/raid1/www/Hosts/bankrupt/TCRAP_Public/171027.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, October 27, 2017, Vol. 20, No. 214
Headlines
A U S T R A L I A
AUS ASIA: Second Creditors' Meeting Scheduled for Oct. 31
AUSTRADIA PTY: Placed Into Liquidation
BONDZULIC WOMEN: First Creditors' Meeting Set for Nov. 2
CAMPERDOWN DAIRY: Collapse Hit Brisbane Lions for Second Year
HUNTER AND KING: First Creditors' Meeting Set for Nov. 3
NUFARM LIMITED: Adama Acquisition No Impact on Moody's Ba3 CFR
ORMARC ENGINEERING: First Creditors' Meeting Set for Nov. 3
RHODES & BECKETT: Set to Return Under New Owners After Collapse
STE ENGINEERING: Second Creditors' Meeting Set for Nov. 2
C H I N A
YANGO CITY GROUP: S&P Assigns 'B' CCR With Stable Outlook
YANGO GROUP: Fitch Assigns B Long-Term IDR; Outlook Positive
YANGO GROUP: Moody's Assigns B2 1st-Time CFR; Outlook Stable
I N D I A
ABU ESTATE: CARE Assigns 'B' Rating to INR13.30cr LT Loan
ACUITY INDIA: CARE Assigns 'B+' Rating to INR8.37cr LT Loan
ADAMS MARKETING: Ind-Ra Moves D Issuer Rating to Not Cooperating
ARIYANAYAKI AGRO: CRISIL Reaffirms B+ Rating on INR9.4MM Loan
ARYAN CHARITABLE: CRISIL Assigns B- Rating to INR5.5MM Term Loan
DURGESHWARI INDUSTRIES: CARE Moves B+ Rating to Not Cooperating
ERA INFRA: UBI Seeks Insolvency Proceedings Against Firm
FINFOOT LIFESTYLE: CARE Moves B- Rating to Not Cooperating
GEO AQUATIC: CRISIL Reaffirms B+ Rating on INR5MM Bill Disc.
JOG CONSTRUCTION: CARE Moves B+ Rating to Not Cooperating
K.C. INDUSTRIES: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan
KARTIKEYA PAPER: CRISIL Lowers Rating on INR25MM Cash Loan to B
KATHPAL DAIRIES: CARE Assigns B+ Rating to INR15.90cr LT Loan
KAY BEE: CRISIL Reaffirms B- Rating on INR7MM Cash Loan
KEDARNATH COTTONS: CRISIL Reaffirms B Rating on INR20MM Loan
KESHAV GREENS: CRISIL Reaffirms 'B' Rating on INR3.5MM Term Loan
KLR INDUSTRIES: Ind-Ra Migrates D Rating to Not Cooperating
MB SPONGE: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
MOGALS EDUCATIONAL: CRISIL Cuts Rating on INR16MM LT Loan to 'D'
NEOMETRIX ENGINEERING: CRISIL Reaffirms B- Rating on INR4.5M Loan
OSNAR CHEMICAL: Ind-Ra Moves B+ Issuer Rating to Not Cooperating
P.C. JAIN: CRISIL Lowers Rating on INR6.0MM LT Loan to B+
PRITHVI POLYMERS: Ind-Ra Moves B Issuer Rating to Not Cooperating
R D SALES: Ind-Ra Assigns BB- Issuer Rating, Outlook Stable
RAMCO INTERNATIONAL: Ind-Ra Moves BB- Rating to Not Cooperating
SAI MAATARINI: Ind-Ra Moves BB Issuer Rating to Not Cooperating
SHRI MAHADEV: CRISIL Reaffirms 'B' Rating on INR4.3MM Cash Loan
SHRINET AND SHANDILYA: CARE Reaffirms B+ Rating on INR3cr LT Loan
SRI BALAMURUGAN: CRISIL Reaffirms B Rating on INR6MM Cash Loan
SRI DHARAM: CRISIL Reaffirms 'D' Rating on INR14.5MM LT Loan
SRI VENKATRAMA: CRISIL Raises Rating on INR20MM Cash Loan to B+
STATE BANK OF INDIA: Profit Hinges on Ongoing NPL Resolution
THAKKARSONS ROLL: Ind-Ra Moves BB Rating to Not Cooperating
TRIBHUWAN NARAYAN: CRISIL Lowers Rating on INR10MM Bank Loan to D
TRIDENT SUGARS: CRISIL Keeps 'C' Loan Rating on Watch Developing
UNISEX AGENCIES: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
VAISHNAVI GLOBAL: CRISIL Reaffirms B+ Rating on INR14MM LT Loan
VIKRAM INFRASTRUCTURE: Ind-Ra Affirms 'B+' LT Issuer Rating
M A L A Y S I A
PRESS METAL: S&P Assigns 'BB-' Corp Credit Rating, Outlook Pos.
N E W Z E A L A N D
FIRST CREDIT UNION: S&P Affirms Then Withdraws 'BB-/B' Ratings
S I N G A P O R E
EZION HOLDINGS: Will Apply to Strike Out Originating Summons
JAYA HOLDINGS: Set to Liquidate and Delist From SGX
T H A I L A N D
TMB BANK: Fitch Affirms 'BB+' Support Rating Floor
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A U S T R A L I A
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AUS ASIA: Second Creditors' Meeting Scheduled for Oct. 31
---------------------------------------------------------
A second meeting of creditors in the proceedings of Aus Asia
Minerals Limited has been set for Oct. 31, 2017, at 11:00 a.m.,
at the offices of Pitcher Partners, Level 1, 914 Hay Street, in
Perth, West Australia.
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 Oct. 30, 2017, at 4:00 p.m.
Daniel Johannes Bredenkamp and Renee O'Driscoll of Pitcher
Partnerswere appointed as administrators of Aus Asia Minerals on
Aug. 28, 2017.
AUSTRADIA PTY: Placed Into Liquidation
--------------------------------------
At the Second Meeting of Creditors held on Oct. 18, 2017,
Austradia Pty Ltd was placed into liquidation by resolution of
creditors. James Stewart, Ryan Eagle and Jim Sarantinos of
Ferrier Hodgson were appointed Liquidators.
On May 24, 2017, James Stewart, Ryan Eagle and Jim Sarantinos
were appointed as joint and several Voluntary Administrators to
the assets and undertakings of Austradia Pty by resolution of the
Company's directions, pursuant to Section 436A of the
Corporations Act 2001.
On Aug. 25, 2017, the Administrators announced the successful
restructure of the Australian retail business. This was achieved
by the completion of the sale of certain assets to Top Shop/Top
Man (Australia) Limited, an entity controlled by the Arcadia
Group (Arcadia), a British multinational fashion retailer.
As a result, stores located at Sydney Gowings, Bondi, Melbourne
Emporium and Brisbane will remain open.
Arcadia took control of the business and the remaining stores on
Sept. 3, 2017, following the transfer of certain employees and go
forward store leases.
BONDZULIC WOMEN: First Creditors' Meeting Set for Nov. 2
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Bondzulic
Women Pty Ltd will be held at the offices of Worrells Solvency &
Forensic Accountants, Level 1, 160 Brisbane Street, in Ipswich,
Queensland, on Nov. 2, 2017, at 10:30 a.m.
Adam Francis Ward Worrells Solvency was appointed as
administrator of Bondzulic Women on Oct. 24, 2017.
CAMPERDOWN DAIRY: Collapse Hit Brisbane Lions for Second Year
-------------------------------------------------------------
Andrew Hamilton at The Courier-Mail reports that Brisbane are
looking at another massive annual loss after being struck by the
collapse of a major commercial partner for the second year in a
row.
Naming sponsor Camperdown Dairy International was placed into
administration in July after an AUD83 million collapse, the
report recalls.
Camperdown Dairy International paid the first year of a three-
year deal last year but haven't made a payment this year,
according to The Courier-Mail.
The Courier-Mail says the Lions are understood to be trying to
recover a debt of AUD1 million in unpaid sponsorship fees from
the company and if they are unsuccessful, their annual end of
year financial report is set to detail a loss of around AUD2
million.
It is understood the Lions are close to announcing a replacement
sponsor in the coming weeks for 2018 and beyond, the report
notes.
According to the report, Brisbane lost AUD1.7 million last year
but included in that was a payout to sacked coach Justin
Leppitsch and a AUD300,000 renovation at their Gabba
headquarters.
The previous year, 2015, was the Lions' best in close to a decade
where their annual losses totalled about AUD700,000, the report
states.
It was only the second time since their last finals appearance in
2009 that the annual losses had been under AUD1 million.
The club had hoped to fall in that range again this year before
the collapse of CDI, the report says.
Camperdown Dairy International produces and supplies infant dairy
products in Australia.
Craig Shepard and Jarrod Villani KordaMentha were appointed
Administrators of Camperdown Dairy on July 5, 2017.
HUNTER AND KING: First Creditors' Meeting Set for Nov. 3
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Hunter And
King Street Project Pty Ltd will be held at the offices of SV
Partners, Suite 3, Level 4, 426 King Street, in Newcastle, West
New South Wales, on Nov. 3, 2017, at 10:00 a.m.
Daniel Jon Quinn of SV Partners was appointed as administrator of
Hunter and King Street on Oct. 24, 2017.
NUFARM LIMITED: Adama Acquisition No Impact on Moody's Ba3 CFR
--------------------------------------------------------------
Moody's Investors Service says that Nufarm Limited's Ba3
corporate family rating will not be immediately impacted by its
acquisition of the European product portfolio of Adama
Agricultural Solutions Ltd and Syngenta Crop Protection AG.
The rating outlook is stable.
"The acquisition of the assets for a cash consideration of USD490
million, plus approximately USD50 million for inventory, will
have a small positive impact on financial leverage, because the
transaction will be substantially funded by an underwritten
equity issue of AUD446 million," says Maurice O'Connell, a
Moody's Vice President and Senior Credit Officer.
"Based on Moody's pro forma estimate for the fiscal year ended
July 2017, and assuming the full year earnings impact and funding
structure as announced, Nufarm's adjusted financial leverage
would have registered 3.5x rather than the actual 3.7x," adds
O'Connell. "Such a situation strongly positions Nufarm within the
parameters of its Ba3 rating, and the equity raising provides
flexibility for Nufarm to acquire additional debt-funded assets
within the tolerance levels set for its rating."
The assets being acquired are established brands with over 50
formulations and in excess of 260 registrations in the European
Economic Area. Moody's considers that the transaction will
strengthen Nufarm's presence in Europe, which accounted for a
modest 18% of reported revenue in the year ended July 2017.
The rating could be upgraded if Moody's sees a consistent
improvement in the performance across Nufarm's businesses,
including better earnings and cash flow generation from
Australia, and reduced working capital. Financial metrics that
Moody's would consider for an upgrade include a Moody's adjusted
debt/EBITDA of below 3.5x.
Nufarm's rating could face negative pressure if operating
conditions deteriorate beyond Moody's current expectations. Such
a scenario could include a further deterioration in its
Australian operations or lower-than-expected growth from South
America.
The rating could also experience negative pressure if the company
cannot sustain or improve on its countermeasures to manage
working capital effectively.
Specific metrics that Moody's would consider in downgrading the
rating include an adjusted debt/EBITDA exceeding 4.5x-5.0x on a
sustained basis. In addition, negative rating actions would
likely occur if the company cannot comply adequately with the
financial covenants in its debt facilities.
The principal methodology used in this rating was Global Chemical
Industry Rating Methodology published in December 2013.
Nufarm is a crop protection company which manufactures and sells
a range of crop protection products including herbicides,
insecticides and fungicides.
ORMARC ENGINEERING: First Creditors' Meeting Set for Nov. 3
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Ormarc
Engineering Pty Ltd will be held at the offices of KordaMentha,
Level 10, 40 St Georges Terrace, in Perth, West Australia, on
Nov. 3, 2017, at 10:00 a.m.
John Bumbak and Richard Tucker of KordaMentha were appointed as
administrators of Ormarc Engineering on Oct. 24, 2017.
RHODES & BECKETT: Set to Return Under New Owners After Collapse
---------------------------------------------------------------
SmartCompany reports that high-end male and female fashion chain
Rhodes & Beckett is set to return to the Australian market under
new ownership in November after collapsing into voluntary
administration in February this year.
According to SmartCompany, Inside Retail reported that Black Bear
Holdings will re-launch the brand with a focus on premium retail
locations, and says four boutiques and two pop-up stores will be
launched across Melbourne, Sydney, and Adelaide.
Worldwide shipping will also be offered through a new website,
with former creative director of Rhodes & Beckett and Black Bear
director Michel Boutin saying the retailer was aiming to provide
customers "innovative, fresh designs on a quick rotation,"
SmartCompany relates.
Luke Christopher Targett, Bruno A Secatore and Daniel P
Juratowitch of Cor Cordis Chartered Accountants were appointed as
administrators of Rhodes & Beckett on Feb. 6, 2017.
STE ENGINEERING: Second Creditors' Meeting Set for Nov. 2
---------------------------------------------------------
A second meeting of creditors in the proceedings of STE
Engineering Pty Ltd has been set for Nov. 2, 2017, at 1:00 p.m.,
at the boardroom of Chifley Advisory, Level 2, 9 Phillip Street,
in Parramatta, NSW, and the trading premises of the Company at
4 Hynes Court, in Mildura, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 1, 2017, at 4:00 p.m.
Gavin Moss and Trent McMillen of Chifley Advisory were appointed
as administrators of STE Engineering on Nov. 1, 2017.
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C H I N A
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YANGO CITY GROUP: S&P Assigns 'B' CCR With Stable Outlook
---------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term corporate credit
rating to Fuzhou-based property developer Yango City Group Co.
Ltd. The outlook is stable.
S&P said, "The rating on Yango City reflects our view that the
developer will continue to maintain high debt leverage to support
its rapid expansion and penetration into higher-tier cities. In
our view, this fast-expansion model will pressure Yango City's
internal resources and increase execution risk. In addition, the
company's refinancing risk is high relative to peers' because of
large non-bank borrowings and a short-debt maturity profile.
Nevertheless, we believe these risks are tempered by Yango City's
satisfactory sales execution, our expectation of high growth in
contracted sales in the coming two years, and the company's
established market position in Fujian.
"We believe Yango City will continue to have high spending on
land in the next two to three years to support its strong sales
growth and target to be a top-10 developer in China in terms of
scale. We project that the company will spend Chinese renminbi
(RMB) 60 billion - RMB70 billion on land each year from 2017 to
2019, which will be about 85% of its contracted sales in 2017,
gradually reducing to 55% of sales by 2019. These ratios are high
relative to many Chinese developers that on average spend 40%-50%
of their contracted sales proceeds on land banking each year.
"In our view, rising land price in higher-tier cities will limit
Yango City's growth in margins, despite the recent increase in
property price. The developer will need to increase land reserves
in tier-one cities and key tier-two cities to execute its "3+1+x"
-- three regions + 1 greater Fujian area + x strategic cities --
strategy. As of June 30, 2017, Yango City has land reserves of
around 30 million square meters, of which about one-third is in
the Yangtze River Delta, Pearl River Delta, and the Beijing-
Tianjin-Hebei Metropolitan Area. Yango City is expanding
geographically and plans to increase the proportion of contracted
sales from these three regions to two-thirds of total contracted
sales by 2019, from one-third in 2016.
"We believe Yango City can maintain robust growth in contracted
sales between 2017 and 2019 and bring in large cash flows for
further development. Our view is based on the company's increased
saleable resources in the past two years and a likely
acceleration in land acquisitions. In the first half of 2017,
Yango City's property sales, including contracted sales and
subscription sales, were RMB39.5 billion. We forecast that the
full year contracted sales will reach RMB65 billion-RMB70
billion, supported by total saleable resources of more than RMB90
billion in the second half of 2017, including new launches. In
2018, Yango City estimates its saleable resources will be around
RMB180 billion. We expect the company will maintain its leading
position in Fuzhou and some key cities in the province. It
generated RMB20.7 billion (45% of the total) of contracted sales
in Fujian in 2016."
Yango City's increased use of merger and acquisitions (M&A)
instead of public auctions for land banking helps it to achieve
high asset churn and quickly bring in cash inflow from sales.
Some of these projects are ready for sale or have short lead-
times from land acquisition to project launch. The cost of land
parcels acquired through M&A is lower than that for land acquired
from public auction. In addition, the flexible payment terms of
M&A allow Yango City to smoothen out its payment schedule.
However, using M&A increases Yango City's risks, and the company
has to rely heavily on due diligence. Asset packages acquired
could have varying project quality and prospects, resulting in
volatility of profitability. In the first half of 2017, Yango
City spent RMB25.1 billion on land acquisitions, of which around
85% was through M&A.
S&P said, "We forecast that Yango City's gross debt will increase
to about RMB150 billion in 2018, from RMB68.7 billion in 2016.
The developer has a significant portion of debt in short-term
borrowings. We estimate that its debt maturity profile as of June
30, 2017, was marginally over two years.
"We project that Yango City's debt leverage will gradually
improve, although it will remain high. The debt-to-EBITDA ratio
is likely to decrease to 12x in 2018, from 14.5x in 2016, because
we expect the increase in revenue upon project completion and
delivery will outgrow debt. Strong sales execution and open
financing channels are the keys to support this high-growth
operating model.
"We assess Yango City as a core entity of its parent Fujian Yango
Group Co. Ltd.
"Fujian Yango has been the single largest shareholder of Yango
City for the past 10 years. Yango City also accounts for the
majority of the parent's revenue, profit, assets, and debt. We
believe this relationship will be maintained in the coming few
years despite the parent's active expansion into other
businesses, including environmental and education services.
"The stable outlook reflects our view that Yango City's debt
leverage will moderately improve over the coming 12 months. We
expect the developer to maintain high expenditure on land
acquisitions to support its expansion. However, growth in revenue
and contracted sales will offset the impact of the higher debt.
"We may lower the rating if Yango City's financial leverage
deteriorates from its 2016 level. We may also downgrade the
company if it increases reliance on short-term borrowings, which
could weaken its liquidity or debt maturity profile.
"In a less likely scenario, we may lower the rating on Yango City
if the creditworthiness of Fujian Yango materially deteriorates,
possibly due to major debt-funded expansion or acquisitions in
its non-property businesses.
"We may raise the rating if Yango City demonstrates strong sales
execution and improves its financial leverage, such that: (1) its
debt-to-EBITDA ratio is significantly better than our expectation
of 12x-14x on a sustained basis; and (2) its parent's leverage
profile improves."
YANGO GROUP: Fitch Assigns B Long-Term IDR; Outlook Positive
------------------------------------------------------------
Fitch Ratings has assigned China-based property developer Yango
Group Co., Ltd. a Long-Term Foreign-Currency Issuer Default
Rating (IDR) of 'B' with Positive Outlook.
Yango's ratings are supported by its large, good-quality land
bank that is comparable to those of 'BB' category homebuilders
and its growing business scale, especially after changes in its
top management in 1H17. Its ratings are constrained by its high
leverage, as measured by net debt/adjusted inventory, of 69% at
end-1H17, which Fitch expects to increase in 2017. The company's
churn rate, as measured by contracted sales/gross debt, has also
been low at below 1.0x in the past few years.
The Positive Outlook reflects Fitch's expectation that Yango's
business profile will continue to improve in line with its
expanding scale, as well as improvement in its financial profile
from 2018. Yango will be able to replenish its land bank at a
slower pace from 2018, which will allow its leverage to fall
closer to 65% in 2018 and raise its contracted sales/gross debt
to above 1.0x.
KEY RATING DRIVERS
High Quality Land Bank: Fitch believes Yango's land bank, which
was acquired at low cost and partly located in Tier 1 cities,
will support its business scale growth and healthy profit margin.
Yango had 16.4 million sq m of land available for sale by gross
floor area (GFA) as of end-2016. This was sufficient for four
years of development. Tier 1 cities accounted for 24% of its
total land bank at end-1H17. The average cost of the company's
land bank was CNY3,252 per sq m at end-2016, or about 21% of
Fitch's expected contracted average selling price (ASP) in 2017.
Yango's land bank is larger than most of the lower-leveraged
homebuilder peers rated 'BB' and 'BB-'.
Strong Growth in Contracted Sales: Yango's expansion strategy has
resulted in a moderate-sized operation of CNY35 billion in
contracted sales in 2016, based on Fitch estimate. Fitch estimate
contracted sales will increase 90% to CNY67 billion in 2017 as
the company has maintained strong sales despite a subdued
domestic property market in 1H17. The rapid sales growth and
steady cash collection has also been aided by the company's fast-
churn business model and enhancements to its projects with
education resources operated by its parent Fujian Yango Group
Co., Ltd. Yango's business profile may strengthen materially if
it is able to expand to over CNY100 billion in contracted sales,
especially after top management changes in 1H17.
Improving EBITDA Margin: Fitch expect Yango's EBITDA margin to
improve because of the strong appreciation of housing prices in
Tier 1 and 2 cities, where most of Yango's land reserves are
located. Yango's 2016 EBITDA margin of 23% is comparable to those
of its peers. Its EBITDA margin stayed in the low-to-mid 20%
range between 2013 and 2016.
High Leverage Constrains Rating: Yango's aggressive land
acquisition since 2015, in which sales receipts were almost
entirely reinvested in acquiring land, has driven leverage up.
Its net debt to inventory reached 68% by end-2016 and 69% at end-
1H17. Fitch do not expect leverage to come off in 2017 and expect
only marginal improvement in 2018, given the company's plan to
continue enlarging its scale to stay competitive. Fitch expects
Yango's land acquisition pace, relative to its sales, to slow in
2018 as its land bank will hit around 26 million sq m by end-
2017, which will give it four years of land reserve, based on its
enlarged scale.
DERIVATION SUMMARY
Yango has larger scale in terms of contracted sales and higher
EBITDA than 'B' rated Chinese homebuilders like Guorui Properties
Limited (B/Stable), Hong Yang Group Company Limited (B/Stable)
and Oceanwide Holdings Co. Ltd. (B/Negative), which have
contracted sales of less than CNY15 billion.
Yango and Oceanwide both have high leverage of around 70%, but
Yango is likely to expand its sales and deleverage at a faster
pace. Yango's scale is also growing faster than similarly sized
Ronshine China Holdings Limited (B+/Stable), but its leverage is
higher than Ronshine's around 50%. Yango's land bank is more
diversified than Ronshine, Guorui, and Hong Yang, which explains
why its contracted sales can increase much faster; unconstrained
by specific market weaknesses. This faster sales growth will also
support Yango's rapid improvement in its financial profile;
supporting its Positive Outlook.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- Replenishing land to maintain land bank life of around four
years
- Contracted sales to increase by 90% and 75% in 2017 and 2018
- EBITDA margin after adjusting for capitalised interest to
remain stable in 2017, but increase to 25% in 2018 and 29% in
2019.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Achieving management's 2017 target for the amount of sales
collected and on track to achieve the target for 2018
- Net debt/adjusted inventory falling to around 65% in 2018 and
continuing to deleverage
- Contracted sales/gross debt sustained above 1x from 2018
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Failure to achieve the positive sensitivities over the next 12
months
- Changes to the company's top management team resulting in
disruption to its business strategy
LIQUIDITY
Tight Liquidity: Yango had CNY31 billion in cash and CNY17
billion in unused bank facilities at end-1H17, which is
insufficient to cover negative free cash flow of around CNY20
billion and short-term debt of CNY33 billion. The company has
plans to optimise its debt structure and extend debt maturity by
using multiple funding channels, including equity financing, and
issuance of offshore bonds and perpetual capital securities.
YANGO GROUP: Moody's Assigns B2 1st-Time CFR; Outlook Stable
------------------------------------------------------------
Moody's Investors Service has assigned a first-time B2 corporate
family rating (CFR) to Yango Group Co., Ltd.
The rating outlook is stable.
RATINGS RATIONALE
"Yango's B2 corporate family rating reflects the company's strong
sales execution, large scale and good track record in Fujian
Province and the Yangtze River Delta," says Kaven Tsang, a
Moody's Vice President and Senior Credit Officer.
Yango has strong sales execution ability, enabling it to grow to
a scale larger than most single-B-rated Chinese property
developers. Its contracted (including subscription) sales grew
about 55% year-over-year to RMB46.2 billion in 2016.
Moody's expects Yango's contracted sales to reach around RMB65-70
billion in 2017. In the first nine months of 2017, the company
had already achieved contracted (including subscription) sales of
RMB59.7 billion.
Yango has shown strong sales execution on residential properties
in Fujian Province and the Yangtze River Delta. The company
maintains a market-leading position in the Fuzhou property market
and has ranked as the top developer in terms of sales amounts and
area for the past 5 years.
The Fujian and Yangtze River Delta regions will continue to be
important contributors to the company's sales over the next 12-18
months. According to the company, these two regions together
accounted for around 41.8% of its inventory by value at the end
of 2016.
It has established its brand name in China. This situation helps
to reduce execution risk in its expansion to new markets, such as
the Pearl River Delta region and Beijing-Tianjin-Hebei regions,
which it has entered over the past two years.
Yango's B2 CFR is also supported by its ability to access the
domestic debt market. It issued domestic bonds totaling RMB15.4
billion from 2015 to 2016.
On the other hand, the company's B2 rating is constrained by its
weak financial metrics due to its sizeable debt-funded land
acquisitions, made to support growth, as well as its expansion
into new regions.
Reported debt reached RMB101.5 billion at the end of June 2017,
up significantly from RMB37.2 billion at the end of 2015. As a
result, debt leverage - as measured by revenue/adjusted debt -
was weak at around 22% for the 12 months ended June 2017.
Interest coverage was also weak at 1.5x during the same period.
Yango's B2 CFR is also constrained by weak cash collections from
contracted sales. Moody's estimates that cash proceeds from
contracted sales to total contracted (including subscription)
sales only registered 55%-60% over the past 12-18 months, weaker
than its B-rated Chinese property peers.
Nevertheless, Moody's expects the company to adopt a more
measured approach to land acquisitions. Accordingly, its debt
growth will likely slow over the next 2 years.
As a result, revenue/adjusted debt could improve to around 30%-
40% and interest coverage to 1.6x-1.7x from the levels in June
2017. Such levels are comparable to those of its B2-rated Chinese
property peers.
Yango's CFR also factors in the company's weak liquidity position
due to its slow cash collections. Its cash balance of around
RMB31.2 billion at the end of June 2017 was inadequate to cover
its short-term debt of around RMB35.4 billion.
The ratings outlook is stable, reflecting Moody's expectation
that Yango will (1) manage the refinancing of its short-term
debt; (2) maintain strong contracted sales growth; and (3) adopt
a more measured approach in land acquisitions to improve its
liquidity and debt leverage positions over the next 12 to 18
months.
Upward ratings pressure could emerge if Yango shows a track
record of improvements in its liquidity and debt leverage
positions, while maintaining strong contracted sales growth.
Credit metrics that indicate upgrade pressure include: (1)
revenue/adjusted debt above 60%-65%, (2) adjusted EBIT/interest
cover above 2x; and (3) cash/short-term debt above 1.25x on a
sustained basis.
On the other hand, downward ratings pressure could emerge, if
there is any deterioration in Yango's credit metrics, or
liquidity position, such as an increased level of refinancing
risk.
Deteriorating credit metrics that could trigger downward ratings
pressure include adjusted EBIT/interest coverage below 1.25x-
1.50x.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Yango Group Co., Ltd is a Chinese property developer focused on
the Greater Fujian, Yangtze River Delta, and Pearl River Delta
regions. It listed on the Shenzhen Stock Exchange in 2002.
Its operations are mainly focused on mass-market residential
property development. It had a total land bank of around 30.1
million square meters across 31 cities at the end of June 2017.
=========
I N D I A
=========
ABU ESTATE: CARE Assigns 'B' Rating to INR13.30cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Abu
Estate Private Limited (AEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 13.30 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of AEPL takes into
consideration small scale of operations with fluctuating total
profitability margins, leveraged capital structure and weak debt
coverage indicators. The rating is further tempered by
seasonality associated with hotel industry and high competition
from other players in the industry along with geographic
concentration risk. The rating is however, underpinned by the
experience of the promoters in hotel industry with long track
record of the company, growing total operating income, locational
advantage and comfortable operating cycle days.
Going forward, the company's ability to increase its occupancy
level to improve scale of operations coupled with increase
in average room rent to improve its profitability margins would
be key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with fluctuating profitability margins
during review period: Despite of long track record of the
company, scale of operations are relatively small marked by total
operating income (TOI) of INR10.59 crore during FY17 prov. with
negative networth of INR1.89 crore as on March 31, 2017 (Prov.).
Further PBILDT margin of the company declined from 35.43% in FY15
to -5.12% in FY16 due to renovation activities and upgradation of
the company's hotel to 4 star category resulting in higher level
of administrative and operating costs. However, the same improved
to 15.37% in FY17 (Prov.) at the back of increased prices of the
rooms resulting in higher profitability margins. Furthermore, the
company incurred negative PAT during FY16 due to negative PBILDT
coupled with higher level of interest and depreciation cost of
the company.
Leveraged capital structure due to negative networth and weak
debt coverage indicators: The capital structure of the company
remained leveraged marked by high level of debt equity and
overall gearing ratio.
Debt equity and overall gearing ratio remained high at 5.05x as
on March 31, 2014 due to higher level of debt level of the
company. Higher debt level of the company is due to long term
loan availed for construction of the hotel rooms and renovation
of the existing premise. The same improved slightly to 3.10x as
on March 31, 2015at the back of scheduled repayment of the term
loan. However gearing levels deteriorated to -10.43xand -9.92x as
on March 31, 2016 and March 31, 2017 (Prov.) respectively due to
negative networth of the company, due to losses incurred by the
company during FY15 and FY16.Further Total debt/GCA of the
company also stood higher at 8.75x as on March 31, 2017 due to
lower cash
accruals and higher level of total debt of the company.
Seasonality associated with hotel industry with competition from
other players in the industry: The demand for hotel and
hospitality sector has direct relation to the overall health of
economy. The Indian hotel industry normally experiences high
demand during January-August, mainly on account of summer
vacations and marriage season in the state. However, this trend
is seeing a change over the recent few years. Hotels have
introduced various offerings to improve performance (occupancy)
during the lean months. These include targeting the conferencing
segment and offering lucrative packages during the lean period.
Further the company faces competition from a number of small and
medium players since it is located in commercial area of the
city. Though there are other regional players offering services,
AEPL is able to withstand in the market through its vast
experience and established track record coupled with continuous
business promotion activities. Apart from this, expansion of
business operations will help the firm to attract new customers
as well.
Geographic concentration risk: The business operations of the
company are geographically concentrated to Chennai, Tamil Nadu
State as the company has its hotel located at single location and
all of its revenues are being driven through the same, and has no
branches as on date.
Key Rating Strengths
Experience of the promoters in hotel industry for around three
decades and long track record of the company: AEPL was
incorporated in the year 1985, promoted by Mr. Nilagiri Abdul
AzeezAbuthahir(Managing Director) and Mrs. Razia Banu (Director).
Both the directors are qualified and have more than three decades
of experience in the hotel industry. They are actively involved
in day to day operations of the company. The operations of the
company are well supported by strong management team who are
qualified and experienced in their respective fields.
Growth in total operating income during review period: The total
operating income of the company has increased at a compounded
annual growth rate (CAGR) of 31.22% during FY15-17 (Prov.) from
INR6.15 crore in FY15 to INR10.59 crore in FY17 (Prov.). the same
was on account of increased level of occupancy of the hotel and
increased amount of demand of the restaurant. AEPL renovated and
upgraded the hotel to 4 star categories with which the company
increased the prices of the hotel rooms.
Location advantage of the company with its hotel being located in
commercial area of amenable to target business class patrons:
AEPL has the location advantage, as the hotel premise is located
in one of the prime commercial areas of Chennai city.
The hotel provides restaurant, coffee shop, bar and banquet hall
services. With commercial nature of location of the hotel, the
company is likely to have assured business from room bookings,
restaurant business and other related incomes.
Comfortable operating cycle days: The operating cycle of the
company remained comfortable during review period. The operating
cycle of the company remained negative during FY15 and FY17 due
to lower level of inventory and collection days coupled with
average credit availed by the company from its suppliers being
around 30 days. Inventory level of the company stood in the range
of 3-7 days with nature of the business being hotel and company
maintains inventory of food related raw materials. Majority of
the payments of the hotel being advance payments or against cash
payments except for few corporate customers, average collection
days stood in the range of 20 days.
Abu Estate Private Limited (AEPL) was incorporated on March 25,
1985 as a private limited company by Mr. N.A. Abu Thahir
(Director) and Mrs. RaziaBanu (Director). The company has its
registered office located at Chennai and is engaged in
hospitality business and offers services in the area of
restaurants, bar, banquet hall, rooms, and coffee shop. AEPL has
its hotel named Abu Sarovar Portico located at Poonamalle High
road, Chennai. AEPL renovated and upgrade the hotel in to 4 star
categories in FY16. The hotel building is having a built-up area
of 1 lakh sq.ft. Currently, the company is managed by Mr. N.A.
Abu Thahir and Mrs. RaziaBanuwho look after overall operations of
the company.
ACUITY INDIA: CARE Assigns 'B+' Rating to INR8.37cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Acuity
India Resorts Private Limited (AIRPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.37 CARE B+; Stable Assigned
Detailed Rationale& Key Rating Drivers
The ratings assigned to the bank facilities of AIRPL are
primarily constrained on account of small scale of operations,
low profitability, leveraged capital structure, weak debt
coverage indicators and moderate liquidity position. The ratings
are further constrained on account of cyclical and competitive
nature of hotel industry.
The rating, however, derives strength from the wide experience of
promoters, successful completion of capex and benefits derived
from increased promotion of tourism in Gujarat.
Ability of AIRPL to increase its occupancy level thereby
increasing overall scale of operations along with improvement in
profitability, solvency position and debt protection metrics are
the key rating sensitivities.
Detailed description of key rating drivers
Key Rating Weaknesses
Small scale of operations and low profitability: Total Operating
Income of AIRPL remained very small at INR2.19 crore during FY16
as compared to INR0.64 crore during FY15. During FY17 (Prov.),
TOI of AIRPL improved to INR4.02 crore on the back of improvement
in overall occupancy level. Further, with small base of TOI,
profit levels also stood low market by PAT of INR0.10 crore in
FY16.
Leveraged capital structure, weak debt coverage indicators and
moderate liquidity position: The capital structure of AIRPL
remain leveraged marked by an overall Gearing ratio of 4.20 times
as on March 31, 2016 mainly due to higher debt level compared to
net worth base. Debt coverage indicators remained weak marked by
total debt to GCA of 59.27 times as on March 31, 2016 (84.43
times as on March 31, 2015) on account of improvement in GCA
level. Liquidity position remained moderate as indicated by
current ratio of 1.34 times and quick ratio of 1.05 times as on
March 31, 2016. Further, working capital cycle of the company
remained at negative 15 days during FY16.
Cyclical and competitive nature of hotel industry: The Indian
hotel industry is highly fragmented in nature with presence of
large number of organized and unorganized players spread across
various regions. Further, the hospitality industry is highly
sensitive to the untoward events such as slowdown in the economy.
Key Rating Strengths
Experienced promoters: Mr. Upendra Anthwal and Mr. Lakhabhai
Keshwala are the key promoters of AIRPL. Mr. Upendra Anthwal has
an experience of 10 years into varied businesses. He is presently
looking after overall business operations of the company. Mr.
Lakhabhai Keshwala, having experience in various businesses for
over 30 years is looking after the general administration of the
company.
Successful completion of capex: During Q3FY17, AIRPL successfully
completed debt funded capex worth INR 21.22 crore towards
construction of building and other amenities for resort purpose.
The project was funded via debt equity mix of 4.61 times. Post
completion of this project, TOI during FY17 (Prov.), improved to
INR 4.02 crore.
Incorporated in August 2012, Acuity India Resorts Private
Limited(AIRPL) is engaged into hospitality business in the name
of '7 Seasons Resorts & Spa' which is operating a Resort,
banquet, restaurant and Spa. It is located at Khambhaliya-Dwarka
highway, Lakhabawal, Jamnagar, Gujarat 361 008.
ADAMS MARKETING: Ind-Ra Moves D Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Adams
Marketing Private Limited's (AMPL) Long-Term Issuer Rating to
'IND D' from 'IND B-' while simultaneously migrating it to the
non-cooperating category. The Outlook was Stable. The issuer did
not participate in the surveillance exercise, despite continuous
requests and follow-ups by the agency. Thus, the rating is on the
basis of best available information. Investors and other users
are advised to take appropriate caution while using these
ratings. The rating will now appear as 'IND D(ISSUER NOT
COOPERATING)' on the agency's website. The instrument-wise rating
actions are:
-- INR245 mil. Fund-based limit (Long-term) downgraded and
migrated to non-cooperating category with IND D(ISSUER NOT
COOPERATING);
-- INR5.58 mil. Term loan (Long-term) downgraded and migrated to
non-cooperating category with IND D(ISSUER NOT COOPERATING);
and
-- INR100 mil. Proposed fund-based limit (long term) downgraded
and migrated to non-cooperating category with Provisional IND
D(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information the rating action is taken.
COMPANY PROFILE
AMPL was incorporated in 2007. The company is based in Howrah and
is an authorised dealer for various electronics goods. AMPL is
also the distributor of Bharti Airtel Limited for the Kolkata
circle.
ARIYANAYAKI AGRO: CRISIL Reaffirms B+ Rating on INR9.4MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of Ariyanayaki Agro Foods International (AAFI) at
'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.4 CRISIL B+/Stable (Reaffirmed)
Long Term Loan .6 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average
financial risk profile because of modest networth and debt
protection metrics, and small scale of operations in the
intensely competitive rice milling industry. These weaknesses are
partially offset by the extensive experience of its proprietor.
Analytical Approach
Unsecured loan from proprietor has been treated as 75% equity and
25% debt as these will remain in business and carry no interest.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Networth and gearing were
weak at INR2.2 crore and 2.53 times, respectively, as on
March 31, 2017. Interest coverage ratio was around 1.2 times due
to low operating profitability of 2.7% in fiscal 2017.
* Small scale of operations in competitive segment: With revenue
of around INR45.6 crore in fiscal 2017, scale remains small and
prevents the firm from taking advantage of benefits arising from
economies of scale. While large players have better efficiencies
and pricing power, modest players such as AAFI have low pricing
flexibility, which constrains profitability. Also, the rice
milling business in Tamil Nadu is intensely competitive, which
further impacts profitability.
Strength:
* Extensive experience of proprietor: The proprietor and family
have been in the rice milling business since the 1980s, during
which they have established strong relationship with farmers.
Also, the mill is strategically located in the middle of heavy
paddy-growing areas benefitting the overall business profile.
Outlook: Stable
CRISIL believes AAFI will continue to benefit over the medium
term from its proprietor's extensive experience. The outlook may
be revised to 'Positive' if improvement in scale of operations
and operating profitability leads to a better financial risk
profile. The outlook may be revised to 'Negative' if aggressive
debt-funded expansions, substantial decline in revenue and
profitability, or capital withdrawal further weakens financial
risk profile.
Set up in 1995 in Pallathur, Tamil Nadu, as a proprietorship firm
by Mr. K Sivaprakasam, AAFI mills and processes paddy into rice,
rice bran, broken rice, and husk.
On a provisional basis, net profit was INR0.1 crore on net sales
of INR45.6 crore in fiscal 2017; net profit was INR0.1 crore on
net sales of INR37.7 crore in fiscal 2016.
ARYAN CHARITABLE: CRISIL Assigns B- Rating to INR5.5MM Term Loan
----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B-/Stable' rating on the
long-term bank facility of The Aryan Charitable Trust KTL
(Aryan).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 5.5 CRISIL B-/Stable
The rating reflects Aryan's nascent stage of operations in the
intensely competitive education industry, and expected below-
average financial risk profile due to a weak capital structure.
These weaknesses are partially offset by the extensive industry
experience of trustees and low funding risk in the project.
Key Rating Drivers & Detailed Description
Weaknesses
* Nascent stage of operations and expected small scale in the
intensely competitive education industry: Since commercial
operations are expected to start from April 2018. Consequently,
occupancy levels are expected to remain low. This will likely
lead to low revenue in fiscal 2018. Furthermore, the trust is
expected to face intense competition in the education industry
from already established players in the region.
* Below-average financial risk profile: The financial risk
profile is expected to be constrained by a weak capital structure
and subdued debt protection metrics. The gearing is expected to
be high at over 13 times and debt protection metrics will likely
be weak for fiscal 2018 due early stage of operations.
Strengths
* Trustees' extensive industry experience: Operations are managed
by Mr. Parduman Singh and his family members who have experience
of over two decades in the education industry through their two
operating schools in the region. Their extensive experience
should benefit Aryan over the medium term.
* Low funding risk: The total project cost of INR7.17 crore,
funded through debt to equity ratio of 3:1. The trustees had
already brought in 75% of their total contribution in the form of
share capital and bank has disbursed around 75% of total
contribution.
Outlook: Stable
CRISIL believes Aryan will continue to benefit over the medium
term from its trustees' extensive experience. The outlook may be
revised to 'Positive' if higher occupancy and fees of students
lead to substantial cash accrual in early stage of operations.
Conversely, the outlook may be revised to 'Negative' if low
occupancy and fees, or delays in project execution constrain cash
accrual and liquidity.
Aryan, a not-for-profit organisation, is setting up middle
school, Aryan International School, affiliated with the Central
Board of Secondary Education (CBSE) at village Katwad, Kaithal
(Haryana). Operations will be managed by its chairman Mr.
Parduman Singh. The commercial operations are expected to start
from April 2018 onwards.
DURGESHWARI INDUSTRIES: CARE Moves B+ Rating to Not Cooperating
--------------------------------------------------------------
CARE has been seeking information from Durgeshwari Industries
Limited to monitor the rating vide e-mail communications/letters
dated September 13, 2017, September 12, 2017, September 8, 2017
and September 4, 2017, and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the rating. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on Durgeshwari Industries
Limited bank facilities will now be denoted as CARE B+; ISSUER
NOT COOPERATING. Users of this rating (including investors,
lenders and the public at large) are hence requested to exercise
caution while using the above rating.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 15.00 CARE B+; Issuer Not
Facilities Cooperating
Detailed description of the key rating drivers
At the time of last rating on September 20, 2016 the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
Weak financial risk profile of entity with reasonable
profitability margin: The scale of operations of DIL have
declined in FY14-FY16, on account of reduced order intake.
Furthermore the small scale of operations of entity with its low
net worth limits its financial flexibility in times of stress and
deprives it of scale benefits. The entity has weak debt coverage
indicators along with leveraged capital structure as on March 31,
2016.Further the operating profitability margins of entity
remained reasonable in range of 4.50-7.40%, however the PAT
margins of entity continued to remain below unity during FY14-
FY16.
Working capital intensive nature of operations: The operations of
DIL are working capital intensive in nature, as it has to
maintain inventory for more than three months in order to ensure
uninterrupted production which requires huge dependence on
working capital borrowings .The entity further provides a credit
period of around one month to its customers and receives a credit
period of around three months from its suppliers.
Presence in highly fragmented industry with limited value
addition: DIL is engaged in the ginning and pressing of cotton,
along with the oil extraction, which involves very limited value
addition and hence results in thin profitability margins.
Moreover, on account of large number of units operating in cotton
ginning business in Maharashtra, 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.
Operating margins susceptible to cotton price fluctuation and
seasonality that is associated with cotton industry: Raw Cotton,
a seasonal agricultural commodity (from November to February), is
the key raw material, and accounts for 65 to 68 per cent of yarn
spinners' operating costs. The global scenario for cotton, in
terms of output, demand-supply, and exports/imports, can impact
domestic prices. Interdependency across the value chain exists;
hence, the ability to pass on any increase in cost and thus
maintain healthy margins remains a key driver for players.
Further, besides seasonal availability of raw cotton the prices
of raw cotton are also dependent upon factors like, rainfall,
area under production, yield for the year, international demand
supply scenario, export quota decided by government and inventory
carry forward from the previous year. Ginners usually have to
procure raw materials at significantly higher volume to bargain
bulk discount from suppliers.
Key Rating Strengths
Established track record of operations of entity along with
experienced promoters: Parbhani (Maharashtra) based, DIL was
incorporated in 1994.The promoters have gained an experience of
around two decades in cotton processing industry through their
association with DIL. Being in the cotton industry for such a
long period has helped them in gaining adequate acumen about the
industry.DIL has a track record of more than two decades and has
strengthened its base in the seed processing and oil extraction.
Diversified customer base: DIL supplies cotton bales, cotton seed
oil, cotton cake etc. to companies located in and around the
vicinity of Maharashtra like Dharam deep Commodities Private
Limited, Louis Dreyfus Commodities Private Limited (Madhya
Pradesh), Manjeet Cotton Private Limited and Rajshree Fibres to
name a few, along with retailing of the same and sales to local
players. DIL has a well diversified customer profile, which
shields it from the risk of decline in income from operations,
due to lower order from one particular customer.
DIL, was initially established in 1994, as a seed processing
company under the name Durgeshwari Seeds Private Limited (DSPL)
and was further converted into Public Ltd Company under the
current name in the year 2011. The operations of the company are
being handled by Mr. Vijay Agrawal and his brothers. The entity
operates from its sole manufacturing plant at Parbhani
(Maharashtra) with an installed capacity of manufacturing 400
quintal bales per day. The main by-product of DIL is cotton seed
cake and cotton seed oil. DIL procures cotton directly from the
farmers based out in Parbhani (Maharashtra) region and supplies
cotton bales, cotton seed oil, cotton cake etc. to companies
located in and around the vicinity of Maharashtra, Gujarat and
Tamil Nadu. The company also undertakes job work as well as
trading of the same but only on a marginal scale.
ERA INFRA: UBI Seeks Insolvency Proceedings Against Firm
--------------------------------------------------------
Financial Express reports that citing legal precedents and rules
under the Insolvency and Bankruptcy Code (IBC), Union Bank of
India on Oct. 25 argued before the National Company Law Tribunal
(NCLT) that insolvency proceedings can be triggered against Era
Infra Engineering Ltd even if winding-up petitions were pending
before the Delhi High Court.
Union Bank had filed an insolvency petition against Era Infra,
which owes the public sector lender INR681 crore in term loans
and $11 million in ECBs, under Section 7 of the IBC, the report
discloses.
The maintainability of the insolvency petition is the primary
issue before the tribunal, since several winding-up petitions
have already been filed against the company, Financial Express
says.
In his argument, Union Bank's advocate said the IBC is a
consolidating law relating to insolvency of corporate entities
which provides for resolution of the corporate debtor before
ordering liquidation, Financial Express relates. "On the
contrary, remedy under Sec 433(e) of the Companies Act, 1956 and
the remit of the Company Court is winding up the company, which
is analogous to liquidation under the Code. Therefore, the
jurisdiction of the Tribunal under Sec 7 of the Code is
independent of the jurisdiction of the Company Court under 433(e)
of the Companies Act," he added, the report relays.
Eighteen winding-up petitions filed by various operational and
financial creditors against Era Infra Engineering are pending
before the Delhi High Court, Livemint.com reported. Union Bank of
India is not among them. Era Infra Engineering owes more than
INR10,000 crore to its creditors.
Era is one of the 12 bad loan accounts that have been directed by
the central bank to be referred under IBC, Livemint.com said.
Era Infra Engineering Limited engages in the execution of
construction contracts involving engineering, procurement and
construction projects across a range of sectors, such as roads
and highways, power, railways, metro, aviation, industrial,
institutional and related segments. Its principal business
activities are to carry on the business of builders, civil
contractors, and sanitary engineers, architects, town planners
and to submit tenders for the aforesaid business; to layout,
develop, construct, build, erect, demolish, re-erect, repair,
remodel, execute or do any other work in connection with any
industrial complex/parks, flyovers, ports, airports, highways,
roads, railways, irrigation, dam and canals, among others, and to
act as manufacturer, trader, dealer, importer, exporter, buyer,
seller of all any type/kind of material used in the construction/
infrastructure industry, including setting up of ready mix plant
in India or abroad.
FINFOOT LIFESTYLE: CARE Moves B- Rating to Not Cooperating
----------------------------------------------------------
CARE Ratings has been seeking information from Finfoot Lifestyle
Private Limited to monitor the ratings vide e-mail
communications/letters dated August 28, 2017, August 10, 2017 ,
May 24, 2017 and April 24, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requisite information for monitoring the rating. 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 Finfoot Lifestyle Private Limited's bank
facilities will now be denoted as CARE B-/CARE A4; ISSUER NOT
COOPERATING. Users of this rating (including investors, lenders
and the public at large) are hence requested to exercise caution
while using the above rating.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 12.01 CARE B-; Issuer not
Facilities cooperating; Based on best
available information
Short term Bank
Facilities 0.20 CARE A4; Issuer not
cooperating; Based on best
available information
The ratings continue to be constrained on account of project
stabilization risk and its presence in highly fragmented
industry. The ratings derive strength experienced and
professional management team, location advantage and favorable
industry outlook.
Detailed description of the key rating drivers
At the time of last rating on September 16, 2016 the following
were the rating strengths and weaknesses (updated for the
information available from ministry of corporate affairs (MCA)):
Key Rating Weakness
Project stabilization risk: FLPL commenced commercial production
at its plant since March 2016 as per the schedule; accordingly
FY16 was the first year of operation for the company with one
month of operations.
Presence in a highly fragmented textile industry with limited
presence in textile value chain: FLPL would have its
presence in the manufacturing of grey fabrics which is a highly
fragmented industry with the presence of numerous independent
small-scale enterprises owing to the low entry barriers leading
to high level of competition. Due to the high degree of
fragmentation, small players hold very low bargaining power
against both its customers as well as its suppliers, resulting in
very thin profit margins. Furthermore, weaving business involves
working capital intensive nature of operations which would
require blockage of working capital in inventory and debtors and
hence going forward, the management of those funds would be
crucial. Furthermore, FLPL has a limited presence in the textile
value chain as it is engaged in the manufacturing of grey fabrics
from yarn and would sell its products to companies in domestic as
well as global market.
Key Rating Strengths
Experienced and professional management team: The promoter of
FLPL, Mr. Rajaram Pathak has more than 30 years of industry
experience. Mr. Pathak has done MBA (HR) and looks after overall
operations of the company. Other directors namely Mr. Gaurav
Pathak and Mr. Gautam Pathak have around 13 years of experience
and look after Marketing and finance activities of the company.
Prior to FLPL the promoters were engaged in facility management
services through group entity CLR Facility Services Private
Limited.
Favorable industry outlook: India is the one of the world's
largest producers of textiles and garments. Abundant availability
of raw materials such as cotton, wool, silk and jute as well as
skilled workforce have made the country a sourcing hub. It is the
world's second largest producer of textiles and garments. The
Indian textiles industry accounts for about 24 per cent of the
world's spindle capacity and 8 per cent of global rotor capacity.
The potential size of the Indian textiles and apparel industry is
expected to reach US$223 billion by 2021. The Indian textiles
industry is set for strong growth, buoyed by strong domestic
consumption as well as export demand.
Advantage of location with manufacturing facility located in the
textile cluster of Maharashtra: The manufacturing facility of
FLPL is located in village: Yadrav Dist: Kolhapur, Maharashtra,
The proposed location of the plant is easily accessible from
textile hubs of Maharashtra such as Ichalkaranji, Kolhapur,
Bhiwandi, Baramati etc. resulting in timely availability of raw
material at competitive prices. The location of the company is
ideal due to its proximity to major market, availability of basic
amenities like power, water and roads and also due to its
proximity to spinning mills in Western Maharashtra. Maharashtra
and nearby states have robust demand for fabric due to
significant presence of textile units. Proximity to the end-user
industries will also help the company to understand the market
needs and facilitate it to respond quickly to the end-user
requirements.
Finfoot Lifestyle Private Limited (FLPL), incorporated in 2011
was promoted by Pathak family of Pune. The company was promoted
to set up a power loom weaving unit at Village Yadrav, District
Kolhapur. The plant became operational in March, 2016. The unit
was set up at an aggregate cost of INR13.61 crore funded through
term loan of INR9.66 crore and balance from promoter's
contribution. The plant has 24 new modern shuttle-less airjet
looms with an installed capacity of manufacturing 10,000 meter of
fabric per day. The company has taken a building/facility on
lease for 99 years starting from 2014 from Parvati Co-operative
Industrial Estate Limited with a total area of about 2,250 square
meters (sq.mt.) and which is used for weaving facility. FLPL is
eligible for 15% capital subsidy and 6% interest subsidy benefit
under Technology Upgradation Fund (TUF) scheme by Ministry of
Textiles, Government of India. Apart from these, the company
shall also be entitled to avail policy benefits under Maharashtra
Industrial Policy 2013 and Maharashtra Textile Policy. CLR
Facility Services Private Limited (CFPL) is the group company of
FLPL which offers facility management services across 8 states
including Maharashtra, Karnataka, Goa, Gujarat, Andhra, Delhi,
Madhya Pradesh and Tamil Nadu.
GEO AQUATIC: CRISIL Reaffirms B+ Rating on INR5MM Bill Disc.
------------------------------------------------------------
CRISIL has reaffirmed its rating on the bank facilities of Geo
Aquatic Products Private Limited (GAPPL) at 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 5 CRISIL B+/Stable (Reaffirmed)
Packing Credit 2 CRISIL A4 (Reaffirmed)
Term Loan 3.74 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect GAPPL's modest scale of
operations in the highly fragmented seafood industry and
susceptibility of operating margin to fluctuations in the raw
material prices. These weaknesses are partially offset by the
extensive experience of GAPPL's promoter in the marine business
and established relationship with suppliers and customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in highly fragmented industry: With
an estimated operating income of about INR25 crores in fiscal
2017, scale remains modest in the intensely competitive seafood
export segment that has several organised and unorganised
players. Though the scale is expected to improve, it will still
remain modest over the medium term. The company also has to
compete with neighboring countries such as Thailand, China, and
Vietnam.
* Susceptibility of operating margin to volatility in raw
material prices: GAPPL's operating margins are subject to
volatility in the raw material prices. As prices of raw material
are fixed at the time of entering into the agreement with the end
customers, the company has only limited flexibility to pass the
raw material price increases to its customers,
Strength
* Extensive experience of promoter in the seafood segment and
established relations with suppliers and customers: Presence of
over two decades in the seafood industry through group firm,
Cherukattu Industries, has enabled the promoter to establish a
well-diversified clientele and healthy relationship with
suppliers which has resulted in stable orders and timely supply
of quality raw material.
Outlook: Stable
CRISIL believes GAPPL will continue to benefit over the medium
term from the extensive experience of its promoter in the seafood
business. The outlook may be revised to 'Positive' if a
significant increase in scale of operations while maintaining
profitability leads to larger-than-expected cash accrual. The
outlook may be revised to 'Negative' if revenue or profit
declines, leading to lower-than-expected cash accrual or stretch
in working capital requirement impacts the financial risk
profile, particularly its liquidity.
Incorporated in 1998 and promoted by Kerala-based Mr. C M
Ahammedkutty, GAPPL processes and exports shrimp. The company
essentially exports the Vannamei type of shrimp to Europe and
Gulf countries. Processing facility is in Alappuzha, Kerala.
JOG CONSTRUCTION: CARE Moves B+ Rating to Not Cooperating
---------------------------------------------------------
CARE has been seeking information from Jog Construction Company
Private Limited to monitor the ratings vide e-mail
communications/letters dated September 12, 2017, September 7,
2017 and September 4, 2017, August 24, 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. In line with the extant SEBI guidelines CARE's rating on
Jog Construction Company Private Limited bank facilities will now
be denoted as CARE B+/A4; ISSUER NOT COOPERATING. Users of this
ratings (including investors, lenders and the public at large)
are hence requested to exercise caution while using the above
ratings.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.00 CARE B+; Issuer not
Facilities cooperating
Short-term Bank 2.00 CARE A4 Issuer not
Facilities cooperating
Detailed description of the key rating drivers
At the time of last rating on October 25, 2016 the following were
the rating strengths and weaknesses:
Key Rating Weakness
Working capital intensive nature of business: The company's
operations are working capital intensive as reflected in its
elongated operating cycle and high receivable period, owing to
the nature of business being construction. The company funds a
portion of its working capital cycle by availing higher credit
period from its suppliers.
Presence in a competitive industry segment with tender driven
nature of business: The Indian construction sector is highly
fragmented with presence of many mid and large-sized players.
Increase in competition on the back of tender driven nature of
the business and relaxation in the pre-qualification criteria by
some of the nodal agencies has resulted in aggressive bidding by
many construction companies during the last one-two years, hence
leading to high competition.
Concentration on government contracts along with exposure to
tender driven process: JCCPL has to participate in the tenders
floated by the government departments. There is intense
competition to get these contracts due to entry of new players
and increasing number of bidders for projects. Furthermore, the
tender driven process is lengthy at times, sometimes taking more
than a year to complete the process. Thus, company's ability to
secure fresh orders and executing the projects as per scheduled
timeline would remain crucial for its overall growth.
Key Rating Strengths
Experienced promoters: Mr. Jagdish Jog, Mrs. Rajashree J. Jog and
Mr. Shankar Jog, promoters of JCCPL have an average experience of
around two decades in the construction industry. The requisite
qualification and experience of promoters in the construction
industry aids JCCPL in managing day to day operations. Prior to
JCCPL the promoters were in the same industry as independent
contractors. Being in the industry for almost two decades has
helped the promoters in gaining adequate acumen about the
industry.
Partial comfort from price escalation clause in most of the
projects: JCCPL derives comfort from price escalation clause as
Most (around 80%) of the projects have an in built price
variation clause which mitigates the risk arising out of adverse
movement in raw material prices. However, it does not protect
JCCPL from overhead costs in case of delay in projects for more
than stipulated time frame.
Jog Construction Company Private Limited (JCCPL) was incorporated
as a private limited company in Ponda, Goa in 2005 by Mr. Jagdish
R Jog and Mrs. Rajashree J Jog. The operations of the company are
managed by Mr. Shravan Jog, Mr. Anant Gaude, Mr. Jayant Gaonkar,
Mr. Shankar Jog and Mr. Abhijit Mane.The company is in process of
execution of road projects for the government authorities and is
awarded Class A contractor status with Goa Government.JCCPL is
mainly involved in execution of tender based small and mid- sized
contracts in construction of road segment awarded by the
Government of Goa and National Highway Corporation (NHC) which
enables it to participate in any tender for R&B (Road and Bridge)
department.
K.C. INDUSTRIES: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of K.C. Industries (KCI) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B+/Stable (Reaffirmed)
Revenue grew 9% in fiscal 2017 due to better price realisation
coupled with repeat orders from existing customers. Revenue
growth is expected to remain steady over the medium term, backed
by partners' extensive experience and established relationship
with customers.
Operating profitability stood moderate at 5.0-5.5% over the two
fiscals through 2017, and is expected to remain at 5% over the
medium term. However, margin will remain susceptible to
volatility in raw material prices.
Liquidity is adequate backed by sufficient cash accrual against
nil debt obligation over the medium term, and funding support
from promoters and family in the form of unsecured loans.
However, bank limit utilisation remained high at 97% over the 12
months through August 2017, owing to large working capital
requirement.
Analytical Approach
Unsecured loans of INR4.26 crore (estimated as on March 31, 2017)
extended by the partners and family, have been treated as neither
debt nor equity, as these are expected to remain in the business
in the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Total outside liabilities
to tangible networth ratio was moderate at 2.15 times as on March
31, 2017, primarily driven by sizeable working capital
requirement. The ratio will likely remain at 2.15-2.30 times over
the medium term. Debt protection metrics remain weak, with
interest coverage ratio of 1.28 times in fiscal 2017.
* Modest scale: Modest scale is indicated by net sales estimated
at INR49.73 crore in fiscal 2017 and limited capacity of 4 tonne
per hour. Despite steady growth, revenue is expected to remain
moderate over the medium term amid intense competition.
* Working capital-intensive operations: Gross current assets
(GCAs) were sizeable at 239 days as on March 31, 2017, driven by
high inventory and low receivables of 230 and 20 days,
respectively. Against this, credit from suppliers stood at 45
days. Operations may remain working capital intensive over the
medium term, with GCAs at 240-250 days.
Strength
* Partners' extensive experience in the basmati rice industry and
funding support: Partners' longstanding experience in the rice
milling industry has helped establish strong relationships with
customers and suppliers. The partners also extended unsecured
loans to support the business.
Outlook: Stable
CRISIL believes KCI will continue to benefit over the medium term
from the partners' extensive experience. The outlook may be
revised to 'Positive' in case of higher-than-expected cash
accrual, with efficient working capital management, along with
significant capital infusion, leading to better key credit
metrics. The outlook may be revised to 'Negative' if the
financial risk profile weakens, particularly liquidity, most
likely due to low cash accrual and substantial increase in
working capital requirements or sizeable debt-funded capital
expenditure.
KCI, a partnership between Mr. Raman Kumar and Mr. Sameer
Valecha, is a part of the KC group of Jalalabad, Punjab. The
group processes the PUSA 1121 variety of basmati rice.
KARTIKEYA PAPER: CRISIL Lowers Rating on INR25MM Cash Loan to B
---------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facilities of Kartikeya Paper Distributor Pvt Ltd (KPDPL) to
'CRISIL B/Stable' from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects deterioration in business risk profile and
financial flexibility. During fiscal 2017, operating income
declined 10% to an estimated INR78.8 crore from INR87.6 crore in
the previous fiscal on account of disruption in procurement from
key supplier, Ballarpur Industries Limited (BILT). Also, working
capital requirement remained large, with gross current assets
(GCAs) of 253 days as on March 31, 2017, against 240 days in the
previous year. This was due to rise in receivables to 153 days
from 137 days. This led to constrained financial flexibility,
reflected in high bank limit utilisation and reliance on
temporary overdraft limit. Operations will remain working
capital-intensive over the medium term.
The rating reflects KPDPL's below-average financial risk profile
because of high gearing and weak debt protection metrics, modest
scale of operations, and large working capital requirement. These
weaknesses are partially offset by the extensive experience of
its promoter in trading in paper products and his funding
support.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: High debt level with gearing of
2.3 times as on March 31, 2017 and low profitability led to
average debt protection metrics, with interest coverage and net
cash accrual to adjusted debt ratios of below 1.5 times and 0.03
time, respectively, for fiscal 2017. Metrics are expected to
remain weak over the medium term.
* Working capital-intensive operations: The GCAs were 253 days as
on March 31, 2017, due to stretched receivables of 153 days and
inventory of 111 days.
* Modest scale of operations: With an estimated revenue of
INR78.86 crore for fiscal 2017, scale remains small in the
intensely competitive paper segment that has low entry barrier.
Strength
* Promoter's extensive experience: Presence of over two decades
has enabled the promoter to develop local market dynamics and
build strong relationship with over 2000 customers in Uttar
Pradesh. Also, healthy ties with distributors has led to KPDPL
becoming the exclusive dealer in Uttar Pradesh.
Outlook: Stable
CRISIL believes KPDPL will continue to benefit over the medium
term from the extensive experience of its promoter. The outlook
may be revised to 'Positive' in case of significant cash accrual
or capital infusion, and if working capital management improves.
The outlook may be revised to 'Negative' if low cash accrual,
large working capital requirement, or sizeable, debt-funded
capital expenditure puts pressure on liquidity.
Incorporated in April 1998 in Lucknow and promoted by Mr. Raj
Kumar Agarwal, KPDPL trades in paper and paper products. The
company is an authorised distributor of BILT and Avery Denison
(India) Pvt Ltd.
KATHPAL DAIRIES: CARE Assigns B+ Rating to INR15.90cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Kathpal Dairies (KDS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15.90 CARE B+; Stable Assigned
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of KDS is constrained
by its small scale of operations, low profitability margins and
weak solvency position The rating is further constrained by
implementation risk along with funding risk associated with debt
funded greenfield project, susceptibility to adverse regulatory
changes and raw material-related risk, seasonal nature of
operations, proprietorship nature of constitution and firm's
presence in competitive and fragmented nature of industry. The
rating, however, derives strength from experienced proprietor and
comfortable operating cycle.
Going forward, the ability of the firm to execute the project as
per project schedules and within cost estimates while improving
its profitability margins and solvency position would be the key
rating sensitivities.
Detailed description of the key rating drivers
Weaknesses
Small scale of operation along with low profitability margins The
firm's scale of operations has remained small marked by Total
Operating Income (TOI) of INR15.82 crore in FY17 (refers to the
period April 1 to March 31; based on provisional results) and
tangible net worth of INR0.90 crore as on March 31, 2017.
Further, the firm's GCA was low at INR0.18 crore for FY17. The
small scale limits the firm's financial flexibility in times of
stress and deprives it from scale benefits. The firm has achieved
Total operating income of INR7.00 crore in 5MFY18 (Prov.). The
PBILDT margin of the firm has been on the lower side due to
limited value addition and also due to firm's presence in highly
fragmented industry. The same improved from 1.26% in FY16 to
1.58% in FY17 on back of better absorption of fixed costs which
deprived it of its scale benefits. Consequently, PAT margin stood
low at below unity level during the last three financial years
(FY17: 0.65%, FY16: 0.34%, FY15: 0.64%).
Weak solvency position
KDS has a leveraged capital structure with overall gearing ratio
of 2.29x as on March 31, 2017. The same deteriorated from 1.22x,
as on March 31, 2016, due to higher utlisation of working capital
borrowings as on balance sheet date. Furthermore, total debt to
GCA stood high at 11.26x for FY17. However, the interest
coverage ratio stood moderate at 3.70x in FY17. The working
capital limits stood fully utilized for the 12 months period
ended August 2017.
Implementation risk along with funding risk associated with debt
funded greenfield project: The company is undertaking a project
to setup a manufacturing facility for milk products and SMP. The
total cost of the green-field project is estimated at INR24.85
crore, being financed which will be funded by term loan of
INR13.90 crore, subsidy from MOFPI of INR3.82 crore and remaining
from the promoter's contribution in the form of capital. Term
loan of INR9.90 crore is yet to be tied up. Out of the total
capex planned, as on September 20, 2017, the project has incurred
an expenditure of INR4.50 crore which has been funded through
term loan of INR2.80 crore and proprietor's contribution of
INR1.70 crore. This exposes the firm towards project execution in
terms of yet to be tied-up debt, completion of the project with-
in the envisaged time and cost. Furthermore, due to debt funding
for the project and given the low networth base of the company at
present, its capital structure is going to remain leveraged going
forward.
Susceptibility to adverse regulatory changes and raw material-
related risk: The price of the raw material is sensitive to
changes in government policies which in turn makes profitability
margins of the company vulnerable towards government policies.
Also, milk supply and its prices are exposed to external risk
like cattle diseases on which the dairy companies do not have
any direct control and therefore, any fluctuation in prices of
milk will have a direct impact on the profitability margins of
the company.
Seasonal nature of operations: India being a tropical country
renders a hot and humid climate for the animals and thus
fluctuations in the milk production. There is a flush season in
the cooler parts of the year whereas the production goes down in
the warmer months. The milk processing companies converts the
surplus milk during November-April (flush season) into ghee,
skimmed milk powder, liquid milk etc. to maintain the continuous
supply of milk products round the year. This leads to increased
working capital requirement during the period.
Proprietorship nature of constitution: KDS's constitution as a
proprietorship firm has the inherent risk of possibility of
withdrawal of the proprietor's capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of proprietor. Moreover,
proprietorship firms have restricted access to external borrowing
as credit worthiness of proprietor would be the key factor
affecting credit decision of the lenders. However, during FY14-17
period, the proprietor has infused funds amounting to INR 0.74
crore.
Highly competitve and fragmented nature of industry: The dairy
business is highly fragmented and dominated by few large players
having nationwide presence. The competition is intense due to the
presence of large number of regional and local milk and milk
product suppliers. Around 80% of the domestic dairy industry
consists of unorganized players, fragmented in various regions.
KDS faces intense competition from bigger private players and
co-operative dairy societies with well established brands as well
as unorganized sectors comprising of milk vendors.
Strengths
Experienced proprietor: KDS got established in 2010 and is
currently being managed by Mr. Rakesh Kumar. The proprietor has
an experience of 20 years in the dairy industry through his
association with KDS and other regional entities engaged in
similar business. The proprietor has adequate acumen about
various aspects of business which is likely to benefit KDS in the
long run.
Comfortable operating cycle: The average operating cycle of the
firm stood short at 29 days for FY17. The firm does not maintain
inventory as raw milk procurement is on daily basis and also,
milk processing time is low & finished goods are also dispatched
same day. Furthermore, the firm receives a credit period of upto
a month from its suppliers and extends a credit period of upto
one and a half months to its customers. The working capital
limits stood fully utilized for the 12 months period ended August
2017.
Kathpal Dairies (KDS) is a proprietorship firm established in
October, 2010 by Mr. Rakesh Kumar. KDS is engaged in processing
of milk which includes pasteurization and chilling at its
facility located in Moga, Punjab (Unit I) with an installed
capacity of chilling 1.80 crore litres of milk per annum as on
March 31, 2017. KDS procures the non-pasteurized milk from local
milk dairies in Moga, Punjab. The firm sells the pasteurized milk
to various dealers and wholesalers located mainly in Punjab,
Haryana, Himachal Pradesh, Jammu & Kashmir and Delhi. KDS is
setting up Unit II for manufacturing of milk products and SMP
with an installed capacity of processing 8.64 crore litres of
milk per annum at Moga, Punjab. The operations in the same are
expected to commence from January 2018.
KAY BEE: CRISIL Reaffirms B- Rating on INR7MM Cash Loan
-------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B-/Stable' rating on
the long-term bank facility of Kay Bee Cotgin Private Limited
(KBCPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B-/Stable (Reaffirmed)
The rating reflects KBCPL's modest scale of operations in the
intensely competitive cotton industry, weak financial risk
profile and stretched liquidity. These weaknesses are partially
offset by the extensive industry experience of its promoters and
their funding support.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Financial risk profile is marked
by modest networth of INR1.47 crore and high gearing of 6.92
times as on March 31, 2017. The interest coverage was weak at
0.95 time for fiscal 2017. The company however benefits from
promoter-funding in the form of unsecured loans at INR3.4 crore
as on March 31, 2017.
* Exposure to volatility in cotton prices and intense competition
The operating margin is highly susceptible to fluctuations in
cotton prices. Moreover, intense competition in the industry also
restricts the margin.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' two decade-long experience in the industry and
established relationships with suppliers and customers should
support business.
Outlook: Stable
CRISIL believes KBCPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if there is improvement in revenue, profitability and
capital structure. The outlook may be revised to 'Negative' if
decline in revenue and profitability, or stretch in working
capital cycle or large debt-funded capital expenditure weakens
financial risk profile, especially liquidity.
Incorporated in 1997, KBCPL carries out cotton ginning and
pressing operations at its facility in Abohar, Punjab. The
operations are managed by Mr. Ashok Gandhi and family.
KEDARNATH COTTONS: CRISIL Reaffirms B Rating on INR20MM Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facilities
of Kedarnath Cottons Private Limited (KCPL) at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 20 CRISIL B/Stable (Reaffirmed)
Proposed Long
Term Bank Loan
Facility 0.93 CRISIL B/Stable (Reaffirmed)
The Ratings continues to reflect KCPL's below average financial
risk profile marked by a small net worth, high gearing, and weak
debt protection metrics. Rating also factors in susceptibility of
its profitability margins to volatility in raw material prices.
These rating weaknesses are partially offset by the benefits KCPL
derives from the extensive industry experience of its promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: The company's net worth is modest,
estimated at around INR7.8 Cr, as on March 31, 2017. The
company's modest profitability, along with a high debt level,
resulted in weak debt protection metrics; the company's interest
coverage and net cash accruals to total debt (NCATD) ratios are
estimated at around 1.6 times and 3 per cent, respectively, for
2016-17. Gearing was at 3.1 times as on March 31 2017.
* Susceptibility of profitability margins to volatility in raw
material prices: Cotton purchases account for about 85-90per cent
of KCPL's cost of production. As the prices of these raw
materials have been highly volatile in past and are expected to
remain so, the company's margins are highly susceptible to
fluctuations in the prices of raw materials.
Strength
* Extensive industry experience of the promoters: KCPL's
promoters have been engaged in the cotton ginning business for
more than two decades. The company benefits from the promoters'
strong relations with farmers and other suppliers, enabling
efficient procurement.
Outlook: Stable
CRISIL believes that KCPL will continue to benefit over the
medium term from its promoters' extensive industry experience and
established relationships with customers. The outlook may be
revised to 'Positive' if there is a substantial and sustained
improvement in the company's revenues and profitability margins,
or there is a substantial improvement in its capital
structure/net-worth on the back of sizeable equity infusion from
its promoters. Conversely, the outlook may be revised to
'Negative' in case of a steep decline in the company's
profitability margins, or significant deterioration in its
capital structure caused most likely by a large debt-funded
capital expenditure or a stretch in its working capital cycle.
Set up in 2009 by Mr. Kedarnath Padigela, the Adilabad
(Telangana)-based KCPL gins cotton.
During fiscal 2017, the company provisionally reported a profit
after tax (PAT) of INR0.70 Crores on operating income of INR67.40
Crores against PAT of INR0.39 Crores on operating income of
INR76.05 Crores in the previous fiscal.
KESHAV GREENS: CRISIL Reaffirms 'B' Rating on INR3.5MM Term Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long-term bank facilities of Keshav Greens (KG).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.2 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2.0 CRISIL B/Stable (Reaffirmed)
Term Loan 3.5 CRISIL B/Stable (Reaffirmed)
The rating reflects KG's modest scale of operations, constrained
financial risk profile marked by small net worth and high
gearing, expected modest cash accrual and presence in the
intensely competitive cold storage business in Gujarat. These
weaknesses are partially offset by the extensive entrepreneurial
experience of the partners.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Intense
competition kept revenue modest at INR3.33 crore during fiscal
2017.
* Below-average financial risk profile and expected modest
accrual: Small networth and high gearing of INR1.54 crore and
2.76 times, respectively, as on March 31, 2017, constrain the
financial risk profile. Moreover, expected modest accrual should
keep networth small.
Strengths
* Extensive experience of the partners: Benefits from the
partners' decade-long experience in the agriculture industry
should support the business.
Outlook: Stable
CRISIL believes KG will benefit from the extensive experience of
its partners. The outlook may be revised to 'Positive' if
increase in revenue and profitability result in high cash
accrual. The outlook may be revised to 'Negative' if decrease in
revenue or profitability leads to low cash accrual, or if large
working capital requirement weakens financial risk profile,
especially liquidity.
Established in April 2015 as a partnership firm, KG provides cold
storage services. Its unit, at Nikoda, Gujarat, commenced
commercial operations in February 2016.
Revenue was INR3.33 crore and net loss was INR0.37 crore for
fiscal 2017.
KLR INDUSTRIES: Ind-Ra Migrates D Rating to Not Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated KLR Industries
Limited's (KLRIL) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR30 mil. Long-term loan (Long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating;
-- INR282 mil. Fund-based facilities (Long-term) migrated
to non-cooperating category with IND D(ISSUER NOT
COOPERATING) rating; and
-- INR125 mil. Non-fund-based facilities (Short-term) migrated
to non-cooperating category with IND D(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 19, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
KLRIL was initially established as KLR Universal by Mr. K. Laxma
Reddy in 1985. KLR Universal was engaged in manufacturing of
button bits, a tool used in water well drilling applications,
before being incorporated as KLR Industries Limited in January
2002. The company has a manufacturing facility in Cherlapally,
Hyderabad. KLRIL is engaged in manufacturing of drilling
equipment such as drilling rigs, hammers, and bits, for the
application of water wells, mining, piling, geological survey,
construction, among others.
MB SPONGE: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated MB Sponge and
Power Limited's 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:
-- INR112 mil. Fund-based limits- CC migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating;
-- INR4 mil. Fund-based limits- ODBD migrated to non-cooperating
category IND A4+(ISSUER NOT COOPERATING) rating; and
-- INR21 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 20, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2004, MB Sponge and Power manufactures sponge
iron at its 60,000mtpa manufacturing facility in Burdwan, West
Bengal.
MOGALS EDUCATIONAL: CRISIL Cuts Rating on INR16MM LT Loan to 'D'
----------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of Mogals Educational and Charitable Trust (MECT) to
'CRISIL D' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 16 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Overdraft 1 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Proposed Long Term 1 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL BB-/Stable')
The downgrade reflects the trust's delays in meeting its term
loan obligation, because of stretched liquidity.
The trust is also susceptible to regulatory changes and to
intense competition in the education sector. However, it benefits
from its established regional presence and its promoter's
experience in the education sector, and its moderate financial
risk profile.
Key Rating Drivers & Detailed Description
Strengths
* Delay in debt servicing: Stretched liquidity driven by cash
flow mismatches has led to delay in servicing of debt.
Weakness
* Susceptibility to regulatory changes: The establishment and
operations of higher educational institutions are governed by
governmental and quasi-government agencies such as All India
Council for Technical Education (AICTE), universities, and the
state government. Even enhancing number of seats and fees charged
requires prior approval. The agencies conduct detailed study of
aspects such as the institution's facilities, technology,
faculty, and track record before granting approval. Also, courses
offered have to comply with operational and infrastructure norms
laid down by these regulatory bodies. Thus, the trust needs to
regularly invest in its workforce and infrastructure.
* Exposure to intense competition in the education sector: The
brand value of MECT is confined to Tamil Nadu, and most of its
students are from in and around the region. The colleges face
competition from more than 570 engineering colleges in Tamil
Nadu, of which, 30 are in Kanyakumari. Furthermore, the
engineering colleges have been in operation only for five years,
and ability to sustain brand image, and attract and retain
students remains to be seen. Besides, there are no tie-ups with
prominent global universities, restricting brand image.
Strengths
* Established regional presence and the promoter's experience in
the education sector: MECT's promoter Mr. Mohamed Eakieem has
experience of one decade in the education sector. On account of
experienced management, occupancy has been moderate, at 75%. All
the institutions are approved by AICTE/National Council for
Teacher Education (NCTE) and the state government. The
educational institutions provide a wide array of courses ranging
from undergraduate and postgraduate engineering courses to
teacher training courses. All the colleges have state-of-the-art
laboratories, equipment, infrastructure, and a strong faculty.
MECT's revenue rose 11.2% for the three fiscals through 2017, to
INR10.4 crore.
* Moderate financial risk profile: The financial risk profile is
backed by moderate gearing of 1.8 times as on March 31, 2017, and
comfortable debt protection metrics, with net cash accrual to
total debt and interest coverage ratios at 24% and 2.67 times,
respectively, for fiscal 2017. Networth was modest, at INR10.6
crore as on March 31, 2017. Gearing ranged from 1.5 to 1.9 times
in the three fiscals ended March 31, 2017.
MECT, based in Nagercoil (Tamil Nadu), was established in 2004 by
Mr. Mohamed Eakieem. The trust offers undergraduate, graduate,
and post-graduate courses in engineering, and teacher training
courses through MET College of Education, MET Engineering
College, and MET Teacher Training College.
NEOMETRIX ENGINEERING: CRISIL Reaffirms B- Rating on INR4.5M Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Neometrix Engineering Private Limited (NEPL) at 'CRISIL B-
/Stable/CRISIL A4'. The ratings reflect a small scale of
operations, large working capital requirement, and below-average
financial risk profile. These weaknesses are partially offset by
promoters' extensive experience in the defence and aviation
equipment industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL A4 (Reaffirmed)
Cash Credit 4.5 CRISIL B-/Stable (Reaffirmed)
Analytical Approach
Unsecured loans of INR23.7 lakh are treated as debt as these are
not subordinated to bank debts.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: Despite being in business for 12
years, scale has remained small due to intense competition in the
tender-based defence equipment business. Operating income stood
at INR12.7 crore in fiscal 2017.
* Susceptibility to volatility in raw material prices, and
working capital-intensive operations: Absence of any price
agreement with suppliers and customers renders profitability
susceptible to volatility in raw material prices. Operations are
working capital intensive, driven by sizeable receivables.
* Below-average financial risk profile: The financial risk
profile is constrained by gearing of 2.6 times and below average
debt protection metrics.
Strength
* Promoters' extensive experience: Technically qualified
promoters have extensive experience both in India and overseas.
This experience has enabled the company undertake new projects
without much difficulty, execute projects on time resulting in
repeat orders, and cater to the stringent requirements of marquee
clients such as Indian Army, Navy, Air Force and Railways.
Outlook: Stable
CRISIL expects NEPL to benefit from the promoters' experience.
The outlook may be revised to 'Positive' if scaling up of
operations or efficient working capital management leads to
improvement in cash flows and liquidity, and consequently, the
financial risk profile. The outlook may be revised to 'Negative'
in case of stretch in receivables or weakening of capital
structure or debt protection indicators.
Established in 2005 by Mr. Shailendra Pratap Singh, NEPL
manufactures and installs test equipment for defence, mainly the
Indian Air Force. Based in Noida, the company also caters to the
Indian Railways, Navy and Army and automotive segment
occasionally.
OSNAR CHEMICAL: Ind-Ra Moves B+ Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Osnar Chemical
Private Limited's (OCPL) 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 facilities migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING) rating; and
-- INR40 mil. Non-fund-based facilities migrated to non-
cooperating category with IND B+(ISSUER NOT COOPERATING)/IND
A4(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 25, 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 1972, OCPL offers services for road development
and improvement and undertakes contracts for waterproofing and
damp-proofing work.
P.C. JAIN: CRISIL Lowers Rating on INR6.0MM LT Loan to B+
---------------------------------------------------------
CRISIL Ratings has downgraded its ratings on bank loan facilities
of P.C. Jain and Company (PJC) to 'CRISIL B+/Stable/CRISIL A4'
from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6.5 CRISIL A4 (Downgraded from
'CRISIL A4+')
Overdraft 3.5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Proposed Long Term 6.0 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in the business risk profile
reflected in a significant decline in operating income to INR7.95
crore in fiscal 2017 from INR17.06 crore in fiscal 2016 due to
fewer orders. The operating margin also declined to 5.66% from
11.23% owing to high fixed cost. This, coupled with capital
withdrawal of INR61 lakh in fiscal 2017 led to a net cash loss of
INR35 lakh during the fiscal, and hence to high dependence on
bank borrowing for incremental working capital requirement.
Consequently, bank limit utilisation increased to an average of
66% during the 12 months through June 2017 against 40-45%
earlier, despite the significant decline in the scale of
operations
Ability to win and execute tenders for revival of the operating
income and profitability will remain a key rating sensitivity
factor over the medium term.
Analytical Approach
Unsecured loans of INR1.82 crore from the proprietor as on
March 31, 2017, have been treated as 75% equity and 25% equity.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations: This exposes the firm to any adverse
external factors. The scale of operations is expected to remain
small owing to low revenue visibility given the tender-based
nature of operations and limited orders in hand.
* Geographical concentration in revenue: The firm bids for road
projects only in Banswara district of Rajasthan.
Strengths
* Extensive industry experience of the proprietor: The
proprietor, Mr. P C Jain, has been engaged in the civil
construction industry for over three decades. This has helped to
develop an established relationship with customers and suppliers
and resulted in a sound understanding of the business environment
in Rajasthan.
Outlook: Stable
CRISIL believes PCJC will continue to benefit from the extensive
industry experience of its proprietor. The outlook may be revised
to 'Positive' in case of a significant ramp-up in scale of
operations while profitability is maintained, leading to higher-
than-expected cash accrual and improvement in the financial risk
profile. The outlook may be revised to 'Negative' if large, debt-
funded capital expenditure or a decline in profitability weakens
the financial risk profile, particularly liquidity.
PJC was established as a proprietorship firm in 1975 in Rajasthan
by Mr. P C Jain. The firm provides turnkey construction services,
mainly for civil works relating to roads for authorities such as
the Public Works Department, Rajasthan.
PRITHVI POLYMERS: Ind-Ra Moves B Issuer Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Prithvi Polymers
Industries Pvt. Ltd.'s (PPIPL) 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:
-- INR25 mil. Fund-based limits migrated to non-cooperating
category with IND B(ISSUER NOT COOPERATING) rating;
-- INR7.25 mil. Non-fund-based limits migrated to non-
cooperating
category with IND A4(ISSUER NOT COOPERATING) rating; and
-- INR70 mil. Term loans migrated to non-cooperating category
with IND B(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 5, 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 2014, PPIPL manufactures thermoform disposables.
The company is managed by Pradeep Goenka and has its registered
office in Mumbai.
R D SALES: Ind-Ra Assigns BB- Issuer Rating, Outlook Stable
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned R. D. Sales
(RDS) a Long-Term Issuer Rating of 'IND BB-'. The Outlook is
Stable. The instrument-wise rating action is:
-- INR80 mil. Fund-based limits assigned with IND BB-/Stable/IND
A4+ rating.
KEY RATING DRIVERS
The ratings reflect RDS's moderate scale of operations and credit
profile due to its trading nature of operations. In FY17, its
revenue improved to INR796 million (FY16: INR779 million) on back
of an increase in the volume of sales, with net interest coverage
(operating EBITDA/gross interest expense) being flat at 1.3x
(1.2x) and net financial leverage (total adjusted net
debt/operating EBITDAR) increasing to 6.2x (5.1x) due to an
increase in the total debt along with a decline in the operating
margins. EBITDA margins slightly deteriorated to 1.4% in FY17
(FY16: 1.5%) due to an increase in overhead expenses.
Moreover, the liquidity position of the company is moderate as
reflected in its around 99% average utilisation of the working
capital limits during the 12 months ended September 2017.
The ratings are supported by the company's promoters' experience
of around a decade in the iron and steel industry.
RATING SENSITIVITIES
Positive: An improvement in the liquidity and scale of operations
will be positive for the ratings.
Negative: Deterioration in the overall credit profile will be
negative for the ratings.
COMPANY PROFILE
RDS is engaged in the trading of thermo-mechanically treated
bars, structural steel and other steel products.
RAMCO INTERNATIONAL: Ind-Ra Moves BB- Rating to Not Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Ramco
International's (RI) 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:
-- INR160 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB-(ISSUER NOT COOPERATING)/IND
A4+(ISSUER NOT COOPERATING) rating; and
-- INR7.50 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 4, 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 1995, RI manufactures garden hand tools at its
site in Jalandhar, Punjab, and sells products in international
markets such as Australia and the UK.
SAI MAATARINI: Ind-Ra Moves BB Issuer Rating to Not Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sai Maatarini
Tollways Limited's (SMTL) term loans to the non-cooperating
category. The issuer did not participate in the surveillance
exercise despite continuous requests and follow ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR13,973.5 mil. Term loans migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 28, 2015. Ind-Ra is unable to provide an update as the
agency does not have adequate information to review the rating.
COMPANY PROFILE
SMTL is a special purpose vehicle, incorporated to implement a
166.17km lane expansion (two-to-four laning) between Panikolli
and Rimuli in Odisha on National Highway 215, under a 24-year
concession from the National Highways Authority of India ('IND
AAA'/Stable).
SHRI MAHADEV: CRISIL Reaffirms 'B' Rating on INR4.3MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long-term bank facilities of Shri Mahadev Silk Mills Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.3 CRISIL B/Stable (Reaffirmed)
Long Term Loan 2.7 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .3 CRISIL B/Stable (Reaffirmed)
The rating reflects modest scale of operations in the intensely
competitive textile industry, working capital intensive
operations and subdued financial risk profile marked by a modest
net worth, high TOLTNW and moderate debt protection metrics.
These rating weaknesses are partially offset by and the extensive
experience of promoters and their fund support.
Analytical Approach
Unsecured loans from promoters of INR3.37 crores have been
treated as neither debt nor equity as it expected to remain in
the company.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the intensely competitive textile
industry: Limited capacity and intense competition in the textile
industry have led to a moderate scale, reflected in revenue of
INR28.12 crore in fiscal 2017 (increased modestly from INR26.43
crores in fiscal 2016). Modest scale also restricts benefits of
economies of scale and limits pricing flexibility, thereby
constraining profitability.
* Subdued financial risk profile: As on March 31, 2017, the net
worth was modest at INR3.08 crore and TOLTNW high at over 5.75
times (compared to 3.01 and 5.22 times respectively a year ago).
With continued large working capital debt, gearing is expected to
remain high over the medium term. Interest coverage ratio was
moderate at 2 times and NCATD of .15 times during fiscal 2017 due
to low profitability and high debt level.
* Large working Capital requirements: SMSMPL's working capital
requirements are high reflected in gross current assets of 216
days as on March 31, 2017 compared to 171 days a year ago. The
company had debtors of 166 days and inventory of 40-50 days as on
March 31, 2017. This leads to high dependence on creditors and
bank facilities to fund working capital requirements.
Strengths
* Extensive experience of the promoters and their fund support:
SMSMPL's promoters have extensive experience of over 20 years in
dyeing and processing segment. This has helped in establishing a
customer and supplier base within the vicinity of Surat, and
scale up operations over the years. The promoters have also
supported the fund requirements through unsecured loans.
Outlook: Stable
CRISIL believes SMSMPL will continue to benefit over the medium
term from the promoters' extensive industry experience. The
outlook may be revised to 'Positive' if revenue and profitability
improve, leading to higher cash accrual or significant capital
infusion leads to improvement in financial risk profile and
liquidity. The outlook may be revised to 'Negative' in case of
lower-than-expected revenues or profitability or stretch in
working capital cycle further weakens financial risk profile,
particularly liquidity.
SMSMPL, incorporated by Mr. Nandkishore Rathi and his family, is
engaged in the business of dyeing and processing of manmade
fabrics with total capacity of 1.75 lakh meters/ day at its
manufacturing unit at Surat, Gujarat.
SHRINET AND SHANDILYA: CARE Reaffirms B+ Rating on INR3cr LT Loan
-----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shrinet and Shandilya Construction Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 3.00 CARE B+; Stable Reaffirmed
Short Term Bank
Facilities 32.00 CARE A4; Reaffirmed
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of SSPL continues to
remain constrained by small and fluctuating scale of operations,
working capital intensive nature of operations and SSPL's
presence in a highly competitive construction industry.
The rating constraints are partially offset by the experienced
promoters, moderate profitability margins, moderate capital
structure and moderate order book.
Going forward, the ability of SSPL to increase its scale of
operations while improving its profitability margins, maintaining
its capital structure while managing its working capital
requirements shall be the key rating sensitivities.
Detailed description of the key rating drivers
Small and fluctuating scale of operations: The company is a small
regional player involved in executing civil construction
contracts. The ability of the company to scale up to larger-sized
contracts having better operating margins is constrained by its
total operating income and GCA of INR30.63 crore and INR1.62
crore respectively in FY17 (FY refers to the period April 1 to
March 31).; based on provisional results). The small scale of
operations in a fragmented industry limits the pricing power and
benefits of economies of scale. Furthermore, company's total
operating income has been fluctuating over the past three years
(FY15-FY17) due to tender-driven nature of business. The total
operating income registered growth in FY17 over previous year
owing to increase in the number of orders executed.
Working capital intensive nature of operations: The operating
cycle of the company has stood at 85 days in FY17. The firm
maintains inventory in form raw material at different sites for
the smooth execution of orders. Further, the company raises bills
to its customers who take 3-4 months to realize owing delay is
clearance from government department. The company receives an
average payable period of around a month from its suppliers. The
working capital limits remained fully utilized during the 12
months ending August 2017.
SSPL's has given significant loans and advances to various
entities which stood at INR 24.73 crore as on March 31, 2017. The
same lead to weak liquidity position of the company. Furthermore,
any delay in realization of the same would have an adverse impact
on the financial risk profile of SSPL and would continue to be a
key rating sensitivity.
Highly competitive industry with presence of several organized
and unorganized players: SSPL faces direct competition from
various organized and unorganized players in the market. There
are a number of small and regional players in the industry which
limits the bargaining power of the company and in turn exerts
pressure on its margins. Hence, going forward, due to increasing
level of competition and aggressive bidding, the profits margins
are likely to be under pressure in the medium term.
Business risk associated with tender-based orders: The company
majorly undertakes government projects, which are awarded through
the tender-based system. The company is exposed to the risk
associated with the tender-based business, which is characterized
by intense competition. The growth of the business depends on its
ability to successfully bid for the tenders and emerge as the
lowest bidder. Further, any changes in the government policy or
government spending on projects are likely to affect the revenues
of the company.
Experienced management: Mr. Sanjay Partap Singh has more than two
decades of experience in civil construction (Road and Building)
work through his association with SSPL. He handles the overall
operations of the company. He is supported Mr. Vishnu Saran
Singh, who has 19 years of experience in civil construction
through his association with SSPL. Prior to SSPL he used to work
as an independent government contractor.
Moderate profitability margins and capital structure: The
profitability margins of the firm stood moderate during last
three financial years (FY15-FY17). PBILDT margin stood at 11.21%
in FY17 as against 9.95% in FY16 on account of better margin
contacts executed. PAT margin improved and stood at above 2.98%
in FY17 as against 2.39% in FY16.
The capital structure of the company stood moderate from the last
three balance sheet dates. Capital structure as marked by overall
gearing improved and stood at 0.96x as on March 31, 2017 as
against 1.22x as on March 31, 2016. The improvement was on
account of lower debt levels owing to repayment of term loan &
unsecured loans, and lower utilization of working capital limits
as on balance sheet date coupled with higher tangible networth
base owing to accretion of profits to reserves.
Moderate order book: The unexecuted order book of the company
stood at INR 65.50 crore as on September 28, 2017 which is
approximately 2.14 times of its total operating income of FY17.
The unexecuted orders have to be executed in next 24 months. The
moderate order book provides revenue visibility in the short to
medium term for the company.
Shrinet and Shandilya Construction Private Limited (SSPL) was
incorporated in July 10, 1998 by Mr. Sanjay Partap Singh. The
company is engaged in construction of roads and development work
like construction of drains and culvert. SSPL executes contracts
mainly for government departments like New Okhla Industrial
Development Authority (NOIDA), Office of Executive Engineer-
Irrigation Division, Road Division and Superintending Engineer-
Rural Engineering Department. The main raw material for the
company includes bitumen, crushed stone, dust sand, cement and
tar which the company procures mainly from local dealers where
project is located. The company procures bitumen from Indian Oil
Corporation.
SRI BALAMURUGAN: CRISIL Reaffirms B Rating on INR6MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable/CRISIL A4'
ratings on the bank facilities of Sri Balamurugan Engineering
Works Private Limited (SBEW).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Open Cash Credit 6 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2 CRISIL B/Stable (Reaffirmed)
Standby Overdraft
Facility 2 CRISIL A4 (Reaffirmed)
The ratings continue to reflect SBEW's weak financial risk
profile because of high gearing and large working capital
requirement. These strengths are partially offset by promoter's
extensive experience in the industry for more than a decade.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: Financial risk profile of SBEW is
weak marked by high gearing and weak debt protection metrics.
Gearing was 3.04 times as on March 31, 2017 while the interest
cover was 1.34 times.
* Large working capital requirement: Gross current assets were at
265 days as on March 31, 2017 due to large raw material
requirement and high debtors. Inventory days stood at 107 days,
while debtors stood at 119 days as on as on March 31, 2017.
Operations will continue to remain working capital intensive over
the medium term.
Strength
* Extensive experience of promoters: Promoters extensive
experience of more than a decade in fabrication business and
established relationship with its client is expected to support
the business risk profile of the company.
Outlook: Stable
CRISIL believes SBEW will benefit over the medium term from its
promoter's extensive experience. The outlook may be revised to
'Positive' if revenue and profitability grow significantly, while
improving financial risk profile. Conversely, the outlook may be
revised to 'Negative' if revenue and operating margin decline or
if stretched working capital cycle weakens financial risk
profile.
Established in 1977 in Tiruchirappalli, Tamil Nadu, SBEW is
engaged in heavy structural fabrication for boilers. The company
is promoted by Mr. S M P Selvam.
SRI DHARAM: CRISIL Reaffirms 'D' Rating on INR14.5MM LT Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on bank facility of Sri
Dharam Educational Trust (SDET) at 'CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 14.5 CRISIL D (Reaffirmed)
The rating reflects instances of delay by SDET in servicing its
term debt, owing to weak liquidity. The rating also factors in
the small scale of operations and intense competition from other
institutes in the vicinity. However, the trust benefits from the
management's extensive experience in the educational sector.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations and intense competition: The trust
derives its revenue mainly from the nursery school- Aakrutii, and
primary school- Sri Dharamchand Jain School affiliated to Central
Board for Secondary Education (CBSE) in Tindivanam (Tamil Nadu).
Intense competition from other established local schools, and
time required to ramp up operations of the new school, limit the
trust's ability to scale up.
Strength
* Extensive experience of the trustee: The decade-long experience
of the founder, Mr. H Bablasa, and the track record and
operational capabilities of all trustees, will continue to
support the business risk profile.
Set up in 2013, SDET runs a nursery school in Tindivanam (Tamil
Nadu), Aakrutii School and a secondary school (Sri Dharamchand
Jain School) affiliated to CBSE. Daily operations are overseen by
the key promoter-trustee, Mr. Bablasa.
On a provisional basis, net loss of INR2.3 crore was reported on
total revenue of INR0.2 crore in fiscal 2017, vis-a-vis INR2.4
crore and INR0.1 crore, respectively, in fiscal 2016.
SRI VENKATRAMA: CRISIL Raises Rating on INR20MM Cash Loan to B+
---------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term facility
of Sri Venkatrama Agro Tech (SVAT) to 'CRISIL B+/Stable' from
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 20 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects steady improvement in SVAT's financial risk
profile. Networth increased to INR6.3 crore in fiscal 2017 from
INR4.6 crore a year ago, while gearing steadily improved to 3.1
times as on March 31, 2017. Revenue has been stable at INR30-36
crore over the four fiscals through 2017, and profitability
expanded to 7.4% from 5.6% a year ago; growth will likely remain
moderate over the medium term. Nil debt-funded capital
expenditure (capex) plans, coupled with steady accretion to
reserve, and efficient working capital management are likely to
support key financial metrics over the medium term.
The rating continues to reflect SVAT's modest scale of operations
in the rice milling industry and susceptibility of profitability
to volatility in raw material prices. These weaknesses are
partially offset by the extensive experience of the partners in
the industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and susceptibility to volatile raw
material prices: With no major capex expected over the medium
term, scale of operations should remain modest'revenue was INR31
crore in fiscal 2017. Operating margin is susceptible to
volatility in the price of paddy, which gets impacted by changes
in climate and regulations.
Strength
* Extensive industry experience of the partners: Benefits from
the partners' 15 years of experience in the industry and
established relationships with suppliers and customers should
support business.
Outlook: Stable
CRISIL believes SVAT will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if increase in revenue and profitability improves cash
accrual, and substantial capital infusion strengthens financial
risk profile. The outlook may be revised to 'Negative' if low
cash accrual or high working capital debt or any capex weakens
financial risk profile.
Set up in 2011, SVAT mills and processes paddy into rice, rice
bran, broken rice, and husk. It is promoted by Mr. Padmakar
Choudary and family.
STATE BANK OF INDIA: Profit Hinges on Ongoing NPL Resolution
------------------------------------------------------------
Moody's Investors Service says that the ongoing rounds of
nonperforming loan (NPL) resolutions initiated by the Indian
central bank hold the key to the State Bank of India's (SBI, Baa3
positive, ba1) credit profile.
"The resultant haircut on SBI's assets will likely show a
substantial impact," says Alka Anbarasu, a Moody's Vice President
and Senior Analyst. "Moody's scenario analysis concludes that SBI
can absorb haircuts of up to 50%-55%, while maintaining a common
equity Tier 1 ratio of above 9.5% at the end of March 2019."
Such a common equity Tier 1 ratio would give the bank some buffer
above the minimum regulatory requirement of 8.6% by March 2019.
"This scenario also implies that a haircut exceeding 50%-55% will
put pressure on SBI to once again seek external capital to uphold
its capital position," adds Anbarasu.
The scenario analysis assumes about 35%-40% of the bank's NPLs
are resolved under the various resolution processes in the next
two financial years.
Moody's conclusions are contained in its just-released report
titled "State Bank of India: Coming NPL resolution holds key to
profit and capital performance," and is authored by Anbarasu.
Moody's report says that SBI is exposed to swings in its credit
costs (loan-loss provisions), as it continues to provide for a
large stock of problem assets and newly recognized NPLs.
And, the substantial increase in SBI's NPLs after the merger with
its associate banks, uneven adjustments of the economy to recent
financial disruptions, and current regulatory efforts to resolve
problem accounts, will result in negative pressure on the bank's
credit costs.
Moody's analysis suggests that a 50 basis points (bps) change in
SBI's credit costs as a percentage of gross loans will have a
30bps impact on its return on assets (ROA). On an annualized
basis, the bank reported credit costs of 2.6% of gross loans and
an ROA of 0.4% in the quarter ended June 2017.
Moody's also points out that the bank's capitalization has
improved - after a recent capital raising exercise - and the bank
still owns a majority stake in its life insurance subsidiary,
which represents a potential source of capital, if needed.
The bank has also slowed its annual loan growth to 6%-8% compared
with average yearly growth of about 20% on a standalone basis
between 2008 and 2013; a situation which has reduced the strain
on capitalization.
SBI is the largest bank in India by deposits and loans. Based on
these two parameters, it is three times larger than its closest
domestic competitor. The bank reported total consolidated assets
of INR33.3 trillion at June 30, 2017.
THAKKARSONS ROLL: Ind-Ra Moves BB Rating to Not Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Thakkarsons Roll
Forming Private Limited's (TRF) 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 mil. Long-term loan migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating;
-- INR140 mil. Fund-based facilities migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating; and
-- INR110 mil. Non-fund-based facilities migrated to non-
cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 6, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
TRF was set up in 1990 by Mr. Devang Thakkar, his brother, Mr.
Bhavin Thakkar, and his wife Mrs. Mansi Thakkar. The company
manufactures metal crash barriers (guard rails), module mounting
structures for solar panels, and other steel structures.
TRIBHUWAN NARAYAN: CRISIL Lowers Rating on INR10MM Bank Loan to D
-----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Tribhuwan
Narayan Singh (TNS) for obtaining information through letters and
emails dated June 19, 2017, and July 20, 2017, apart from
telephonic communication. However, the issuer has remained non-
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4')
Cash Credit 10 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL B+/Stable')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.'
Detailed Rationale
CRISIL has downgraded its ratings on the bank facilities of TNS
to 'CRISIL D/CRISIL D' from 'CRISIL B+/Stable/CRISIL A4'. The
downgrade reflects delays in servicing debt. CRISIL held
discussions with bankers, who have confirmed the ongoing delay.
Established in 1991 as a proprietorship firm by Mr. Tribhuwan
Narayan Singh and currently managed by his son, Mr. Abhishek
Singh, TNS is based in Ghazipur, Uttar Pradesh, and constructs
roads and bridges for government departments in Uttar Pradesh and
Jharkhand.
TRIDENT SUGARS: CRISIL Keeps 'C' Loan Rating on Watch Developing
----------------------------------------------------------------
CRISIL Ratings rating on the bank facilities of Trident Sugars
Limited (TSL) remains on 'Rating Watch with developing
Implications'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 34.2 CRISIL C (Continues on
Bank Loan Facility 'Rating Watch with
Developing Implications')
Rupee Term Loan 15.8 CRISIL C (Continues on
'Rating Watch with
Developing Implications')
CRISIL had placed the ratings on the bank facilities of TSL on
Rating Watch with developing Implications on 29th April, 2017.
On April 29, 2017, CRISIL had placed the ratings on the bank
facilities of TSL on Rating Watch with Developing Implications.
The rating action followed the announcement by Rajshree Sugars
and Chemicals Limited (RSCL) confirming divestment of its entire
stake in TSL to Natems Sugars Private Limited (NSPL). CRISIL will
continue to follow up with NSPL's management to evaluate the
extent of impact of any potential corporate action on its credit
risk profile and will remove the ratings from watch and take a
final rating action upon receiving adequate clarity and
information.
The ratings continue to reflect TSL's below-average financial
risk profile marked by high gearing and below average debt
protection metrics, and the company's susceptibility to
regulatory risks in the sugar industry. These rating weaknesses
are partially offset by TSL's long-standing regional presence.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: The Company's financial risk
profile continue to be weak marked by high gearing and subdued
debt protection metrics. Substantial losses incurred in the past
and sizeable debt has resulted in leveraged capital structure.
Debt protection metrics remains subdued marked by interest
coverage of 0.84 for fiscal 2017.
Strengths
* Long-standing regional presence in Telanagana: TSL has a long
standing presence in Zaheerabad, Telangana region. The plant
currently has a crushing capacity of 3000 TCD (tonnes of cane per
day). TSL's plant (crushing unit) is located close to sugar
crane growing region. CRISIL believes that long standing presence
in Telangana region and plant's proximity to crane growing
regions will benefit TSL over the medium term.
Based in Zaheerabad (Telanagana), TSL was incorporated in 2002 is
into manufacturing of sugar and has a crushing capacity of 3000
TCD (tonnes of cane per day).
For the fiscal 2017, TSL reported net loss of INR0.8 crores on
income from operations of INR114 crore. The company reported net
loss of INR4.96 crore on income from operations of INR143 crore
for fiscal 2016.
UNISEX AGENCIES: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facility of Unisex Agencies (UA).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Reaffirmed)
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the below-average financial risk
profile because of modest net worth and weak capital structure,
and large working capital requirement. These weaknesses are
partially offset by extensive experience of the promoter in the
textile trading business, and firm's moderate scale of
operations.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: The firm has weak debt
protection metrics, reflected in estimated interest coverage
ratio of 1.36 times and net cash accrual to adjusted debt ratio
of 0.04 time for fiscal 2017. Total outstanding liabilities to
tangible networth ratio remains stretched, at 5.40 time as on
March 31, 2017. Networth was small, at INR1.75 crore as on
March 31, 2017.
* Working capital-intensive operations: Gross current assets are
estimated at 203 days estimated as on March 31, 2017, primarily
on account of receivables of 125 days and inventory of 74 days.
Working capital-intensive operations led to high bank line
utilization.
Strengths
* Extensive experience of the promoter in the textile trading
business: Experience of more than two decades in the textile
trading segment has helped the promoter establish strong
relationships with suppliers and customers, and will continue to
support the firm's business risk profile.
* Moderate scale of operations with stable operating margin: The
scale of operations is indicated by moderate revenue of INR48
crore in fiscal 2017, against INR49 crore in fiscal 2016.
Operating margin remained stable, around 4%.
Outlook: Stable
CRISIL believes UA will continue to benefit from its promoter's
extensive industry experience. The outlook may be revised to
'Positive' if it scales up operations significantly, with stable
profitability, leading to higher-than-expected cash accrual, or
if the promoter infuses substantial long-term funds, resulting in
better liquidity. The outlook may be revised to 'Negative' if the
financial risk profile, particularly liquidity, weakens because
of lower cash accrual or a stretch in working capital cycle.
Unisex was set up by Mr. Rohit Khanna as a proprietorship firm in
1994. It distributes products of brands such as Adidas, Jockey
sportswear, Pepe Jeans, Just for Kids, Fila, and Provogue in
Punjab, Haryana, Himachal Pradesh, and Jammu & Kashmir. The firm
also retails branded garments, and has 14 retail outlets in
Punjab.
VAISHNAVI GLOBAL: CRISIL Reaffirms B+ Rating on INR14MM LT Loan
---------------------------------------------------------------
CRISIL Ratings rating on the long term bank facilities of
Vaishnavi Global Private Limited (VGPL) continue to reflect
VGPL's modest scale of operations in a fragmented industry and
large working capital requirements. It also factors in weak
financial risk profile, marked by weak capital structure. These
weaknesses are partially offset by the promoters' extensive
experience in the textile industry, its established customers and
supplier base and its moderate operating profitability.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 14.0 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: VGPL's scale of operation remained
modest as indicated by modest revenues of INR23 crore in fiscal
2017.
* Large working capital requirements: The company has working
capital intensive operations as indicated by high gross current
asset of 251 days as on March, 2017. This is on account of high
inventory level and stretched receivables.
* Weak financial risk profile: VGPL's weak financial risk profile
is marked by weak capital structure. The gearing ratio remained
high at 6.17 times as on March, 2017 on account of higher
reliance on external borrowings to fund the working capital
requirements.
Strength
* Extensive experience of promoters and longstanding relationship
with customers: VGPL benefits from the extensive experience of
promoters of over 3 decades in garment industry. Over the years,
the management has established longstanding relationship with the
customers thus, resulting in repeated orders.
Outlook: Stable
CRISIL believes that VGPL will continue to benefit over the
medium term from its promoters extensive industry experience and
established customer base. The outlook may be revised to
'Positive' if substantial improvement in scale of operations and
working capital cycle while maintaining operating profitability
results in improvement in its financial risk profile. Conversely,
the outlook may be revised to 'Negative' if VGPL's financial risk
profile weakens, due to low cash accruals or sharp increase in
working capital requirements, or if the company undertakes a
higher-than-expected debt-funded capital expenditure programme.
Incorporated in 1997 as a proprietorship firm and later re-
constituted as private limited company, VGPL manufactures order-
based garments mainly jeans and it also processes fabric. The
company is promoted by Mr. Rishi Mehra and Ms. Priti Mehra and is
based in Mumbai.
VIKRAM INFRASTRUCTURE: Ind-Ra Affirms 'B+' LT Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Vikram
Infrastructure Company's (VIC) Long-Term Issuer Rating at 'IND
B+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR150 mil. Fund-based limits affirmed with IND B+/Stable
rating;
-- INR100 mil. Non-fund based limits affirmed with IND A4
rating.
KEY RATING DRIVERS
The affirmation reflects VIC's continued tight liquidity position
and small scale of operations. The company fully used its working
capital limits during the 12 months ended September 2017 and
reported flat revenue of INR265 million in FY17 (FY16: INR267
million) due the execution of a lesser number of work orders.
Moreover, the credit metrics remained moderate in FY17, despite
interest coverage increasing to 1.4x (1.1x) and net leverage (net
debt/operating EBITDA) reducing to 5.5x (6.7x) due to an
improvement in operating EBITDA margin to 11.1% (8.8%) on account
of a decline in overhead expenses.
The ratings, however, are supported by VIC's partners' two-
decade-long experience in the construction segment.
RATING SENSITIVITIES
Positive: An improvement in the liquidity along with the scale of
operations will be positive for the ratings.
Negative: Further deterioration in the liquidity will be negative
for the ratings.
COMPANY PROFILE
VIC is a partnership firm established in 1989. It has three main
areas of business, namely infrastructure (civil construction),
mining, and ready mix concrete.
===============
M A L A Y S I A
===============
PRESS METAL: S&P Assigns 'BB-' Corp Credit Rating, Outlook Pos.
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term corporate credit
rating to Press Metal Aluminium Holdings Bhd. (PMB), a Malaysia-
based aluminum extrusion and smelting company. The outlook is
positive. At the same time, S&P is assigning its 'BB-' issue
rating to US$400 million in senior unsecured notes issued by
Press Metal (Labuan) Ltd. PMB, its two smelting operating
subsidiaries, and certain other subsidiaries, unconditionally
guarantee the notes.
The rating on PMB reflects the company's modest production and
scale as an aluminum smelter and extruder, its single-asset and
single-metal exposure to aluminum, and a limited record of
operations at larger production levels. The company also has
debt-funded its capacity expansion, and its cash flow adequacy
ratios will remain sensitive to fluctuations in aluminum prices.
PMB's sound cost position with low power costs and limited
reinvestment needs in the operations support its debt reduction
potential through 2019 and mitigate these constraints.
S&P said, "We regard PMB's scale and fairly narrow operating
diversity as the main rating constraint. The company is a small
aluminum producer, with a capacity of 760,000 tons and aluminum
extrusion capacity of 160,000 tons. That's about 1% of the global
aluminum capacity and multiple times smaller than other peers
rated by S&P Global Ratings, such as Norsk Hydro ASA, Aluminium
Corp. of China, or Vedanta Resources Plc. PMB's scale is unlikely
to change materially over the next two to three years because it
would need to source low-cost power to remain cost competitive.
We also expect no major change to PMB's product range, which
currently focuses on commodity aluminum products, including
ingots, billets, and wire rod, for which barriers to entry are
limited.
"We expect PMB's production and cash flows to remain concentrated
to its Bintulu and Mukah sites in Sarawak, with contribution of
more than 80% through 2019. The high geographic and single-asset
exposures affect the company's credit profile because it reduces
earnings quality and predictability. In particular, operations
are solely dependent on Sarawak Energy Bhd., the state
electricity producer and sole electricity source for PMB,
providing uninterrupted power. A state-wide power outage in 2013
led to a 50% decline in sales volume at the Mukah plant; it took
nearly five months before full ramp-up could resume. We believe
another outage of this magnitude is unlikely, given the
additional power capacity built by Sarawak Energy since. A fire
in 2015 also led to production shutdown of several weeks at the
Bintulu plant. It generally takes several weeks before production
can resume safely even after a short few hours of production
shutdown.
"We view PMB's single-metal concentration to aluminum as
moderately credit negative. Aluminum prices are volatile, ranging
from US$2,000 per ton in the fourth quarter of 2014 to below
US$1,500 per ton for about 12 months between July 2015 and July
2016. However, PMB hedges the prices of part of its production
every year, with about 75% of projected production in 2018 hedged
at about US$1,860 per ton, and a further 15% of the 2019
production hedged. Hedging reduces the volatility of the
company's profits and cash flows. We estimate it would take a
sizable US$300 drop in aluminum prices over a full year for PMB's
EBITDA to decline 30% from our base case, assuming the company
hedges about 50% of its production annually. That compares with a
US$150 per ton drop, a much more likely scenario, in the absence
of hedging.
"Despite the single-metal and single-site concentration risks,
PMB's cost position is a supporting factor for the rating. We
project the company's cash production costs, including overheads,
at about US$1,400 per ton through 2019, at the bottom of the
first quartile of the global cost curve. Unlike some of its
peers, such as Norsk Hydro, PMB is not vertically integrated into
power, bauxite, or alumina. However, its power cost is about
US$100 per ton less than peers because of a long-dated power
purchase agreement with Sarawak Energy and with modest annual
escalation.
"We project PMB's EBITDA margin to exceed 15% in our pricing
assumption through 2019, given its cost base. The company's
quarterly EBITDA margin has been volatile historically, ranging
from our estimate of about 12% when aluminum prices fell below
US$1,600 per ton, to more than 20% currently. Nevertheless, the
partial hedging of production volumes into 2019 provides
visibility on absolute earnings and profit margins."
PMB built its smelting capacity at the expense of leverage over
the past few years. Its debt-to-EBITDA ratio averaged about 6.5x
between 2011 and 2013 following the commissioning of the first
320,000-ton aluminum capacity at the Bintulu plant. Although PMB
repaid some debt in 2014 with cash flows from new capacity, it
funded a second round of expansion in 2015 with debt and its
debt-to-EBITDA ratio increased to nearly 4.0x in 2015 from 2.9x
in 2014.
The positive rating outlook recognizes the prospect of declining
debt over the next 12-18 months. S&P estimates that PMB could
generate annual discretionary cash flows of Malaysian ringgit
(MYR) 500 million on average over 2017-2019, assuming annual
EBITDA of about MYR1.3 billion and combined spending and dividend
outflows below MYR500 million.
In S&P's base case, reported gross debt approaches MYR2.7 billion
in 2018 and MYR2 billion in 2019 if the company repays debt with
available cash and excess cash flows. Cash flow adequacy ratios
will strengthen commensurately, with the ratio of funds from
operations (FFO) to debt approaching 40% in 2018 and possibly 50%
in 2019. Such ratios, if achieved, would be commensurate with a
'BB' rating. Absolute debt reduction would also lower the
structural sensitivity of PMB's credit ratios to fluctuations in
aluminum prices, mitigate somewhat the lingering risk of
production interruptions, and help the company build a more
comfortable liquidity buffer against low-probability but high-
impact events. However, given PMB's past growth aspirations and
financial policies, S&P is uncertain of its commitment to a more
conservative balance sheet through 2019 and its willingness to
pay down maturing debt.
The positive outlook reflects the prospects of strengthened
credit metrics over the next 12 months and improved resilience to
future fluctuations in aluminum prices if PMB continues to pay
down debt with excess cash flows.
S&P said, "We may revise the outlook to stable if PMB's trend of
improving cash flow adequacy is interrupted and it becomes likely
that the ratio of FFO to debt fails to approach 45% sustainably.
This could materialize if: the company undertakes debt-funded
expansion or acquisitions significantly beyond our base case,
keeping net debt above MYR3 billion; aluminum prices fall
sustainably below US$1,650/ton; production declines below 550,000
tons because of unplanned interruptions with no prospect of near-
term recovery; or a combination of the three.
"We may raise the rating within the next 12 months if PMB
continues to pay down debt with excess cash flows, such that its
ratio of FFO to debt stays above 45% on a sustainable basis. An
upgrade to 'BB' would also be contingent upon the company
adopting a cautious approach to liquidity management, with
permanently reduced short-term debt maturities and ample cash
balances."
====================
N E W Z E A L A N D
====================
FIRST CREDIT UNION: S&P Affirms Then Withdraws 'BB-/B' Ratings
--------------------------------------------------------------
S&P Global Ratings said it has affirmed its long-term 'BB-' and
short-term 'B' ratings on First Credit Union (FCU). S&P then
withdrew the ratings at the issuer's request. At the time of the
withdrawal, the outlook on the long-term rating was positive.
The ratings on FCU reflected the credit union's very strong
capitalization, with a risk-adjusted capital ratio of 21.5% as of
June 30, 2017, based on S&P Global Ratings' Bank Capital
Methodology. FCU's small size and lack of diversity in business
activities and potential funding pressures in a stress scenario
offset this strength, in S&P's view.
S&P said, "FCU's small size, business mix (with a concentration
in residential mortgages and personal loans), and nature of its
customer base make it more susceptible to strong competition from
finance companies and larger banks, in our opinion. The credit
union defends itself from these pressures by holding significant
liquidity and relying on retail deposits for funding, which we
view as price-sensitive but available in a stress scenario. The
credit union's history of mergers, information technology
projects, and willingness to explore new business lines puts it
on a path to reducing these weaknesses, in our view."
=================
S I N G A P O R E
=================
EZION HOLDINGS: Will Apply to Strike Out Originating Summons
------------------------------------------------------------
Marissa Lee at The Strait Times reports that Ezion Holdings said
on Oct. 25 that it will be applying to strike out the Originating
Summons issued by the High Court and taken out by bond holder
Ravi Murarka against the company.
According to the report, Mr. Murarka is seeking a court
declaration that Ezion's shares have "ceased to be traded" on the
Singapore Exchange. This is in reference to a bond clause that
allows holders of Ezion's DBS-backed bonds to demand to be paid
back in full "in the event that the shares of the issuer cease to
be listed or traded," the report relays.
Ezion suspended trading of its shares on Aug. 14 to discuss a
debt reorganisation plan with lenders, according to the Strait
Times.
The Strait Times adds that the firm said it intends to
strenuously oppose the Originating Summons.
Its lawyers told the High Court at a pre-trial conference on
Oct. 25 that the company will be applying to strike out the
Summons, the report notes.
This application must be filed by Nov. 1. The Court has fixed the
application hearing for Nov. 27, The Strait Times adds.
About Ezion Holdings
Singapore-based Ezion Holdings Limited engages in investment
holding and provision of management services. The Company, along
with its subsidiaries, specializes in the development, ownership
and chartering of offshore assets to support the offshore energy
markets. Its segments include Production and maintenance support,
which is engaged in owning, chartering and management of rigs and
vessels involved in the production and maintenance phase of the
oil and gas industry; Exploration and development support, which
is engaged in owning, chartering and management of rigs and
vessels involved in the exploration and development phase of the
oil and gas industry, and Others, which includes assets or
investments involved in renewable energy and other oil and gas
related industry. The Company owns a fleet of multipurpose self-
propelled service rigs. It owns a fleet of service rigs in
Southeast Asia for use in offshore oil and gas industry, and
offshore wind farm industry.
JAYA HOLDINGS: Set to Liquidate and Delist From SGX
----------------------------------------------------
Marissa Lee at The Strait Times reports that mainboard-listed
cash company Jaya Holdings said on Oct. 25 that it has submitted
a proposal to the Singapore Exchange in relation to a proposed
voluntary liquidation.
It had earlier received a delisting notification from the bourse
operator as it does not have any underlying business, the report
says.
According to The Strait Times, Jaya will be convening an
extraordinary general meeting to approve the liquidation and the
appointment of a liquidator. A circular setting out details will
be dispatched to shareholders in due course, it said.
Jaya Holdings Limited owns, builds, repairs, manages, and
charters ships.
===============
T H A I L A N D
===============
TMB BANK: Fitch Affirms 'BB+' Support Rating Floor
--------------------------------------------------
Fitch Ratings has upgraded TMB Bank Public Company Limited's
(TMB) National Short-Term Rating to 'F1+(tha)' from 'F1(tha)',
and affirmed the bank's Long-Term Issuer Default Rating (IDR).
The agency has also affirmed the Long-Term IDR of Bank of Ayudhya
Public Company Limited (BAY), as well as the National Long-Term
Ratings of Thanachart Bank Public Company Limited (TBANK) and
Thanachart Capital Public Company Limited (TCAP). All Outlooks
are on Stable.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS AND SENIOR DEBT
BAY's IDRs, National Ratings and senior debt ratings are driven
by institutional support. Fitch sees BAY as a strategically
important subsidiary of the Bank of Tokyo-Mitsubishi UFJ, Ltd.
(BTMU; A/Stable/a), which owns 76.9% of BAY. BAY plays a key role
in implementing the group's strategies in south-east Asia, and
represents one of BTMU's largest overseas investments.
TMB's IDRs, National Ratings and senior debt ratings reflect its
standalone strength, as indicated by its Viability Rating (VR).
The upgrade in TMB's National Short-Term Rating to 'F1+(tha)' is
driven by the bank's liquidity and funding profile, which the
agency now views as being commensurate with similarly rated
domestic peers.
TBANK's National Ratings reflect its moderate domestic franchise
as the sixth-largest commercial bank in Thailand, and its leading
market position in the auto hire-purchase segment. The ratings
are also based on TBANK's overall financial profile, which
continues to improve, particularly in asset quality and capital.
TBANK continues to receive ordinary support from its 49%
shareholder, the Bank of Nova Scotia (AA-/Stable), including
management and operational support as well as an uncommitted
credit facility.
TCAP's Stable Outlook mirrors that of TBANK. TCAP's Long-Term
National Rating is notched down from that of its core operating
subsidiary, TBANK. This approach reflects the structural
subordination of the holding company and the presence of large
minority interests.
VIABILITY RATINGS
BAY's VR reflects the diversified business model of Thailand's
fifth-largest commercial bank, as well as the bank's proven
performance track record and improving asset-quality metrics.
BTMU acquired a majority stake in BAY in 2013, and since then has
integrated BAY into the group's operations; it provides important
ordinary support, for example, in foreign-currency funding,
marketing, and management.
TMB's VR reflects its promising earnings prospects and a sound
liquidity position that stems from its robust transactional
banking franchise. TMB is Thailand's seventh-largest commercial
bank, with market shares of around 5% in loans and deposits at
end-June 2017. The bank's loan loss coverage of around 140%
limits provisioning risks, particularly from the SME segment,
where asset-quality uncertainties remain.
SUPPORT RATING AND SUPPORT RATING FLOOR
BAY's Support Rating is based on Fitch's view of an extremely
high probability of extraordinary support from its parent, BTMU.
TMB's Support Rating and Support Rating Floor are based on
sovereign support. Fitch believes TMB is systemically important,
though to a lesser degree than the country's large commercial
banks.
SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
The Tier 2 subordinated notes, which include legacy and Basel III
notes, of BAY and TMB are rated one notch below the banks'
National Long-Term Ratings. This reflects loss-severity risks
arising from their subordinated status and a lack of mandatory
full write-down features. There is no notching for non-
performance risk as the notes' key terms exclude going-concern
loss absorption features.
RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND SENIOR DEBT
BAY's IDRs, National Ratings and senior debt ratings are
sensitive to changes in Fitch's assumptions about the ability or
propensity of BTMU to support BAY. No upside is possible to the
IDR, which is at Thailand's Country Ceiling, or the National
Ratings, which are already at the highest level on the Thai
national scale. There may be downside to the ratings if BTMU is
downgraded or BAY's strategic importance to BTMU is reduced,
resulting in a reduction in BTMU's propensity to extend support.
TMB's IDRs and senior debt ratings are sensitive to changes in
its VR. The bank's National Long-Term Rating is also sensitive to
changes in its VR, but may be upgraded if the bank's key
financial metrics significantly improve relative to Thai peers
while its VR remains the same.
Fitch may upgrade TBANK's National Ratings if the bank can
further strengthen its key financial measures in a way that can
be sustained through industry cycles, particularly in asset
quality, capital and profitability. Conversely, the agency may
downgrade the rating if the recent improvements in the bank's
financial profile are materially reversed. The agency could also
upgrade the ratings if Bank of Nova Scotia, currently a minority
shareholder, were to become a majority shareholder in TBANK.
However, Fitch deems this improbable over the medium term.
Any change in TBANK's National Ratings is likely to have a
corresponding effect on TCAP.
VIABILITY RATINGS
BAY's VR may see upside if the bank can further leverage its
integration with BTMU into sustained improvements in its
corporate profile, while also adding to its capital buffers
without a shift in risk appetite. Conversely, there may be
downside pressure if there is a severe and sustained weakening in
asset quality and earnings, or a large decline in liquidity
buffers.
TMB's VR may face downward pressure if the bank's asset quality,
profitability, liquidity or capitalisation deteriorates sharply.
Conversely, the agency may upgrade its VR if the bank sustains
improvements in a combination of these factors.
SUPPORT RATING AND SUPPORT RATING FLOOR
Fitch may change BAY's Support Rating of '1' if BTMU's propensity
to support BAY is reduced. This can happen if the group
significantly lowers its shareholding in BAY or reverses recent
integration measures. However, Fitch deems this unlikely in the
short term. Changes in BTMU's Long-Term IDR may also affect BAY's
Support Rating.
The agency may change TMB's Support Rating of '3' and Support
Rating Floor of 'BB+' if Fitch perceives there to be a material
change in the bank's systemic importance. This may happen, for
example, if the bank's market share in either loans or deposits
changes significantly, although this is unlikely to happen in the
near term.
SUBORDINATED DEBT
BAY's and TMB's subordinated debt ratings are broadly sensitive
to the same factors affecting their National Long-Term Ratings.
The rating actions are as follows:
BAY
Long-Term IDR affirmed at 'A-'; Outlook Stable
Short-Term IDR affirmed at 'F2'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '1'
National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(tha)'
National long-term senior unsecured debt affirmed at 'AAA(tha)'
Legacy Basel II subordinated debt affirmed at 'AA+(tha)'
Basel III Tier 2 subordinated debt affirmed at 'AA+(tha)'
TMB
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
National Long-Term Rating affirmed at 'A+(tha)'; Outlook Stable
National Short-Term Rating upgraded to 'F1+(tha)' from 'F1(tha)'
USD3.0 billion senior unsecured Euro medium-term note (EMTN)
programme affirmed at 'BBB-'
Long-term foreign-currency senior unsecured debt affirmed at
'BBB-'
Basel III Tier 2 subordinated debt rating affirmed at 'A(tha)'
Legacy Basel II subordinated debt rating affirmed at 'A(tha)'
TBANK
National Long-Term Rating affirmed at 'A+(tha)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(tha)'
TCAP
National Long-Term Rating affirmed at 'A(tha)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(tha)'
*********
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 ***