ratings on
FEPL's bank facilities will now be denoted as CARE D/CARE D;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2.00 CARE D; Issuer not
cooperating; Based on best
available Information
Long-term/Short- 3.50 CARE D/CARE D; Issuer not
Term Bank Facilities cooperating; Based on best
Available Information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings take into account the delay in servicing of its debt
obligations due to weak liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in debt servicing: As per the interaction with the banker,
FEPL has been delaying its payment of debt obligations, wherein
there have been overdrawals exceeding 30 days in the bank
overdraft over April 2017-June 2017.
Incorporated in 2004, FEPL is engaged in SI (System Integration)
of SPV (Solar Photovoltaic)-based power systems, manufacturing of
oil mist systems, viz, oil mist lubrication systems, blaze flow
oil purification systems, etc, coupled with trading of solar
products, chemicals and providing consultancy services of SPV-
based products. It has executed SI of SPV based power systems
aggregating 800 KWp in Kuwait, for a renowned overseas company
named Plant Engineering Co. (PEC) which acts as a dealer of
petroleum pumps, flow meters, tank truck equipment, industrial
hoses, valves and oil field equipment. FEPL caters to a reputed
set of oil & petroleum players in India, viz, IOCL, BPCL (rated
'CARE AAA; Stable'), HPCL, etc., for its various oil mist
systems. Moreover, it has provided consultancy services for over
19.5 KWp of various SPV-based products, viz, solar lighting,
grid-tie solar, rooftop solar, etc. However, the company has now
increasingly shifted its focus on SI of SPV-based power systems
and trading of solar products, which contributed ~94% of the
total operating income in FY16 (refers to the period April 1 to
March 31).
G AND T INDUSTRIES: CRISIL Assigns B+ Rating to INR4MM Cash Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of G and T Industries Pvt Ltd (GTIPL). The
ratings reflect company's initial stage of operations and working
capital intensive nature of operations. These weaknesses are
partially offset by the extensive experience of the promoters and
moderate financial risk profile.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Working
Capital Facility 1 CRISIL B+/Stable
Cash Credit 4 CRISIL B+/Stable
Letter of Credit 1 CRISIL A4
Key Rating Drivers & Detailed Description
Weakness
* Initial stage of operations:
Incorporated in 2013, the company commenced its trial run in
January 2017 and operations in April 2017. The company is
currently operating at 60 per cent capacity utilization wherein
further ramp up in operations will be a key rating sensitivity
factor.
* Working capital intensive operations
The operations of the company are expected to be working capital
intensive owing to high debtor and inventory holding. The
utilization of the working capital bank lines is expected to
remain high due to high working capital requirements.
Strengths
* Extensive experience of the promoters
CRISIL believes that the extensive experience of the promoters
through their trading companies will continue to support the
business risk profile of the company.
* Moderate financial Risk profile:
The company has financed its entire project from unsecured loan
from promoters thereby ensuring a moderate gearing of the
company. CRISIL believes that the continued support from the
promoters will continue to support the financial risk profile.
Outlook: Stable
CRISIL believes that the GTIPL will benefit over the medium term
from extensive experience of the promoters and better market
penetration through its sister trading companies. The outlook may
be revised to 'Positive' if the group registers significant
increase in its revenue and profitability, resulting in
substantial cash accruals, and improves its working capital cycle
on a sustainable basis. Conversely, the outlook may be revised to
'Negative' if the group's financial risk profile, particularly
liquidity, weakens due to delays in realization of receivables or
unanticipated withdrawal of capital by promoters from the
business.
Promoted by Mr. G Prakash Kumar, Mr. G Gyanchand, Mrs P Kavitha
and Mr. G. Ghewarlal, Chennai-based GTIPL manufactures super
enamelled copper wire and has a production capacity of 660 MT per
annum.
G KUMARAVEL: CRISIL Reaffirms 'B' Rating on INR6.5MM Cash Loan
--------------------------------------------------------------
CRISIL's rating on the bank facilities of G Kumaravel Textiles
(GKT) continues to reflect the firm's modest scale of operations
in the fragmented textile industry, and its below-average
financial risk profile marked by high gearing and weak debt
protection metrics. These weaknesses are partially offset by its
proprietor's extensive industry experience.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.5 CRISIL B/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: GKT's scale of operations is
modest, as reflected by the estimated revenue of around INR13
crores for fiscal 2017. The modest players have limited
bargaining powers both with customers and suppliers.
* Below-average financial risk profile: Networth was modest
estimated at INR 1.1 crores and the firm has high gearing of 6.8
times as on March 31, 2017. Interest coverage is also expected to
be below-average at 1.5 time for the said fiscal.
Strength
* Extensive industry experience of the proprietor: The promoter,
Mr. Kumaravel has an industry experience of over 10 years. He has
been associated with the same set of suppliers, for procuring raw
material for more than a decade and his long years of experience
has also enabled them form a list of reputed customers.
Outlook: Stable
CRISIL believes GKT will continue to benefit over the medium term
from the extensive industry experience of its proprietor. The
outlook may be revised to 'Positive' if there is revenue growth
and stable profitability, leading to increase in cash accrual and
a better financial risk profile. The outlook may be revised to
'Negative' in case of lower-than-expected cash accrual, or
weakening of working capital management, or substantial debt-
funded capital expenditure, leading to deterioration in financial
risk profile.
GKT, a proprietorship firm established on 2005, manufactures and
retails lungis in Tamilnadu and Andhra. GKT has integrated
facilities for all processes, such as dyeing, warping, sizing,
tending, weaving, packing, and distributing. The firm is managed
by Mr. G Kumaravel.
GALVA DECOPARTS: Ind-Ra Assigns BB+ LT Issuer Rating
----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Galva Decoparts
Private Limited (GDPL) a Long-Term Issuer Rating of 'IND BB+'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR190 mil. Fund-based working capital facilities assigned
with IND BB+/Stable/IND A4+ rating;
-- INR42 mil. Non-fund based working capital facilities assigned
with IND A4+ rating;
-- INR600 mil. Proposed long-term loans* assigned with
Provisional IND BB+/Stable rating;
-- INR210 mil. Proposed fund-based facilities* assigned with
Provisional IND BB+/Stable/Provisional IND A4+ rating; and
-- INR8 mil. Proposed non-fund-based facilities* assigned with
Provisional IND A4+ rating.
* The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by GDPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect GDPL's small scale of operations, volatile
EBITDA margin and moderate credit metrics. Revenue grew at a CAGR
of 30.94% over FY14-FY17 to INR882 million (FY16: INR670 million)
due to an increase in orders from existing customers. The EBITDA
margin was in the range of 17%-21.5% (FY17: 19.4%, FY16: 21.1%,
FY15: 21.5%) on account of a change in product mix. EBITDA
interest coverage (operating EBITDA/gross interest expense)
improved to 3.5x in FY17 (FY16: 2.4x) and net leverage (adjusted
net debt/operating EBITDA) to 1.7x (2.7x) owing to lower
utilisation of fund-based facilities.
Ind-Ra expects the revenue to grow in the medium term as the
company is constructing a new plating plant in Sunar to increase
its installed capacity. The facility is expected to begin trial
production in August 2018. The agency expects the margin to
remain at similar levels, while it expects the net leverage to
deteriorate to around 5x in FY18 due to its ongoing debt-led
capex plan of INR810 million. The company has not tied-up funds
for capex; this could lead to time and cost overruns.
The ratings factor in GDPL's moderate liquidity position as
reflected by 79.36% average utilisation of fund-based facilities
during the 12 months ended July 2017.
The ratings, however, are supported by the promoter's a decade-
long experience in the plating business.
RATING SENSITIVITIES
Positive: Timely completion of capex resulting in an improvement
in the revenue and the overall credit metrics will be positive
for the ratings.
Negative: Any decline in the revenue and EBITDA margin leading to
a sustained deterioration in the credit metrics could lead to a
negative rating action.
COMPANY PROFILE
Established in 2007, GDPL is engaged in the manufacturing and
electroplating of anti-lock braking system plastic components
used for decorative purposes in the automobile (85% of revenue)
and FMCG (15% of revenue) industries.
GRACE SUPPLIERS: Ind-Ra Upgrades LT Issuer Rating to 'BB'/Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Grace Suppliers
Private Limited's (GSPL) Long-Term Issuer Rating to 'IND BB' from
'IND BB-(ISSUER NOT COOPERATING)'. The Outlook is Stable. The
instrument-wise rating actions are:
-- INR394 mil. (increased from INR230 mil.) Fund-based limits
upgraded with IND BB/Stable rating;
-- INR8.2 mil. (reduced from INR10 mil.) Term loan due on
January 2021 upgraded with IND BB/Stable rating.
KEY RATING DRIVERS
The upgrade reflects an increase in revenue and an improvement in
credit metrics. Its credit profile continued to be moderate. In
FY17, revenue was INR645 million (FY16: INR569 million), interest
coverage was 1.7x (1.4x) and net financial leverage was 6.1x
(6.3x). Revenue growth was driven by higher sales. The
improvement in credit metrics was mainly due to a fall in debt.
Operating EBITDA margin fell to 5.3% in FY17 (FY16: 5.8%).
The ratings are supported by GSPL's position as the sole dealer
of Tanishq jewellery in Jamshedpur and the director's experience
of almost 14 years in the jewellery business.
The ratings, however, are constrained by GSPL's continued tight
liquidity position, indicated by an average utilisation of about
94% during the 12 months ended August 2017, due to the working
capital-intensive nature of business. Its working capital cycle,
albeit improved, was elongated at 150 days in FY17 (FY16: 175
days).
RATING SENSITIVITIES
Negative: Deterioration in credit metrics will be negative for
the ratings.
Positive: Further improvement in credit metrics will be positive
for the ratings.
COMPANY PROFILE
GSPL is a franchise holder of Titan Industries Limited's
jewellery brand Tanishq since 2002. It has two showrooms in
Jamshedpur, with a product portfolio including rings, earrings,
necklaces, bangles and gold coins. GSPL is managed by Mr. Anil
Agarwal. The company opened a new showroom at Sakchi in August
2017.
GRAMCO INFRATECH: CARE Reaffirms 'B' Rating on INR9.82cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Gramco Infratech Private Limited (GIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.82 CARE B; Stable Reaffirmed
Rating Rationale & Key Rating Drivers
The rating assigned to the bank facilities of GIPL continue to
remain constrained on account of its modest scale of operations
with significant decline in Total Operating Income (TOI) in FY17
over FY16 continuous net and cash losses, weak solvency position
and stressed liquidity position. The rating is, further,
continued to remain constrained on account of its presence in
highly fragmented as well as government regulated industry and
vulnerability of margins to fluctuation in agriculture
commodities prices.
The rating, however, continue to derive strength from the
experienced management with long track record of operations
in the agro commodity industry.
The ability of the company to increase its scale of operations
along with better management of working capital and improvement
in overall financial risk profile of the company would be the key
rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weakness
Modest Scale of operations with significant decline in TOI and
net and cash losses
The scale of operations of the company stood at a modest level
with Total Operating Income (TOI) of INR5.29 crore in FY17
(provisional) along with low net worth base of INR11.02 crore as
on March 31, 2017. As per provisional result of FY17, TOI of the
company has significantly declined by 45.00% over FY16 mainly on
account of lower revenue realized due to demonetization.
Further in FY17, the company incurred operating loss mainly due
to decrease in cost of traded goods, employee cost and other
expenses. Due to operating losses coupled with higher interest
expenses, the company incurred net loss of INR2.17 crore in FY17
as against net loss of INR1.71 crore in FY15.
Weak solvency position and stressed liquidation position
The capital structure of the company stood moderate with an
overall gearing of 1.17 times as on March 31, 2017, however
deteriorated marginally mainly on account of adjustment of net
loss to reserve and increase in debt. Further, total share
capital as on March 31, 2017 stood at INR17.29 crore, which
includes INR14.74 crore as Compulsorily Convertible Preference
Share Capital.
The debt coverage indicators of GIPL stood weak as on March 31,
2017 due to negative Gross Cash Accruals.
Further, the business of the company is working capital intensive
in nature with elongated operating cycle at 140 days owing to
high inventory holding and collection period. Further the
liquidity ratio stood weak marked by current ratio and quick
ratio stood at 0.52 times and 0.28 times as on March 31, 2017. It
has utilized 80% of working capital borrowings in last twelve
months ended July 2017.
Presence in highly fragmented as well as government regulated
industry and vulnerability of margins to fluctuation in
agriculture commodities prices.
The agro commodity industry is characterized by limited value
addition, highly fragmented and competitive in nature as evident
by the presence of numerous unorganized and few organized
players. The entry barriers in this industry are very low on
account of low capital investment and technological requirement.
Due to this, the players in the industry do not have any pricing
power. Further, the industry is characterized by high degree of
government control both in procurement and sales for agro-
commodities. Government of India (GoI) decides the Minimum
Support Price (MSP) payable to farmers.
Further, the profitability of the company remained fluctuating in
last three financial year ended FY14 due to fluctuation in
agriculture commodities prices which depends on various factors
like vagaries of weather, yield production and seasonality.
Key Rating Strengths
Experienced management
Mr. Ramnik Singh Saluja, director, is an MBA by qualification and
has more than three decades of experience in the trading of
agricultural commodities industry and metal industry. He looks
after overall affairs of the company. Prior to GIPL, Mr. Ramnik
Singh Saluja was engaged in wind energy business from 1995 to
1998. Then after, he moved on to the business of exporting
potatoes and pulses to the Middle East and South Asian Countries.
Then after, he moved into metal industry trade, which has been
his family business for over 40 years now. He also has the
distinction of been appointed as the Nodal Officer for Madhya
Pradesh, by Government of India.
Further, at present Small Industries and Development Bank of
India (SIDBI) holds 10% stake in Equity share Capital in the name
of SIDBI Venture Capital Fund Ltd.
Indore (Madhya Pradesh) based GIPL was incorporated in 2009 by
Mr. Ramnik Singh Saluja along with his family members. However,
in FY14, SIDBI Venture Capital Fund Limited took 10% shareholding
in the company by infusing of funds of INR0.10 crore and infused
INR7.40 crore in the form of Cumulative Convertible Preference
Share Capital for funding of its projects and working capital
funding. GIPL is mainly engaged in the business of warehousing,
grading and trading of agro commodities, soil testing, seeds
multiplication program and financing activities against warehouse
receipts. The company has seven warehouse located at Pivday,
Tinonia, Attotkhs, Binjal, Nanded, Titwas and Piplyanath.
Further, it has tied up with Bank of India for financing services
to farmers against warehouse receipts. It has grading process at
all locations for agro commodities like wheat, chana, soyabeans
etc. with 2,500 Metric Tonns Per Month (MTPM) at each location.
The company has utilized its 30% of installed capacity in past 12
months ending March 31, 2017.
HARRIN POULTRY: CARE Assigns B+ Rating to INR11cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Harrin
Poultry Farm (HPF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Harrin Poultry Farm
(HPF) is tempered by lack of operational track record due to
recent start of operations, competition from more established
integrated players in the poultry industry and inherent risk in
poultry in terms of disease outbreaks. However, the rating
derives comfort from experienced proprietor and easy availability
of raw material from group entity. Going forward, the firm's
ability of the firm to stabilize the operations and generate the
revenue and profit levels as envisaged would be its key rating
sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced proprietor
HPF is managed by Mr.Senthilkumar, who has around two decades of
experience in the similar line of business and overall
administration activities are supported by a team of supervisors.
Easy availability of raw material from associate concern The
entity procures feeds from its own associate concern and is not
dependant on outside parties for the feed. Captive feed mills
ensure the smooth supply of feed. The quality of feed is very
important as the chicks are at a growing stage which otherwise
would affect the quality of egg produced. However, the overall
impact is relatively low as compared to other major poultry
players due to the availability of captive feed mills.
Key Rating Weaknesses
Lack of operational track record along with stabilisation of the
project
HPF started commercial operations from May 5, 2017 with 1 batch
of birds (50,000 per batch) which is the chick stage. The entity
is in the nascent stage of operations. HPF has leveraged capital
structure owing to recent completion of the debt funded project.
The total cost incurred for the project was INR15.35 crore of
which INR11 crore was funded by longterm loans and INR4.35 crore
was contributed by the proprietor. HPF has proposed to set up the
remaining 6 batch of birds from July 2017. The total installed
capacity being 7 batches with 50,000 per batch. HPF is also
engaged in egg production. On completion of 16 weeks, the egg
production would commence. Despite the commencement of operations
of HPF, ability of the firm to complete the balance project
capacities without any cost or time over run will remain critical
from credit perspective.
Competition from more established integrated players in the
poultry industry
Indian poultry industry is largely unorganized with very few
integrated players having presence across the value chain. The
economics of the commercial poultry farming business is largely
dependent on the realizations of eggs, broilers and the cost of
feed. The prices of large integrated poultry players act as a
yardstick for small poultry players like HPF. Inherent risk in
poultry in terms of disease outbreaks The margins of the HPF are
susceptible to the volatility associated with the realizations of
eggs and inherent risk of disease outbreak associated with the
poultry industry which can lead to demand collapse. Commercial
poultry operations especially in the broiler segment tend to be
highly volatile, given the low level of capital investment
required in the business and the fragmented nature of the
industry. Changes in the prices of live birds, table eggs and
feed costs have a strong impact on the profitability and cash
flows of the companies operating in poultry industry. Further
there are large variations in the production and consumption of
poultry meat and egg in India across various states. The
consumption is affected by various factors including taste
preferences, religious practices, per capital income,
urbanization, etc.
Harrin Poultry Farm (HPF) is promoted by Mr. Senthilkumar as a
Proprietorship firm. The firm started its commercial operations
from May 05, 2017 with 1 batch of birds (50,000 per batch) which
is the chick stage. HPF has proposed to set up 5 batches of birds
in an interval of 10 weeks between purchase of each batch by
February 2018. Prior to establishment of HPF, Mr.Senthilkumar was
engaged in handling the overall activities of Harrin Feeds, a
proprietorship firm, promoted by Mr. Senthilkumar in 2009. HPF is
engaged in poultry farming. The operations of HPF currently
include rearing of chicks for production of eggs.
JAIN OVERSEAS: Ind-Ra Moves 'D' Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Jain Overseas'
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 action is:
-- INR330 mil. Fund-based limit migrated to non-cooperating
category with IND D(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Aug. 19, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2009 as partnership firm, Jain Overseas is
engaged in the milling, processing, sorting and polishing of
basmati and non-basmati rice; it has a 9 metric tons per hour
rice milling plant at Sikandrabad, Uttar Pradesh.
KERAFIBERTEX INTERNATIONAL: Ind-Ra Affirms BB+ LT Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Kerafibertex
International Pvt Ltd's (KFIPL) Long-Term Issuer Rating at 'IND
BB+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR450 mil. Fund-based working capital limits affirmed with
IND BB+/Stable rating; and
-- INR32.50 mil. Non-fund-based working capital limits with IND
A4+ rating.
KEY RATING DRIVERS
The affirmation reflects KFIPL's continued moderate credit
profile in FY17, despite stable revenue growth and an improvement
in EBITDA margins and leverage. According to the FY17 provisional
financials, revenue grew 13.5% yoy to INR1,208 million due to a
higher number of the orders obtained and executed, while margins
improved to 6.5% (FY16: 5.4%) due to lower raw material prices.
EBITDA interest coverage declined to 2.4x in FY17 (FY16: 3.6x)
due to the impact of interest expenses on the debt borrowed
during 4QFY16. Net debt/EBITDA improved to 2.6x in FY17 (FY16:
4.8x) because of a reduction in debt and an increase in EBITDA.
Ind-Ra expects credit metrics to remain at the current levels on
stable EBITDA margins due to stable raw material prices and
absence of debt-led capex.
The ratings are constrained by KFIPL's stretched liquidity
reflected by average 90.9% working capital utilisation for the 12
months ended July 2017. Net working capital cycle remained long
at around 95 days in FY17 (FY16: 120 days) due to high receivable
days, despite low inventory days.
The ratings, however, are supported by the company's promoters'
over 10 years of experience in manufacturing coir products.
RATING SENSITIVITIES
Positive: Substantial growth in the top line while maintaining
the profitability, leading to a sustained improvement in the
credit metrics will lead to a positive rating action.
Negative: A substantial decline in the profitability resulting in
sustained deterioration in the credit metrics will lead to a
negative rating action.
COMPANY PROFILE
Established in 2000, KFIPL is a subsidiary of M/s Giacomini &
Gambarova S.r.l., Italy. The company manufactures coir products.
KOHENOOR INDUSTRIES: Ind-Ra Downgrades LT Issuer Rating to 'D'
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Kohenoor
Industries' (KI) Long-Term Issuer Rating to 'IND D' from 'IND
BBB-'. The Outlook was Stable. The instrument-wise rating action
is:
-- INR175 mil. Fund-based limit (long-term) downgraded with
IND D rating.
KEY RATING DRIVERS
The downgrade reflects KI's overutilisation of fund-based limit
for over 30 days during July 2017 owing to a weak liquidity
position due to an increase in working capital requirements.
RATING SENSITIVITIES
Positive: The utilisation of fund-based limit within the
sanctioned limit for at least three consecutive months would lead
to a positive rating action.
COMPANY PROFILE
KI is a part of Jajodia group, headed by Mr. Pawan Kumar Jajodia.
KI is a proprietorship firm, engaged in the trading of pulses,
sugar and edible oil.
LIKHITA ENERGY: CARE Revises Rating on INR14.50cr Loan to B+
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Likhita Energy Systems Private Limited (LESPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.50 CARE B+; Stable Revised from
CARE B; Stable
Short-term Bank
Facilities 3.00 CARE A4 Assigned
Detailed Rationale& Key Rating Drivers
The revision in the long-term rating assigned to the bank
facilities of LESPL takes into account increase in total
operating income and profitability margins and improvement in
capital structure and debt coverage indicators during FY17
(Provisional, refers to period April 01 to March 31). The ratings
continue to be tempered by small scale of operations, working
capital intensive nature of operations, debt funded capital
expenditure and shortterm revenue visibility from order book
position. The ratings are, however, derive strength from
experience of promoter for more than two decades in the
engineering industry, and strong and reputed clientele.
Going forward, ability of the company to increase its scale of
operations, maintain the profitability margins, improve capital
structure and manage working capital requirements efficiently are
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations
The company has a relatively small scale of operations with total
operating income of INR22.01 crore and PAT of INR6.86 crore
during FY17 (Prov.) as compared to total operating income of
INR18.12 crore and PAT of INR3.50 crore during FY16.
The equity share capital of the company stood at INR3.13 crore
and the net worth stood at INR7.04 crore as on March 31, 2017
(Prov.).
Working capital intensive nature of operations
The operating cycle elongated from -25 days in FY16 to 165 days
in FY17 (Prov.) due to elongated inventory period of 208 days in
FY17 (Prov.) as compared to 22 days in FY16 due to manufacturing
nature of business.
Short-term revenue visibility from order book position
LESPL has weak order book of INR2.84 crore as on July 31, 2017
which translates to 7.68x of total operating income of FY18 and
the same is likely to be completed by Q3FY18. The said order book
provides revenue visibility for short term. The entire order
value of INR2.84 crore pertains to manufacturing of tubular
towers and gusset plates to Suzlon Energy Limited and Juwi India
Renewable Energies Private Limited.
Key Rating Strengths
Experience of promoter for more than two decades in the
engineering industry
Mr. T.Y. Reddy, promoter and Managing Director of Likhita Group
of Companies, is a graduate in Mechanical Engineering from the
University of Marathwada in India. He has more than 25 years of
experience in engineering industry. Mr. T.P Reddy has over a
decade of experience in architecture, design and development of
large-scale distribution systems and Mr. ASGS Sandilya has an
experience of more than 20 years in manufacturing, marketing,
customer support and liasoning.
Strong and reputed clientele
Mr. T.Y. Reddy's experience in the industry has enabled him to
establish and maintain healthy relationships with his customers.
LESPL caters to a strong and reputed client base like Suzlon
Energy Limited, Bharat Heavy Electricals Limited, BGR Energy
Systems Limited, N.C.C. Limited and Juwi India Renewable Energy
among others.
Increasing total operating income and profitability margins
during review period
The total operating income has witnessed a growth of 21.47%
during FY17 (Prov.) to INR22.01 crore vis-a-vis INR18.12 crore
during FY16. The increase in the scale of operations was on
account of increase in orders from existing customers as well as
addition of new customers.
The PBILDT margin increased by 542 bps to 40.76% in FY17 (Prov.)
as compared to 35.34% in FY16 due to decrease in raw material
costs and power and fuel costs and employee costs.
The PAT margin improved from 19.33% in FY16 to 31.15% in FY17
(Prov.) due to increase in PBILDT in absolute terms coupled with
decrease in depreciation and interest costs.
Improvement in capital structure and debt coverage indicators
The capital structure of the company improved and remained
moderate. Despite increase in debt levels, the debt equity
and overall gearing ratio improved from 579.40x and 977.31x
respectively as on March 31, 2016 to 0.33x and 1.40x
respectively as on March 31, 2017(Prov.) due to increase in
tangible networth.
The debt coverage indicators of the company also improved marked
by total debt/GCA improved from 1.78x in FY16 to 1.21x in FY17
(Prov.) due to increase in cash accruals. The PBILDT interest
coverage ratio improved from 4.49x in FY16 to 10.80x in FY17
(Prov.) due to increase in PBILDT level coupled with decrease in
interest cost at the back of scheduled repayment of term loan.
Likhita Energy Systems Private Limited (LESPL) was incorporated
in June 21, 2010 and is engaged in fabrication/manufacturing of
tubular wind turbine towers, huge storage tanks and heavy
fabrication of structures for thermal power stations, harbour
projects, and refinery projects on order basis. LESPL is managed
by Mr. T. Y. Reddy, Mr. ASGS Sandilya and Mr. T. P. Reddy.
LESPL is a part of Likhita Group (ISO 9001:2008 Certified); an
engineering company established in 1996 and having diverse
focus on multiple business segments which includes manufacturing
of bulk drugs processing equipment and wind turbine towers for
wind power projects, construction of residential buildings and
also have presence in IT enabled services. The quality and safety
of Likhita Group is certified by 'TUV India' and 'TATA Projects
Ltd' and it is also an 'ISO 9001:2000' certified company.
Mr. T.Y. Reddy, promoter of the company, has also promoted
Likhita Process Industries (LPI) and Likhita Fabtech Engineers
(LFE). LPI was incorporated in 2005 and engaged in manufacturing
non-conventional energy equipments like windmill tower internals,
solar structures and power sub-station equipments. LFE is focused
on manufacturing chemical plant equipments like reactors,
condensers, heat exchangers, pressure vessels etc.
LINERS INDIA: CRISIL Reaffirms B- Rating on INR12.50MM Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL A4' rating to the short-term bank
facility of Liners India Limited (LIL) and reaffirmed its 'CRISIL
B-/Stable' rating on the company's long term-term bank
facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .75 CRISIL A4 (Assigned)
Cash Credit 12.50 CRISIL B-/Stable (Reaffirmed)
Proposed Non Fund
based limits 4.50 CRISIL A4 (Assigned)
Proposed Long Term
Bank Loan Facility .75 CRISIL B-/Stable (Reaffirmed)
Import Letter of
Credit Limit 6.5 CRISIL A4 (Assigned)
Foreign Bill
Discounting 1.0 CRISIL B-/Stable (Reaffirmed)
On August 9, 2017, CRISIL had revoked the suspension of its
rating on bank facilities of LIL's and assigned it's 'CRISIL B-
/Stable' rating to the long term facilities.
The ratings reflect working capital intensive operations and
Susceptibility of margins to pricing pressures and volatility in
input prices. These ratings weakness are partially offset by the
Extensive experience of promoters along with diversified customer
base.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility of margins to pricing pressures and volatility
in input prices.
The basic raw material used for manufacturing the components is
Pig Iron, Ferro Molybdenum and Iron Scrap which constitutes up to
60% of the raw material cost. The prices of steel are subject to
high volatility that can alter the margins.
* Working capital intensive nature of operations
The Company has working capital intensive operations as seen in
the GCA days of 205 days as on March 31, 2017. The same has been
increasing y-o-y on account of increased debtor and inventory
Maintainence
Strengths
* Extensive Experience of Promoters:
The main promoters of the Company Mr. S.Ganesh has more than 3
decades of experience in business line. The same has been
instrumental in the entity building healthy relationship with the
clients.
* Diversified customer base
The Company has diversified customer base as seen in the list
that consists of Ashok Leyland, Royal Enfield, Mahle, Tata Motors
Ltd, Mahindra & Mahindra Ltd, John Deere, Triumph.
Outlook: Stable
CRISIL expects LIL to maintain a stable credit profile on the
back of moderate financial risk profile and an established
customer base which will ensure stability to the revenues. The
outlook may be revised to 'Positive' in case the company
successfully scales up its operations while sustaining its
profitability and comfortable capital structure. Conversely, the
outlook may be revised to 'Negative' in case of decline in
profitability or company incurs more than anticipated debt funded
capex leading to deterioration in debt protection measures or
defers its capex plans.
LIL was incorporated in 1974, as a partnership firma and in 1994
it was converted to a public limited company (closely held).The
Entity is involved in manufacture of automobile cylinder liners.
The firm has recorded PAT of INR0.18 Crore on operating income of
INR70.84 Crore for the fiscal 2017 vis-a-vis net losses of
INR4.66 Crore on operating income of INR87.15 Crore for the
fiscal 2016
M.M. IMPORT: CRISIL Puts 'B' Issuer Not Cooperative Rating
----------------------------------------------------------
CRISIL has been consistently following up with M.M. Import and
Export (MMIE) for obtaining information through emails dated
July 21, 2017 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B/Stable (Issuer Not
Cooperating; Removed from
'Notice of Withdrawal' and
Rating Reaffirmed)
Letter of Credit 7 CRISIL A4 (Issuer Not
Cooperating; Removed from
'Notice of Withdrawal' and
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 firm.
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 MMIE. 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
MMIE 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 its ratings on the bank facilities of MMIE
at 'CRISIL B/Stable/CRISIL A4' and removed from 'notice of
withdrawal'.
MMIE was set up as a partnership firm in 2009 and is engaged in
timber trading. The firm located in Muvattupuzha, Kerala and
promoted by Mr. Kasirath Tharfia and Mr. Abdul Kalam Kutty is
engaged in trading of sawn timber and log wood.
M.S. SOLVENT: CARE Reaffirms 'B' Rating on INR7.50cr LT Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
M.S. Solvent Industries (MSSI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Bank 7.50 CARE B; Stable Suspension
Facilities Revoked and rating
reaffirmed
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of M.S. Solvent
Industries (MSSI) continues to remain constrained by its small
scale of operations with low net worth base, low profitability
margins and leveraged capital structure. The rating is further
constrained on account of vulnerability of profitability margins
due to presence in the highly volatile agrocommodity business
coupled with highly fragmented industry. The rating, however
continues to draw comfort from experienced partners and moderate
operating cycle.
Going forward, the ability of the firm to increase the scale of
operations while improving its profitability margins and capital
structure shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations coupled with low net worth base The
scale of operations continues to remain small marked by total
operating income and gross cash accruals of INR55.26 crore and
INR0.37 crore respectively in FY16 (FY refers to April 1 to
March 31) . Further, the net worth base also remains small at
INR1.87 crore as on March 31, 2016. The small scale limits the
firm's financial flexibility in times of stress and deprives it
from scale benefits. Further, the company has achieved TOI of
INR55 crore during FY17 (based on provisional results).
Low profitability margins coupled with leveraged capital
structure
The profitability margins of the firm continuee to remain low for
the past three financial years, i.e., FY14-FY16 due to low value
addition and highly competitive nature of industry. PBILDT margin
of the firm stood at 1.05% in FY16 and reannied almost stable.
Furthermore, PAT margin continued to remain very low at 0.05% in
FY16.
The capital structure of the company remained improved; however,
continues to remain leveraged marked by overall gearing ratio of
2.08 as on March 31, 2016 as against 3.60x as on march 31, 2015
due to increase in partners' capital base owing to infusion of
funds by the partners coupled with repayment of unsecured loans &
lower utilization of working capital borrowings as on balance
sheet date.
Fragmented and competitive nature of industry
The specific food habits of different regions in India have led
to preferences of different types of edible oil. Coconut oil is
used widely in the south, mustard and palm in the north, and
groundnut in the west. The urban centres have witnessed greater
demand for sunflower, soya and rice-bran oils. Thus, localization
of product offerings has fragmented the industry and lowered
capacity utilization, due to large number of players and limited
availability of raw material.
Vulnerability of profitability margins due to presence in the
highly volatile agro-commodity business
The profitability is greatly influenced by the movement in prices
of rice bran, De-oiled Cake (DOC) and refined oil. Price of rice
is governed by the demand-supply dynamics prevalent in major rice
growing nations, weather conditions and prices of substitute
edible oils. Domestic production of rice, in turn, is dependent
on area under cultivation, vagaries of monsoon, prices of other
crops, Minimum Support Price (MSP) and incentives offered by
Government of India (GoI). Furthermore, any increase in the seed
prices without a corresponding increase in DOC and edible crude
oil prices will adversely impact already low profitability
margins of the entities in this business.
Key Rating Strengths
Experienced partners in processing of agricultural products The
firm is being collectively managed by its four partners namely,
Mr Mahendra Singh, Mr Anil Kumar, Mr Harish Kumar and Mr Daleep
Singh. All the partners of the firm have more than a decade of
experience in the agro processing industry which includes
processing of paddy and extraction of rice bran oil though their
association with MSRM and MSSI. The same aids in establishing
relationship with both suppliers and customers.
Moderate operating cycle
Operating cycle of the firm continues to remain moderate at 6
days in FY16. Since the firm is engaged in extraction of rice
bran oil it maintains inventory of key raw material, i.e., rice
bran for up to 39 days in FY16 to ensure continuous production.
The firm extends credit period of up to 17 days to its customers
and receives a credit period of up to 50 days from its suppliers.
Working capital borrowings remained around 70% utilized during
the past 12 months ending June, 2017.
M.S. Solvent Industries is a partnership firm established in July
2009 by four partners, namely, Mr. Mahendra Singh, Mr. Anil
Kumar, Mr. Harish Kumar and Mr. Daleep Singh sharing profits and
losses equally. The firm is engaged in extraction of rice bran
oil at its processing facility located in Gadarpur (Uttarakhand)
with an installed capacity to extract 40480 Metric Tons per annum
as on June 30, 2017. The key raw material required by the firm is
rice bran. The firm procures rice bran from rice mills based in
Uttarakhand. The firm sells rice bran oil to edible oil
refineries based in Uttar Pradesh and the de oil cake is sold to
poultry farmers based in Uttarakhand and Rajasthan. The firm has
started an additional rice mill unit in November, 2016 that has
enabled the firm to extract rice bran oil through milling. Here
the rice bran oil will be extracted form paddy. This unit has an
installed capacity of 8480 metric tons per annum. M.S. Rice Mill
is an associate concern and engaged in processing of paddy since
2004.
MAA KALIKA: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Maa Kalika
Bhandar's (MKB) Long-Term Issuer Rating to 'IND D' from 'IND BBB-
'. The Outlook was Stable. The instrument-wise rating action is:
-- INR225 mil. Fund-based limit (long-term) downgraded with
IND D rating.
KEY RATING DRIVERS
The downgrade reflects MKB's overutilisation of fund-based limits
for over 30 days during July 2017 owing to a weak liquidity
position due to an increase in working capital requirements.
RATING SENSITIVITIES
Positive: The utilisation of fund-based limit within the
sanctioned limit for at least three consecutive months would lead
to an upgrade.
COMPANY PROFILE
SKE is a partnership firm and a part of the Jajodia group, headed
by Mr. Pawan Kumar Jajodia. SKE is engaged in the trading of
pulses, sugar and edible oil.
MADHAV STORES: Ind-Ra Moves 'B+' Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Madhav Stores'
Long-Term Issuer Rating to the non-cooperating category. The
issuer did not participate in the rating exercise, despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
B+(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR40 mil. Fund-based limit migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING)/IND A4(ISSUER
NOT COOPERATING) rating;
-- INR24.28 mil. Term loan migrated to non-cooperating category
with IND B+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 31, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Madhav Stores was established on in October 2010 and started
operations from March 2011. The firm trades kitchen alliances,
groceries, baby toys and crockery.
MAHAVIR ENTERPRISES: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Mahavir
Enterprises's (ME) Long-Term Issuer Rating to 'IND D' from 'IND
BBB-'. The Outlook was Stable. The instrument-wise rating action
is:
-- INR184 mil. Fund-based limit (long-term) downgraded with
IND D rating.
KEY RATING DRIVERS
The downgrade reflects overutilisation of fund-based limit for
more than 30 days due to weak liquidity position, resulting from
an increase in working capital requirements.
RATING SENSITIVITIES
Positive: The utilisation of the fund-based limit within the
sanctioned limit for at least three consecutive months would lead
to a positive rating action.
COMPANY PROFILE
ME is a part of Jajodia group, headed by Mr. Pawan Kumar Jajodia.
It is a proprietorship firm, engaged in the trading of pulses,
sugar and edible oil. All entities are engaged into the same
business activity.
MPL AUTOMOBILES: CRISIL Reaffirms B- Rating on INR25MM Loan
-----------------------------------------------------------
CRISIL has been consistently following up with MPL Automobiles
Agency Private Limited (MAAPL) for obtaining information through
emails dated July 21, 2017 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Inventory Funding 12.5 CRISIL B-/Stable (Issuer Not
Facility Cooperating; Removed from
'Notice of Withdrawal' and
Rating Reaffirmed)
Secured Overdraft 25.0 CRISIL B-/Stable (Issuer Not
Facility Cooperating; Removed from
'Notice of Withdrawal' and
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 MAAPL. 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
MAAPL is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL B' category
or lower. Based on the last available information, CRISIL has
reaffirmed the rating at 'CRISIL B-/Stable' and removed from
'Notice of Withdrawal'.
MAAPL, incorporated in 2000, is an authorised dealer for
passenger vehicles of M&M in Chennai. MMPL, incorporated in 1998,
is an authorised dealer for commercial vehicles of M&M in
Chennai. The group is promoted by Mr. S. Ashok and his family.
The promoters own other entities, which are managed independently
and are engaged in dealership activity for various original
equipment manufacturers, such as Ashok Leyland Ltd, Honda Motors
Pvt Ltd, and Ford India Pvt Ltd.
MPL MOTORS: CRISIL Reaffirms B- Rating on INR2.5MM Loan
-------------------------------------------------------
CRISIL has been consistently following up with MPL Motors Private
Limited (MMPL) for obtaining information through emails dated
July 21, 2017 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.6 CRISIL B-/Stable (Issuer Not
Cooperating; Removed from
'Notice of Withdrawal' and
Rating Reaffirmed)
Inventory Funding 2.5 CRISIL B-/Stable (Issuer Not
Facility Cooperating; Removed from
'Notice of Withdrawal' and
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 MPL Motors 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 MPL Motors Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL B' category or
lower. Based on the last available information, CRISIL has
reaffirmed the rating at 'CRISIL B-/Stable' and removed from
'Notice of Withdrawal'.
MMPL, incorporated in 1998, is an authorised dealer for
commercial vehicles of M&M in Chennai. MAAPL, incorporated in
2000, is an authorised dealer for passenger vehicles of M&M in
Chennai. The group is promoted by Mr. S. Ashok and his family.
The promoters own other entities, which are managed independently
and are engaged in dealership activity for various original
equipment manufacturers, such as Ashok Leyland Ltd, Honda Motors
Pvt Ltd, and Ford India Pvt Ltd.
PANINI GRANITES: CRISIL Raises Rating on INR7.7MM LT Loan to B-
---------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Panini
Granites Private Limited (Panini) to 'CRISIL B-/Stable/CRISIL A4'
from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Letter of Credit 2.5 CRISIL A4 (Upgraded from
'CRISIL D')
Long Term Loan 3.8 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Proposed Long Term 7.7 CRISIL B-/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
The rating upgrade reflects improvement in Panini's liquidity
that has enabled timely debt servicing for past six months
through August 2017. CRISIL believes that the company will
continue to meet its debt obligations in a timely manner over the
medium term backed by improved cash accruals and timely support
from promoters.
The rating continues to reflect Panini's large working capital
requirement, modest scale of operations in the intensely
competitive and fragmented granite processing industry while its
profitability is susceptible to volatility in granite prices and
forex rates. However, the company benefits from its promoters'
extensive industry experience
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive granite
processing industry: Panini's business risk profile remains
constrained by its modest scale of operations in the intensely
competitive granite processing industry. The company's modest
scale is indicated by its revenues of INR28.2 Cr in 2016-17. The
modest scale of operations limits its bargaining power with its
customers and suppliers, and prevents the company from achieving
economies of scale.
* Large working capital requirements: Panini's business is
working capital intensive, as reflected in gross current asset
(GCA) days of 205 days as on March 31, 2017. The high GCA days
emanates from the company's high inventory levels of around 146
days as on the same date. GCA days are expected to remain similar
over the medium term.
* Susceptibility of its profitability margins to volatility in
granite prices and foreign exchange (forex) rates: The granite
industry's profitability margins are highly correlated with
fluctuations in raw material prices. Raw material costs accounted
for around 66 per cent of Panini's operating income in 2016-17.
Furthermore, the prices of key raw material, raw granite, are
highly volatile. Panini also derives around 40 per cent of its
revenues from exports thus exposing its margins to volatility in
granite prices and to forex movements.
Strength
* Extensive experience of promoters in granite industry: The
promoters of Panini have been in the granite business since 2003.
They have been in the business of trading in granites and have
been operating two distribution centers in the US. They have
established relationship with customers consisting of mainly
builders and fabricators from whom they get repeat orders.
Outlook: Stable
CRISIL believes Panini will continue to benefit over the medium
term from its promoter's extensive experience. The outlook may be
revised to 'Positive' if significant improvement in scale of
operations and profitability, leads to better business and
financial risk profile. Conversely, the outlook may be revised to
'Negative' if cash accrual declines or if the company contracts
sizeable debt to fund working capital requirement or large capex,
thereby weakening financial risk profile.
Incorporated in October 2011, Panini Granites Pvt Ltd (Panini) is
promoted by Mr. Srikanth Yadlapati, Mr. Veeru Koritala, and Mr.
Nag Donthineni. Panini is dealing with the processing of granite,
withcapacity of 430 cubic metres (cbm) per month (5160 cbm per
annum), in Ongole District, Andhra Pradesh.
During fiscal 2017, the company reported a profit after tax (PAT)
of INR0.91Crores on operating income of INR28.19 Crores against
PAT of INR0.67 Crores on operating income of INR27.86 Crores in
the previous fiscal.
PHOOLTAS TRANSRAIL: CRISIL Lowers Rating on INR44MM Loan to 'D'
---------------------------------------------------------------
CRISIL has removed its ratings on the bank facilities of Phooltas
Transrail Limited (Phooltas; formerly known as Phooltas Harsco
Rail Solutions Pvt Ltd and part of the SPL group) from 'Rating
Watch with Negative Implications', and has downgraded the ratings
to 'CRISILD/CRISILD' from 'CRISIL BB+/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 44 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL A4+')
Cash Credit 4 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL BB+')
Letter of Credit 2 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL A4+')
Proposed Long Term 10.6 CRISIL D (Removed from
Bank Loan Facility 'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL BB+')
On March 10, 2017, CRISIL had downgraded the ratings to 'CRISIL
BB+/CRISIL A4+' from 'CRISIL BBB/Negative/CRISIL A3+' and placed
the rating on 'Watch with Negative Implications'. The rating
action followed SPL group's decision to de-merge railways and
road division in separate companies [road business in Phooltas
and railways business in Speedcrafts Limited (SPL; part of the
SPL group)]. The ratings continued to be on watch on June 09,
2017 as CRISIL was in discussions with SPL and Phooltas's
management to evaluate the impact of the proposed de-merger on
its credit risk profile.
The rating downgrade reflects overdrawals of more than 30 days in
cash credit facility because of weak liquidity.
The ratings also reflect group's working capital-intensive
operations and tender-based nature of operations. These rating
strengths are partially offset by group's stable market position
in the road construction and track maintenance industry.
Analytical Approach
Despite management's intent to demerge the business, CRISIL
continues to consolidate the business and financial risk profiles
of Phooltas and SPL on account of lack of clarity on the demerged
business and financial profiles. SPL and Phooltas, together known
as the SPL group, currently has business and financial inter-
linkages.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: SPL group's business is
highly working capital intensive, as reflected in GCA days of 352
days as on March 31, 2016 on account of high inventory levels of
around 201 days and receivables cycle of 102 days.
* Tender-based operations: The track maintenance industry in
India consists of a single major customer, the Indian Railways,
and limited number of authorised suppliers. Lack of alternate
demand and delay in commissioning of new orders restricts SPL
group's scale of operations. On account of customer concentration
and tender-based nature of operations, the SPL group has limited
visibility on order book.
Strengths
* Stable market position in the road construction and track
maintenance industry: The SPL group also has a stable market
position in the road construction and railway maintenance
equipment industry. In the track maintenance equipment segment,
the SPL group has an edge over its competition which provides it
with a first-mover advantage and cost advantage over other large
players; this has helped the group maintain a sizeable market
share. Track maintenance equipment and track laying projects are
expected to be the revenue drivers for the SPL group over the
medium term. Indian Railways continues to be the SPL group's
largest customer and accounts for a major proportion of the
group's outstanding orders.
SPL, set up in 1971, manufactures road construction equipment. In
1975, it ventured into manufacturing of road-rollers, and
subsequently diversified its product profile by adding drum mix
plant, pot-hole repairing machines, and hot-mix rolling plants.
The company has its manufacturing facility in Patna and Haridwar.
Phooltas, was set up in 1985 and has its manufacturing facility
in Patna, was set up in 1985. It was set up as an Indo-US joint
venture, with Harsco Rail (a division of Harsco Corporation) as
the equity partner; however Harsco Rail sold its stake in fiscal
2016. It sells track maintenance equipment largely to various
divisions of Indian Railways. Phooltas, because of its small
manufacturing capability, majorly sources the track maintenance
equipment to SPL.
PRUDHVI INFRA: CARE Hikes Rating on INR22.50cr LT Loan to BB-
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Prudhvi Infra Projects Private Limited (PIPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 22.50 CARE BB- Revised from
Facilities CARE B+
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
Prudhvi Infra Projects Private Limited (PIPPL) takes into account
significant increase in total operating income during FY17
(refers to period April 01 to March 31) along with improvement in
operating cycle days of the company. The ratings continue to take
into account experienced and resourceful promoter, healthy order
book position albeit geographic and customer concentration.
The ratings are, however, tempered by the limited track record of
the company with small scale of operations, declining
profitability margins with leveraged capital structure and weak
debt coverage indicators and presence in highly competitive
construction industry.
The ability of the company to increase profitability margins and
improve its capital structure and debt coverage indicators while
managing its working capital efficiently are the key rating
sensitivities.
Detailed Description of the key rating drivers
Key Rating Weaknesses
Limited track record of the company and small scale of operations
The scale of operations has increased significantly during FY17
as compared to FY15 and FY16, but however still remained
relatively small as compared to other industry peers marked by
total operating income of INR42.56 crore during FY17 and low net
worth base of INR8.96 crore as on March 31, 2017. However the
company has substantial order book in hand and visibility of
increasing TOI to offset the risk of discontinued operations due
to non-availability of the business.
Presence in highly competitive construction industry due to
nature of business
The company receives all its work orders from private companies,
constituting 100% of its order book position.
Profitability margins come under pressure because of competitive
nature of the industry. However, the promoters' long industry
experience of more than two decades mitigates this risk to some
extent. Nevertheless, there are numerous fragmented & unorganized
players operating in the segment which makes the civil
construction space highly competitive.
Declining profitability margins
Despite of TOI of the company y-o-y, PBILDT margin of the company
has been declining y-o-y from 14.63% to 6.59% in FY17 on account
of increased amount of sub-contracting works of the company
coupled with increasing material cost due to the nature of works
under taken by the company. Furthermore, PAT margin of the
company also reduced from 1.48% in FY15 to 0.73% in FY17 due to
increase in interest due to enhancement in working capital and
depreciation cost at the back of company has purchased a new
machinery.
Leveraged capital structure and weak debt coverage indicators
The capital structure of the company is moderate for the last
three balance sheet date ended March 31, 2017, marked by
comfortable debt equity and moderate overall gearing ratio at
0.51x and 1.81x respectively as on March 31, 2017, the same has
been deteriorated marginally from 0.19x and 1.68x as on March 31,
2015 due to increased debt levels which comprises of increased
amount of unsecured loans and working capital bank borrowings.
However the promoters are continuously infusing the fundsin the
company i.e., equity infused from INR5.50 crore as on March 31,
2015 to INR7.40 crore as on March 31, 2017.
The debt coverage indicators of the company also remained weak
marked by increase in total debt/GCA from 11.13x as on March 31,
2015 to 16.05x as on March 31, 2017 due to increased amount of
debt from INR10.22 crore as on March 31, 2015 to INR16.23 crore
as on March 31, 2017. PBILDT interest coverage ratio of the
company remain comfortable at 1.68x as on March 31, 2017.
Key Rating Strengths
Experienced and resourceful promoters
PIPPL is promoted by Mr. P. Somasekhar, the managing director of
the company. He is a qualified B.Tech graduate with around two
decades of experience in construction business. Mrs. Leelarani is
a graduate has around one decades of experience in construction
business. Both the directors are actively involved in the day-to-
day operations of the company.
The company is supported by the technical team for smooth
functioning of business operations. The promoters of the company
have been resourceful and infusing funds as and when it was
required.
Increase in total operating income during FY16 and FY17
The total operating income of the company grew significantly by
49.21% from INR14.85 crore in FY15 to INR42.56 crore in FY17 on
account of increased amount of execution of work orders received
from Ratna Infra Projects Private Limited and new contracts as
well.
Healthy order book position albeit geographic concentration
The company has a current order book of INR217.52 crore as on
August 20, 2017 which translates to 5.11x of total operating
income of FY17 and the same is likely to be completed by October
2018. The said order book is related to construction of roads and
irrigation works undertaken from Ratna Infra Projects Private
Limited and Mohan Projects Limited. However, the order in hand
provides revenue visibility for short to medium term. The current
order book of the company is concentrated with two customers and
geographically constrained in North eastern states i.e. Nagaland
&
Mizoram and Andhra Pradesh only.
Improved operating cycle days of the company
The working capital cycle days of the company improved
significantly y-o-y from 268 days in FY15 to 218 days in FY16 and
157 days in FY17 on account of improved collection days of the
company. Collection days of the company improved from 265 days in
FY15 to 126 days in FY17 at the back of sooner realization of
receivables. The average inventory days of the company also
improved from 115 days in FY15 to 60 days in FY17 at the back of
increased level of project execution. Despite of the improvement,
working capital cycle days still remained on a higher side.
Moderate industry outlook and growth prospects
The construction industry contributes around 8% to India's Gross
domestic product (GDP). Growth in infrastructure is critical for
the development of the economy and hence, the construction sector
assumes an important role. During the last few years (mainly
FY13-FY15), there was a reduction in flow of orders along with
slow movement of the existing order book. However, the focus of
the government on infrastructure development is expected to
translate into huge business potential for the construction
industry in the long-run. In the short to medium term (1-3
years), projects from
infrastructure sector are expected to dominate the overall
business for construction companies. Going forward, companies
with better financial flexibility would be able to grow at a
faster rate by leveraging upon potential opportunities.
Prudhvi Infra Projects Private Limited (PIPPL) was incorporated
in the year 2012 by Mr. P. Somasekhar (Managing Director) and
Mrs. P. Leelarani (Director). The company has its registered
office located at S. R Nagar, Hyderabad. PIPPL is engaged in
executing civil construction projects like construction of roads,
bridges, irrigation channel, reservoir and others. The company
get orders through sub-contracting from Ratna Infra Projects
Private Limited, Mohan Projects Limited and Gayatri Projects
Limited . The company purchase raw material like steel cement
etc., from Amarnath
Agencies, Nageswara Rao Steel Traders. The company has current
order book of INR217.52 crores as on August 20, 2017 to be
completed by October 2018.
RAKESH MARBLE: CRISIL Puts B Rating to Issuer Not Cooperating
-------------------------------------------------------------
CRISIL has been consistently following up with Rakesh Marble and
Granite (RMG) for obtaining information through emails dated
July 21, 2017 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL B+/Stable'; Removed
from 'Notice of Withdrawal'
and 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 firm.
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 RMG. 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
RMG is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL B' category
or lower. Based on the last available information, CRISIL has
downgraded the rating to 'CRISIL B/Stable' from 'CRISIL
B+/Stable' and removed from 'notice of withdrawal'.
RMG, set up in 2005, is a Palakkad (Kerala)-based proprietorship
firm. It trades in ceramic tiles, granite, marble tiles, sanitary
ware, and tap fittings. The proprietor of the firm is Mrs. V
Hemalatha.
RAVI REALCON: CRISIL Puts B Loan Rating to Issuer Not Cooperating
-----------------------------------------------------------------
CRISIL has been consistently following up with Ravi Realcon
Private Limited (RRPL) for obtaining information through emails
dated July 21, 2017 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Issuer Not
Cooperating; Downgraded from
'CRISIL A4+'; Removed from
'Notice of Withdrawal' and
Rating Reaffirmed)
Cash Credit 4.25 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB-/Stable'; Removed
from 'Notice of Withdrawal'
and 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 firm.
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 RRPL. 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
Ravi RRPL is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
B' category or lower. Based on the last available information,
CRISIL has downgraded the ratings to 'CRISIL B/Stable/CRISIL A4'
from 'CRISIL BB-/Stable/CRISIL A4+' and removed from 'Notice of
Withdrawal'.
Incorporated in 2011, RRPL undertakes civil construction works
mainly construction of roads, bridges, and buildings for
government departments. The company is promoted by Andaman and
Nicobar Islands-based Mr. Ravi Rungta and Mr. Pankaj Rungta, who
have over one decade of experience in the construction business.
RELIANCE COMMS: Ericsson Files Insolvency Case Against Firm
-----------------------------------------------------------
Reuters reports that Ericsson's Indian subsidiary has filed
insolvency petitions against Reliance Communications and two of
its companies to recover unpaid dues, the Indian mobile operator
said in a stock exchange filing on Sept. 13.
The Swedish telecoms equipment maker, which signed a seven-year
deal in 2014 to operate and manage Reliance Communications'
nationwide network, is seeking a total of INR11.55 billion ($180
million) from the three companies, the filing said, the report
relays.
According to Reuters, Reliance Communications said it planned to
challenge the insolvency petitions. The filing said the Ericsson
case would go before the National Company Law Tribunal, the
designated court for bankruptcy cases in India, on Sept. 26.
"Ericsson has done this as a last resort in order to resolve an
issue regarding debt that Reliance owes to Ericsson for services
provided under a contract. As the legal process is ongoing, we
don't have any further comments at this point," the Swedish
company, as cited by Reuters, said.
Reuters says the petitions come as the Indian phone company
controlled by billionaire Anil Ambani races against time to seal
deals to sell a stake in its tower assets to Canada's Brookfield
and to merge its mobile services business with rival Aircel.
Reliance Communications reported its third quarterly loss in a
row last month and is trying to find ways to cut its debt after
creditors gave it a reprieve on loan repayments until the end of
2017, Reuters discloses.
The report relates that the Brookfield and Aircel deals are
expected to reduce its debt burden by INR250 billion. Ambani said
at the time of the loan reprieve that he expected to complete the
deals by September, the report states.
Reliance Communications shares closed 4 percent lower on Sept. 13
before the filing was released, after local media reports said
Ericsson had filed an insolvency plea, Reuters says.
India last year revamped its bankruptcy laws to help cut a record
$150 billion in impaired bank loans. The rules allow financial as
well as business creditors to trigger bankruptcy proceedings
against a company which has defaulted on payments, the report
notes.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd (BOM:532712)
-- http://www.rcom.co.in/Rcom/personal/home/index.html-- is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile
communication (GSM) technology-based networks across India;
voice, long distance services and broadband access to enterprise
customers; managed Internet data center services, and direct-to-
home (DTH) business. Global operations comprise Carrier,
Enterprise and Consumer Business units. It provides carrier's
carrier voice, carrier's carrier bandwidth, enterprise data and
consumer voice services. The Company owns and operates Internet
protocol (IP) enabled connectivity infrastructure, comprising
over 280,000 kilometers of fiber optic cable systems in India,
the United States, Europe, Middle East and the Asia Pacific
region.
As reported in the Troubled Company Reporter-Asia Pacific on
June 8, 2017, Moody's Investors Service has downgraded Reliance
Communications Limited's (RCOM) corporate family rating and
senior secured bond rating to Ca from Caa1. The outlook is
negative. This concludes the review of the ratings initiated by
Moody's on May 30, 2017.
The TCR-AP reported on June 8, 2017, that Fitch Ratings
downgraded India-based Reliance Communications Limited's (Rcom)
Long-Term Foreign- and Local-Currency Issuer Default Ratings
(IDR) to 'RD' from 'CCC'. Fitch has also downgraded the rating on
Rcom's USD300 million 6.5% senior secured notes due 2020 to
'C/RR4' from 'CCC/RR4'.
The downgrade follows Rcom's June 2, 2017 announcement that all
of its bank lenders are prepared to waive debt service
obligations until end-2017 to provide time for the company to
lower its debt through two proposed transactions and present a
plan demonstrating how the debt can be serviced over the long
term.
Under Fitch ratings definitions this situation constitutes a
restricted default, as multiple waivers or forbearance periods
have been extended in parallel following a non-payment event.
ROYALE MANOR: Ind-Ra Migrates BB Issuer Rating to Not-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Royale Manor
Hotels and Industries Limited's (Royale Manor) 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:
-- INR79.55 mil. Fund-based limits migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating; and
-- INR9.28 mil. Term loan due on September 2018 migrated to non-
cooperating category with IND BB(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 20, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Royale Manor was incorporated in 1991as Royale Manor Hotels
Limited in Gujarat. The company is established as the first five-
star hotel of Ahmedabad and is primarily engaged in the
hospitality business. The name of the hotel property is The Ummed
Ahmedabad.
SAM INDUSTRIAL: CARE Moves B+ Rating to Not Cooperating
-------------------------------------------------------
CARE has been seeking information from Sam Industrial Enterprises
Limited (SIEL) to monitor the rating(s) vide e-mail
communications/letters dated August 25, 2017, June 27, 2017, etc.
and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the SEBI guidelines,
CARE has reviewed the rating on the basis of publicly available
information which however, In care's opinion is not sufficient to
arrive at fair rating. Further, Sam Industrial Enterprises
Limited has not paid the surveillance fees for the rating
exercise as agreed to in its rating agreement. The ratings of Sam
Industrial Enterprises Limited will now be denoted as CARE B+;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.50 CARE B+; Issuer Not
Cooperating; based on best
Available information
Short-term Bank
Facilities 2.50 CARE A4; Issuer Not
Cooperating; based on best
Available information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on June 13, 2016. The following were
the rating strengths and weaknesses (Updated for the information
available from the registrar of companies).
Key Rating Weaknesses
Small scale of operations: The scale of operations of the company
stood small at INR45.97 crore for FY16 which limits the firm's
financial flexibility in times of stress and deprives it of scale
benefits.
Thin profitability margins: Margins of the company have been
erratic during three years FY14-FY16 owing to tender driven
nature of business. The PBILDT and PAT margins stood low at 9.45%
and 0.40% for FY16.
Leveraged capital structure and weak coverage indicators: The
capital structure of the company marked by overall
gearing ratio stood leveraged at 1.76x as on March 31, 2016
mainly on account of high dependence of external borrowings.
Further the coverage indicators of the company marked by interest
coverage ratio and total debt to GCA stood weak at 1.14x and
64.71x for FY16 as against 1.26x and 37.65x for FY15 on account
of high interest cost resulting into lower GCA.
Working capital intensive nature of operations: Operations of the
company are highly working capital intensive marked by an average
operating cycle of 164 days in FY16. The company sells products
to various government agencies and schools from whom the company
receives payments on delivery of the books to its customers. Due
to procedural delays at the customer end, there is usually a
delay in recovery of debtors. This resulted into an average
collection period of around 96 days for FY16. The company
normally receives credit period of around 15-30 days from its
suppliers. The company is required to maintain adequate raw
material inventory of paper, ink, lubricants, packing material
etc. for smooth running of its printing operations. This resulted
into an average inventory period of 82 days for FY16.The high
working capital requirement were largely met through bank
borrowings.
Competitive nature of industry: The printing and publication
industry is characterized by a high level of fragmentation and
regional concentration. Indian printing industry is characterized
as fragmented & competitive with very little differentiation in
terms of service offering. SIEL faces direct competition from
various organized and unorganized players in the market. There
are a number of small and regional players who are located in and
around area and catering to the same market which has limited the
bargaining power of the company and has exerted pressure on its
margins. The profits margins are likely to be under pressure in
the medium term.
Key rating strengths
Long track record of operations coupled with experienced
proprietor: The business is currently being managed by Mr Amit
Kaka with the support of other two directors, Mr Puneet Kumar
Mittal and his brother Mr Nitin Kumar Mittal. Mr Amit Kaka has an
experience of almost two decades in this printing and publication
business through his association with Kaka Publication Private
Limited, Kaka Sons Private Limited and SIEL. Mr Puneet Kumar
Mittal and Mr Nitin Kumar Mittal have an experience of more than
two decades each in printing and publishing industry through
their association with SIEL.
Noida (Uttar Pradesh) based, SAM Industrial Enterprises Limited
(SIEL) was incorporated in 1992 as SIRIUS Industrial Enterprises
Limited. In 1995 the name changed to the present one. The company
was promoted by Mr. Amit Kaka. . SIEL is engaged in designing,
printing and binding of books such as text books, guides for 10th
and 12th standard, sample papers, brochures and other printed
education material for various boards like Board of High School
and Intermediate Education Uttar Pradesh (U.P. Board), National
Council of Educational Research and Training (NCERT) and
Jharkhand Academic Council (Jharkhand Board). The company
procures the raw material such as paper, ink, chemical,
lubricants, and packing material locally from traders and
distributors. It gets the order through tendering and bidding
process. The company has two associate concerns namely Kaka
Publication Private Limited and Kaka Sons Private Limited
promoted by Mr. Amit Kaka. Both the companies are engaged in
similar line of business.
SHRI RASBIHARI: CARE Assigns B+ Rating to INR8.84cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shri
Rasbihari Agro Processors Private Limited (SRAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.84 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Shri Rasbihari Agro
Processors Private Limited (SRAPL) is constrained on account of
modest scale of operations with thin profit margins, moderate
capital structure and debt coverage indicators. The rating
further takes into account the working capital nature of
operations and its presence in highly competitive and fragmented
nature of industry. The rating however derives strength from the
experience of the promoter in agro based industries and
locational advantage emanating from proximity to raw material.
Going forward, ability of the company to increase its scale of
operations and improve profitability and capital structure and
manage working capital requirement effectively are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations with thin profit margins: SRAPL
commenced commercial production from January 31, 2012. Owing to
its short track record of about five years the scale of
operations has remained modest with low net worth base.
Furthermore, the profitability of the entity remained thin owing
to limited value addition nature of business and high
competition. Furthermore the margins remained susceptible to
fluctuation in input prices owing to seasonality associated with
availability of cotton.
Moderate capital structure and debt coverage indicators: The
relatively modest debt profile of the company as against the low
net worth base resulted in modest capital structure for the
company. Moreover, with thin profitability and modest debt
profile, the debt coverage indicators of the company remained
moderate.
Working capital intensive nature of operations: The liquidity
position of the company remained moderate with gross current
asset days of 42 days during FY17 (Provisional). Furthermore as
the raw material availability is seasonal in nature the company
has to maintain higher inventory. The working capital
requirements of the company are met by the cash credit facility
the average utilization of the CC limit was on higher side in the
peak season (October to May).
Operating margins are susceptible to cotton price fluctuation and
seasonality associated with cotton industry: Prices of raw
material i.e. raw cotton are highly volatile in nature and depend
upon factors like, area under production, yield for the year,
international demand supply scenario, export quota decided by
government and inventory carry forward of last year. Ginners
usually have to procure raw materials at significantly higher
volume to bargain bulk discount from suppliers.
Further, cotton being a seasonal crop as it is available mainly
from November to February results into a higher inventory holding
period for the business. Thus, aggregate effect of both the above
factors results in exposure of ginners to price volatility risk.
Presence in highly fragmented industry with limited value
addition: SRAPL is engaged in the ginning and pressing of
cotton which involves very limited value addition and hence
results in thin profitability. Moreover, on account of large
number of units operating in cotton ginning business, the
competition within the players remains very high resulting in
high fragmentation and further restricts the profitability. Thus,
ginning players have very low bargaining power against its
customer as well as suppliers.
Key Rating Strengths
Experienced promoters: SRAPL is promoted by Sarda family of
Chandrapur and the company's executive directors are Mr.Ramkishor
Sarda and Mr.Anandidevi Sarda. Mr.Ramkishor Sarda (Managing
Director) has an experience of about three decades in agro based
industries through its group company. Being in the industry for
about three decades helps the promoter to gain adequate acumen
about the business which will aid in smooth operations of SRAPL.
Location advantage emanating from proximity to raw material:
SRAPPL's unit has close proximity to cotton growing areas of
Chandrapur which is the major raw material procurement
destination for the company. Furthermore, the plant has easy
accessibility to transportation facilities and other requirements
like good supply of power, water etc.
Chandrapur (Maharashtra) based Shri Rasbihari Agro Processors
Private Limited (SRAPL) was incorporated as a private limited
company in the year 2012. The company is promoted by Mr Ramkishor
Sarda and Mr Anandidevi Sarda (Spouse of Mr Ramkishor Sarda) and
is engaged in cotton ginning and pressing business at its
manufacturing facility located at Chandrapur, Maharashtra having
an installed capacity of 35,000 bales per annum and cotton seeds
of 10,000 MTPA. SRAPL procures its raw material i.e raw cotton
from the local market and farmers and the finished products i.e.
cotton bales and cotton seeds are sold to the customers located
throughout India.
SHRI SALASAR: CRISIL Assigns B+ Rating to INR30MM Term Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Shri Salasar Agro Processors (SSAP). The
rating reflects risks pertaining to timely stabilization and ramp
up of SSAP's new plant and below-average financial risk profile.
These weaknesses are partially offset by the extensive experience
of the promoters in the agro-products industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable
Proposed Term Loan 30 CRISIL B+/Stable
Analytical Approach
For arriving at the ratings, CRISIL has treated INR4 crore of
interest free unsecured loans from promoters and their relatives
as neither debt nor equity as it is expected to be retained in
the business and these are sub-ordinated to bank borrowings.
Key Rating Drivers & Detailed Description
Weaknesses
* Risks pertaining to timely stabilization and ramp up of SSAP's
new plant: The firm had bought new plant in Nagpur for about
INR12 crore which will be debt funded to tune of INR9 crore. The
timely stabilization and ramp up of new plant will be key rating
sensitivity factor over the medium term.
* Below-average financial risk profile: The networth was modest
at about INR1.90 crore and the gearing high at 3.30 times, as on
March 31, 2017. The interest coverage ratio was moderate at 2
times in fiscal 2017.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of over 2 decades of experience in the agro
products industry. This has resulted in steady orders from
customers and a long-standing relationship with suppliers and
customers.
Outlook: Stable
CRISIL believes SSAP will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of a substantial increase in revenue and
profitability, leading to a substantial increase in cash accruals
and hence to a better financial risk profile. The outlook may be
revised to 'Negative' in case of a decline in cash accruals, or
larger than expected debt-funded capital expenditure, or an
increase in working capital requirement, resulting in weakening
of the financial risk profile, particularly liquidity.
Incorporated in 2013, SSAP is engaged manufacturing of soyabean
oil and deoiled cake (DOC).
SHUKAN MICRO: CRISIL Reaffirms 'B' Rating on INR7.2MM Term Loan
---------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Shukan Micro Mineral LLP (SMM LLP) at 'CRISIL B/Stable/CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .6 CRISIL A4 (Reaffirmed)
Cash Credit 4.0 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .2 CRISIL B/Stable (Reaffirmed)
Term Loan 7.2 CRISIL B/Stable (Reaffirmed)
The ratings reflect a small scale and early stage of operations
in the intensely competitive ceramics industry, and large working
capital requirement. These weaknesses are mitigated by the
extensive industry experience of the partners, and the favorable
location of the plant ensuring availability of raw material and
labor.
Analytical Approach
For arriving at the ratings, unsecured loans from partners have
been treated as neither debt nor equity as these carry a lower-
than-the-market interest rate, and will remain in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a competitive industry:
Operations began from August 2016. Cash accrual will be lower
during the plant stabilization period. Hence, scale of operations
will remain small over the medium term (revenue is estimated at
Rs9.9 crore for fiscal 2017).This is compounded by intense
competition, which limits bargaining power with suppliers and
customers.
* Large working capital requirement:
Working capital requirements are large as indicated in high GCA
days of around 120 days as on 31st March 2017.
Strengths
* Extensive experience of the partners
The partners have been in the ceramics industry for over a decade
through group companies. This has enabled them to understand
local market dynamics and establish a strong relationship with
suppliers and customers.
* Favorable location ensuring availability of raw material and
labor:
The plant is located in Morbi, Gujarat, the hub of India's
ceramic tiles segment. This ensures easy access to clay (main raw
material), and availability of contractors and skilled labor.
Outlook: Stable
CRISIL believes SMM LLP will maintain its business risk profile
backed by the experience of its partners. However, the financial
risk profile is expected to remain moderate over the medium term
with average gearing and debt protection metrics due to lower
accrual during the project stabilisation phase. The outlook may
be revised to 'Positive' if earlier-than-expected stabilisation
of operations improves the financial risk profile. The outlook
may be revised to 'Negative' in case of a lower-than-anticipated
operating margin, sizeable debt-funded expansion, or inefficient
working capital management, leading to weakening of the financial
risk profile.
SMM LLP was incorporated in June 2015 in Morbi, promoted by Mr.
Godhaviya Bhavesh Narbheram, Mr. Bhesadadia Hitesh Hardas, Mr.
Virangama Ramesh Amarsi, and Mr. Fultariya Gunvany Ravji. It has
a manufacturing unit for NA2O feldspar and K2O feldspar -
purified clay used in manufacturing of ceramic products.
In fiscal 2017, net loss was INR0.93 crore on an operating income
of INR9.90 crore.
SORENTO GRANITO: CARE Reaffirms B+ Rating on INR17.75cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Sorento Granito Private Limited (SGPL),, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 17.75 CARE B+; Stable/CARE A4
Term Bank Reaffirmed
Facilities
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of SGPL continue to
remain constrained on account of its moderate scale of
operations, low profitability, moderately leveraged capital
structure, weak debt coverage indicators and moderate liquidity
position. The ratings also remain constrained on account of
susceptibility of its margins to volatility in raw material and
fuel prices, customer concentration risk and its presence in
highly fragmented vitrified tiles industry with fortunes linked
with the cyclical real estate market. The ratings also take into
consideration decline in turnover, profitability and cash
accruals along with elongation in operating cycle during FY17
(Provisional; refers to the period April 1 to March 31) over
FY16.
The ratings, however, continue to draw strength from vast
experience of the promoters in the tiles manufacturing business,
well-established relationship with customers & suppliers and
location advantage through its presence in the tile cluster of
Gujarat.
The ability of SGPL to increase its scale of operations and
improve its overall financial risk profile by improving
profitability, capital structure and debt coverage indicators
while efficiently managing the working capital requirements
remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate scale of operations with low profitability: The total
operating income (TOI) decreased and stood moderate at INR40.79
crore in FY17 (Provisional) from INR48.30 crore in FY16.
Resultantly, the operating profits also decreased in FY17
(Provisional) over FY16. Further, PAT stood low on the back of
high depreciation and interest costs during FY17.
Moderately leveraged capital structure with a deterioration in
debt coverage indicators and moderate liquidity position: The
capital structure as marked by overall gearing ratio remained
moderately leveraged at 2.18 times as on March 31, 2017
(Provisional) as against 2.09 times as on March 31, 2016, owing
to an increase in the total debt level.
Furthermore, the debt coverage indicators also deteriorated due
to a decrease in cash accruals and an increase in total level of
debt as on March 31, 2017 (Provisional). The liquidity position
stood moderate as marked by current ratio at 1.36 times as on
March 31, 2017 (Provisional) and high utilization of working
capital borrowings which stood at 93% for the past 12 months
period ended July, 2017. Operating cycle also stood elongated at
179 days during FY17.
Susceptibility of operating margins to fluctuations in the raw
material and fuel prices along with presence in fragmented
industry with fortunes dependent on the cyclical real estate
industry and concentrated customer base: The prices of primary
raw material, i.e. clay and fuel, i.e. Liquefied Natural Gas is
market driven and might put pressure on the margins of SGPL.
Majority of the demand of tiles comes from the real estate
industry which is highly cyclical in nature, while presence of
numerous organized and unorganized players makes the industry
fragmented. Also, very few customers contribute a major chunk
towards the TOI, leading to customer concentration risk.
Key Rating Strengths
Experienced promoters with established customer and supplier
relationship: The key promoters of SGPL have an average
experience of more than 10 years in the same line of business,
while the long standing industry experience has helped SGPL to
establish customer and supplier base.
Location advantage: SGPL's plant is located in Morbi (Gujarat)
which is one of the largest ceramic clusters in India having
easy access to raw materials, labour, water and power connection.
Incorporated in 2007, Morbi-based SGPL is engaged in the
manufacturing of vitrified tiles. SGPL is promoted by Mr.
Bhagwandas Tulsiyani along with Mr. Hasmukhlal Ubhadiya, Mr.
Murlibhai Tulsiyani and Mr. Narendra Kagthara. SGPL operates
with an installed capacity of manufacturing 7,500 boxes of tiles
per day and sells its product under the brand name of "Sorento".
SPEEDCRAFTS LIMITED: CRISIL Cuts Rating on INR24MM Loan to 'D'
--------------------------------------------------------------
CRISIL has removed its ratings on the bank facilities of
Speedcrafts Limited (SPL; part of the SPL group) from 'Rating
Watch with Negative Implications', and has downgraded the ratings
to 'CRISILD/CRISILD' from 'CRISIL BB+/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL A4+')
Cash Credit 24 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL BB+')
Letter of Credit 3.5 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL A4+')
Proposed Long Term 21.22 CRISIL D (Removed from
Bank Loan Facility 'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL BB+')
Term Loan 8.90 CRISIL D (Removed from
'Rating Watch with Negative
Implications'; Downgraded
from 'CRISIL BB+')
On March 10, 2017, CRISIL had downgraded the ratings to 'CRISIL
BB+/CRISIL A4+' from 'CRISIL BBB/Negative/CRISIL A3+' and placed
the rating on 'Watch with Negative Implications'. The rating
action followed SPL group's decision to de-merge railways and
road division in separate companies [road business in SPL and
railways business in Phooltas Transrail Limited (Phooltas;
formerly known as Phooltas Harsco Rail Solutions Pvt Ltd and part
of the SPL group)]. The ratings continued to be on watch on June
09, 2017 as CRISIL was in discussions with SPL and Phooltas's
management to evaluate the impact of the proposed de-merger on
its credit risk profile.
The rating downgrade reflects overdrawals of more than 30 days in
cash credit facility because of weak liquidity.
The ratings also reflect group's working capital-intensive
operations and tender-based nature of operations. These rating
strengths are partially offset by group's stable market position
in the road construction and track maintenance industry.
Analytical Approach
Despite management's intent to demerge the business, CRISIL
continues to consolidate the business and financial risk profiles
of SPL and Phooltas Transrail Ltd (Phooltas; formerly known as
Phooltas Harsco Rail Solutions Pvt Ltd) on account of lack of
clarity on the demerged business and financial profiles. SPL and
Phooltas, together known as the SPL group, currently has business
and financial inter-linkages.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: SPL group's business is
highly working capital intensive, as reflected in GCA days of 352
days as on March 31, 2016 on account of high inventory levels of
around 201 days and receivables cycle of 102 days.
* Tender-based operations: The track maintenance industry in
India consists of a single major customer, the Indian Railways,
and limited number of authorised suppliers. Lack of alternate
demand and delay in commissioning of new orders restricts SPL
group's scale of operations. On account of customer concentration
and tender-based nature of operations, the SPL group has limited
visibility on order book.
Strengths
* Stable market position in the road construction and track
maintenance industry: The SPL group also has a stable market
position in the road construction and railway maintenance
equipment industry. In the track maintenance equipment segment,
the SPL group has an edge over its competition which provides it
with a first-mover advantage and cost advantage over other large
players; this has helped the group maintain a sizeable market
share. Track maintenance equipment and track laying projects are
expected to be the revenue drivers for the SPL group over the
medium term. Indian Railways continues to be the SPL group's
largest customer and accounts for a major proportion of the
group's outstanding orders.
SPL, set up in 1971, manufactures road construction equipment. In
1975, it ventured into manufacturing of road-rollers, and
subsequently diversified its product profile by adding drum mix
plant, pot-hole repairing machines, and hot-mix rolling plants.
The company has its manufacturing facility in Patna and Haridwar.
Phooltas, was set up in 1985 and has its manufacturing facility
in Patna, was set up in 1985. It was set up as an Indo-US joint
venture, with Harsco Rail (a division of Harsco Corporation) as
the equity partner; however Harsco Rail sold its stake in fiscal
2016. It sells track maintenance equipment largely to various
divisions of Indian Railways. Phooltas, because of its small
manufacturing capability, majorly sources the track maintenance
equipment to SPL.
SPEL SEMICONDUCTOR: CRISIL Hikes Rating on INR45MM Loan to 'C'
--------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of
SPEL Semiconductor Ltd (SPEL; part of the SPEL group) to 'CRISIL
C/CRISIL A4' from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 4 CRISIL A4 (Upgraded from
'CRISIL D')
Packing Credit 11 CRISIL A4 (Upgraded from
'CRISIL D')
Proposed Long Term 45 CRISIL C (Upgraded from
Bank Loan Facility 'CRISIL D')
Proposed Short Term 15 CRISIL A4 (Upgraded from
Bank Loan Facility 'CRISIL D')
The rating upgrade reflects improvement in the group's operating
performance in fiscal 2017, after a subdued performance in fiscal
2016, when labour strikes had resulted in delayed execution of
orders. Operating loss reduced to 1.7% in fiscal 2017 from 37%
the previous fiscal. Competitive pressure, especially from South
East Asian players, however, continues to be intense.
The ratings also reflect SPEL's modest scale and susceptibility
to pricing pressure. These rating weaknesses are partially offset
by the long-standing presence in the integrated circuit (IC)
segment.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of SPEL and its wholly owned subsidiary,
SPEL America Inc, USA, together referred to as the SPEL group.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale and susceptibility to pricing pressure in the
intensely competitive global semiconductor industry - Despite the
group being one of the few IC assembly and testing entities in
India, the global semiconductor subcontracting industry is marked
by the presence of several large players based out of China,
Korea, and Malaysia.These players with integrated operations have
better control on their raw material prices and greater ability
to absorb fluctuations in input costs rendering pricing
flexibility. Modest scale will continue to limit SPEL's
advantages of economies of scale.
Strengths
* Longstanding presence in IC segment backed by experienced and
qualified management: The SPEL group has been in the
semiconductor industry for more than three decades and is one of
the few IC assembly and testing entities in India; it executes
subcontracts for big players such as Pericom and California Micro
Devices Corporation (CMD). The operations are professionally
managed, thereby enabling the group get certified by its end
users such as Samsung, Canon, IBM, among others and supply ICs to
them directly. Benefits from the established market position and
experienced and qualified management are expected to continue
even over the medium term.
Set up by Southern Petrochemical Industries Corporation Ltd in
1984 in Chennai, SPEL assembles, tests, and packs ICs. Its
products are used mostly in cell phones, computers, notebooks,
and personal digital assistants. The company's wholly owned
subsidiary in the US, SPEL America, commenced operations in 2005-
06 (refers to financial year, April 1 to March 31) mainly to
support SPEL's marketing activities and to expand its clientele.
SRI BALAJI: CRISIL Reaffirms 'B' Rating on INR15MM Cash Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings at 'CRISIL B/Stable/CRISIL A4'
on the bank facilities of Sri Balaji Raw And Parboiled Rice Mills
Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 8 CRISIL A4 (Reaffirmed)
Cash Credit 15 CRISIL B/Stable (Reaffirmed)
Warehouse Financing 15 CRISIL B/Stable (Reaffirmed)
The ratings reflect Balaji's moderate scale of operations in the
intensely competitive rice-milling industry and the
susceptibility of the company's operating profitability to
volatility in raw material prices and changes in government
regulations. The rating also reflects it's weak financial risk
profile because of low net worth, high gearing and weak debt
protection metrics. These weaknesses are partially offset by the
extensive experience of the promoters in the rice industry.
Key Rating Drivers & Detailed Description
Weakness
* Moderate scale of operations in the intensely competitive rice-
milling industry: Balaji's business risk profile is marginally
constrained on account of its moderate scale of operations in the
fragmented and intensely competitive rice milling industry. The
company reported revenues INR97.12 crore for Fiscal 2016-17
(refers to financial year April 1 to March 31). Company's
revenues are expected to increase but should remain moderate over
the medium term.
* Susceptibility of the firm's operating profitability to
volatility in raw material prices and changes in government
regulations: Raw material (Paddy) accounts for around 80-85% of
the total cost exposing the company to the risk arising due to
volatility in the same. Furthermore domestic rice industry is
highly regulated because of which the company is exposed to the
risk of any unfavorable change in the same.
* Weak financial risk profile: Financial risk profile is weak
marked by low net worth, high gearing and weak debt protection
metrics. Net worth was low at around INR11.3 crore against a
total debt outstanding of Rs27.25 crore resulting in high gearing
of 2.4 times as on March 31 2017. Debt protection metrics was
also weak as reflected in interest coverage ratio and net cash
accruals to total debt of 1.06 times and 0.7% for the Fiscal
2016-17.
Strengths
* Extensive experience of promoters
Balaji's promoters have been in the rice milling business for
more than three decades. Balaji is the latest venture of the
promoters who already have other group companies in the same line
of business. Long standing experience of promoters has enabled
the firm in establishing strong relationship with the suppliers
and customers because of which the company has been able to ramp
up its operations quickly.
Outlook: Stable
CRISIL believes Balaji will continue to benefit over the medium
term from the promoters' extensive experience. The outlook may be
revised to 'Positive' if substantial and sustainable improvement
in revenue and profitability, or a sizeable equity infusion
strengthens liquidity and financial risk profile. Conversely, the
outlook may be revised to 'Negative' if a steep decline in
profitability, or stretch in working capital cycle or large debt
funded capital expenditure weakens the financial risk profile.
Set up in June 2013 by Mr. Viswanadham and his family, Balaji
mills and processes paddy into rice; it also generates by-
products, such as broken rice, bran, and husk. The mill is in
Vijayawada.
Balaji reported profit after tax (PAT) of INR0.16 crore on
revenues of around INR97.12 crore in fiscal 2017, against 0.12
crore and INR102.51 crore in fiscal 2016.
SRI VINAYAGA: CRISIL Assigns 'D' Rating to INR22.5MM LT Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
loan facility of Sri Vinayaga Green Power Generation Private
Limited (SVGPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 22.5 CRISIL D
The rating reflects instances of delay in servicing term debt
because of weak liquidity on account of mismatch in cash flows.
Key Rating Drivers & Detailed Description
Weakness
* Steady revenue stream, backed by power purchase agreement (PPA)
for three years: The PPA for three years helps keep demand risk
moderate, and supports revenue visibility.
Strengths
* Exposure to changes in regulations and climatic conditions: Any
changes in Government's evacuation policy, wheeling charge, or
fall in power generation level can impact credit risk profile.
* Weak capital structure: Negative networth on account of initial
large capex and losses, have resulted in a weak capital
structure.
SVGPL, incorporated in 2012 by Mr. Duraiswamy Vinoth and six
other members of his family at Namakkal, operates a 5 MW solar
power plant.
SUBIZZ TRAVEL: CARE Moves B+ Rating to Not Cooperating
------------------------------------------------------
CARE has been seeking information from Subizz Travel Solutions
Private Limited to monitor the ratings vide emails dated
August 22, 2017 and August 10, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requisite information for monitoring the ratings. In
the absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. Further,
Subizz Travel Solutions Private Limited has not paid the
surveillance fees for the rating exercise as agreed to in its
rating agreement In line with the extant SEBI guidelines CARE's
rating on Subizz Travel Solutions Private Limited will now be
denoted as CARE B+/ A4,; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 0.44 CARE B+; Issuer Not
Cooperating; Based on best
Available information.
Short term Bank
Facilities 0.48 CARE A4; Issuer Not
Cooperating; Based on best
Available information.
Long term /Short
Term Bank Facilities 1.08 CARE B+/CARE A4; Issuer Not
Cooperating; Based on best
Available information.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating assigned to the bank facilities of Subizz Travel
Solutions Private Limited continues to remain constrained by its
small scale of operations, presence in highly competitive and
fragmented industry, leveraged capital structure and working
capital intensive nature of operations.
Going forward, the ability of the company to increase the scale
of operations while improving profitability margins, capital
structure shall remain the key rating sensitivity. Also,
efficient management of working capital requirement shall be the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations
The scale of operations has remained small marked by a total
operating income and gross cash accruals of INR1.04 crore and
INR0.17 crore respectively during FY16. The small scale limits
the company's financial flexibility in times of stress and
deprives it from scale benefits.
Leveraged capital structure
Capital structure of the company stood leveraged for the past
three years (FY14-FY16). Overall gearing ratio stood at 1.20x as
on March 31, 2016.
Working capital intensive nature of operations
The operation of the company is working capital intensive nature
marked by operating cycle of 114 days in FY16. STSPL sells the
tickets on cash basis to individual clients. However, for
corporate clients (which form 90% of the client base) the company
offers a credit of around 15-30 days. The company receives a
credit period of around 20 days. The company books the commission
received in total operating income and the amount receivable from
customers is amount equivalent to the price of the tickets which
is being shown under debtors account which resulted in high
debtors. The company pays its creditors as and when it receives
payments from its customers. All these lead to high operating
cycle of 114 days.
Presence in highly competitive and fragmented industry
The tourism industry is highly fragmented industry which is
characterized by the presence of large number of small -tomedium
sized players with individual entities accounting for a small
portion of the overall market. The industry is dominated by
unorganized sector on account of low capital requirements as well
as low entry barriers. As a result, the competitive pressures in
the industry are high which adversely impacts the bargaining
power and profitability of all the players in the industry. The
company also faces competition from organized players like Make
My Trip, Goibibo.com etc which exerts the pressure on the margin
of the company.
Key Rating Strenghts
Experienced promoters
The company is promoted by Mr. Maninder Uppal and Ms. Priyadatta
Uppal. Mr. Maninder Uppal has around two decades of experience in
tour and travel industry. Prior to incorporation of STSPL, he was
regional manager of India in "FCM Travel Solution" an Australian
Company engaged in tour and travel business. He manages the day
to day operation of the company. Ms. Priyadatta Uppal has an
experience of four years in tour and travel industry through her
association with STSPL. She handles the sales and marketing
department.
Moderate profitability margins and coverage indicator
Profitability margins of the company increased and stood moderate
for FY16.The PBILDT margin of the company improved and continues
to remain moderate at 34.84% in FY16 on account of better
absorption of fixed cost expenses.
Consequently, PAT margin stood improved and stood at 16.57%
during FY16 as against 14.12% FY15.
Debt coverage indicators marked by interest coverage ratio and
Total Debt/ GCA stood moderate at 4.57x and 1.83x respectively
for FY16.
Pune based, Subizz Travel Solutions Private Limited (STSPL)
incorporated in June 20, 2012 as a private limited is promoted by
Mr. Maninder Uppal, and Ms. Priyadatta Uppal.STSPL is engaged in
travel and tours business wherein it provide domestic and
international tour packages which includes air & rail tickets,
hotel packages and cab services. The company's client includes,
corporates and individuals. STSPL is registered with the
International Air Transport Association (IATA) and they are also
a member of Travel Agents Federation of India(TAFI). The company
generates around 85% of it's revenue from booking air tickets and
the remaining 15% from other services. The company gets contracts
from corporates and has around 15 corporate contracts in hand.
For each corporate client the company has one travel consultant
exclusively dealing with the corporate client. The company
generates 90% of it's revenue from corporate clients and the
remaining 10% from individual customers.
TEXCEL INTERNATIONAL: CRISIL Puts B Issuer Not Cooperating Rating
-----------------------------------------------------------------
CRISIL has been consistently following up with Texcel
International Private Limited (TIPL) for obtaining information
through emails dated July 21, 2017 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10.2 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB/Stable'; Removed
from 'Notice of Withdrawal'
and Rating Reaffirmed)
Letter of Credit 3.0 CRISIL A4 (Issuer Not
Cooperating; Downgraded from
'CRISIL BB/Stable'; Removed
from 'Notice of Withdrawal'
and 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 firm.
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 TIPL. 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
TIPL is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL B' category
or lower. Based on the last available information, CRISIL has
downgraded the ratings to 'CRISIL B/Stable/CRISIL A4' from
'CRISIL BB/Stable/CRISIL A4+' and removed from 'Notice of
Withdrawal'.
TIPL, based in Chennai, was established in 2001 by the late Mr. R
Rajalingam and was managed by Mr. Kumar Narayanan. In April 2013,
MICPL acquired all of Mr. Narayanan's shares in the company.
Currently, the operations are managed by a professional chief
executive officer (CEO), Mr. M A Prasad. The company manufactures
precision components for the automobile, engineering, and related
industries, and undertakes heavy fabrication works for several
marquee engineering companies.
VRAJ REALTORS: CRISIL Reaffirms B+ Rating on INR8MM LT Loan
-----------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Vraj Realtors (VR) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 8 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect susceptibility of VR's revenue to
the cyclicality in the real estate industry. Also, the sales
velocity and construction progress of VR's ongoing project has
remained modest thereby, exposing the project to moderate
implementation risks. These rating weaknesses are partially
offset by extensive industry experience of promoters and
favorable location of its ongoing project.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to moderate project risk: VR is currently undertaking
construction of Vraj Tiara residential project in Worli, Mumbai.
The project is in nascent stages of construction with limited
sales recorded. CRISIL believes that the project progress and
sales velocity will remain key rating sensitivity factor over the
medium term.
* Susceptibility of VR's revenue to the cyclicality in the real
estate industry: India's real estate industry is marked by
cyclicality, opaque transactions, and intense fragmentation
because of the presence of a large number of regional players.
Strengths
* Extensive experience of promoters: VR benefits from over three
decades of extensive experience of its promoters in the real
estate industry. Over the years the promoters have developed a
track record of timely completion of residential and commercial
projects.
* Favourable location of project: Vraj Tiara is a premium
residential project situated at Adarsh Nagar, Worli. The project
benefits from its favourable location, close proximity to prime
areas and excellent connectivity. The favourable location is
partially expected to mitigate the demand risk for the project,
as the construction progresses.
Outlook: Stable
CRISIL believes VR will continue to benefit from extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of more-than-expected sales realization
from ongoing projects, leads to substantially large cash inflows.
Conversely, the outlook may be revised to 'Negative' if there are
any delays in the execution of the project or in the receipt of
advances from customers, or if VR undertakes a large, debt-funded
project, impacting its financial risk profile.
Vraj Realtors (based in Mumbai), a partnership firm, is into the
development of residential projects. The firm is a part of the
Vraj group which has interests in logistics, packaging, cement
and marketing. Currently, the firm is executing residential
project ' Vraj Tiara in Worli, Mumbai. The firm is promoted by
Babaria Family represented by Shri. Kirit Vrajlal Babaria, Mr.
Sharad Kirit Babaria and Mr. Mitesh Kirit Babaria and is based in
Mumbai.
WINSOME INTERNATIONAL: Ind-Ra Moves D Rating to Not-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Winsome
International Limited's (Winsome) 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 action is:
-- INR160 mil. Fund-based limit (Long-term/Short-term) migrated
to non-cooperating category with IND D(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 27, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Winsome is a public limited company. It has a manufacturing unit
in the name of Rameshwara Jute Mills in Muktapur, District
Samastipur in north Bihar and 400 narrow looms with 5,420
spindles.
====================
N E W Z E A L A N D
====================
BLUE CHIP: Robt Jones Ordered to Refund NZ$750K to Northern Crest
-----------------------------------------------------------------
BusinessDesk reports that Robt Jones Holdings will have to pay
some NZ$752,000 plus six years of interest to the liquidators of
Northern Crest Investments after the High Court ruled Bob Jones's
real estate firm jumped the queue in a liquidation of the failed
Blue Chip company.
In the High Court in Auckland, Justice Christine Gordon ruled in
favor of Northern Crest liquidators Anthony McCullagh and Stephen
Lawrence of PKF Corporate Recovery & Insolvency that payments to
the Wellington property mogul's real estate vehicle in 2010 were
made when the former Blue Chip unit was insolvent and could be
clawed back in the liquidation, according to BusinessDesk. The
litigation had its origins in the years leading up to Northern
Crest's 2011 liquidation when two related parties covered unpaid
rents after RJH stepped up demands when the firm fell behind its
rental payments on an Auckland Queen St lease.
The liquidators claimed the payments to discharge the debt to RJH
were a "redirection of licence fees owed to NCI (Northern Crest)"
at a time when the company was insolvent and were voidable
transactions, the September 8 judgment said, BusinessDesk relays.
Justice Gordon agreed, saying it was clear the payments "enabled
RJH to receive more in satisfaction of NCI's debt that RJH would
have received in NCI's liquidation," where unsecured creditors
were owed NZ$10 million and contingent claims totalled NZ$36m,
the report relays.
According to BusinessDesk, the judge rejected RJH's contention
the liquidators abused the process by not investigating licence
and loan arrangements deeply enough before filing the court
application, which the real estate firm said was "for the purpose
of recovering their fees incurred" knowing that "there was no
prospect of any recovery for the pool of creditors".
BusinessDesk relates that Justice Gordon said there was no
evidence that the application "was motivated by any improper or
illegitimate purpose" and the fact that funds received would be
absorbed by the liquidators' fees was "irrelevant" given their
legal obligations.
RJH was ordered to pay Northern Crest NZ$751,941.52, plus
interest at an annual rate of 5 percent from the date of the
liquidator's June 2011 appointment. The judge reserved her
decision on costs, the report notes.
Northern Crest had been part of the Blue Chip group and licensed
property investment services. It relocated to Australia, where it
was listed on the ASX, after making its last payment to RJH,
However, liquidators were appointed in 2011 when a former Blue
Chip employee's claim on the business was upheld, with Associate
Judge Tony Christiansen deeming the firm was insolvent and that
there were "significant reasons to expedite liquidation".
The Blue Chip group of companies failed in 2008 owing NZ$84
million to more than 2,000 investors and became a pin-up for
regulatory failures of the time when the Securities Commission
said property investment schemes fell outside the law requiring
an offer document.
BusinessDesk relates that the Supreme Court later rejected that
view in ruling the investment scheme marketing between 2005 and
2007 required a prospectus, however, the Financial Markets
Authority didn't go further than reviewing the case, instead
deciding it wasn't in the public interest because Blue Chip-
funded developers reached a settlement with investors.
WESTPAC BANKING: S&P Rates Add'l Tier 1 Capital Securities 'BB+'
----------------------------------------------------------------
S&P Global Ratings said it has assigned its 'BB+' issue credit
rating to the Additional Tier 1 capital securities that Westpac
Banking Corp. (Westpac; AA-/Negative/A-1+) has proposed to issue
out of the bank's New Zealand branch. The securities are fixed-
rate resetting perpetual subordinated contingent convertible
securities.
S&P said, "We rate these securities four notches below Westpac's
stand-alone credit profile of 'a-'. We exclude a three-notch
uplift for government support, reflecting our view that support
from the Australian government is unlikely to extend to hybrid
capital instruments issued by Westpac." The following factors
reflect the difference:
-- The securities' subordinated status (deduct one notch);
-- The risk of partial or untimely payment of coupons, in S&P's
view (deduct two notches); and
-- Contingent capital clauses for conversion into common equity
or write-down (deduct one notch).
S&P said, "We have assessed the proposed issue as having
intermediate equity content. In our view, these securities would
be able to absorb losses on a going-concern basis through
nonpayment of coupons, conversion into common equity, or
principal write-down. On issuance, we understand that these
securities will qualify as fully compliant Basel III Additional
Tier 1 capital under the Australian Prudential Regulation
Authority's requirements. These securities are perpetual
instruments with no fixed maturity date."
===============
P A K I S T A N
===============
PAKISTAN MOBILE: S&P Affirms 'B' CCR After Tower Infra Divestment
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on Pakistan Mobile Communications Ltd. (Jazz), a Pakistan-
based wireless service provider. The outlook is stable.
S&P said, "We affirmed the rating because we believe the recent
sale of the telecom tower infrastructure business does not
adversely affect Jazz's business profile. In our view, the
divestment of the telecom tower assets is in line with Jazz's
objective of becoming less asset-heavy and more focused on
technology and digital enterprise. We expect the company to
maintain its No. 1 position in Pakistan's competitive cellular
market, after it was further strengthened by its acquisition of
Warid Telecom (Private) Ltd. in 2016. Jazz has a 37.6% market
share of subscribers in Pakistan as of May 2017."
Jazz divested about 13,000 telecom towers (held in a wholly owned
subsidiary, Deodar (Private) Ltd.) in August 2017 for about
US$940 million. The transaction is awaiting regulatory approvals,
and we expect it to be completed by the end of 2017. Jazz plans
to use the proceeds toward partial debt repayment, funding its 4G
network roll-out, and possible shareholder distributions.
S&P said, "We estimate Jazz's overall leverage to increase to
2.0x-2.5x over the next three years, higher than our previous
estimate of less than 1.5x. This higher leverage is largely
driven by our view of the periodic payments for the use of towers
as a debt-like obligation.
"We expect Jazz to sustain annual revenue growth of 4%-5% over
2018 and 2019, led by higher 3G and 4G data consumption, which
will partially mitigate the impact of stagnating and gradually
declining voice revenues. Jazz's pan-Pakistan network coverage,
good brand presence, and entry into 4G with the integration of
Warid Telecom will support such growth. While Jazz's above-
average profitability supports its business position, we believe
the country and macroeconomic risk of Pakistan will continue to
weigh on the company's credit profile."
The stable outlook on Jazz reflects the outlook on our sovereign
credit rating on Pakistan.
S&P said, "We could lower our rating on Jazz if we lower the
sovereign rating or the transfer and convertibility assessment on
Pakistan. This could happen if Pakistan's external and fiscal
performance weakens.
"We are unlikely to lower the rating on Jazz if the company's
operating and financial performances deteriorate, given that its
stand-alone credit profile (SACP) is two notches above the
corporate credit rating.
"However, we may lower the SACP by one notch if Jazz's ratio of
FFO to debt falls below 30% sustainably. This could happen if the
company experiences weaker subscriber and revenue growth even as
it steps up investments toward the 4G network rollout.
"We could upgrade Jazz if we raise the sovereign credit rating on
Pakistan. The company's better operating performance could only
improve its SACP, given the sovereign rating constraint. However,
we are unlikely to raise the SACP unless Jazz attains a dominant
market share and improves its geographic diversity."
=================
S I N G A P O R E
=================
MMI INTERNATIONAL: Fitch Withdraws B+ Long-Term IDR
---------------------------------------------------
Fitch Ratings has withdrawn the ratings on Singapore's MMI
International Ltd and its 100% parent Precision Capital Private
Limited. The two entities had Long-Term Foreign-Currency Issuer
Default Ratings (IDRs) of 'B+' and Stable Outlooks.
The ratings have been withdrawn as MMI and Precision Capital have
chosen to stop participating in the rating process because they
do not intend to issue bonds in the foreseeable future.
Therefore, Fitch will no longer have sufficient information to
maintain the ratings. Accordingly, Fitch will no longer provide
ratings or analytical coverage for MMI and Precision Capital.
PRECISION CAPITAL: Moody's Lowers CFR to B3; Outlook Negative
-------------------------------------------------------------
Moody's Investors Service has downgraded Precision Capital
Private Ltd.'s (PCPL) corporate family rating (CFR) to B3 from
B2.
At the same time the outlook changed to negative from stable.
RATINGS RATIONALE
"The downgrade reflects the company's significant bank loan
amortization payments which will absorb cash on hand and cash
from operations over the next 6-12 months," says Annalisa
DiChiara, a Moody's Vice President and Senior Credit Officer.
PCPL reported a 4% contraction in revenues to $543 million for
fiscal year end June 2017 while reported normalized EBITDA
expanded 14.5%. The company also reported $34 million in cash on
its balance sheet at end-June 2017.
At the same time leverage, as measured by adjusted Debt /EBITDA
stood around 4.3x.
"Although the company has been successful in managing costs to
help offset slower revenue growth, which Moody'sviews positively,
EBITDA is expected to remain relatively flat over the next 12-24
months so the company's liquidity position will deteriorate
quickly as Moody'sestimates cash costs - including capex,
interest and mandatory loan amortization payments - will climb to
over $100 million for the year ending June 2018," adds DiChiara.
However, the company does have access to a $60 million revolving
credit facility -- undrawn at end-June 2017 -- which can be used
to support liquidity.
At the same time, the company remains exposed to contracting
demand in the hard disk drive (HDD) industry, and it relies
heavily on just a few players, including Seagate Technology HDD
Holdings and its intermediaries which account for around 80% of
revenues. Any change in these relationships would have a
significant impact on its cash flows.
Structural changes in HDD demand drivers - including a slowdown
in PC demand, increasing penetration of solid state drives (SSDs)
and a market shift to higher capacity HDDs - are expected to
drive a continued contraction in unit sales of HDDs year-over-
year. As PCPL's revenues are highly correlated to the number of
HDDs shipped globally, Moody's expects relatively flat EBITDA
over the next 12-24 months.
On the other hand, PCPL's B3 rating continues to reflect its
dominant position in the HDD components market, which is
supported by high barriers to entry and long-term and strategic
relationships with major original equipment manufacturers (OEMs).
The negative outlook reflects the company's tightening liquidity
position, due to heavy debt service costs.
A ratings upgrade is unlikely, unless a significant debt
reduction results in an improved capital structure, with adequate
liquidity.
Conversely, the rating could be downgraded further over the next
6-12 months if cash falls below $25 million. An inability to
remain compliant with its bank covenants would also be negative
for the rating.
The principal methodology used in this rating was Diversified
Technology Rating Methodology published in December 2015.
Precision Capital Private Ltd. is a subsidiary of MMI
Technologies Pte Ltd., a leading precision engineering components
company for HDD manufacturers worldwide. PCPL is majority-owned
by the private equity house, Kohlberg Kravis Roberts, with a
total controlling interest of 73%, while the remaining 27%
interest is held by the management of MMI.
====================
S O U T H K O R E A
====================
KUMHO ASIANA: To Give Up Mgt Rights of Unit if Restructuring Fail
-----------------------------------------------------------------
Yonhap News Agency reports that Kumho Asiana Group said on
Sept. 14 it will give up the management rights of its tire unit
if the airline-to-construction conglomerate fails to restructure
the financially troubled unit by March.
Yonhap relates that the group said in a statement that it will
also give up its right to buy back Kumho Tire Co. from a third
party.
According to Yonhap, the announcement comes after Kumho Tire's
creditors raised a question about the "details-deficient" self-
rescue plan submitted on Sept. 12 by the tiremaker to its
creditors, who are led by the state-run Korea Development Bank.
In March, China's Qingdao Doublestar signed a KRW955 billion
(US$843 million) contract with the creditors to buy a 42.01
percent stake in Kumho Tire, the report recalls. However, the
deal collapsed as the creditors rejected Doublestar's demand to
cut the price, citing the South Korean firm's weak earnings.
In the January-June period, Kumho Tire's net losses deepened to
KRW108 billion from KRW22 billion a year earlier. At the end of
June, it owed a total of KRW2.74 trillion to financial
institutions, Yonhap discloses.
In the self-rescue measures, the tiremaker said it will raise
about KRW200 billion by selling new stocks this year and will
raise funds by selling its loss-making plants in China by March,
says Yonhap.
Yonhap relates that Kumho Tire said the sale of its assets in
China could fetch up to KRW400 billion, but it didn't provide
further details on its self-rescue program.
The tiremaker could reportedly raise a total of KRW630 billion by
issuing new shares, selling assets in China and selling a stake
in Daewoo Engineering & Construction Co., adds Yonhap.
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
At that time, Kumho Asiana Group Chairman Park Sam-koo was given
a priority option to buy back the tiremaker should the creditors
of Kumho Tire decide to sell the company, according to Yonhap
News Agency.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***