/raid1/www/Hosts/bankrupt/TCRAP_Public/171117.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, November 17, 2017, Vol. 20, No. 229
Headlines
A U S T R A L I A
101 IT: Creditors Opt to Wind Up Mobile Phone Repair Company
AUSTRALIAN WAGYU: Second Creditors' Meeting Set for Nov. 23
PARKHURST FARMS: First Creditors' Meeting Set for Nov. 23
TEN NETWORK: Sale to CBS Completed; Administration Concluded
VERILUMA SOFTWARE: First Creditors' Meeting Set for Nov. 27
VINCI HOLDINGS: First Creditors' Meeting Set for Nov. 27
WIDA PLUMBING: Former Director Convicted of Fraud
YARRA STATION: First Creditors' Meeting Set for Nov. 23
C H I N A
ANTON OILFIELD: Debt Exchange May Improve Liquidity, Fitch Says
ANTON OILFIELD: Moody's Puts Caa1 CFR on Review for Upgrade
BLUEGOGO: Bike-Sharing Firm Goes Bankrupt
GUANGZHOU R&F: US$500MM Notes Issue No Impact on Moody's Ba3 CFR
LEECO: Sunac Extends Fresh Loans to Video Streaming & TV Units
H O N G K O N G
NOBLE GROUP: Weak 3Q Results No Impact on Caa3 CFR, Moody's Says
I N D I A
APEX AUTO: ICRA Reaffirms D Rating on INR69.66cr Loan
ARHAM ARTS: CARE Assigns B- Rating to INR5.36cr LT Loan
ASM SPUN: CARE Moves B+ Rating to Not Cooperating Category
B. J. HOTELS: CARE Assigns B+ Rating to INR6.12cr LT Loan
BHASKAR SHRACHI: Ind-Ra Moves D Issuer Rating to Non-Cooperating
BHOOMI GINNING: ICRA Moves D Rating to Not Cooperating Category
C.M. BUILDS: CARE Assigns B+ Rating to INR10cr LT Loan
CELOGEN PHARMA: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
DC WOVENSACK: ICRA Reaffirms B Rating on INR6.60cr Term Loan
ENCANA INTERNATIONAL: CARE Assigns B Rating to INR7.92cr Loan
FAST TRACK: CARE Moves B+ Rating to Not Cooperating Category
GENERAL POLYTEX: ICRA Moves B Rating to Not Cooperating Category
HI-TEC ROCK: CARE Moves B+ Rating to Not Cooperating Category
JAI BHARAT: CARE Moves B+ Rating to Not Cooperating Category
LAMANE INFRASTRUCTURE: Ind-Ra Moves BB- Rating to Non-Cooperating
MAHESHWARI TECHNOCAST: CARE Assigns B+ Rating to INR7.20cr Loan
MEHTA INTERTRADE: Ind-Ra Moves BB Rating to Non-Cooperating
MELSTAR INFORMATION: CARE Cuts Rating on INR14cr Loan to 'D'
MINI DIAMONDS: ICRA Moves D Rating to Not Cooperating Category
NIJANAND PIPES: ICRA Cuts Rating on INR5.0cr LT Loan to 'D'
ORB ENERGY: ICRA Lowers Rating on US$2.25MM LT Loan to 'D'
RAHIL MULTIPACK: CARE Assigns 'B' Rating to INR5.72cr LT Loan
RAJ AGRO: ICRA Moves 'B' Rating to Not Cooperating Category
RSG DEVELOPERS: ICRA Reaffirms B Rating on INR5.5cr Loan
S G S MOTORS: Ind-Ra Affirms 'BB+'/Stable Long-Term Issuer Rating
SANDOR LIFESCIENCES: ICRA Reaffirms B- Rating on INR35cr Loan
SHREE GOVARDHAN: ICRA Reaffirms B+ Rating on INR10cr Loan
SHRI UMA: CARE Reaffirms B+ Rating on INR6cr LT Loan
SIDWIN FABRIC: ICRA Assigns B+ Rating to INR8.53cr Loan
SRI RAM INDUSTRIES: ICRA Reaffirms B+ Rating on INR5cr LT Loan
SRI VENKATA: ICRA Reaffirms B+ Rating on INR10.75cr Cash Loan
SRI VINAYAKA: CARE Assigns 'B' Rating to INR2.0cr LT Loan
SWASTIK COLD: ICRA Moves B Rating to Not Cooperating Category
TGB BANQUETS: CARE Raises Rating on INR11cr LT Loan to BB
I N D O N E S I A
KAWASAN INDUSTRI: Fitch Puts Final B+ Rating to US$111MM Notes
J A P A N
TELLMECLUB: Police Arrest President, Ex-Employee for Fraud
* JAPAN: No. of Corporate Bankruptcies Up 7.3% in October
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A U S T R A L I A
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101 IT: Creditors Opt to Wind Up Mobile Phone Repair Company
------------------------------------------------------------
Leon Spencer at ARN reports that 101 IT Solutions, which traded
as Fonebiz, has gone into liquidation just over a month after
being placed into voluntary administration.
Domenic Calabretta, of Mackay Goodwin, was appointed as
liquidator on November 15 after creditors voted in favor of
winding up the company, which had been in administration since
October, according to ARN.
Mr. Calabretta, along with Grahame Ward, were also joint
administrators of the company, which had its headquarters in
Sydney, ARN notes.
"Fonebiz has carried out an extensive review of its operations in
Australia and New Zealand and after careful consideration has
made the difficult decision to close its mobile device repair
business," the company noted on its website when it first entered
administration, ARN relays.
ARN, citing documents lodged by the administrators with
Australia's corporate regulator, says Fonebiz entered
administration with roughly AUD3.7 million owing to former
employees and unsecured creditors.
101 IT Solutions, traded as Fonebiz, provided mobile phone repair
services.
AUSTRALIAN WAGYU: Second Creditors' Meeting Set for Nov. 23
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Australian
Wagyu Exports Pty. Ltd has been set for Nov. 23, 2017, at
11:00 a.m., at the offices of Amos Insolvency, 25/185 Airds Road,
in Leumeah, New South Wales.
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. 22, 2017, at 4:00 p.m.
Peter Andrew Amos of Amos Insolvency was appointed as
administrator of Australian Wagyu on Oct. 19, 2017.
PARKHURST FARMS: First Creditors' Meeting Set for Nov. 23
---------------------------------------------------------
A first meeting of creditors in the proceedings of Parkhurst
Farms Pty Ltd will be held at the offices of Deloitte Financial
Advisory Pty Ltd, Level 10, 550 Bourke Street, in Melbourne,
Victoria, on Nov. 23, 2017, at 10:00 a.m.
Richard John Hughes and Salvatore Algeri of Deloitte were
appointed as administrators of Parkhurst Farms on Nov. 13, 2017.
TEN NETWORK: Sale to CBS Completed; Administration Concluded
------------------------------------------------------------
KordaMentha Restructuring, Administrators of Network Ten,
announced on November 16 the completion of the sale of Ten
Network Holdings Limited to CBS which occurred around 3:00 p.m.,
November 16.
The completion concludes the five-month administration of Network
Ten with operational control being handed over to CBS with
immediate effect.
Mark Korda stated: "We are very proud to be handing Ten over to
CBS. The opportunity to add CBS' global industry expertise to
Ten's already very talented executive team is a hugely exciting
opportunity for Ten. I would like to thank Ten's employees for
the open and embracing manner in which they have engaged with us
over the last five months. I would also like to thank Ten's
viewers, advertising clients, content partners and suppliers for
their support during this period."
Network Ten is a division of Ten Network Holdings, one of
Australia's leading entertainment and news content companies,
with free-to-air television and digital media assets. Ten Network
Holdings includes three free-to-air television channels - TEN/TEN
HD, ELEVEN and ONE - in Australia's five metropolitan markets of
Sydney, Melbourne, Brisbane, Adelaide and Perth, plus the online
catch-up and streaming service tenplay.
Network Ten was forced to go into voluntary administration in
June 2017 when its billionaire shareholders backed out from
guaranteeing a loan for the Company. KordaMentha Restructuring
partners Mark Korda, Jenny Nettleton and Jarrod Villani were
appointed as voluntary administrators.
The creditors of Ten Network on Sept. 19 voted in favor of a
AUD209.7 million takeover bid from CBS Corp.
VERILUMA SOFTWARE: First Creditors' Meeting Set for Nov. 27
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Veriluma
Software Pty Limited will be held on Nov. 27, 2017, at 10:00 a.m.
at CPA Australia, Room -SYD L3, Training 5, Level 3, 111
Harrington Street, in Sydney, New South Wales.
Jamieson Louttit of Jamieson Louttit & Associates was appointed
as administrator of Veriluma Software on Nov. 15, 2017.
Veriluma develops, markets, and commercializes software products
and services in Australia. The company's software provides
descriptive/predictive analytics and intelligence in the areas in
financial services, fintech, insurance, law, and resource
sectors, as well as governments.
VINCI HOLDINGS: First Creditors' Meeting Set for Nov. 27
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Vinci
Holdings (WA) Pty Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Level 3, 15 Ogilvie Road, in
Mount Pleasant, West Australia, on Nov. 27, 2017, at 10:30 a.m.
Mervyn Jonathan Kitay of Worrells Solvency was appointed as
administrator of Vinci Holdings on Nov. 15, 2017.
WIDA PLUMBING: Former Director Convicted of Fraud
-------------------------------------------------
Paul Joseph Hanson, a former director of Wida Plumbing Supplies
Pty Ltd (Wida), was convicted of fraud on Nov. 8, 2017 under the
Crimes Act (Vic) in the Victorian County Court.
Mr. Hanson, of Caroline Springs, Victoria, was sentenced to a
Community Correction Order for a period of 3 years after
previously pleading guilty. The order requires Mr. Hanson to
complete 300 hours of community service.
Mr. Hanson used Wida to operate a plumbing business. Wida was
placed in external administration in December 2012.
The Australian Securities and Investments Commission commenced an
investigation after the Receiver of Wida, Mat Muldoon from
Sellers Muldoon Benton, lodged a report with ASIC. ASIC found
that in November 2013, Mr Hanson illegally accessed and
transferred AUD124,763.84 from a Wida overdraft bank account to
the personal bank account of a family member. Mr Hanson
subsequently arranged for the family member to withdraw the money
and hand it to him. Mr Hanson used the money for his own personal
use.
By virtue of being convicted, Mr Hanson is also disqualified from
managing corporations for 5 years from the day of his conviction.
The matter was prosecuted by the Commonwealth Director of Public
Prosecutions.
On Nov. 23, 2016, Mr Hanson was charged with three counts of
obtaining a financial advantage by deception under the Crimes Act
(Vic) 1958.
As part of Mr Hanson's willingness to plead guilty, the charges
were consolidated to one count of obtaining a financial advantage
by deception.
On July 7, 2017, Mr Hanson pleaded guilty to one count of
obtaining property by deception in the Melbourne Magistrates
Court.
YARRA STATION: First Creditors' Meeting Set for Nov. 23
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Yarra
Station Pty Ltd will be held at the offices of Deloitte Financial
Advisory Pty Ltd, Level 10, 550 Bourke Street, in Melbourne,
Victoria, on Nov. 23, 2017, at 10:30 a.m.
Richard John Hughes and Salvatore Algeri of Deloitte were
appointed as administrators of Yarra Station on Nov. 13, 2017.
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C H I N A
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ANTON OILFIELD: Debt Exchange May Improve Liquidity, Fitch Says
---------------------------------------------------------------
Fitch Ratings says China-based Anton Oilfield Services Group's
(CCC) proposed debt exchange offer is, based on CARE's current
understanding of the proposed transaction, not a distressed debt
exchange (DDE), and could improve the company's liquidity and
capital structure. However, if the transaction fails, Anton faces
high refinancing risk and its ratings may come under pressure
over the next 12 months.
On November 13, 2017, Anton announced it would offer to exchange
the existing USD243 million 7.5% bonds due November 2018 for new
bonds with maturity in 2020 at USD1,018.75 per USD1,000 of
principal outstanding, plus capitalised interest. The exchange
offer expires on 27 November 2017. The company is also conducting
a concurrent issuance of new bonds to refinance the 2018 bonds at
maturity if the exchange offer is not fully taken up.
Fitch does not consider Anton's exchange offer as a DDE because
the exchange offer does not appear to involve a material
reduction in terms. The exchange consideration is above par,
versus the close to par trading levels of the existing 2018 bonds
in the secondary market; the final interest rate of the new bonds
will be set at the pricing of the concurrent issuance, which is
likely to be market-based. According to documentation already
received, the proposed new bonds will carry slightly relaxed
covenants compared to the existing bonds.
If Anton completes the transaction as planned, which will extend
its bond maturity to 2020 and improve its liquidity profile,
Fitch may consider positive rating action. Anton's business
profile has also improved amid stabilising oil prices. Its order
book expanded to CNY3.7 billion at end-September 2017 from CNY3.2
billion at end-2016, and project execution has accelerated in the
last two quarters. Anton generated CNY288 million in EBITDA at a
margin of 33% in 1H17, compared to about CNY275 million in full
year 2016 at a margin of 17%. Fitch expects Anton's FFO adjusted
net leverage to decline to around 5.0x in 2017-2018 from 6.0x in
2016.
If Anton fails to complete the transaction, Fitch is likely to
affirm its ratings at 'CCC' because the company still has up to
one year to refinance the bonds. It may still be able to tap
alternative funding channels based on its stabilising business
operations and availability of unencumbered assets. However,
Anton's rating may come under pressure if the company fails to
conclude refinancing arrangements in six months.
Anton faces high refinancing risk with tight liquidity. At 30
June 2017, Anton had CNY961 million of debt maturing within 12
months, compared with an unrestricted cash balance of CNY341
million and available undrawn credit facilities of around CNY303
million. Although stabilising oil prices have led to an increase
in orders and higher revenue, Fitch expects Anton's FCF to be
negative in the short to medium term due to a prolonged
receivable collection cycle (1H17: 293 days). The company is
still far short of the liquidity needed to refinance the USD243
million (CNY1.7 billion) of bonds due in November 2018, although
the receipt of the remaining CNY343 million from the buyer of a
40% share in its Iraqi business in August 2017 has helped.
ANTON OILFIELD: Moody's Puts Caa1 CFR on Review for Upgrade
-----------------------------------------------------------
Moody's Investors Service has placed the Caa1 corporate family
rating (CFR) of Anton Oilfield Services Group and the Caa1 senior
unsecured rating on the notes due in November 2018 (the existing
notes) on review for upgrade following the announcement of
Anton's debt exchange offer.
Moody's has also assigned a Caa1 rating to Anton's proposed
senior unsecured notes. The proposed notes have also been placed
on review for upgrade.
The proceeds from the proposed notes will be used to refinance
the existing notes, as well as for general corporate purposes.
RATINGS RATIONALE
On November 13, 2017, Anton announced an exchange offer for any
and all outstanding existing notes due in November 2018 with an
outstanding principal amount of about USD243 million. The
exchange offer will expire on November 27, 2017.
Under the offer, for each USD1,000 principal amount of the
outstanding existing notes, the holders of the existing notes
will receive USD1,018.75 in aggregate principal amount of the
proposed notes and capitalized interest in the form of the
proposed notes.
Moody's does not deem this exchange offer as a distressed
exchange -- which is considered as a default event under Moody's
definition -- because the holders will not incur economic loss as
the exchange offer is above par value of the existing notes.
"Moody's view the proposed refinancing plan as credit positive as
the proposed notes should extend Anton's debt maturity profile by
two years to 2020 and thereby alleviate near-term liquidity
pressure. Upon completion of the transaction, such that the 2018
notes are fully exchanged, the CFR and the proposed notes could
come under upward rating pressure. At the same time, the rating
on the 2018 notes will be withdrawn," says Chenyi Lu, a Moody's
Vice President and Senior Credit Officer.
"Moody's expect Anton's financial profile will improve over the
next 12-18 months, as higher earnings will only be partially
offset by a modest debt increase. Specifically, Moody's expect
adjusted debt/EBITDA will be 5.0x-5.5x over the next two years,
which is in line with a single-B credit rating," adds Lu, who is
also Moody's Lead Analyst for Anton.
Moody's expects Anton's revenue to grow by 20.1% in 2017 and
12.5% in 2018, driven by stable to improving exploration and
production spending in the domestic market and continued growth
traction in its overseas markets, especially in Iraq and
Ethiopia.
Anton's adjusted EBITDA margin should also improve to about
25.5%-26.0% over the next two years from 16.7% in 2016, driven by
operational efficiencies from higher revenues, increased revenue
contributions from overseas markets with better margins, and cost
and expense control measures.
Moody's expects the company's adjusted debt/EBITDA to improve to
5.0x-5.5x over the next two years from 5.8x for the 12 months
ended June 2017 and 9.7x at the end of 2016, driven by strong
improvements in EBITDA, partially offset by a modest increase in
debt to support its working capital needs.
The review for upgrade will focus on Anton's execution of its
plan to refinance its maturing debt. In particular, Moody's will
assess the company's capital structure, liquidity profile and
plan to sustain its improving credit and business profiles,
following the completion of the proposed transaction.
On the other hand, if the company fails to execute its
transaction, the ratings will likely face downward pressure.
The review will conclude once the transaction completes.
The principal methodology used in these ratings was Global
Oilfield Services Industry Rating Methodology published in May
2017.
Listed on the Hong Kong Stock Exchange in December 2007, Anton
Oilfield Services Group was founded by its chairman, Mr. Luo Lin,
in 1999.
The company is a leading Chinese oilfield-services provider, and
focuses on China's fast-growing natural gas sector. It offers
integrated oil/gas field services solutions covering various
phases of field development, including oil production operation
services, well completion technologies, and drilling
technologies, globally.
BLUEGOGO: Bike-Sharing Firm Goes Bankrupt
-----------------------------------------
Chen Qingqing at Global Times reports that Chinese bike-sharing
services provider Bluegogo has gone bankrupt, media reports said,
and its major supplier said the company has been struggling with
financial difficulties for months.
The company recently announced it will dismiss its entire staff
and pay their salaries until February 2018, an unidentified
employee of Bluegogo said in a post on social media platforms on
November 15, Global Times relays.
The company has been getting many complaints from users
concerning deposit refunds, Global Times adds citing Bluegogo in
a post on its Weibo account on October 20.
A senior executive of Bluegogo told the Global Times on
November 15 that he had already resigned. The company's PR
representative said he has also left Bluegogo.
According to Global Times, Chen Anqiao, a bike supplier to
Bluegogo, said the company suspended its orders in April due to
financial problems. "They could not raise any funds from
investors," he said, noting this situation had caused problems
for bike manufacturers and suppliers, the report relays.
"We have accumulated a debt amounted to more than CNY10 million
($1.51 million) because of the suspended orders," Global Times
quotes Mr. Chen as saying.
GUANGZHOU R&F: US$500MM Notes Issue No Impact on Moody's Ba3 CFR
----------------------------------------------------------------
Moody's Investors Service says that Guangzhou R&F Properties Co.,
Ltd.'s issuance of US$500 million notes due February 2023 has no
immediate impact on its Ba3 corporate family rating or on R&F
Properties (HK) Company Limited's B1 corporate family rating.
The ratings outlooks remain negative.
The notes will be issued by Easy Tactic Limited, a wholly-owned
subsidiary of R&F Properties (HK). The notes will also be
guaranteed by R&F Properties (HK) and supported by a keepwell
deed and an equity interest purchase undertaking between
Guangzhou R&F, R&F Properties (HK), and the trustee.
R&F Properties (HK) is a wholly-owned subsidiary of Guangzhou
R&F.
The bond proceeds will mainly be used to refinance existing debt
and for general working capital purposes.
"The new notes issuance will improve the company's liquidity and
lengthen its debt maturity profile," says Kaven Tsang, a Moody's
Vice President and Senior Credit Officer.
The company had RMB32.4 billion of cash on hand at the end of
June 2017, which covered 128% of its short-term debt as of that
date.
The proposed bonds issuance will also have limited impact on the
company's credit metrics because the majority of the proceeds
will be used to refinance existing debt.
The negative outlook reflects Moody's view that Guangzhou R&F
will continue to face elevated financial risk in the near term,
due to its high debt leverage. The financial risk associated with
the company's high debt leverage will add challenges to its
operations if the property market weakens in 2018.
Moody's expects the company's revenue/adjusted debt will trend
towards 50%-60% over the next 12-18 months from 40% for the 12
months ended June 30, 2017, as its revenue increases on the back
of growing contracted sales. EBIT/interest should also improve to
3.2x-3.4x over the same period from 2.5x for the 12 months to
June 2017.
The company's contracted sales grew 25% year-on-year to RMB66.1
billion in the first ten months of 2017, on track towards its
full-year target of RMB80 billion.
Guangzhou R&F's Ba3 corporate family rating continues to reflect
its sizeable scale and track record of operating through the
economic cycles, its robust sales performance of the last three
years, and good geographic diversification. On the other hand,
the rating is constrained by its high debt leverage, which limits
the company's funding flexibility.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Established in 1994 and listed on the Hong Kong Stock Exchange in
2005, Guangzhou R&F Properties Co., Ltd. is a mid-sized developer
in China's residential and commercial property sector.
At the end of June 2017, the company's land bank totaled 48.5
million square meters across 51 locations: 46 in China, two in
Australia, and one each in the UK, Korea and Malaysia. At the end
of 2016, Mr. Li Sze Lim and Mr. Zhang Li - the company's co-
founders - owned 33.52% and 32.02% of equity interest in the
company.
LEECO: Sunac Extends Fresh Loans to Video Streaming & TV Units
--------------------------------------------------------------
Zheng Yangpeng at The South China Morning Post reports that
billionaire property magnate Sun Hongbin has come to the rescue
of LeEco for the second time this year, providing US$270 million
in loans to the internet giant's video streaming and TV unit on
Nov. 16 through his Tianjin-based residential developer China
Sunac Holdings.
Sunac will provide Leshi Internet a CNY1.29 billion loan for
general working capital, plus CNY3 billion of guarantees to its
existing and new debts, the company said in a filing to the Hong
Kong stock exchange on Nov. 16, the report relates. In addition,
Leshi Zhixin the TV unit, will receive a CNY500 million loan, the
statement said.
According to the Post, the announcement reflects the second major
investment by Sunac to support embattled LeEco this year. In
January the company invested CNY15 billion in LeEco subsidiaries,
including an 8.61 per cent stake in Leshi and a 33.5 per cent
stake in Leshi Zhixin.
Sun, chairman and executive director of Sunac, was appointed to
take up the top leadership post at Leshi in July after Jia
Yueting, its founder and CEO, stepped down from all management
roles at the company, the Post recalls.
Sunac is the fifth-largest developer in China by sales value.
The Post notes that at the time the investments were unveiled in
January, Sun said he admired Jia's entrepreneurship and noted
that LeEco's entertainment assets fit with his own ambition to
expand into the sector.
But the cash injections and corporate restructuring efforts have
failed to reverse LeEco's fortunes, as the company was embroiled
in a series of defaults, the Post says.
Trading in Leshi shares has been suspended since mid-April on the
ChiNext board, the report notes.
In early November China's securities regulator said it is
investigating Leshi Internet Information & Technology Co for
suspected fraud involving its 2010 IPO, the Post reports.
According to the Post, Jia said in a recent interview that he was
unable to provide further funding in the form of loans, or
increase his stake in LeEco related companies.
Despite cascading woes, Sun Hongbin has publicly defended his
firm's holdings in the company, and said if he couldn't turn
LeEco around, it would be "a regret for his lifetime," the Post
relays.
The latest lending agreement will allow Sunac to increase its
stakes in Leshi Investment, LeSports, Chongqing Leshi
Microcredit, Leshi Cloud and Leshi Zhixin, all subsidiaries of
LeEco, if the borrowers failed to repay the loans, the Post adds.
As reported in the Troubled Company Reporter-Asia Pacific on
July 6, 2017, The Financial Times said that a Chinese court has
frozen millions of dollars in assets belonging to embattled tech
conglomerate LeEco, dealing another blow to the company as it
struggles to stay afloat. The FT related that an order issued by
the court backed up a request by China Merchants Bank to freeze
CNY1.24 billion of assets from three LeEco subsidiaries as well
as the personal assets of LeEco founder Jia Yueting and his wife
Gan Wei, LeEco confirmed. The assets were frozen because of
missed interest payments on a loan taken out by LeEco's mobile
phone subsidiary, the company added.
China-based LeEco makes smartphones, entertainment platforms,
set-top boxes, and smart TVs.
================
H O N G K O N G
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NOBLE GROUP: Weak 3Q Results No Impact on Caa3 CFR, Moody's Says
----------------------------------------------------------------
Moody's Investors Service says that Noble Group Limited's weak
financial results for Q3 2017 will have no immediate impact on
its Caa3 corporate family rating or the negative rating outlook.
"Noble's continued to report a large net loss and its cash
holdings further decreased in Q3 2017. That said, these
developments are within expectations and the current Caa3 rating
already reflects a significant probability of default within the
next 12 months," says Gloria Tsuen, Moody's Vice President and
Senior Analyst.
Noble's cash and short-term deposits (excluding cash balances
with future brokers) fell to $256 million at end-September 2017
from $467 million at end-June 2017. This is insufficient to cover
the company's $1.6 billion in bank debt and bonds due in the next
12 months.
The company also reported a large adjusted net loss of $1.2
billion in Q3 2017, mainly because of write-downs for net fair
value gains and the loss related to the sales of its businesses.
As a result, its equity base shrank to $1.0 billion at end-
September 2017 from $2.1 billion at end-June 2017.
Noble's cash flow from operations turned to positive $236 million
in Q3 2017 from negative $546 million in 2Q 2017, mainly because
of a decrease in working capital deficits. However, Moody's
expects the company to have difficulty in generating positive
cash flow, given its weak underlying profitability.
The company is selling its assets to help reduce debt: (1) it
sold its North American gas and power businesses for $248
million; (2) it announced a proposed sale of Noble Americas Corp.
-- which operates its global oil liquids business -- in October
2017; and (3) it will further dispose of other assets over the
next two years.
However, it is highly uncertain whether these sales will raise
sufficient proceeds to meet its debt maturities and cash outflow
over the next 12 months. In addition, the proposed disposals
would substantially reduce Noble's scale and global reach,
challenging its ability to generate profit and cash flow to
service the remaining debt.
The principal methodology used in this rating was Trading
Companies published in June 2016.
Noble Group Limited is a global physical commodities supply chain
manager. The company's activities across the supply chain include
the sourcing, storage, processing, transportation, and
distribution of various commodity products.
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I N D I A
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APEX AUTO: ICRA Reaffirms D Rating on INR69.66cr Loan
-----------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]D assigned to
the INR41.66-crore (revised from INR52.16 crore) term loans and
INR15.00-crore cash-credit facilities of Apex Auto Limited. ICRA
has also reaffirmed the short-term rating of [ICRA]D assigned to
the INR13.00-crore (revised from INR25.00 crore) bill-discounting
facility, INR19.00-crore (revised from INR11.00 crore) non-fund
based facilities and INR11.34-crore (revised from INR10.00 crore)
untied limits.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 69.66 [ICRA]D; reaffirmed
Non-fund Based limits 19.00 [ICRA]D; reaffirmed
Untied limits 11.34 [ICRA]D; reaffirmed
Rationale
The reaffirmation of the ratings takes into account AAL's
consistent delay in servicing of debt obligations, leading to
overdue of principal and interest on term loans. Historically,
profits and cash accruals from the business have remained low
against sizeable debt-servicing commitments, which led to
consistent delay in debt servicing.
The ratings are also impacted by AAL's weak financial profile,
characterised by high gearing and depressed level of coverage
indicators. AAL has been incurring losses at the net level over
the past few years although some improvement was witnessed in the
last fiscal. The ratings remain constrained by the high customer-
concentration risks of AAL as around 76% of its revenues come
from Tata Hitachi Construction Machinery Company Limited (THCM)
and Volvo India Pvt. Ltd. (VIPL), at present. The ratings are
also constrained by AAL's exposure to volatility in raw-material
prices, primarily steel, though the presence of price-variation
clause in some of the contracts insulates the company to an
extent.
The ratings, however, derive comfort from the experience of the
promoters who have been involved in the business of fabricating
auto components for the earth-moving and construction equipment
for more than two decades. AAL also receives repeat orders from
its reputed customers, which indicates the company's technical
competence.
Key rating drivers
Credit Strengths
* Experience of the promoters in the auto-components
manufacturing business: The promoters have nearly two decades of
experience in the fabrication of heavy parts for the earth moving
and construction equipment. Long track record of the promoters
supports the company's business. In view of government's focus on
the infrastructural development, the overall growth prospect of
the construction equipment industry remains favourable.
* Reputed customer base, repeat orders from established players
indicate technical competence: The company generates around 76%
of its revenues from THCML and VIPL, both of which have
established market position. This almost mitigates the
counterparty risks for AAL. Repeat orders from such established
players indicate technical competence of AAL.
Credit Weaknesses
* Consistent delay in servicing of debt obligations:
Historically, profits and cash accruals from the business have
remained low against the sizeable debt-servicing commitments,
which led to consistent delay in debt servicing.
* Weak financial profile characterised by high gearing and
depressed coverage indicators; however, top-line and cash
accruals from the business witnessed a significant improvement:
The operating income of the company registered a growth of around
44% in FY2017, over the previous fiscal supported by higher
execution of orders. Accordingly, the OPBDITA of the company also
witnessed a steep improvement during the same period. The
financial profile of the company is weak in view of losses
incurred at the net level over the past few years although
improvement was witnessed in the last fiscal. AAL had been
generating cash losses since FY2014; however, as a result of
improved OPBDITA, the company recorded cash accruals of INR5.51
crore during FY2017. The gearing of the company stood at 3.75
times as on March 31, 2017, higher than 3.66 times of March 31,
2016. On account of high gearing, the coverage indicators stood
at depressed level during FY2017.
* High customer-concentration risks: With two customers
accounting for almost 76% of the entire revenues in FY2017, the
customer-concentration risk is high. However, the established
market position of the customer mitigates counterparty risk to an
extent.
* Exposure to raw-material price risk; though price-variation
clause in some of the contracts insulates the company to an
extent: The major raw material for AAL is steel, which it
procures from Steel Authority of India Limited (SAIL), JSW Steel
Ltd. and Jindal Steel & Power Ltd. While AAL is exposed to margin
risks due to the fixed-price nature of most of its contracts, the
price-variation clause in some of the contracts mitigates the
risk to an extent.
Apex Auto Limited is engaged in the fabrications of parts for the
earth-moving and construction equipment industries. It was set up
in 1994 to manufacture components for smaller range of excavators
of THCM. Currently, the company manufactures components for
excavators, back hoe loaders, cranes, compactors, transit mixers,
underground drilling, crushing & screening equipments for the
domestic and international market.
ARHAM ARTS: CARE Assigns B- Rating to INR5.36cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Arham
Arts (ARA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 5.36 CARE B-; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ARA is constrained
on account of its small scale of operation coupled with net
losses, highly leveraged capital structure, weak debt coverage
indicators and working capital intensive nature of operations.
The rating is also constrained due to susceptibility of profit
margins to volatility in raw material prices and its presence in
highly fragmented and competitive textile industry. The rating,
however, derives strength from extensive experience of the
proprietor in the textile industry and location advantage on
account of its presence in the textile hub of India.
The ability of ARA to increase its scale of operations with
improvement in profitability and efficient working capital
management would remain the key rating sensitivities. Further,
improving solvency position and debt protection metrics would
also remain crucial.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations coupled with net losses: During FY17
(Prov.) the total operating income (TOI) stood small at INR15.02
crore as against INR16.30 crore during FY16, owing to decrease in
demand. The PBILDT margin of ARA remained low in the range of
4.32%-6.43% during past three years ended FY17 (Provisional),
while it booked net losses in FY17 (Provisional) and FY16.
Highly leveraged capital structure and weak debt coverage
indicators: The capital structure of the firm stood highly
leveraged as on March 31, 2017 on account of higher debt level as
against low net worth base due to net losses booked year on year.
The debt coverage indicators of the firm also remained weak with
highly leveraged capital structure and thin profitability. The
Interest coverage ratio stood at 1.03 times during FY17
(Provisional).
Working capital intensive nature of operations: The operations
remained working capital intensive in nature marked by an
elongated working capital cycle at 154 days during FY17
(Provisional), while the current ratio remained at 1.44 times as
on March 31, 2017 (Provisional). The average utilization of
working capital limits has remained high at 85% during past
twelve months ended July, 2017.
Susceptibility of profit margins to volatility in raw material
prices and its presence in highly fragmented and competitive
textile industry: ARA is engaged in the business of trading and
manufacturing of grey fabric. The key raw material, i.e.
polyester, being derivative of crude oil, the prices of the same
is volatile in nature and might put pressure on the margins of
the firm. Furthermore, ARA operates in highly fragmented,
organized and unorganized market of textile industry marked by
large number of small sized players. Also, the presence of big
sized players with established marketing & distribution network
results into intense competition in the industry.
Key Rating Strengths
Experienced proprietor: Mr. Moolchand Jain, aged 63 years, is
having more than 3 decades of experience in the same line of
business and manages overall operations of the firm.
Location advantage: The manufacturing unit of ARA is situated in
Surat, which is the textile hub of India, ensuring easy access to
raw materials, labour, customers and competitive advantage in
terms of lower logistic expenditure.
Surat-based (Gujarat), ARA was established as a proprietorship
firm in 2008 by Mr. Moolchand Jain. ARA is engaged into
manufacturing and trading of grey polyester fabric along with
printing and dyeing of the same. ARA operates from its plant
located in Surat, Gujarat having an installed capacity of
manufacturing 3200 meter of grey fabric per day as on March 31,
2017.
ASM SPUN: CARE Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------
CARE Ratings has been seeking information from ASM Spun Tex to
monitor the rating(s) vide e-mail communications/ letters dated
September 5, 2017 & August 31, 2017, etc. and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the
ratings. In line with the SEBI guidelines, CARE has reviewed the
rating on the basis of publicly available information which
however, In care's opinion is not sufficient to arrive at fair
rating. The ratings of ASM Spun Tex will now be denoted as CARE
B+/A4; ISSUER NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.32 CARE B+; Issuer Not
Cooperating
Short-term Bank
Facilities 0.68 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(s).
Detailed description of the key rating drivers
At the time of last rating on March 1, 2017. The following were
the rating strengths and weaknesses.
Key rating weakness
Small scale of operations: The scale of operations is small
marked by a total operating income and gross cash accruals
INR21.60 crore and INR2.58 crore during FY16 (refers to the
period April 1 to March 31). Furthermore, the net worth base also
remains relatively small at INR6.36 crore as on March 31, 2016.
The small scale limits the firm's financial flexibility in times
of stress and deprives it from scale benefits. Furthermore, the
firm has achieved total operating income of INR19.12 crore in
10MFY17 (refers to the period April 1 to January 31; based on
provisional results).
Leveraged capital structure: As on March 31, 2016, the capital
structure of the firm stood leveraged mainly on account of debt
funded capex undertaken to set up the new manufacturing facility
coupled with reliance on external borrowings to meet the working
capital requirements. Overall gearing ratio stood at 2.98x as on
March 31, 2016 showing an improvement from 3.25x as on March 31,
2015 owing to lower utilization of working capital limits as on
balance sheet date. Though overall gearing improved, however, the
same continues to remain high.
Operating margins susceptible to cotton price fluctuation and
seasonality associated with cotton industry: Agro-based industry
is characterized by its seasonality, as it is dependent on the
availability of raw materials, which further varies with
different harvesting periods. Operations of cotton business are
seasonal in nature, as sowing season is done during March to July
and harvesting cycle (peak season) is spread from November to
February every year. Cotton (one of the main raw material) being
an agricultural product, its demand supply situation depends on
various natural conditions like monsoons, drought and floods. It
being a product of international importance, its price is very
volatile depending on the demand-supply situation in the global
markets, export policy decided by government and inventory
carried forward of last year. Thus, aggregate effect of these
above factors results in exposure of ASM to price volatility
risk.
Operations are susceptible to Government regulations: In the
past, the prices of cotton have remained volatile mainly on
account of government policies in respect of Minimum Support
Price (MSP) & controls on its export. Hence, any adverse change
in government policy may negatively impact the prices of raw
cotton in the domestic market and could result in lower
realizations and profit for ASM.
Highly competitive nature of industry: Organized sector
consisting of large-scale spinning units and composite mills is
responsible for nearly 75% of installed capacity of the yarn
production and unorganized sector consisting of small scale
spinning units account for rest of the capacity. This leads to
highly fragmented industry structure having high level of
competition and intense pricing pressures.
Moreover, Indian textile industry is the second largest employer
after agriculture. Any adverse changes in the global economic
outlook as well as demand-supply scenario in the domestic market
directly impacts demand of the textile industry. Textile industry
as a whole remains vulnerable to various factors such as
fluctuations in prices of raw material mobilization of adequate
workforce and changes in government policies for overall
development of the textile industry. Any significant changes in
such factors will have direct impact on the business operations
of the firm.
Key rating strength
Experienced promoters: The firm is currently being managed by Mr
Sanjay Garg. He has around three decades of experience in
manufacturing of yarn through its association with M/s Akshay
Spin Mills and M/s Deepak Spin Mills.
Moderate profitability margins and operating cycle: The
profitability margins of the firm have stood moderate at 18.37%
in FY16 and showing marginal improvement over previous year on
account of economies of scale. However, high financial charges
and depreciation restricted the net profitability of the firm and
the PAT margin remained thin at 0.76% in FY16.
The firm's main raw materials are agro products (cotton and
cotton waste) and in order to smooth running of its production
processes for the entire year, the firm is required to maintain
adequate inventory of raw material. The firm mainly hold
inventory in the form of raw material and average inventory days
stood at 57 days for FY16. The firm operates in a highly
competitive industry wherein it extends credit period of around
1-2 months to its customers. Furthermore, the firm enjoys similar
average credit period of 48 days from its suppliers.
Haryana-based, ASM Spuntex (ASM) was established as a
proprietorship firm in April 2014 by Mr Sanjay Garg. ASM is
primarily engaged in the manufacturing of cotton yarn with an
installed capacity of 30 lakh kg of yarn per annum as on March
31, 2016. The manufacturing facility is located at Gohana Road,
Panipat, Haryana. The firm sells its finished product
domestically to various wholesalers, traders and fabric
manufacturing companies. The firm procures the key raw materials
i.e. Cotton and cotton waste from various traders located in
Haryana region. Akshay Spin Mills and Deepak Spin Mills are group
associates and are engaged in manufacturing of cotton yarn.
B. J. HOTELS: CARE Assigns B+ Rating to INR6.12cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of B. J.
Hotels Private Limited (BJHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.12 CARE B+; Stable Assigned
The ratings assigned to the bank facilities of BJHPL are
constrained on account of small scale of operations with low
capitalization, moderate capital structure, weak debt coverage
indicators and moderate liquidity position with moderately
working capital intensive nature of operations. The ratings are
also constrained on account of its presence in highly competitive
and fragmented industry, susceptibility of margins to volatility
in raw material prices and foreign exchange rates.
The rating however, derives strength from long track record of
operation and experienced promoters in the hospitality industry
and healthy profitability margins, comfortable liquidity position
and operational synergies with group companies and presence in
highly competitive, fragmented and cyclical nature of industry.
The ability of BJHPL to increase its scale of operations and
improve capital structure along with efficient management of
working capital requirement are the key rating sensitivities.
Detailed description of the key rating drivers
Key rating Weakness
Small scale of operations with low capitalization: Although the
entity was incorporated in 1971, the total operating income has
declined from INR5.72 crore in FY14 to INR1.80 crore in FY17 on
account of the change in the line of business from hospitality to
service income. However, its networth base remained low at
INR2.97 crore as on March 31, 2017, which limits its financial
flexibility to meet any exigency.
Weak debt coverage indicator: Further owing to healthy
profitability and high debt levels, coverage indicators remained
weak with total debt / GCA of 9.48x and interest coverage at
1.97x in FY17.
Highly competitive, fragmented and cyclical nature of industry:
The Indian hotel industry is highly fragmented in nature with
presence of large number of organized and unorganized players.
Further, the hospitality industry is highly sensitive towards the
economic cycle as it majorly depends on spending of the people
and organizations. Moreover, the company faces tough competition
from several four star, three star and budget hotels located in
the vicinity which also puts pressure on the profitability of the
company.
Key rating Strengths
Long track record of operation and experienced promoters in the
hospitality industry: The promoters have an established track
record in the hospitality industry and have an experience of
operating hotel for more than three decades. Mr. Gurinder Singh
Bawa, Director, the main promoter of the company possesses wide
experience of more than four decades in hospitality industry and
looks after the overall management of the company. He is further
assisted by his son Mr. Karanveer Singh Bawa, Director, has 20
years of experience in hospitality industry. Apart from the
directors, BJHPL also hired other technically qualified personnel
to handle the day to day operations of the company.
Moderate capital structure: BJHPL's capital structure improved
but remained moderate with moderate overall gearing owing to low
networth base.
Healthy profitability margins: PBILDT margin remained healthy in
the range of 70.03%-96.02% during last three years ending FY17
account of its presence in service industry. PBILDT margin
improved marginally & stood at 96.02% in FY17 vis-Ö-vis 82.04% in
FY16 on account of decrease in other expenses (mainly includes
legal and professional fees, interest
paid on service tax and others)and employee cost. Further net
profit margin also improved and remained healthy at 25.18% in
FY17 Prov (vis-a-vis -2.47 % in FY16) due to decrease in interest
cost.
Comfortable liquidity position: The liquidity position is marked
by comfortable current ratio and high operating cycle. While the
current ratio was at 2.53 times, its quick ratio remained at 2.53
times as on March 31, 2017. The entity generally receives rental
income within 30-45 days. Thus operating cycle remained negative
during FY17. Net working capital as a % of capital employed was
81 percent in FY16 and 22% in FY17. While cash flow from
operating activities was negative, the unencumbered cash & bank
balance was around INR0.11 crore as on March 31, 2017 as well.
B.J. Hotels Private Limited (BJHPL) was incorporated in 1971, as
a private limited company, by Mr. Mr. Gurindersingh P. Bawa and
Mr. Karanveersingh G. Bawa. BJHPL has developed hotel in Khar
Mumbai under the name of "Hotel Bawa Suites" with room inventory
of 26 rooms comprising of 7 floors plus 6 shops on ground floor
and basement which are given on rent to Airtel, Viom Network
Limited, Indus, Zodiac, Vijaydeep Hotels Pvt Ltd and IOSIS Spa
and Wellness. From FY15 entire hotel business was transferred to
one of its group company namely Vijaydeep Hotels Private Limited
and now BJHPL earns only rental income from the shops on the
ground floor and basement from companies namely Airtel, Viom
Network Limited, Indus, Zodiac and others. The group is into
hospitality industry for more than 3 decades and has established
boutique properties in Mumbai namely, Hotel Bawa International,
Hotel Bawa Continental, Hotel Bawa Suites and Hotel Bawa Regency.
BHASKAR SHRACHI: Ind-Ra Moves D Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Bhaskar Shrachi
Alloys Limited's (BSAL) 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:
-- INR290 mil. Fund-based limits (long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating; and
-- INR192 mil. Term loan (long-term) migrated to non-cooperating
category with IND D(ISSUER NOT COOPERATING) rating; and
-- INR150 mil. Non-fund-based limits (short-term) migrated to
non-cooperating category with IND D(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
September 30, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
BSAL is a public limited company that was incorporated in 1995 by
Sri Shrawan Kumar Todi of Shrachi Group and Sri Krishna Kumar
Rungta of Bhaskar Group. The company manufactures ferro alloys
(24,000 metric tons per annum (mtpa))), SGCI inserts (6,000mtpa)
and billets (65,000mtpa).
BHOOMI GINNING: ICRA Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA has moved the ratings for the INR12.00-crore bank facilities
of Bhoomi Ginning Pressing Private Limited (BGPPL) to the 'Issuer
Not Cooperating' category. The rating is now denoted as [ICRA]D
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash 12.00 [ICRA]D; ISSUER NOT CO-
Credit OPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in May, 2016. The
lenders, investors and other market participants are thus,
advised to exercise appropriate caution while using this rating,
as the rating does not adequately reflect the credit risk profile
of the entity. BGPPL's credit profile may have changed since the
time it was last reviewed by ICRA. However, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with BGPPL, ICRA has been trying to seek information
from the entity so as to monitor its performance and had also
sent repeated reminders to the company for payment of
surveillance fee that became overdue. Despite repeated requests
by ICRA, the entity's management has remained non-cooperative. In
the absence of requisite information, and in line with SEBI's
circular no. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
ICRA's Rating Committee has taken a rating view based on the best
available information.
Key rating drivers
Credit strengths
* Experience of promoters: BGPPL was established in 2006 to
undertake ginning and pressing of raw cotton and crushing of
cottonseeds. The promoters of the company have more than a decade
of industry experience in the cotton industry.
Credit weaknesses
* Delays in debt servicing: Ongoing delay in debt servicing due
to discontinuity in the business operation of the company.
* Intense competition owing to fragmented industry structure: The
cotton industry is highly fragmented with intense competition
because of low entry barriers that limit its pricing flexibility.
* Vulnerability of profitability towards regulatory and agro-
climatic risks: The company's profitability is vulnerable to
agro-climatic risks, movements of raw cotton prices, regulatory
risks with regard to minimum support price (MSP) of raw cotton
and export of cotton bales.
Incorporated in 2006, Bhoomi Ginning Pressing Private Limited
(BGPPL) is a private limited company managed by three directors
Mr. Sanjaybhai Ramanai Mr. Ashishbhai Ramani and Mr. Maganbhai
Ramani. It is involved in the ginning and pressing of raw cotton
and the crushing of cottonseeds. BGPPL produces mainly cotton
bales, cottonseeds, cottonseed oil, cottonseed oil cakes and
baghru. The manufacturing facility of BGPPL was equipped with 24
ginning machines, one pressing machine and two expellers having
an installed capacity of 220 cotton bales, 0.50 MT of cottonseed
oil and 12.50 MT of cottonseed oil cake per day (24 hours
operation).
In FY2014, the company reported a net profit of INR0.08 crore on
an operating income of INR58.05 crore, as compared to a net
profit of INR0.10 crore on an operating income of INR52.61 crore
in the previous year.
C.M. BUILDS: CARE Assigns B+ Rating to INR10cr LT Loan
------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of C.M.
Builds private limited (CMBPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of CMBPL factors
funding risk as the entire debt is yet to be tied up along with
project execution risk, inherent cyclicality associated with the
real estate sector and competition from other projects in the
vicinity with volatility in raw material prices affecting
profitability.
The rating of CMBPL, however, derives strength from long
experience of its promoters for over two decades in the real
estate sector along with favorable location of the project.
Going forward, ability of the company to achieve targeted sales
and collection efficiency to ensure liquidity will be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Funding risk as the entire debt yet to be tied up along with
project execution risk: Of the total project cost of INR22.25
crore, INR10 crore is proposed to be funded by way of bank loan.
Since the loan is not yet tied up, funding risk related to the
same prevails.
'ARISTO' project which is a residential building with 4 floors
and 4 blocks currently under construction stage. The project is
expected to be completed by March 2020. The construction activity
of the project is undergoing and all statutory clearances
[clearance from Chennai Municipal Development Authority (CMDA)
and corporation], have been obtained by the company. Around 10%
of the project cost has been incurred till September 2017 and the
completion date being March 2020; the project is faced with
execution risks. Moreover, any significant time or cost overruns
could impact the company's liquidity and profitability since
repayments are scheduled to commence from Q3FY19. Furthermore,
timely and adequate customer receipts will remain crucial for
completion of projects within envisaged timelines.
Inherent cyclicality associated with the sector and competition
from other projects in vicinity: The company is exposed to the
cyclicality associated with the real estate sector which has
direct linkage with the general macroeconomic scenario, interest
rates and level of disposable income available with individuals.
In case of real estate companies, the profitability is highly
dependent on property markets. A high interest rate scenario
could discourage the consumers from borrowing to finance the real
estate purchases and may depress the real estate market.
Volatility in raw material prices affecting profitability: Raw
materials used in the business referring to cement, sand, steel
and iron etc. have been fluctuating in the range of 5-10% in the
past. These fluctuations might directly affect the profitability
margins of the company.
Key Rating Strengths
Long Experience of promoters more than two decades as property
developers: C.M. Builds private limited (CMBPL) is a Private
Limited company incorporated in February 1994 by its directors
Mr. M. H. K. Kaleelur Rahuman, Mr. M. Fackeer Mohideen, Mr. M.
Jahir Hussain and Mrs. M. H. K. Hyrunnisa having its registered
office at Chennai. The company involves in constructing
residential properties in and around Tamilnadu. CMBPL having
property development as its core portfolio, have executed over 10
projects in and around Chennai, primarily residential space since
incorporation. The key promoters who are associated with the real
estate business for around 25 years of experience since the day
of its incorporation in real estate industry.
Locational advantage: The project is located at Mettupalayam
road, Coimbatore, Tamil Nadu. Coimbatore is a fast growing
residential area in Tamilnadu with growing industries having
higher employment opportunities. Located in proximity to the IT
Industry, Banks, Schools, Hospitals, automobile hub has attracts
locational advantages & attracted more population to the place.
The project is also near to the bus stand, railway stations. The
same is expected to provide boost to the sales of the project.
C M Builds private limited (CMBPL) is a Private Limited company
incorporated in February 1994 by its directors Mr. M. H. K.
Kaleelur Rahuman, Mr. M. Fackeer Mohideen, Mr. M. Jahir Hussain
and Mrs. M. H. K. Hyrunnisa having its registered office at
Chennai. The company involves in constructing residential
properties in and around Tamilnadu. CMBPL having property
development as its core portfolio, have executed over 10 projects
in and around Chennai, primarily residential space since
incorporation.
CELOGEN PHARMA: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Celogen Pharma
Private Limited's (CPPL) 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 ratings
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR60 mil. Fund-based working capital limits 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
September 23, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
CPPL was incorporated in 2005 by Mr Vijaykumar Nair. It
manufactures pharmaceutical formulations at its facility in
Mahape, Navi Mumbai, and exports them to Nigeria, South East Asia
and Sri Lanka.
DC WOVENSACK: ICRA Reaffirms B Rating on INR6.60cr Term Loan
------------------------------------------------------------
ICRA has re-affirmed the long-term rating of [ICRA]B for the
INR6.60 crore term loan facility and the INR3.25 crore cash
credit facility of DC Wovensack Private Limited. The outlook on
the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term: Fund 3.25 [ICRA]B(Stable); Reaffirmed
based limits-
Cash Credit
Long-term: Fund 6.60 [ICRA]B(Stable); Reaffirmed
based limits-
Term Loans
Rationale
The rating reaffirmation takes into account the company's modest
scale of operations at present and its limited track record; the
weak financial risk profile of the company as characterized by
decline in revenues in FY2017 over previous fiscal coupled with
net losses, highly leveraged capital structure, its weak debt
coverage indicators and the high working capital intensity of
operations due to stretched receivables and high inventory
holding period. The rating is also constrained by the high
competitive pressures from conventional plastic bag manufacturers
and the vulnerability of DWS's profitability to adverse
fluctuations in raw material prices.
The rating, however, continues to favourably factor in the long-
standing experience of the company's promoters spanning over a
decade in the woven sack manufacturing business and the fiscal
benefits received by way of interest and capital subsidy on
account of registration under Technology Upgradation Fund Scheme
(TUFS).
Key rating drivers
Credit strengths
* Long standing experience of promoter spanning over a decade in
woven sack manufacturing industry: DWS is promoted by Mr.
Navalkumar Agarwal, who has a decade-long experience in the woven
fabric manufacturing business. Mr. Agarwal is also actively
engaged in the management of the group company 'Satyam Wovensack
Pvt. Ltd.' which is engaged in the same line of business as DWS.
* Fiscal benefits by way of Interest subsidy and Capital subsidy
on account of registration under TUFS: The company is eligible to
avail interest subsidy of ~6% on term loan for Plant and
Machinery as well as rebate on duty paid on power consumption. In
addition the company is also eligible for 15% capital subsidy on
value of plant and machinery under TUFs Scheme under central
government. The company received an interest subsidy of INR0.82
crore in FY2017 (PY3-INR0.25 crore).
Credit weaknesses
* Modest scale of operations at present and limited track record:
The company commenced its commercial operations in April 2014 and
hence its track record remains limited in the line of business,
however, the promoters have significant experience in
manufacturing of woven sacks. The scale of operations of the
company remains modest at present, with revenues of INR16.29
crore in FY2017 (PY-INR18.30 crore).
* Weak financial risk profile of the company as characterized by
decline in revenues and net losses in FY2017, highly leveraged
capital structure and weak coverage indicators: The company's
operating revenues declined by 11% in FY2017 as compared to
previous fiscal, as a result of lower sales volumes following
weak domestic demand as well as decline in average realizations.
The operating margins also declined to 4.48% in FY2017 (5.41% in
FY2016) in-line with drop in revenues and resultant uneven
distribution of fixed cost. The company reported a net loss of
INR0.22 crore in FY2017, however, the same has contracted over
INR0.48 crore during previous fiscal due to lower interest outgo
as a result of interest subsidy received during the year. The
company's capital structure remains stretched, with gearing of
2.01 times as on March 31, 2017 (1.65 times as on March 31, 2016)
due to increase in working capital borrowings and lower net-
worth. In terms of coverage indicators, interest cover improved
to 5.62 times in FY2017 (1.16 times in FY2016) due to lower
interest cost as a result of interest subsidy, while TD/OPBDITA
remained weak at 11.79 times as on March 31, 2017 (P.Y. 7.51
times).
* High working capital intensity of operations due to stretched
receivables and high inventory: The working capital intensity
remained high with NWC/OI at 25% as on March 31, 2017 as against
13% as on March 31, 2016 due to stretched receivables and higher
finished goods inventory as at year end, due to lower off-take in
the domestic market.
* Vulnerability of profitability to fluctuations in raw material
costs: The key raw material for the company is polypropylene
granules and color master batch. Polypropylene is a crude oil
derivative and hence its price is directly linked to the crude
oil prices in the international market and hence remains
volatile. The company's profitability thus remains exposed to
volatility in prices of these key raw materials, given the low
bargaining power of the company.
* Intense competitive pressures from conventional plastic bags
manufacturers: The Indian poly-woven sack industry produces an
equivalent of around 1.2 million metric tons per annum (MMTPA) of
PP and High Density Polyethylene (HDPE) bags, and is dominated by
players operating in the small and medium scale sector. Owing to
the high fragmentation and limited product differentiation,
competitive intensity and pricing pressure is of a high order.
The company faces intense competition from a number of organized
and unorganized players in the domestic market; and hence its
pricing power remains limited.
DC Wovensack Private Limited (DWS) was incorporated in 2012, and
commenced operations from April 2014. The company, promoted by
Mr. Navalkumar Agarwal, has established a Polypropelene (PP)
woven fabric manufacturing unit at the Pipodara Village in
Mangrol district of Surat, Gujarat, with an annual installed
capacity of 4,372.50 metric tons of woven fabric. Woven fabric is
used to produce woven sacks that are utilized as packaging
material for fertilizer, cement, food, sugar and chemical
industries.
DWS reported a net loss of INR0.22 crore on an operating income
(OI) of INR16.29 crore in FY2017 over net loss of INR0.48 crore
on an OI of INR18.30 crore in FY2016.
ENCANA INTERNATIONAL: CARE Assigns B Rating to INR7.92cr Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Encana
International (EIN), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.92 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of EIN is constrained
by its small scale of operations with net losses in past,
leveraged capital structure and weak debt coverage indicators.
The rating is further constrained by concentrated revenue stream,
elongated collection period, competitive and fragmented nature of
industry and partnership nature of constitution. The rating,
however, derives strength from experienced partners and reputed
clientele.
Going forward, the ability of the firm to profitably scale up its
operations while improving its overall solvency position and
its ability to diversify the customer base would remain its key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with net losses in past: Owing to short
track record of operations, the firm's scale of operations has
remained small marked by TOI of INR14.68 crore in FY17 (refers to
the period April 01 to March 31). The small scale limits the
firm's financial flexibility in times of stress and deprives it
from scale benefits. The increase in scale was accompanied by
decline in PBILDT margin from 9.36% in FY16 to 6.79% in FY17 as
the firm compromised on the margins to increase its sales.
However, the firm incurred net losses during last two financial
years mainly on account of high interest and depreciation costs.
Leverage capital structure and weak debt coverage indicators
The capital structure of the firm stood leveraged with overall
gearing ratio of 2.47x as on March 31, 2017 mainly on account of
firm's reliance on bank borrowings to fund various business
requirements.
The debt coverage indicators stood weak marked by total debt to
GCA of 17.01x for FY17 and interest coverage ratio of 1.28x in
FY17.
Elongated collection period: The collection period stood
elongated at 95 days for FY17. The firm extends credit period of
around three months to its customers as customers base normally
comprises of big players who possess high bargaining power as
compared to small players resulting into high average collection
period.
Concentrated revenue profile albeit reputed customer: The firm is
in the manufacturing and flexographic printing of self-adhesive
labels and is supplying to various manufactures including reputed
customer such as Dabur India Limited. The sales to Dabur India
Limited constituted 70% of total operating income in FY17. Thus,
the firm is exposed to customer concentration risk and any
adverse change in procurement policies of this customer may
adversely affect the business of EIN.
Competitive nature of industry: The printing industry is
characterized by a high level of fragmentation and regional
concentration. Indian printing industry is characterized as
fragmented & competitive with very little differentiation in
terms of service offering. EIN faces direct competition from
various organized and unorganized players in the market.
Partnership nature of constitution: EIN's constitution as a
partnership firm has the inherent risk of possibility of
withdrawal of the partners' capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of partners.
Key Rating Strengths
Experienced partners: Mr. Mohit Malhotra, Mr. Sukhmilap Singh,
Mr. Vishal Todi have an industry experience of 15 years, 10 years
and 13 years respectively through their association with group
concerns and other entities. Furthermore, the partners are
supported by experienced team having varied experience in the
field of marketing and finance aspects of business.
Encana International (EIN) was established in March 2014 as a
partnership firm by Mr. Mohit Malhotra and Mr. Sukhmilap Singh.
However, the commercial operations started in December 2014.
Later, in FY17, Mr. Vishal Todi was added as third partner. All
the partners are sharing profit and losses equally. EIN is
engaged in the manufacturing and flexographic printing of self-
adhesive labels at its manufacturing unit located in Solan,
Himachal Pradesh. The firm has total installed capacity of 60
lakh of self-adhesive labels per annum as on March 31, 2017.
FAST TRACK: CARE Moves B+ Rating to Not Cooperating Category
------------------------------------------------------------
CARE Ratings has been seeking information from Fast Track CFS
Private Limited to monitor the rating(s) vide e-mail
communications/ letters dated September 26, 2017, and numerous
phone calls. However, despite CARE's repeated requests, the firm
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
Fast Track CFS Private Limited's bank facilities will now be
denoted as CARE B+; ISSUER NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 13.00 CARE B+; Issuer Not
Facilities Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in October 27, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Limited experience of the promoters: The company was incorporated
in 2012 by Mr Krishan Mohan Sharan and Mr Anil Mohan Sharan. The
business will commence its operations from December 2016 and FY18
will be the first full year if operations for FTCPL. It is the
first venture of the promoters having limited experience in the
CFS business industry. The promoters have around two and a half
decades of experience in diversified business segments through
their association with other associate concerns. The promoters
have ventured into warehousing industry due to the increasing
demand and favorable government policies to support the same.
Project execution and stabilization risk: FTCPL was constructing
a warehouse cum container freight station with a total project
cost of INR19.00 crore. The project was to be funded through term
loan of INR13.00 crore and balance through promoter's
contribution.
The production was expected to commence from December 2016. The
execution of the project with the envisaged time and cost remains
a risk for the company. During the initial phases of operations,
the capital structure of the company is expected to remain
leveraged characterized by debt funded capex and low capital
base. Further in the absence of any information from the client
regarding the same CARE is unable to express it's opinion.
Customer concentration risk though stable revenue model providing
long term revenue visibility: FTCPL has entered into an Strategic
Alliance Management Agreement with ARR Maritime & Allied Services
Private Limited (AMAL). AMAL is a maritime cargo management
company and the agreement is for a tenure of 6 years having a
renewal clause on annual basis. Under the agreement, FTCPL will
provide approximately two-third of the total area on a fixed
monthly payment with an inbuilt annual escalation clause. Being
on the Strategic Alliance Management Agreement, it is expected
that major portion of revenue is to be generated from a single
client which exposes to the customer concentration risk.
Competitive nature of the industry: The company would be operate
in a competitive industry wherein there is presence of a large
number of players in the unorganized and organized sectors. The
company is comparative a small players catering to the same
market which has limited the bargaining power of the company and
has exerted pressure on its margins.
Key Rating Strengths
Location Advantage to client: Fast Track CFS Private Limited is
constructing a warehouse cum container freight station on Mundra
port which is the largest private port of India located on the
North shore of Gulf of Kutch near Mundra, in Gujarat. The port
has been growing by 25% year on year basis in the last three
years. The port also has special economic zone status. It is well
connected with road, rail and air. The port has diverse cargo
base including dry, bulk, break bulk, liquid, container, car etc.
Thus the presence of presence of warehouse on Mundra Port gives a
locaton advantage to Fast Track CFS Private Limited.
Delhi-based Fast Track CFS Private Limited (FTCPL) is a private
limited company; incorporated in 2012 by Krishan Mohan Sharan and
Mr Anil Mohan Sharan. FTCPL was incorporated with an aim to set
up a warehouse cum container freight station (CFS) at Mundra
Port, Kutch, Gujarat. The warehouse would have an area of 435112
square feet and open space of 217556 square feet and is setup
with estimated cost of INR19 crore, proposed to be funded in the
debt equity mix of 0.48:52. The company will commence its
commercial operations in December 2016.
GENERAL POLYTEX: ICRA Moves B Rating to Not Cooperating Category
----------------------------------------------------------------
ICRA has moved the ratings for the INR78.64 crore bank facilities
of General Polytex Private Limited to the 'Issuer Not
Cooperating' category. The rating is now denoted as: [ICRA]B
(Stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term 58.34 [ICRA]B (Stable) ISSUER NOT
Loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based-Cash 18.00 [ICRA]B (Stable) ISSUER NOT
Credit COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Bank Guarantee 2.30 [ICRA]A4 ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating action is based on no updated information on the
entity's performance since the time it was last rated in May
2016. The lenders, investors and other market participants are
thus advised to exercise appropriate caution while using this
rating as the rating does not adequately reflect the credit risk
profile of the entity. The entity's credit profile may have
changed since the time it was last reviewed by ICRA; however, in
the absence of requisite information, ICRA is unable to take a
definitive rating action.
As part of its process and in accordance with its rating
agreement with GPPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information, and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Long experience of promoters in the fabric manufacturing
industry spanning over four decades: GPPL is managed by Mr. Mohd.
Umar Mohd. Amin and his family, who have vast experience in this
industry. It is part of the Surat-based General Group, which
enjoys a presence in the textile industry through its 10 group
companies, which manufactures polyester greige fabric.
* Proximity of unit to raw material sources and customers: Surat
(Gujarat) is a prime textile hub of India, and is home to
numerous fabric manufacturers. Hence, the location of the
company's manufacturing unit in Surat provides it easy access to
quality raw materials as well as customers, while resulting in
lower logistics costs.
Credit weaknesses
* Modest scale of operations: The company's scale of operations
remained modest in its initial years of operations. GPPL
commenced its commercial operations from March 2015 and reported
an operating income of INR0.25 crore in FY2015 (one month of
operations) and INR36.08 crore in FY2016.
* High working capital intensity of operations: The working
capital intensity of operations remained high owing to elongated
receivables cycle and high inventory holdings, resulting in a
stretched liquidity position. The working capital intensity of
the company stood at 80% in FY2016.
* Weak financial risk profile: The total debt of the company has
been high owing to debt-funded capex, coupled with high working
capital requirements of the business. Its total debt increased
from INR31.62 crore as on March 31, 2015 to INR69.46 crore as on
March 31, 2016, resulting in leveraged capital structure with
gearing of 2.21 times as on March 31, 2016. GPPL's debt coverage
indicators also remained moderate with interest coverage of 1.51
times and NCA/Total Debt of 6% in FY2016.
* Intense competition in a highly fragmented industry structure:
The Indian textile industry is highly fragmented with numerous
organised as well as unorganised players, restricting the pricing
flexibility of the company.
General Polytex Private Limited (GPPL) was incorporated in 2004
as Bam Basuki Tradelink Private Limited, before the company
acquired its present name in August 2012. GPPL's commercial
operations started from March 2015. It manufactures polyester
greige fabric, which is used for making women's wear, dress
materials, suitings, shirtings and home furnishings like
curtains.
GPPL is a part of the Surat-based General Group, which has a
presence in the trading of food products, construction activity
and fabric manufacturing. In the textile industry the group has a
presence through 10 Group companies that manufacture polyester
greige fabric on a job-work basis for GPPL and General
Petrochemicals Limited. The companies are managed by Mr. Mohd.
Umar Mohd. Amin and his family.
The manufacturing facility of GPPL is being set up in two phases
for installing 300 jet looms to manufacture polyester grey fabric
with a production capacity of ~396 lakh metres per annum.
Furthermore, till February 2016, the company had installed 216
looms in its manufacturing facility.
In FY2016, the company reported a net profit of INR0.21 crore on
an operating income of INR36.08 crore, as compared to a net
profit of INR0.00 crore on an operating income of INR0.25 crore
in the previous year (one month of operations).
HI-TEC ROCK: CARE Moves B+ Rating to Not Cooperating Category
-------------------------------------------------------------
CARE Ratings has been seeking information from Hi-Tec Rock Fibre
Private Limited (HRFPL) to monitor the ratings vide letters/e-
mails communications dated June 20, 2017, October 4, 2017,
October 11, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requiste information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on HRFPL's bank facilities
will now be denoted CARE B+; ISSUER NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 4.55 CARE B+; Issuer not
Facilities cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on December 22, 2016 the following
were the rating weaknesses and strengths.
Key Rating Weaknesses
Small scale of operations: HRFPL is a relatively smaller player
with manufacturing capacity of 20000 MTPA. The total turnover and
PAT of the company stood at INR15.47 crore and INR0.16 crore
respectively, in FY16. Further, the net worth base and total
capital employed was low at INR2.52 crore and INR8.47 crore,
respectively, as on March 31, 2016. The company has generated
revenue of INR11.00 crore till November, 2016.
Short track record of operation: HRFPL commenced operation since
2012 and has a short track record of operations.
Working capital intensive nature of business: HRFPL's business,
being manufacturing of rock wool,is working capital intensive by
nature marked by high utilization of working capital limit at
around 80% during last 12 months ended in October 2017.
High competition: HRFPL faces stiff competition from the
organized as well as unorganized players in the industry. This
apart, the company faces tough competition from various regional
and local players with unorganized industry being highly
fragmented. HRFPL has to price its products competitively without
compromising the quality of the products.
Moderate capacity utilization: The capacity utilization of HRFPL
remained at a moderate level of about 50% during FY16 due to
lower demands of rock wool in the market.
Key Rating Strengths
Experienced Promoters: Hi-Tec Rock Fibre Pvt. Ltd. has a well
experienced management team including its directors. Mr. Mohan
Lal Patel, Mr. Hira Lal Patel, Mr. Dhansukh Patel and Mr. Vikash
Patel are the directors of HRFPL and looks after the overall
management of the company. Mr. Mohan Lal Patel having more than
two decades of experience in the industry and are ably supported
by other directors. Mr. Hira Lal Patel (25 years' experience),
Mr. Dhansukh Patel (20 years' experience) and Mr. Vikash Patel
(03 years' experience) along with the team of experienced
professionals who have rich experience in the same line of
business.
Reputed clientele: The company has a reputed clientele base like
BHEL, NTPC, Bhilai Steel Plant, etc.
HRFPL was incorporated in 2012 by Mr. Mohan Lal Patel and Mr.
Hira Lal Patel. Since its incorporation the company is engaged in
the business of manufacturing of rock wool at Rajnandgaon,
Chhattisgarh.
JAI BHARAT: CARE Moves B+ Rating to Not Cooperating Category
------------------------------------------------------------
CARE Ratings has been seeking information from Jai Bharat Rice
Mills to monitor the rating(s) vide e-mail communications/
letters dated October 9, 2017, and numerous phone calls. However,
despite CARE's repeated requests, the firm 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 Jai Bharat Rice Mills'
bank facilities will now be denoted as CARE B+/ CARE A4; ISSUER
NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 16.55 CARE B+; Issuer Not
Cooperating
Short term Bank
Facilities 0.20 CARE A4; Issuer Not
Cooperating
Long Term/Short
term Bank
Facilities 6.00 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(s).
Detailed description of the key rating drivers
At the time of last rating in August 1, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Small scale of operations: The scale of operations has remained
small marked for last three financial years i.e. FY14-FY16
(refers to the period April 1 to March 31).The small scale limits
the firm's financial flexibility in times of stress and deprives
it from scale benefits.
Weak financial risk profile: The firm had low profitability
margin marked by due to low value addition and its presence in a
highly fragmented and competitive industry. Also, PAT margin
stood below unity due to high interest costs owing to reliance on
external borrowings. The capital structure of the firm stood
leveraged due to high dependence on bank borrowings coupled with
low partners' capital. Further, the coverage indicators of the
firm remained weak due to high reliance on external debt
resulting in high interest cost coupled with low gross cash
accruals.
Working capital intensive nature of operations: Operations of the
firm are working capital intensive in nature mainly on account
high average inventory holding. Being a seasonal product the firm
maintain adequate inventory of raw material for smooth running of
its production processes and has to maintain finished goods
(rice) to meet the immediate demand of its customers. The firm
offers credit period of around one month to its customers owing
to high competition. It procures the paddy mainly on cash basis
and from few suppliers it gets payable period of around one
month.
Fragmented and competitive nature of industry: The commodity
nature of the product makes the industry highly fragmented, with
numerous players operating in the unorganized sector with very
less product differentiation. There are several small scale
operators which are not into end-to-end processing of rice from
paddy, instead they merely complete a small fraction of
processing and dispose-off semi-processed rice to other big rice
millers for further processing. Furthermore, the concentration of
rice millers around the paddy growing regions makes the business
intensely competitive.
Business susceptible to the vagaries of nature: Rice being mainly
a 'kharif' crop is cultivated from June-July to September-
October, and the peak arrival of crop at major trading centers
starts in October. The output is highly dependent on the monsoon.
Unpredictable weather conditions could affect the domestic output
and result in volatility in the price of rice. Further, The
Government of India (GoI) every year decides a minimum support
price (MSP) of paddy which limits the bargaining power of the
rice millers over the farmers. The millers can sell rice at the
market rates in the open market only after they fulfill the levy
quota. Frequent changes in the government policies regarding
imposition of ban on export and minimum export price are an
inherent risk for all the non-basmati rice processors.
Key Rating Strengths
Experienced partners: JBRM is currently being managed by Mr.
Ganesh Dass Garg and his son Mr. Assem Garg. Mr. Ganesh Dass Garg
has experience of almost three decades through his association
with JBRM and earlier with Durga Rice Mills. He is supported by
his son in managing the overall operations of the firm who has
experience of one decade through his association with JBRM.
Favourable manufacturing location: JBRM is mainly engaged in
milling and processing of rice. Haryana is one of the highest
producers of paddy in India, which ensures easy availability of
paddy. Furthermore, owing to its location, the firm is able to
cut on the freight component for procurement of raw materials.
Haryana based Jai Bharat Rice Mills (JBRM) was established in
2001 as a proprietorship firm by Mr. Ganesh Dass Garg. JBRM was
reconstituted as a partnership firm on April 1, 2005 with
inclusion of Mr. Assem Garg as a partner. The current partners
are Mr. Ganesh Dass & Mr. Aseem Dass and sharing their profit and
losses equally. JBRM is engaged in milling, processing and
trading of basmati rice with an installed capacity of 4 tonne per
hour (MTPH) at unit located at Tarori, Karnal, Haryana. The firm
procures the raw material (unprocessed rice/ paddy) from grain
markets of Haryana and sells its product to rice exporters in
Haryana.
LAMANE INFRASTRUCTURE: Ind-Ra Moves BB- Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Lamane
Infrastructure Private 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:
-- INR200 mil. Term loan migrated to non-cooperating category
with IND BB-(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 8, 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 1980, Lamane Infrastructure runs a real estate
development business.
MAHESHWARI TECHNOCAST: CARE Assigns B+ Rating to INR7.20cr Loan
---------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Maheshwari Technocast Limited (MTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 7.20 CARE B+; Stable Assigned
Short-term Bank
Facilities 2.50 CARE A4; Assigned
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of MTL are
constrained by its small scale of operations with low profit
margins, volatility in raw material prices, working capital
intensive nature of business, leveraged capital structure with
moderate debt coverage indicators and its presence in an
intensely competitive and cyclical industry. However, the ratings
derive comfort from the promoter's experience, long track record
of operations and reputed & diversified clientele.
Going forward, MTL's ability to increase its scale of operations,
improve profitability margins and effective management of working
capital will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low profit margins: The scale of
operations of the company remained small marked by total
operating income of INR34.18 crore (INR33.97 crore in FY16) with
a PAT of INR0.14 crore (INR0.09 crore in FY16) in FY17. The
company has booked revenue of INR16.08 crore in 5MFY18.
Furthermore, the profit margins of the company remained low
marked by PBILDT margin of 4.07% and PAT margin of 0.42% in FY17.
Volatility in raw material prices: MTL does not have backward
integration for its basic raw-materials (coke, foundry chemicals,
coal, welding electrodes, gases etc.) and it procures the same
from open market at spot prices. Since the raw-material is the
major cost driver and the prices of which are volatile in nature,
the profitability of the company is susceptible to fluctuation in
raw-material prices.
Working capital intensive nature of business: The operations of
the company remained working capital intensive marked by high
inventory holding period. MTL maintains a large quantity of raw
material inventory to mitigate the price fluctuations risk and
smooth running of its production process. Accordingly the average
inventory period of the company remained at 117 days. Further,
the company allows credit of about three weeks to its clients
which also resulted into working capital intensive nature of its
operations. However, it receives credit of about two month from
suppliers due to its long presence in the industry, mitigated the
working capital intensity to a certain extent. Accordingly, the
average fund based bank limit utilization remained on the higher
side at about 80%during last twelve months ending on August 31,
2017.
Leveraged capital structure with moderate debt coverage
indicators: The capital structure of the company remained
leverage marked by debt equity and overall gearing ratios of
0.56% and 3.17x respectively as on March 31, 2017. The debt
coverage indicators of the company also remained moderate marked
by interest coverage of 1.60x and total debt to CGA of 16.92x in
FY17.
Intensely competitive and cyclical industry: The operating
spectrum of the company is highly fragmented and competitive
marked by the presence of numerous players in the region. Hence
the players in the industry do not have pricing power and are
exposed to competition induced pressures on profitability. This
apart, MTL's product being intermediary iron & steel products,
are used primarily by steel industry. Accordingly, it is
subjected to the risks associated with the industry like
cyclicality and price volatility.
Key Rating Strengths
Experienced promoters with long track record of operations: MTL
is into manufacturing of rolling mill spare parts since 1974 and
thus has long track record of operations. Being in the same line
of business since long period, the promoters have built up
established relationship with its clients and the company is
deriving benefits out of this. Mr. Suresh Kumar Mantri has around
42 years of experience in the same line of business, looks after
the overall management of the company supported by other
directors Mr. Prashant Kumar Mantri who also has around 14 years
of experience in same line of business.
Reputed and diversified clientele: MTL has been associated with a
number of reputed customers since its inception and has marked a
remarkable presence as a supplier of bearings and spare parts.
The client portfolio of MTL includes reputed names like Bhilai
Steel Plant (a unit of Steel Authority of India Ltd, Rated: CARE
AA+; Stable/A1+), Beekay Steel Industries Limited, National
Aluminium Company Limited, Hindustan Copper Limited and so on.
Considering the client profile of the company, the risk of
default is minimal.
MTL, promoted by Mr Suresh Kumar Mantri, was originally set up as
a partnership firm in 1974 and the same was converted into
limited company with effect from August 14, 1996.MTL is the
ancillary unit of Bhilai Steel Plant, a unit of Steel Authority
of India Limited. Since its inception, MTL has been engaged in
manufacturing of rolling mill spare parts. The manufacturing
facility of the company is located at Bhilai, Chhattisgarh with
an aggregate installed capacity of 3000 MTPA of foundry and 1500
MTPA of fabrications.
MEHTA INTERTRADE: Ind-Ra Moves BB Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Mehta Intertrade
Steels Private Limited's (MISPL) Long-Term Issuer Rating 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 actions are:
-- INR100 mil. Fund-based limits migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating;
-- INR700 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating;
-- INR45 mil. Term loan migrated to non-cooperating category
with IND BB(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 23, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
MISPL is a manufacturer of ERW pipes and cold rolled precision
tubes with the products primarily used in industries such as
automobile, infrastructure and construction.
MELSTAR INFORMATION: CARE Cuts Rating on INR14cr Loan to 'D'
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Melstar Information Technologies Limited (MITL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 14.00 CARE D; Issuer not
Facilities cooperating; Revised from
CARE BB- on the basis of
best available information
Short term Bank 3.00 CARE D; Issuer not
Facilities cooperating; Revised from
CARE A4 on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MITL to monitor the
ratings vide e-mail communications/letters dated 16th August
2017, 4th September 2017, 6th October 2017 and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the
ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the publicly available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The rating on MITL's bank facilities
will now be denoted as CARE D/CARE D; 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(s).
The ratings have been revised on account of delay in debt
servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in debt servicing: As per the interaction with the banker,
there have been overdrawals in working capital limits for more
than 30 days.
Incorporated in the year 1986, Melstar Information Technologies
Limited (MITL), is an ISO 9001:2008, ISO 14001:2004, ISO
27001:2013 and SEI-CMM Level III certified software service
company providing IT solutions and skilled manpower catering to
Banking, Insurance, IT and Government sectors.
Headquartered out of its Mumbai office, MITL also operates branch
offices in Bangalore, Chennai, Hyderabad, Gurgaon and Kolkata.
The company caters to a reputed clientele.
MINI DIAMONDS: ICRA Moves D Rating to Not Cooperating Category
--------------------------------------------------------------
ICRA has moved the rating for the INR9.00 crore bank facilities
of Mini Diamonds (India) Limited to the 'Issuer not co-operating'
category. The rating is now denoted as: "[ICRA]D; ISSUER NOT CO-
OPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Bank limits 9.00 [ICRA]D; ISSUER NOT CO-
OPERATING; Rating moved to
the 'Issuer not co-operating'
category
Rationale
The rating is based on limited information on the entity's
performance since the time it was last rated in May 2016. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with Mini Diamonds (India) Limited, ICRA has been
trying to seek information from the entity so as to monitor its
performance, but despite repeated requests by ICRA, the entity's
management has remained non co-operative. In the absence of
requisite information, and in line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Key rating drivers
Credit Strengths
* Long standing experience of promoters in the cut and polished
diamond industry: The promoters of the firm constitute members of
the Shah family who have an experience of more than 40 years in
the gems and jewellery business.
Credit weaknesses
* Past delays in debt servicing: There were delays in debt
servicing by the company due to its stretched liquidity position.
The liquidity profile of the company is impacted due to the
highly leveraged capital structure and consequent weak debt
coverage metrics.
* Low profitability as inherent in the cut & polished diamonds
(CPD) business: The company has low profitability on account of
limited value addition and highly competitive and fragmented CPD
industry due to low entry barriers.
Incorporated in the year 1987, Mini Diamonds (India) Limited
(MDIL) is promoted by Mr. Upendra Shah and Mr Himanshu Shah. The
company is engaged in manufacturing and trading of cut and
polished diamonds (CPD) and trading of rough diamonds. MDIL
primarily caters to the export market with Hong Kong, Belgium and
Dubai being the major export destinations. The company has its
registered office and manufacturing units located in Mumbai. It
is listed on the Bombay Stock Exchange (BSE).
NIJANAND PIPES: ICRA Cuts Rating on INR5.0cr LT Loan to 'D'
-----------------------------------------------------------
ICRA has downgraded the long-term rating for the INR5.00- crore,
fund-based bank facilities of Nijanand Pipes And Fittings Private
Limited to [ICRA]D from [ICRA]C earlier. ICRA has also downgraded
the short-term rating for the INR1.00-crore non-fund based bank
facilities of the company to [ICRA]D from [ICRA]A4 earlier.
Further, ICRA has also downgraded the ratings of [ICVRA]C/A4
assigned to INR1.83 crore unallocated limits of the company to
[ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund-
based limits 5.00 [ICRA]D, Downgraded from
[ICRA]C
Short term: Non-
fund based limits 1.00 [ICRA]D, Downgraded from
[ICRA]A4
Unallocated 1.83 [ICRA]D, Downgraded from
[ICRA]C/A4
Rationale
The revision in rating factors in the delays in debt obligations,
on account of constrained liquidity position emanating from
elongated receivables and piled up of inventory.
Key rating drivers
* Continuous delay in debt servicing along with overdrawals from
cash credit account: There have been continuous delay in
repayment of interest obligation of cash credit account in the
recent past owing to high working capital requirements emanating
from elongated receivables and piled up of inventory.
Nijanand Pipes and Fittings Pvt. Ltd. (NPAFPL) was incorporated
in April 2008. It manufactures polyvinylchloride (PVC) pipes and
fittings, Chlorinated polyvinyl chloride (CPVC), Rigid Polyvinyl
Chloride (RPVC) pipes, Soil, Waste & Rain (SWR) pipes and
garden/suction pipes, which are largely used in agriculture and
construction sectors. The manufacturing facility of the company
is located at Rajkot, Gujarat, and is currently equipped with a
cumulative capacity of 24,000 MTPA. NPFPL is promoted by Mr.
Ishvarlal S Nodhanvadra, Mr. Nirav Nodhanvadra, Mr. Saileshbhai G
Vadodaria and Mr. Hasmukhbhai Patel.
ORB ENERGY: ICRA Lowers Rating on US$2.25MM LT Loan to 'D'
----------------------------------------------------------
ICRA has revised the long-term rating to [ICRA]D from [ICRA]B
assigned to the INR6.50-crore and US$2.25 million Non Convertible
Debenture Programmes of Orb Energy Private Limited.
Facilities Amount Ratings
---------- ------ -------
Long Term-Non INR6.50cr [ICRA]D; Revised from
Convertible [ICRA]B (Stable)
Debenture
Long Term-Non US$2.25MM [ICRA]D; Revised from
Convertible [ICRA]B
Debenture
Rationale
The rating revision reflects the deferment in the servicing of
debt servicing obligations falling due for payment on
November 3, 2017 owing to stretched liquidity position. ICRA
notes that this deferment of payments has been done with prior
consent from the debenture holder. The stretched liquidity
position of the company was on account of weak operational and
financial performance of the company over the last two years,
coupled with delay in proposed equity infusion from the parent
company. The company has largely remained dependant on its parent
company for infusion of funds for repayment of debt obligations,
working capital and capital expenditure in the past. The
company's weak financial profile, as reflected by successive
years of net losses, has been on account of the company's fixed
costs having remained high vis-a-vis its revenues. The losses
have also resulted in erosion of the net worth of the company.
The operations remain constrained by intense competition from
other established domestic players exerting pricing pressure and
limiting scope for margin expansion. ICRA also takes notes of
susceptibility of the margins to variations in the prices of raw
materials and traded goods.
Key rating drivers
Credit strengths
* Established Track Record: The Company has an established track
record in executing solar photo-voltaic and solar thermal
projects for various reputed customers across the industries.
Supported by strong experience and stable execution, the company
has witnessed repeat orders from many of its customers.
* In-house design and installation team: The company has an in-
house design and installation team which looks into various
technical aspects of installation and post-installation services
and undertakes projects of various complexities. The company has
experienced and qualified technical teams in various domains such
as manufacturing, system integration, R&D, sales and marketing,
finance etc.
* Healthy revenue booking and order book during FY2018: The
Company has registered revenue of INR30.00 crore till
September 30, 2017 and has an outstanding order book of INR14.50
crore as on October 31, 2017.
Credit weaknesses
* Weakening of financial profile: The Company's financial profile
stood subdued as reflected by successive years of net losses
owing to company's fixed costs having remained high vis-a-vis the
turnover. With delay in infusion of funds from the promoter, the
company has been forced to defer the servicing of its NCDs.
* Margins susceptible to volatility in price of raw materials,
traded goods and foreign exchange fluctuations: The Company's
margins are exposed to variations in the prices of raw materials
and traded goods. Also, the company is exposed to foreign
currency fluctuation risk as it imports around ~20% of the raw
materials (solar cells, glass tubes) from China and Taiwan in
absence of any hedging policy in place.
* High intensity of competition: The Company faces competition
from other established domestic players exerting pricing pressure
and limiting scope for margin expansion. However, the company's
established track record of project execution, quality products
and after sales service insulates it from the competition to an
extent.
Orb Energy Private Limited was incorporated in 2006, by Mr.
Damian Miller and Mr. N P Ramesh. The company is a 99.99 per cent
subsidiary of Orb Energy Pte Ltd, Singapore. The company is
primarily involved in manufacturing and installation of solar
photovoltaic systems (Off-grid/on-grid) and solar water heating
systems for residential, industrial and institutional use. In
addition to this, the company also designs, manufactures and
sells products in solar home lighting and street lighting
segments. The company has presence in Karnataka, Andhra Pradesh,
Kerala, Tamil Nadu and Maharashtra through 40 direct-run and
franchised branches. The company has rolled out an in-house
credit programme to fund its commercial/institutional customers
and franchises. The company has also set up a PV module
manufacturing unit in Bangalore with an installed capacity of 50
MW which started commercial production in April 2017.
RAHIL MULTIPACK: CARE Assigns 'B' Rating to INR5.72cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of of
Rahil Multipack (RAHIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term bank
Facilities 5.72 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of RAHIL are primarily
constrained on account of its small scale of operations coupled
with netloss, leveraged capital structure, weak debt coverage
indicators, moderate liquidity position during FY17 (refers to
the period April 1 to March 31). The ratings are also constrained
due to its partnership nature of constitution, presence in highly
competitive packing industry along with susceptibility of its
operating margins to volatility in raw material prices. The
ratings, however, derive strength from experienced promoters in
the similar line of business.
Going forward, RAHIL's ability to increase its scale of
operations along with improvement in profitability, capital
structure and better working capital management will be the key
rating sensitivities.
Key Rating Weaknesses
Small scale of operations coupled with net loss: The scale of
operations of the firm remained small. During FY17 the firm
hasregistered growth of 41.10% but remained small at INR10.87
crore as compared to previous year. Further, during FY17, the
PBILDT margin has marginally declined by 23 bps and stood at
7.61% during FY17, further on the back of high depreciation and
interest cost, the firm has reported net loss.
Leveraged capital structure and weak debt coverage indicators:
The capital structure stood leveraged marked by an overall
gearing ratio stood at 6.88x as on March 31, 2017 as compared to
2.23x as on March 31, 2016 on account of increase in total debt
along with decrease in net worth during FY17. The debt coverage
indicators of the firm also stood weak marked by total debt to
GCA stood at 53.17 years as on March 31, 2017 as against 10.25
years as on March 31, 2016 due to increase in debt level and
lower cash accruals of the firm. Further, Interest coverage of
the firm also remained weak at 1.18 times during FY17 as compared
to 1.98 times during FY16 on account of higher interest cost of
the firm.
Moderate liquidity position along with elongated operating cycle:
The liquidity position of the firm deteriorated but remained
moderate marked by current ratio and quick ratio of 1.31 times
and 0.85 times as on March 31, 2017 as against 1.87 times and
1.39 times respectively as on March 31, 2016. Operating cycle of
the firm elongated and stood at 85 days during FY17 as compared
to 58 days during FY16 on account of increase in inventory and
collection days of the firm.
Partnership nature of constitution: Being a partnership firm,
RAHIL is exposed to inherent risk of partners' capital being
withdrawn at time of personal contingency, and firm being
dissolved upon the death/retirement/insolvency of partners.
Presence in a highly competitive packing industry: RAHIL operates
in a highly competitive segment of the packing material industry
marked by low entry barriers, presence of large number of
organized and unorganized players as well as likely new entrants.
Susceptibility of operating margins to volatility in raw material
costs: A price of raw material i.e. plastic granules is market
driven and expected to put pressure on the margins of packing
material manufacturers. The profitability of RAHIL remains
exposed to volatile plastic granules price.
Key rating strengths
Experienced promoters: The key promoters of RAHIL are Mr
Maganbhai Kagathara, Mr Mayurbhai Kagathara and Mrs Hetalben
Kagathara. All the partners have experience of more than a decade
in the same line of business.
Wankaner (Gujarat) based, RAHIL was established as a partnership
firm by Mr Maganbhai Kagathara, Mr Mayurbhai Kagathara and Mrs
Hetalben Kagathara during August, 2013. RAHIL is engaged into the
manufacturing of packing materials i.e. stretch film, air bubble
film, air bubble bag and air bubble roll etc. Its manufacturing
facility is located at Rangpar (Wankaner) with an installed
capacity of 2040 metric tonne per annum as on March 31, 2017.
RAJ AGRO: ICRA Moves 'B' Rating to Not Cooperating Category
-----------------------------------------------------------
ICRA has moved the long-term rating on the INR5.86-crore bank
facilities of Raj Agro to the 'Issuer Not Co-operating' category.
The long-term rating is now denoted as "[ICRA]B(Stable); ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 5.86 [ICRA]B(Stable); ISSUER NOT
CO-OPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no updated information on the company's
performance since the time it was last rated in April 2016. The
last rating exercise was based on detailed information. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as it
does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA. However, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As a part of its process and in accordance with its rating
agreement with RA, ICRA has been seeking information from the
entity so as to monitor its performance. Despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Stable demand outlook for the rice industry given the healthy
demand in domestic and international markets
* Easy availability of paddy in local wholesale markets
Credit weaknesses
* Intense competition in the industry limits pricing flexibility
* Modest financial risk profile marked by moderate profitability,
high gearing and weak coverage indicators.
* Agro-climatic risks such as adverse weather conditions that can
affect the availability of paddy
RA was established in 2009 and is involved in milling and sorting
of non-Basmati rice. The company's unit at Sarriya-Gorakhpur (UP)
has an installed capacity of 8 tonne/hour. The firm caters to
both domestic and export customers. The day-to-day operations of
the firm are managed by Mr. Ranjan Gupta.
RSG DEVELOPERS: ICRA Reaffirms B Rating on INR5.5cr Loan
--------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B to the
INR7.5-crore fund-based facilities of RSG Developers Pvt Ltd. The
outlook on the long-term rating is 'stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based limits 5.5 [ICRA]B (Stable); Reaffirmed
Non-fund based limits 2.0 [ICRA]B (Stable); Reaffirmed
Rationale
The rating reaffirmation favourably factors in the improvement in
the company's order book which provides revenue visibility for
the medium term. The rating continues to factor in the RSG's
experienced promoters and its long track record in the
construction.
The rating, however, is constrained by the deterioration in RSG's
working capital position due to build up of aged receivables
especially from two clients and significant inventory piled up
from two stuck orders. Consequently, the company's limit
utilisation has continued to remain high, putting pressure on
liquidity. However ICRA notes that the promoters have been
supporting the company's funding position by infusing unsecured
loans. The rating continues to factor in the cyclical nature of
real estate development as well as RSG's exposure to investment
in group projects.
Going forward, the company's ability to speed up the execution in
the backdrop of substantial order book build up while improving
its working capital cycle will be the key rating sensitivities.
Key rating drivers
Credit strengths
* Long track record of promoter in construction business: The
company has been executing construction projects especially in
office and commercial space for over one decade mainly in and
around Noida.
* Good order inflows in the last one year lead to good revenue
visibility in the medium term: Over the last 3FYs, the company
has not received any major orders. However, in January, 2017 the
company has received one order in FY2017 and 1HFY2018 amounting
to INR47.8 crore and INR87.5 crore respectively resulting in
healthy revenue visibility, though concentrated towards two
orders. The company has achieved INR17 crore till September 30,
2017.
Credit weaknesses
* Working capital situation remains stretched because of
significant build up of receivables particularly from two
executed projects: RSG's working capital intensity continued to
deteriorate due to high receivables and inventory cycle with
lower creditors support in FY2017. The significant build up in
receivables, particularly in more than six months debtors is a
key rating concern. Majority of these receivables are from two
stuck orders, which was completed in the past. Further the
inventory remained high on the back of piled up raw material
inventory from one project and unbilled inventory in projects
which are currently ongoing. ICRA notes that part of this has now
been executed and booked as revenue. Further, the elongation in
working capital cycle has been funded by unsecured loans from the
promoters.
* Cyclicality in real estate sector and investments made in group
projects: The company is majorly executing projects in the real
estate segment which has exposed the order book to the cyclical
nature of the industry. ICRA also notes that the company has made
large investments to the other group projects and as on Mar 31,
2017 INR21.15 crore is towards investments.
RSG Developers Private Limited (RSG) was founded in 2004 by Mr.
Rajeev Sharma. The company is based out of Noida (Uttar Pradesh)
and is initially involved in civil construction business of
multiple roads and building construction projects for public
sector clients. However, currently the company is engaged into
construction of residential and commercial projects for private
sector client. Apart from construction the company also
undertakes operations and maintenance projects.
In FY2017, on a provisional basis, the company reported a net
profit of INR0.76 crore on an operating income of INR21.75 crore,
as compared to a net profit of INR0.26 crore on an operating
income of INR21.95 crore in the previous year.
S G S MOTORS: Ind-Ra Affirms 'BB+'/Stable Long-Term Issuer Rating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed S.G.S Motors Pvt
Ltd's (SMPL) Long-Term Issuer Rating at 'IND BB+'. The Outlook is
Stable. The instruments-wise rating actions are:
-- INR300 mil. (increased from INR150 mil.) Fund-based working
capital limit affirmed with IND BB+/Stable rating; and
-- INR20 mil. Non-fund-based working capital limit affirmed with
IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects SMPL's continued moderate scale of
operations and modest credit metrics. In FY17, revenue was
INR2,080 million (FY16: INR2,742 million), interest coverage
(operating EBITDA/gross interest expense) was 1.43x (2.03x) and
leverage (total adjusted net debt/operating EBITDAR) was 8.04x
(6.61x). The revenue decline in FY17 was due to a 32% yoy fall in
the number of vehicles sold to 1,592. The deterioration in credit
metrics was primarily due to a fall in EBITDA (FY16: INR47
million, FY17: INR71 million). Ind-Ra expects SMPL to register
revenue growth for FY18, given the company had booked INR1,915
million in revenue for April-October 2017.
The ratings continue to reflect SMPL's tight liquidity, indicated
by an average maximum working capital utilisation of 75% for the
12 months ended October 2017.
The ratings, however, continue to benefit from the fact that SMPL
is the sole authorised dealer of Tata Motors Limited's commercial
vehicles in Gwalior and six other surrounding locations in Madhya
Pradesh. In addition, the ratings continue to benefit from the
promoter's over six decades of experience in running vehicle
showrooms and service stations.
RATING SENSITIVITIES
Negative: Deterioration in interest coverage due to revenue or
EBITDA margin contraction on a sustained basis will be negative
for the ratings.
Positive: Substantial revenue growth leading to an improvement in
credit metrics on a sustained basis will be positive for the
ratings.
COMPANY PROFILE
SMPL was initially incorporated as SG Motors, a partnership firm,
in August 1989 by the Sanghi Group of Indore. Later, it was
reconstituted as a private limited company and renamed SMPL.
The company has been engaged in automobile dealership since 1954.
SANDOR LIFESCIENCES: ICRA Reaffirms B- Rating on INR35cr Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating at [ICRA]B- to the
INR35.00 crore Non Convertible Debentures (NCD) programme of
Sandor Lifesciences Pvt. Ltd. The outlook on the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non Convertible
Debentures 35.00 [ICRA]B- (Stable); reaffirmed
Rationale
The rating reaffirmation continues to be constrained by small
scale of operations with revenues of INR13.82 crore in FY2017;
weak financial risk profile characterised by operating losses for
the past four years, high gearing and negative coverage
indicators during FY2017 and tight liquidity position as
reflected by high utilization of working capital limits owing to
high receivables. The company has taken INR35.00 crore zero
coupon NCDs in January 2016 to purchase ~31% stake in Sandor
Medicaids Pvt. Ltd (SMPL) and repay promoters' unsecured loans.
ICRA notes that the NCD redemption in FY2021 is contingent upon
the promoter plans of diluting equity in group companies or
refinancing of these NCD's including the accrued interest amount.
This risk is partly mitigated by the demonstrated ability of the
promoter to raise funds as witnessed during the last two years;
the group raised INR41.70 crore from investors for investments
into SMPL and SLPL and sold SMPL stake in Sandor Nephro Services
Pvt. Ltd to Fresenius Medical Care for INR33.38 crore in
September 2016.
The rating, however, derives comfort from long experience of
promoters in the medical drug distribution; exclusive dealership
of medical devices and medicines manufactured by reputed
pharmaceutical companies including Genzyme Corporation (Part of
Sanofi group), Abbot Point of Care under the group company, SMPL
and reputed customer profile with research done for institutes
like National Dairy Development Board, Council of Scientific and
National Research, Baif Development Research Foundation during
FY2017.
Going forward, the ability of the company to increase the scale
of operations, improve margins and effectively manage working
capital requirements would be the key rating sensitivity from the
credit perspective.
Key rating drivers
Credit strengths
* Experience of promoters in the medical diagnostic industry: The
promoters have over two decades of experience in the medical drug
distribution business through group company SMPL. Further, SLPL
has established relationships with research institutions and
hospitals as reflected by repeat orders/work done for them in the
past five years.
* Sandor group company has exclusive dealership of medical drugs
and devices: SLPL holds 28.15% shareholding in SMPL, which is
exclusive supplier for supply of drug and medical devices for
Genzyme (Sanofi Group) for the last 13 years; also exclusive
dealer for sales, marketing and distribution for Abbott point of
care, etc. for the past few years.
Credit weaknesses
* Small scale of operations: The scale of operations of the
company remained small with revenues of INR13.82 crore during
FY2017, although the same increased by 36% from INR10.18 crore in
FY2016 backed by increased revenues from testing charges and
research work.
* High operating losses: The company has been incurring operating
losses over the last four years which are funded by way of
unsecured loans from promoters.
* Weak financial risk profile: The gearing of the company
remained high at 16.85 times as on March 31, 2017 owing to low
net worth levels. The net worth is eroded due to net losses over
the years. The coverage indicators of the company remained weak
with interest coverage of -7.10 times and, NCA/Debt at -25.65%
during FY2017.
Sandor Lifesciences Private Limited (SLPL) is promoted by Mr.
Rajeev Sindhi, which provides services in medical genetics,
cellular biology, protemics, genomics etc. The company is also a
provider of trained scientists and research assistants to Centre
for DNA fingerprinting and diagnostics, operated by the
Department of Biotechnology, Ministry of Science and Technology
and University of Delhi. The company also provides Bio repository
services following standard protocols for inventory and tracking
solutions. Also, R&D Department of SLPL is recognized by
Department of Scientific and Industrial Research (DSIR).
Currently, there are over 120 employees with post graduate,
doctorate and post doctorate qualifications from various
Universities.
SHREE GOVARDHAN: ICRA Reaffirms B+ Rating on INR10cr Loan
---------------------------------------------------------
ICRA has reaffirmed the long-term rating on the INR10.00-crore
fund-based facilities of Shree Govardhan Steels Private Limited
at [ICRA]B+. The outlook on the rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 10.00 [ICRA]B+(Stable); reaffirmed
Rationale
The rating reaffirmation factors in the decline in sales in
FY2017 as well as increased working capital intensity although
these factors were accompanied by improved gearing levels and
better operating margins.
ICRA continues to take into account the company's small scale of
operations with moderate capacity utilisation of the plant, which
impacts business returns. ICRA's rating also continues to be
subdued on account of the fragmented and competitive nature of
the iron and steel industry on account of low technological
complexity of the manufacturing process and vulnerability to
variation in the prices of raw materials. However, the rating
continues to derive comfort from the experienced promoters with a
long track record in the iron and steel industry. The rating also
continues to draw comfort from the company's established
relationship with its customers, which enables it to secure
repeat orders from the same.
Going forward, the company's ability to improve its scale of
operations in a profitable manner, enhance its capital structure
and maintain an optimal working capital intensity will remain the
key rating sensitivities.
Key rating drivers
Credit strengths
* Experienced management lends competitive edge: Though SGSPL was
set up only in 2010, its management has an experience of more
than a decade in the iron and steel industry. Over the years, the
promoters have gained a thorough knowledge of the markets. Such a
long presence in the industry has helped the company in
establishing relationships with several suppliers and customers.
* Established relationship with key customers ensures repeat
orders: The customers of the firm include traders and
manufacturers of different types of iron products used in
construction. The company has well-established relationships with
several customers as is demonstrated by repeat orders from the
same.
Credit weaknesses
* Exposure to price risk as inventory procurement is not backed
by orders from customers: SGSPL typically maintains an inventory
of around 70-90 days and its product procurement is usually not
order backed. Furthermore, the inventory levels are occasionally
increased if the management expects raw material prices to
increase in the near future. This exposes SGSPL's profitability
to adverse movements in raw material prices. However, the same
being an industry practice, the company is generally able to pass
on some increase in raw material prices to its customers.
* Intense competition due to low entry barriers: The iron and
steel manufacturing industry is marked by a large number of
participants across different levels of the value chain. SGSPL is
a small-sized player in the industry. Furthermore, the company is
involved in manufacturing iron bars and angles, which entails
relatively low value addition. This segment of the industry is
highly fragmented, given the low entry barriers as well as
relatively low technical and capital intensity, which limits the
pricing flexibility of the participants, including SGSPL.
SGSPL, which was incorporated in 2010, has its manufacturing
facility at Kasganj in Uttar Pradesh. The company is primarily
involved in manufacturing iron angles with an installed capacity
of 30,000 tonne per annum. The company is managed by Mr. Ashish
Agrawal and Mr. Gaurav Agarwal.
SGSPL, on a provisional basis, reported a net profit of INR0.18
crore on an OI of INR28.04 crore in FY2017 compared with a net
profit of INR0.15 crore on an OI of INR31.18 crore in the
previous year.
SHRI UMA: CARE Reaffirms B+ Rating on INR6cr LT Loan
----------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shri Uma Plastic Industries Private Limited (SUPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.00 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 0.70 CARE A4 Assigned
Detailed Rationale & Key rating Drivers
The rating of SUPL continues to remain constrained on account of
modest scale of operations, thin profitability margins leveraged
capital structure with weak debt coverage indicators, working
capital intensive nature of operations and susceptibility of the
company's profitability to adverse fluctuations in the raw
material prices.
The rating, however, derives strength from the long standing
experience of promoters along with established track record of
operations of more than three decades in the packaging industry.
The ability of the company to increase its scale of operations
while improving profitability along with improvement in the
solvency position and efficient working capital management are
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Continuous Increase in Total Operating Income (TOI) but remained
small: The scale of operations of the company as indicated by TOI
grew healthy at a Compounded Annual Growth Rate (CAGR) of around
21.31% in the last three financial years from INR9.08 crore in
FY15 to INR13.37 crore in FY17 but remained small, attributed to
increase in export of products by the company. During FY17, TOI
witnessed a growth of around 18.98% y-o-y.
Moderate profitability margins: The profitability margins stood
moderate with PBILDT and PAT margin of 9.32% and 0.27% in FY17 as
against 10.63% and 0.25% in FY16 respectively.
The PBILDT margin has shown a declining trend in past three
financial years ended on March 31, 2017. In FY17, the PBILDT
margin declined by 131 bps over FY16 mainly on account of
increase in employee cost which is offset to an extent by
decrease in material cost. Further, with increase in interest and
finance expenses in FY17, the PAT margin dipped marginally by 3
bps but remained thin.
Leveraged capital structure with weak Debt Coverage Indicators:
The capital structure of the company remained leveraged with an
overall gearing of 4.48 times as on March 31, 2017, deteriorated
marginally from 4.45 times as on March 31, 2016 mainly on account
of higher utilization of its working capital bank borrowings
along with infusion of unsecured loans in FY17. The debt coverage
indicators of GIPL stood weak with total debt to GCA of 16.72
times as on March 31, 2017, improved marginally from 17.01 times
as on March 31, 2016 due to marginal increase of 6.65% in GCA
level, further the interest coverage remained low at 1.54 times
in FY17.
Moderate Liquidity Position: The working capital cycle of the
company stood comfortable at 43 days in FY17, however increased
drastically from 6 days in FY16 mainly due to increase in
collection period. Further, the cash flow from operating
activities also declined from cash flow of INR0.68 crore in FY16
to INR0.51 crore in FY17 due to increase in working capital gap
and marginal improvement in profitability. It utilizes more than
95% of its working capital bank borrowings during last 12-month
ended September, 2017. Furthermore, the liquidity ratios of the
company also stood moderate with current ratio and quick ratio of
1.12 times and 0.70 times respectively as on March 31, 2017.
Key Rating Strengths
Experienced promoters with long track record of operations in the
packaging industry: Mr. Jitendra Raj Lodha, the key promoter, has
an extensive experience in this domain of more than three decade
and looks after the overall management of the company. He is
assisted by his wife, Mrs. Neeru Lodha, who has more than two
decade of experience in the industry and is involved in taking
the strategic decision of the company. Further, the directors are
supported by a team of qualified managerial personnel having long
standing experience of around three decades in the industry. Due
to long presence in the industry, SUPL has developed market for
its products and has established good relations with its
customers resulting in continuous flow of repeat orders.
Jodhpur (Rajasthan) based SUPL was initially formed in 1981 as a
partnership firm in the name of M/s Shri Uma Plastic Industries
by 'Lodha family'. Subsequently, in 2005, the constitution of the
firm was changed to private limited and the company assumed its
present name with management being headed by its key promoter,
Mr. Jitendra Raj Lodha. SUPL is primarily engaged in the business
of manufacturing of flexible multilayer rolls and pouches
customised according to user specification which find its
application in various industries ranging from cosmetics to food
industry. Further, the company is also engaged in the trading of
flexible multilayer rolls and plastic pouches. The company
operates from its sole manufacturing facility located at Jodhpur
(Rajasthan) having an installed capacity of 1200 Metric Tonnes
Per Annum (MTPA) as on March 31, 2017.
SUPL mainly caters to the domestic market and supplies its
products directly all over India to diverse units with sales
concentrated predominantly in Rajasthan, Madhya Pradesh and
Karnataka. It procures its key raw material i.e co-extruder sheet
as well as polyester & met film from local Jodhpur market and
Northern part of India.
SIDWIN FABRIC: ICRA Assigns B+ Rating to INR8.53cr Loan
-------------------------------------------------------
ICRA has assigned the long-term rating of [ICRA]B+ on the
INR8.53-crore (enhanced from INR7.00 crore) enhanced fund-based
limit of Sidwin Fabric Private Limited. ICRA has also assigned
the short-term rating of [ICRA]A4 to the INR1.50-crore non-fund
based bank facilities of SFPL. The outlook on the long-term
rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limit 8.53 [ICRA]B+(Stable)
Assigned/Outstanding
Non-fund Based Limit 1.50 [ICRA]A4; Assigned
Rationale
The ratings action factor in the favorable demand prospects of
non-woven fabrics due to their advantages over traditional
products as well as the low industry concentration risks on
account of diverse application of products manufactured by the
company. Further, the ratings positively consider the favourable
growth prospects in terms of diversification and value addition
in the current product line.
The ratings, however, continue to be constrained by the low
bargaining power with suppliers in terms of the credit period.
SFPL's ability to effectively manage the receivables and
inventory position remains crucial. Furthermore, the ratings are
also constrained by the leveraged capital structure on account of
the high working capital requirement. Also, going forward, due to
the proposed capex, the capital structure is expected to remain
stretched. The ratings also take into account the company's weak
coverage indicators on account of moderate profitability and high
finance charges.
Key rating drivers
Credit strengths
* Favorable demand prospects of non-woven fabrics and low
industry concentration risks: The cost effectiveness, durability,
light weight, less labor and power intensive nature are some of
the advantages of non-woven fabrics. Also non-woven fabrics have
diversified applications such as medical and hygiene products,
agricultural coverings, industrial uses etc.
* Favouable growth prospects in terms of diversification and
value addition: The company is planning to diversify into new
products such as disposable bed sheets and fruit cover bags in
the current fiscal.
Credit weaknesses
* Low bargaining power with suppliers: Polypropylene granules is
the basic raw material required for manufacturing of non-woven
fabric and is mainly sourced from the Reliance Industries Limited
and the Indian Oil Corporation, leading to a low bargaining power
for the company.
* Leveraged capital structure on account of high working capital
requirement: The gearing of the company remains high at 1.49
times in FY2017 due to the high working capital requirement. Also
due to the proposed debt funded capex, the capital structure is
expected to remain stretched.
* Coverage indicators remain weak: The coverage indicators remain
weak with the DSCR at 0.95 times, Total Debt/OPBDITA at 2.81
times mainly on account of high debt and moderate profitability.
Incorporated in 2011, Sidwin Fabric Private Limited (SFPL) is
involved in the manufacturing of non-woven polypropylene fabrics.
The company commenced commercial production from June, 2012, from
its manufacturing facility located in Himmatnagar. The annual
installed capacity of the unit is dependent on the linear
density, expressed in gram per square metre (GSM) of the fabric
being manufactured, which is around 2100 MTPA. With the existing
machinery setup, it can manufacture non-woven fabrics of GSM
ranging from 9-200 and having width of 3.2 metre. Non-woven
fabrics have varied applications. SFPL supplies its products
mainly for the preparation of medical and hygiene products,
agricultural coverings and carry bags as well as other industrial
uses.
SRI RAM INDUSTRIES: ICRA Reaffirms B+ Rating on INR5cr LT Loan
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating at [ICRA]B+ for the
INR2.50-crore term loans and the INR5.00-crore cash-credit
facility of Sri Ram Industries. The outlook on the long-term
rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Term
Loan 2.50 [ICRA]B+ (Stable); Reaffirmed
Long-term-Fund-
based Cash Credit 5.00 [ICRA]B+ (Stable); Reaffirmed
Rationale
The rating reaffirmation takes into account the firm's moderate
scale of operations and the high working-capital intensive nature
of operations, leading to reliance on external borrowings,
resulting in high gearing of 4.64 times as on March 31, 2017
(albeit improved from 5.21 times as on March 31, 2016) and
moderate coverage indicators. The rating also factors in the
intensely competitive nature of the rice industry with the
presence of several large and small-scale players which constrain
volumes and pricing flexibility of rice millers. The rating also
takes into account the susceptibility of revenues and margins to
inherent agro-climatic risks and changes in Government policies,
which impact the availability and the price of paddy. The rating
also takes note of the risks inherent in the partnership nature
of the firm such as limited ability to raise funds, withdrawal of
capital, etc. The rating, however, continues to derive comfort
from the healthy revenue growth post capacity expansion in FY2015
and the long experience of the promoters in the rice industry.
The rating also factor in the firm's proximity to paddy-growing
areas in Raichur and nearby districts, in turn, facilitating easy
procurement of raw materials, and the stable demand outlook as
rice is an important part of the staple Indian diet. Going
forward, the firm's ability to maintain healthy revenue growth
and improve profitability, while efficiently managing working-
capital requirements would remain the key rating sensitivities.
Key rating drivers
Credit strengths
* Long experience of promoters in the rice-milling business:
Incorporated in 2007, SRI is a partnership firm involved in the
processing of raw rice and parboiled rice. The firm's milling
unit at Manvi in Raichur district has an installed capacity of 4
MT per hour of milling. The promoters have been involved in the
rice-milling business for over two decades. The sale of whole
rice contributes to a major portion to revenues.
* Proximity to rice-growing areas: The firm's plant is located at
Manvi, which is surrounded by areas such as Raichur, Sindhnoor
and Gangavathi where a major part of the paddy is cultivated.
This results in low transportation cost for the firm and easy
availability of paddy.
Credit weaknesses
* Modest scale of operations with high gearing and moderate
coverage indicators: The overall scale of operations continues to
remain moderate at INR34.66 crore, albeit improvement over the
past two years, resulting in limited operational and financial
flexibility. The working-capital intensive nature of operations
lead to high reliance on external working-capital borrowings,
resulting in high debt levels, which, coupled with low net worth
resulted in high gearing of 4.64 times as on March 31, 2017 and
moderate coverage indicators.
* Intense competition marked by presence of a large number of
players: Owing to low entry barriers with readily-available
technology and proximity to rice-cultivating belt, there are more
than 90 rice-milling units in and around Raichur, leading to
intense competition for paddy procurement, in turn affecting
volumes and pricing flexibility of rice millers like SRI.
* Inherent agro-climatic risks and vulnerability to changes in
Government policies: Being in the agricultural business, industry
players continue to face inherent risks such as unfavourable
monsoons, availability of raw materials at reasonable prices,
epidemics in paddy crop or shift of farmers to other cash crops
and cyclicality, as well as changes in Government regulations.
Incorporated in 2007, Sri Ram Industries is a partnership firm
involved in the milling of paddy and produces raw rice. The
firm's major products include boiled rice, raw rice, bran, broken
rice and husk. The firm has a milling unit at Manvi in Raichur
district, Karnataka with an installed milling capacity of 4 MT
per hour. The firm's plant is spread over 3.5 acres with a
storage capacity of 80,000 bags (75 kg each) of paddy and 250 MT
of rice. The firm sells raw rice under eight brands namely 'KDM',
'Ram', 'Shilpa', 'RSK', 'MVM', 'AKS', 'VTC' and 'Double Parrot'.
Also, the firm sells broken rice under two brands namely 'Rabbit'
and 'Helicopter'.
In FY2017, the firm reported a net profit of INR0.51 crore on an
operating income of INR34.66 crore compared to a net profit of
INR0.40 crore on an operating income of INR29.79 crore in FY2016.
SRI VENKATA: ICRA Reaffirms B+ Rating on INR10.75cr Cash Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating at [ICRA]B+ to the
INR10.75-crore cash credit, INR0.11-crore term loans, INR1.00 non
fun-based limits and INR3.14 crore unallocated limits of
Sri Venkata Srinivasa Raw & Boiled Rice Mill (SVSRBRM). The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 10.75 [ICRA]B+ (Stable); Reaffirmed
Fund-based-Term
Loan 0.11 [ICRA]B+ (Stable); Reaffirmed
Non Fund-Based 1.00 [ICRA]B+ (Stable); Reaffirmed
Unallocated 3.14 [ICRA]B+ (Stable); Reaffirmed
Rationale
The rating factors in SVSRBRM's weak financial profile
characterized by high gearing as on March 31, 2017 and weak
coverage indicators for FY2017. The rating is further constrained
by modest scale of operations, high working capital intensity and
highly fragmented and competitive nature of the rice-milling
industry which limit the firm's ability to pass on the hike in
input costs to the customers. ICRA notes that the performance of
the industry depends on the government's minimum support price
(MSP) policy and also the agro-climatic risks which impact the
availability of paddy. The rating is also constrained by the
risks associated with partnership nature of the firm. The rating,
however, draws comfort from the long track record of the
promoters in the rice mill business and the strategic location of
mill which results in easy availability of paddy. Moreover, ICRA
also takes into account the favorable demand prospects for rice
industry, with rice being a staple food grain and India's
position as world's second largest producer and consumer of rice.
Going forward, the firm's ability to scale up operations, improve
margins, and manage working capital requirements would be the key
rating sensitivity from the credit perspective.
Key rating drivers
Credit Strengths
* Significant experience of the management: The management has
more than two decades years of experience in the rice milling
industry and has an established relationship with customers.
* Favorable location of the unit: The mill is located in Nellore,
Andhra Pradesh, a major paddy growing region. All the paddy
requirements are met locally through direct purchases from
farmers and from traders in some months.
* Favorable demand prospects for rice: Demand prospects of the
industry are expected to remain good as rice is a staple food
grain and India is the world's second largest producer and
consumer of rice.
Credit Weaknesses
* Weak financial profile: The firm has modest scale of operations
with revenues of INR48.25 crore in FY2017. The firm's financial
profile is characterised by high gearing of 2.58 times as on
March 31, 2017 and stretched coverage indicators with an interest
coverage ratio of 1.22 times, Total Debt/OPBITDA of 6.26 times
and NCA/total debt ratio of 3% for FY 2017.
* High working capital intensity: The working capital intensity
of the company has been high at 34% in FY2017 owing to high
inventory holdings. The inventory days increased to 101 as on
March 31, 2017 from 73 as on March 31, 2016 owing to high
procurement during the end of the year.
* Highly competitive nature of industry: Rice milling industry is
highly competitive with presence of a large number of organised
and unorganised players, impacting the margins
* Industry susceptible to agro-climatic risks: The rice-milling
industry is susceptible to agro-climatic risks, which can affect
the availability of the paddy in adverse weather conditions.
* Partnership nature of the firm: SVSRBRM is exposed to risks
associated with partnership firms including capital withdrawal
risk.
Sri Venkata Srinivasa Raw & Boiled Rice Mill (SVSRBRM) was
established as a partnership firm in 1986 by Mr. Srinivasa Rao,
who posses more than 20 years of experience in rice industry. The
firm is situated in the Nellore district of Andhra Pradesh and is
engaged in milling of paddy to produce non-basmati rice. It has
an installed production capacity of 6 tonnes per hour.
SRI VINAYAKA: CARE Assigns 'B' Rating to INR2.0cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of of Sri
Vinayaka Timbers (SVT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2.00 CARE B; Stable Assigned
Short-term Bank
Facilities 8.50 CARE A4; Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SVT are tempered
by small scale of operations with fluctuating total operating
income and profitability margins along with weak debt coverage
indicators. The ratings are further tempered by working capital
intensive nature of operations and constitution of entity as a
partnership firm with inherent risk of withdrawal of capital. The
ratings are, however, underpinned by established track record of
the entity and long experience of partners in the timber trading
industry, comfortable capital structure with stable outlook for
timber industry.
Going forward, ability of the firm to increase its scale of
operations and maintain profitability margins in competitive
environment, ability of the firm to maintain its capital
structure while managing the working capital requirements
effectively would be key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Small scale of operations along with fluctuating total operating
income and profitability margins: Being in operation for almost
two decades now, the scale of operation of the firm remains
small. The total operating income of the firm has been declining
during the review period from INR13.64 crore in FY15 to INR9.79
crore in FY17 (CA Certified Provisional) due to less orders from
the customers and existence of rivalry competition within the
market.
Furthermore, the firm has moderate PBILDT margins during the
review period. The PBILDT margin of the firm decreased from 4.10%
in FY15 3.82% in FY16 due to decrease in PBILDT levels and the
same has been improved to 4.38% in FY17 (CA Certified
Provisional) due to decrease in other expenses such as fire
insurance, license renewal fees, postage & courier, printing &
stationery and telephone & mobile charges. Moreover, the PAT
margins of the firm remained thin and declining during the review
period. The PAT margin of the firm declined from 0.76% in FY15 to
0.73% in FY17 (CA Certified Provisional) on account of
fluctuation in interest cost and increase in depreciation costs.
Weak debt coverage indicators: The debt coverage indicators of
the firm is seen fluctuating and remained weak in FY17 marked by
total debt/GCA of 48.15x in FY15 which deteriorated to 67.42x in
FY16 due to increase in total debt levels. However, the same
improved to 41.89x in FY17 at the back of decrease in debt
levels. Furthermore, the PBILDT interest coverage ratio, was also
seen fluctuating due to fluctuating PBILDT levels and interest
cost. The same stood at 1.45x in FY17 (CA Certified Provisional)
as against 1.54x in FY16.
Working capital intensive nature of operations: The firm has
working capital intensive nature of operations. The firm receives
the payment from its customers on within 120 days and avails the
credit period from its customers up to 30 days. The firm has to
maintain enough inventory levels of 60 to 70 days to meet the
customer requirement as on need basis. The average utilization of
working capital of the firm stood below 50 per cent in the last
12 months ending September 30, 2017.
Highly fragmented industry with intense competition from large
number of players: The firm is engaged in trading of wood which
is highly fragmented industry due to presence of large number of
organized and unorganized players in the industry the firm faces
huge competition.
Constitution of entity as a partnership firm with inherent risk
of withdrawal of capital: With the entity being partnership firm,
there is an inherent risk of instances of capital withdrawals by
partners resulting in lesser of entity's net worth. The
partnership firms are attributed to limited access to funding.
Key Rating Strengths
Established track record of the entity with long experience of
partners in the timber trading industry: SVT was established in
1998 by Mr. Dinesh Hariwal patel, a qualified commerce graduate.
He is the Managing Partner of the firm who takes care of day to
day operations of the business operations. The other partners are
Mr. Manilal Harilal Patel, Ms. Hamsa Patel, Ms. Narmada Patel all
having close to two decades of experience in the trading of
plywood products since the inception of SVT.
Comfortable capital structure: The capital structure of the firm
improved and remained comfortable for the last two balance sheet
date ended March 31, 2017 (CA Certified Provisional) marked by
debt equity and overall gearing ratio of 0.02x and 1.02x
respectively as against 0.04x and 1.88x as on March 31, 2016 at
the back of increase in net worth of the firm on account of
accretion of profits. The debt profile of the firm as on March
31, 2017 (CA Certified Provisional) comprises of long term debt
consisting of vehicle loan (2.53%) and other short term loans and
advances (97.47%) to meet the day to day working capital
requirement of the firm.
Stable outlook for timber industry India imports of industrial
wood have grown threefold during the last 10 years, comprising
mainly tropical logs from ITTO (International Tropical Timber
Organization) producer countries. However, log imports of around
2 million m3 annually still account for only a small share India
is the second-largest importer of tropical logs in the world. At
any given time, around 30% of all tropical logs in trade are
destined for India. Import of logs represents over 74% of the
total imports of forest products in the country. Among the
reasons for importing logs into India are the simple and cost-
effective 23,000-odd saw mills in the country, 98% of which are
small units with an annual log intake of only 3,000 cubic meters.
The total production capacity is estimated at around 27.12
million cubic meters per annum. India is expected to become the
third largest construction market in the world by the year 2025,
when 11.5 million new houses a year are expected to be added
making it US$ 0.93 trillion a year market in the year 2025.
Karnataka based, Sri Vinayaka Timbers (SVT) was established in
1998 as a partnership firm by Mr. Dinesh Hariwal and their
relatives. SVT is engaged in trading of various types of timber
wood for the use of interior designing. The firm imports Burma
Teak Wood, Marabou Wood and Malaysian Sal Wood from the countries
like Burma, Malaysia, and South Africa and sells them to the
local customers located at Karnataka, Tamil Nadu, Kerala, Andhra
Pradesh and Goa in India.
SWASTIK COLD: ICRA Moves B Rating to Not Cooperating Category
-------------------------------------------------------------
ICRA has moved the ratings for the INR6.45-crore bank facilities
of Swastik Cold Storage (SCS) to the 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]B (Stable) ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit Pledge 2.20 [ICRA]B (Stable); ISSUER NOT
CO-OPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based-Cash
Credit Clean 0.25 [ICRA]B (Stable); ISSUER NOT
CO-OPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based-Term
Loan 4.00 [ICRA]B (Stable); ISSUER NOT
CO-OPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in March, 2016. The
lenders, investors and other market participants are, thus,
advised to exercise appropriate caution while using this rating,
as it does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA. However, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As a part of its process and in accordance with its rating
agreement with SCS, ICRA has been trying to seek information from
the entity so as to monitor its performance and had also sent
repeated reminders to the company for payment of surveillance fee
that became overdue. But despite repeated requests by ICRA, the
entity's management has remained non-cooperative. In the absence
of requisite information and in line with SEBI's circular no.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Key rating drivers
Credit strengths
* Proximity of cold-storage unit in Deesa to potato-growing
region: The strategic location of the firm's unit in Deesa in
close proximity to the major potato-growing region of Gujarat
ensures demand of cold storage for potato and potato seeds.
Credit weaknesses
* Operations and profitability exposed to downward pressure on
potato prices: The firm's operations and profitability are
exposed to any downward pressure on potato prices in relation to
the advances provided.
* Seasonal nature of operations: The cold-storage units'
operations are seasonal in nature. With the harvesting period
commencing in February, the loading of potatoes begins by the end
of February and lasts till March. Further, with potatoes having a
limited life even after preservation, farmers liquidate their
stock from the cold storage by November.
* Partnership form of business: Any significant withdrawals from
the capital account could adversely impact its net worth and
thereby the credit profile.
Swastik Cold Storage (SCS) was established in May, 2015, as a
partnership firm. SCS is involved in providing cold storage
facilities to potato farmers and traders on a rental basis. The
firm started commercial operations in mid of February, 2016. The
cold storage facility is located in Deesa, Gujarat, with a
storage capacity of 150,000 bags of 50 kilogram (kg) each. It is
owned by nine partners. Primarily, Mr. Narsinhbhai Kola manages
the operations of SCS.
TGB BANQUETS: CARE Raises Rating on INR11cr LT Loan to BB
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
TGB Banquets and Hotels Limited (TGB), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 11.00 CARE BB; Stable Revised
Facilities from CARE B+
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of TGB
takes into account substantial improvement in the capital
structure of the company on account of repayment of its entire
debt out of sale consideration received from its Surat property
in May 2018. TGB repaid its entire long term loan and utilisation
of fund-based facilities also remained nil September 2017
onwards. Consequently, TGB has become debt-free company.
However, the rating continues to remain constrained on account of
its moderate scale of operations, elongated operating cycle
coupled with high amount of loans and advances extended by TGB,
geographical concentration of its operations along with its
presence in a competitive and inherently cyclical hospitality
industry. The ratings also takes cognizance of improvement in
profitability during FY17 (refers to the period April 1 to
March 31), marked by reduction in loss incurred during the year.
The rating, however, continues to derive strength from TGB's
established track record of operations in hospitality business,
strong presence in food & catering (F&B) business, though facing
increased competition.
TGB's ability to increase its scale of operations along with
further improvement in its profitability and recovery of advances
extended by it would be the key rating sensitivities.
Furthermore, utilisation of the balance sale proceeds in a
profitable manner will also be crucial.
Detailed description of the key rating drivers
Reasons for revision in rating
Substantial improvement in leverage and liquidity: The capital
structure of the company remained comfortable with overall
gearing remaining below unity at 0.91 times as on March 31, 2017.
Further, during FY18, TGB transacted the sale-cum-lease back
transaction of its Surat hotel property in May 2017 for a total
consideration of INR160 crore. The company will continue to run
the property on lease rent basis under the brand TGB Surat. Part
of the sale proceeds were utilized to repay TGB's entire long
term debt of INR59.85 crore and meet working capital
requirements. TGB also reduced its cash credit limit from INR18
crore to INR7 crore in August 2017, which remained unutilized
from September 2017. Consequently, TGB has become a debt free
company.
Key Rating Weakness
Modest scale of operations; albeit improvement in operating
profitability: TGB's total operating income (TOI) remained stable
at INR137.01 crore during FY17 (INR136.97 crore during FY16) due
to stable occupancy rate, challenging economic scenario and
increased competition in hospitality segment on account of new
entrants. Although TOI remained stable, there is a shift of
income base to F&B segment from banquet services. However, the
profitability margins marginally increased to 19.17% in FY17
(17.27% in FY16) on account of lower operational expenses.
High level of competition and cyclical nature of hospitality
industry: The Indian hotel industry is highly fragmented in
nature with presence of large number of organized and unorganized
players spread across various regions. Furthermore, cyclical
nature of the hotel industry and increasing competition from
already established hotels has impacted performances of industry
players.
Key Rating Strengths
Established track record of operations in hospitality industry
with strong presence in F&B segment: The overall affairs of TGB
are managed by Mr Narendra Somani along with Mr Hemant Somani and
Devanand Somani possessing more than two decade experience in
hotel industry. TGB owns a three star hotel property at Ahmedabad
and operates a five star hotel property at Surat and Indore. TGB
also operates restaurants and party plots on management contract
as well as franchisee basis at prominent places in Ahmedabad,
Nadiad, Rajkot, Surat and Jamnagar.
Ahmedabad based TGB Banquets & Hotels Ltd (TGB; renamed on April
19, 2013) was incorporated in 1999 as Bhagwati Banquets & Hotels
Ltd by Mr. Narendra Somani. TGB commenced its operations in June
2002 with a three star hotel property located in Ahmedabad,
Gujarat.
TGB's economy hotel brand, TGB Express, is operational at
Ahmedabad and Nadiad under franchisee arrangement on revenue
sharing basis. Furthermore, TGB operates room facilities at
Karnavati club and operates restaurants of Karnavati Club and
Patang on management contract basis. Further, during FY18 it has
received the management contract for operating restaurant at
Rajpath Club in Ahmedabad.
=================
I N D O N E S I A
=================
KAWASAN INDUSTRI: Fitch Puts Final B+ Rating to US$111MM Notes
--------------------------------------------------------------
Fitch Ratings has assigned Indonesia-based PT Kawasan Industri
Jababeka Tbk's (Jababeka, B+/Stable) US$111 million 6.5% senior
unsecured notes due 2023 a final 'B+' rating with a Recovery
Rating of 'RR4'. The notes are issued by Jababeka's wholly owned
subsidiary, Jababeka International B.V., and are guaranteed by
Jababeka and certain subsidiaries.
The final rating follows the receipt of documents conforming to
information already received and is in line with the expected
rating assigned on November 7, 2017.
The notes are rated at the same level as Jababeka's senior
unsecured rating as they represent its unconditional, unsecured
and unsubordinated obligations. The notes form part of the same
series as the existing USD189 million 6.5% senior unsecured notes
due 2023, which are also rated 'B+' with Recovery Rating of
'RR4'. Fitch believes Jababeka's financial profile will remain
unchanged and consistent with its ratings, as the new notes will
be mainly used to refinance its outstanding USD91 million 7.5%
senior unsecured notes, which are due in 2019, and to extend the
maturity profile of the company's debt, allowing it more
flexibility to manage cash flow.
KEY RATING DRIVERS
Improving Fundamentals, Rising Competition: Indonesia's
industrial sector is showing improved demand. However, Fitch
believes Jababeka may face heightened competition and some
profitability margin is at risk due to new product launches in
its niche and regulatory developments. Jababeka's attributable
presales increased by around 40% yoy in 2016, driven by stronger
industrial land demand in both its Cikarang and Kendal townships.
The trend has continued, with attributable presales rising by
more than 30% yoy in the 12 months to 3Q17.
Fitch sees some short- to medium-term demand risk due to
regulatory developments and a competitive landscape. The
government has announced plans to introduce a price ceiling on
Indonesia's industrial land sales, which may affect presales as
some consumers defer purchases pending greater clarity.
Furthermore, Fitch believes competition for residential property
in Cikarang may increase with new the launch of a new township in
the area. Fitch expects Jababeka to book attributable presales of
IDR1.3 trillion in 2017 and IDR1.4 trillion in 2018.
Solid Recurring Cash Flows: Jababeka's rating is underpinned by a
strong recurring cash flow stream from its 130MW power plant,
which is operated under a 20-year power purchase agreement with
the state electricity company, PT Perusahaan Listrik Negara
(Persero) (BBB-/Positive). The power plant provides solid earning
visibility and is a natural hedge against Jababeka's US dollar-
denominated borrowings, as it operates under a cost pass-through
mechanism with revenue pegged to US dollars. Fitch expects
recurring interest coverage of around 1.0x in 2017 and 2018.
Flexible Capex: Jababeka's capex will be limited to maintenance
and development of its power plant and dry port facilities for
the next few years. This, coupled with the discretionary nature
of land acquisitions and construction costs that are partly
contingent on meeting sales thresholds in the current period,
allows the company to accumulate cash buffers and strengthen its
liquidity profile. Fitch forecasts annual capex of around IDR200
billion over the medium term.
Increasing Product Diversification: Jababeka successfully
launched its second industrial township in Kendal last year, and
its residential and commercial property business has accounted
for around 40% of presales in the previous three years, compared
with 14% in 2011. Fitch believes this provides the company with
long-term diversification benefits.
Low-Cost Land; Profitability Risk: Jababeka's credit profile is
supported by its large, mature land bank in Cikarang of about
1,200 hectares; adequate for around 50 years of development
assuming sales of 15 hectares per year. Cikarang is the company's
most mature development, with established infrastructure and a
captive industrial market. The Kendal township adds approximately
500 hectares of land bank, or 15 years of development assuming
sales of 25 hectares per year. However, Fitch sees some
profitability risk from the proposed caps on industrial land sale
prices. Fitch forecasts Jababeka's overall real estate EBITDA
margin at around 40% over the medium term.
Forex and Project Concentration Risk: Jababeka's rating is
constrained by its highly concentrated business in Cikarang,
which Fitch expects to contribute around 70% of presales over the
medium term. Fitch expects concentration risk to gradually
dissipate with the increasing contribution from the Kendal
estate. The company is also exposed to currency fluctuations, as
most of its debt is US dollar-denominated, while only half of its
revenue is linked to the US dollar.
DERIVATION SUMMARY
Jababeka's rating may be compared with other Fitch-rated
Indonesian property developers, such as PT Modernland Realty Tbk
(B/Stable) and PT Bumi Serpong Damai Tbk (BSD; BB-/Stable). Fitch
assesses Jababeka's credit profile as weaker compared with BSD's,
as indicated by Jababeka's smaller development property scale,
higher leverage, lower presale turnover and weaker recurring
interest coverage. Compared with Modernland, Fitch believes
Jababeka's stronger recurring interest coverage and the more
strategic location of its industrial development, which is
evident from gap in selling prices in their respective townships,
supports its higher rating.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
- Attributable presales of IDR1.3 trillion in 2017 and
IDR1.4 trillion in 2018
- Land acquisitions of around IDR300 billion in 2018
- Construction capex of around IDR800 billion in 2018
Key Recovery Rating Assumptions:
- The recovery analysis assumes Jababeka would be liquidated in
a bankruptcy rather than continue as a going-concern because
it is an asset trading company.
- Recovery analysis applied a haircut of 25% for IDR628 billion
of receivables, 50% for IDR1.5 billion of investment property,
50% for IDR166 billion of affiliates and minority interest
and other assets and no haircut for inventory and land bank.
Fitch believes the company's reported land bank value, which
is based on historical land cost, is at a significant discount
to current market value and, thus, is already conservative.
- Jababeka's power plant fixed assets and land bank located in
Kendal are excluded from the liquidation value estimate as
they are located under subsidiaries that are not part of the
company's US dollar senior unsecured bonds' guarantor group.
- 10% administrative claims are applied on the liquidation
value.
- Jababeka's bank loans of around IDR440 billion are secured by
the company's land bank. Its remaining unused balance on its
loan facilities are also assumed to be fully drawn. Jababeka
is also expected to have around USD290 million of senior
unsecured bonds outstanding, inclusive of the new issue.
- Fitch estimates Jababeka's liquidation value to be able to
cover 91%-100% of its secured and unsecured debt,
corresponding to a 'RR1' Recovery Rating for the senior
unsecured notes after adjusting for administrative claims.
Nevertheless, Fitch has rated its senior unsecured bonds at
'B+' with a Recovery Rating of 'RR4' because, under Fitch's
Country-Specific Treatment of Recovery Ratings criteria,
Indonesia falls into the 'Group D' of countries based on
creditor-friendliness. Instrument ratings of issuers with
assets in this group are subject to a soft cap at the issuer's
Issuer Default Rating.
RATING SENSITIVITIES
Positive rating action is not expected due to limited project
scale and exposure to the highly cyclical industrial development
business.
Developments that may, individually or collectively, lead to
negative rating action include:
- Recurring EBITDA/interest expense at less than 1.0x for
a sustained period (2017F: 1.2x)
- Attributable presales/gross debt at less than 40% for a
sustained period (2017F: 30%)
- Net debt/net inventory at more than 60% for a sustained period
(2017F: 47%)
LIQUIDITY
Sufficient Liquidity: As of end-2016 Jababeka had an adjusted
cash balance of around IDR740 billion, short-term debt maturity
of IDR20 billion and a committed unused credit facility of around
IDR490 billion, which is only available to be drawn down until
1Q17. The company does not plan to construct a second power plant
in the short to medium term, and its capex for the next few years
will be limited to maintenance and development of its power plant
and dry port infrastructure facilities. This, coupled with the
discretionary nature of land acquisitions and construction costs
that are partly contingent on meeting sales thresholds in the
current period, allows the company to accumulate cash buffers and
strengthen its liquidity profile.
=========
J A P A N
=========
TELLMECLUB: Police Arrest President, Ex-Employee for Fraud
----------------------------------------------------------
The Japan Times reports that police on Nov. 8 arrested the
president and a former employee of failed travel agency
Tellmeclub, which offered budget overseas tours, on suspicion of
defrauding a bank of about JPY200 million ($1.76 million) in
loans by window-dressing earnings data.
The travel agency, headed by 67-year-old Chikako Yamada, filed
for bankruptcy in late March with debts of close to JPY15.1
billion, after collecting roughly JPY9.9 billion in advance
payments from between 80,000 to 90,000 customers across Japan,
the report discloses.
The report says Yamada and Toshiyuki Sasai, 36, who was in charge
of accounting, admitted to the allegations, which included the
forging of earnings statements presented to Sumitomo Mitsui
Banking Corp. between June and September 2016, according to the
police.
The Japan Times relates that the two are suspected of
fraudulently securing the loans on the pretext of chartering
aircraft, despite the firm's poor financial condition that
eventually resulted in postwar Japan's fourth-biggest tourism
industry bankruptcy.
The Tokyo-based tour agency started window-dressing its financial
statements by posting fictitious profits the previous business
year, even before it fell into negative net worth in the year
through September 2014, the Japan Times says citing bankruptcy
administrator.
Tellmeclub, which was established in 1998 and once thrived on
online reservations, found it increasingly difficult to provide
budget tours to destinations such as Hawaii and Guam due to
rising advertising and labor costs, as well as a weaker yen that
pushed up its foreign-currency denominated payments, according to
the report.
At a meeting attended by hundreds of creditors on November 6,
Yamada said, "I was the one issuing the management instructions.
After telling lie after lie to financial institutions, we tried
to extend our sales."
Many creditors expressed anger as Yamada said the company has not
yet determined the total amount of claims against it and may
return less money to customers than previously expected, the
report relays.
Tokyo-based travel agency Tellmeclub filed for bankruptcy with
the Tokyo District Court on March 27 with liabilities estimated
at JPY15.1 billion, including JPY9.9 billion relating to 36,000
travel contracts.
* JAPAN: No. of Corporate Bankruptcies Up 7.3% in October
---------------------------------------------------------
Xinhua News Agency reports that a total of 733 companies went
bankrupt in October, rising for the second straight month,
according to a survey by Tokyo Shoko Research Ltd. released on
Nov. 9.
According to the survey, the number of companies went bankrupt
rose by 7.3 percent from a year earlier, Xinhua discloses.
Regionally, the Kinki area in western Japan saw a total of 190
bankruptcies, up by 16.5 percent from a year earlier and rising
for the fourth consecutive month, the report relates.
According to Xinhua, the Chubu region in central Japan, the
Chugoku and Shikoku areas in western Japan, and the Kyushu region
in southwestern Japan also saw bankruptcy cases growing.
The Hokkaido prefecture, the Kanto region and the Tohoku region,
meanwhile, saw the number of bankruptcies decreasing, says
Xinhua.
Xinhua adds that the service industry saw a total of 215
bankruptcy cases, the highest among different industries and up
for the eighth straight month, while the construction industry
saw the fastest growth in the number of bankruptcy cases, which
was up by 29.8 percent from a year earlier.
The research company said despite the slow economic recovery,
enterprises in Japan are still facing difficulties caused by
factors such as labor shortage, Xinhua relays.
*********
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 CARE's 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.
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*** End of Transmission ***