/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/171124.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 24, 2017, Vol. 20, No. 234 Headlines A U S T R A L I A BRISCONNECTIONS: Arup Agrees to Settle AUD2.2BB Claim IMAGEBUILD: Exec Fails to Show Records Due to 'Mental Conditions' J AND I SCAFFOLDING: First Creditors' Meeting Set for Nov. 30 LIVE CLOTHING: First Creditors' Meeting Set for Dec. 4 MERCHANT OVERSEAS: Second Creditors' Meeting Set for Dec. 6 MERINO AND JUMBUCK: First Creditors' Meeting Set for Dec. 4 PALLAS BRIDE: First Creditors' Meeting Set for Nov. 30 SPA TRADING: Second Creditors' Meeting Set for Dec. 1 C H I N A BIOSTAR PHARMACEUTICALS: Incurs $125,000 Net Loss in Third Qtr GUANGZHOU R&F: Fitch Assigns Final BB Rating to US$500MM Notes LODHA DEVELOPERS: Tap Bond Issue No Impact on Moody's B2 Rating OCEANWIDE HOLDINGS: Fitch Rates US$300MM Senior Notes Final 'B' SUNRISE REAL: Maturing Debt Raises Going Concern Doubt TIMES PROPERTY: Fitch Rates Proposed USD Notes 'B+(EXP)' I N D I A ABT INVESTMENTS: CARE Reaffirms B Rating on INR100cr LT Loan ANJANEE CEMENT: CARE Assigns B+ Rating to INR10cr LT Loan ASWATH SAW MILL: Ind-Ra Moves B Issuer Rating to Non-Cooperating ASWATH SAW MILL: Ind-Ra Corrects August 11 Release BHUSHAN STEEL: JFE Holdings and JSW Steel to Bid for Firm BSC C&C KURALI: CARE Lowers Rating on INR227.92cr LT Loan to D CHOKSEY CHEMICALS: CRISIL Reaffirms B Rating on INR6.25MM Loan GAURISANKAR ELECTRO: CARE Moves D Rating to Not Cooperating GAYATRI ROLLING: CRISIL Raises Rating on INR5.5MM Loan to B+ GENNEXT ABASAN: CRISIL Reaffirms 'B' Rating on INR3MM Cash Loan GO GREEN: CARE Moves D Rating to Not Cooperating Category GOPAL KRISNA: Ind-Ra Migrates B Issuer Rating to Non-Cooperating HANUMAN COTTON: CARE Lowers Rating on INR8.01cr LT Loan to 'D' HEADWORD PUBLISHING: CRISIL Lowers Rating on INR7MM Loan to 'B' INVENTION INDIA: CRISIL Lowers Rating on INR6MM Loan to 'D' JAI MATA: CARE Reaffirms B Rating on INR10.60cr LT Loan JAY AGRO: CARE Lowers Rating on INR16.51cr LT Loan to D KEDAR COTTON: CARE Reaffirms B+ Rating on INR9.80cr LT Loan KHEDUT COTEX: CARE Moves B+ Rating to Not Cooperating Category M.G. INFRAESTATES: CRISIL Reaffirms B+ Rating on INR14MM Loan MAA JAYCHANDI: CARE Reaffirms B Rating on INR6.40cr LT Loan MAHESHWARI INDUSTRIES: CARE Assigns B Rating to INR7cr LT Loan MJM INDUSTRIES: Ind-Ra Assigns B Issuer Rating, Outlook Stable PARAS GOTTAM: CARE Reaffirms B+/A4 Rating on INR10cr Loan PRABHUNATH PRASAD: Ind-Ra Assigns BB Issuer Rating PROGNOSYS MEDICAL: CARE Assigns B+ Rating to INR2.50cr LT Loan RAJ HAIR: CRISIL Lowers Rating on INR10MM Bill Disc. to B+ RAJASTHAN METALS: Ind-Ra Moves B+ Rating to Non-Cooperating RAMI REDDY: CRISIL Reaffirms 'B' Rating on INR15MM LT Loan RATTAN KAUR: Ind-Ra Migrates BB- Issuer Rating to Non-Cooperating RELIABLE INDUSTRIES: Ind-Ra Assigns BB+ Rating, Outlook Stable RIDLEY IFMR: Ind-Ra Lowers Series A2 PTCs Ratings to 'C(SO)' SAMRAKSHANA ELECTRICALS: CRISIL Cuts INR27.12MM Loan Rating to B- SANDHYA POULTRY: CRISIL Reaffirms B Rating on INR8MM Cash Loan SANMARG PROJECTS: Ind-Ra Affirms BB- Rating, Outlook Stable SEA LAGOON: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating SHRI RAM: CARE Reaffirms B+ Rating on INR11.64cr LT Loan SOUTH INDIA: CARE Assigns 'B' Rating to INR25cr LT Loan STARWOOD VENEERS: CRISIL Reaffirms B Rating on INR2MM Loan SUBHA-SOUMYA COLD: CRISIL Reaffirms B- Rating on INR6.40MM Loan SURGICOINMEDEQUIP: CARE Moves D Rating to Not Cooperating U. C. JAIN: CARE Moves D Rating to Not Cooperating Category UNIMECH INDUSTRIES: Ind-Ra Affirms 'BB-' Rating, Outlook Stable WAGNER TRIDENT: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating * INDIA: Cabinet OKs Amendments to Insolvency and Bankruptcy Code J A P A N TAKATA CORP: Exclusive Plan Filing Period Moved to January 21 TOSHIBA CORP: Goldman to Get $180 Million Payday With Sale Deal TOSHIBA CORP: JPY600BB Shares Issue is Credit Pos., Moody's Says N E W Z E A L A N D DC ROSS: Scott Technology Buys Firm Out of Receivership S O U T H K O R E A LEO MOTORS: Reports US$2.9 Million Net Loss in Third Quarter - - - - - ================= A U S T R A L I A ================= BRISCONNECTIONS: Arup Agrees to Settle AUD2.2BB Claim ----------------------------------------------------- Jenny Wiggins and Katie Walsh at The Australian Financial Review report that lenders to the bankrupted toll road Airport Link will get some of their money back after international engineering and design group Arup agreed to settle a AUD2.2 billion lawsuit alleging it made misleading and deceptive traffic forecasts. AFR relates that the settlement, which has not been disclosed but is believed to be more than AUD100 million, marks the end of a series of lawsuits and class actions against forecasters that were over-optimistic on how many cars would use toll roads such as Brisbane's Clem Jones Tunnel as well as Sydney's LaneCove Tunnel and CrossCity Tunnel. Arup decided to negotiate a settlement after the engineering and design group's former lead traffic forecaster, Gerard Cavanagh, acknowledged under cross-examination in the Federal Court that the traffic models devised for Airport Link were "totally and utterly absurd" and that some of its forecasts were "simply ridiculous," according to AFR. The 6.7-kilometre Airport Link tunnel, which links Brisbane Airport with the CBD, went into receivership in early 2013 - just seven months after opening - after traffic was two-thirds lower than Arup predicted, AFR says. AFR states that Arup's barrister, Ian Pike, SC, indicated lawyers were worried about the viability of Arup's defence on November 1 when he told the court that they were no longer planning to argue the case that the engineering group had "a reasonable basis" for its traffic forecasts, and would no longer defend allegations that it had engaged in gross negligence. Arup abandoned plans to call its own traffic expert to give evidence and Mr. Pike told the court that Arup's lawyers were concerned about their "ethical obligations" regarding Arup's financial position if they proceeded with the trial, the report relays. PPB Advisory, Airport Link's receivers, decided to settle the lawsuit despite the acknowledgements from Mr. Cavanagh, because a AUD2.2 billion judgment against the engineering group would have forced it into bankruptcy, making it hard to recover any cash for lenders, AFR says. Arup's Australian revenues are around AUD350 million annually. According to the report, Arup and PPB Advisory have signed settlement papers but will not finalise the settlement until Arup pays, with the parties planning to return to court on December 14 to finalise proceedings. About BrisConnections Group BrisConnections Group is the company behind the AUD4.8 billion Airport Link tunnel. AirportlinkM7 is the toll road linking Brisbane's CBD to the northern suburbs and the Brisbane Domestic and International Airport. David McEvoy, Christopher Hill and Michael Owen of PPB Advisory were appointed as Receivers and Managers to the BrisConnections Group on Feb. 19, 2013. This follows the appointment of partners of McGrathNicol as Voluntary Administrators by the Board of BrisConnections Group. BrisConnections went into administration on debts worth more than the tunnel. IMAGEBUILD: Exec Fails to Show Records Due to 'Mental Conditions' ----------------------------------------------------------------- ABC News reports that the director of Imagebuild Group, a building company that collapsed owing AUD20 million, has failed to provide records to the firm's liquidator, claiming he cannot cooperate because of "mental conditions". It has also been revealed that the company was leasing a number of luxury cars and motorcycles when it went into liquidation, the report says. ABC News relates that the liquidator has also raised concerns the company may have been trading while insolvent. However, the liquidator has warned creditors it could cost another AUD100,000 to get to the bottom of the business failure. According to the report, Imagebuild Group was targeted earlier this year in an online campaign by angry contractors who claimed the director, Brett Spits, had failed to pay numerous suppliers and subcontractors. Tradesmen who carried out work on a number of Imagebuild Group projects in Melbourne's suburbs told the ABC that when they billed the company, they were told their contracts were in fact with another company, called SFOPPS. The report says the director of SFOPPS was initially Theresa Spits, Mr Spits's mother, but last December, a woman called Lisa Baker was appointed as the director and the company put into liquidation. A number of contractors and suppliers were left out of pocket to the tune of millions of dollars, the report notes. Imagebuild Group itself was forced into liquidation in August by a joinery company, to which it owed hundreds of thousands of dollars, the report discloses. At the time, it was constructing an apartment building in West Melbourne. ABC says underworld figure Mick Gatto is among the investors in that project, while his son Damien was employed by Imagebuild as a contract administrator. Lawyers for the joinery company then selected a firm of liquidators called Jirsch Sutherland to investigate Imagebuild's affairs, despite the fact the Australian Taxation Office (ATO) expressed a preference for a different liquidator, ABC News says. J AND I SCAFFOLDING: First Creditors' Meeting Set for Nov. 30 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of J and I Scaffolding Pty Ltd will be held at the offices of BRI Ferrier (NSW) Pty Ltd, Level 30, Australia Square, 264 George Street, in Sydney, New South Wales, on Nov. 30, 2017, at 9:30 a.m. Brian Raymond Silvia and Andrew John Cummins of BRI Ferrier were appointed as administrators of J and I Scaffolding on Nov. 22, 2017. LIVE CLOTHING: First Creditors' Meeting Set for Dec. 4 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Live Clothing Pty Ltd will be held at the offices of Ferrier Hodgson, Level 28, 108 St Georges Terrace, in Perth, West Australia, on Dec. 4, 2017, at 11:00 a.m. Wayne Rushton, Martin Jones and James Stewart of Ferrier Hodgson were appointed as administrators of Live Clothing on Nov. 22, 2017. MERCHANT OVERSEAS: Second Creditors' Meeting Set for Dec. 6 ----------------------------------------------------------- A second meeting of creditors in the proceedings of Merchant Overseas Logistics Pty Ltd has been set for Dec. 6, 2017, at Merchant Shipping Offices, 16 McDonald Road, in Chadwick, West Australia. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Dec. 5, 2017, at 4:00 p.m. Andrew Schwarz of AS Advisory was appointed as administrator of Merchant Overseas on Oct. 31, 2017. MERINO AND JUMBUCK: First Creditors' Meeting Set for Dec. 4 ----------------------------------------------------------- A first meeting of the creditors in the proceedings of Merino and Jumbuck Company (Australia) Pty Ltd will be held at the offices of Chartered Accountants Australia and New Zealand, Level 18, 600 Bourke St, in Melbourne, Victoria, on Dec. 4, 2017, at 11:00 a.m. Laurence Andrew Fitzgerald and Michael James Humphris of William Buck were appointed as administrators of Merino and Jumbuck on Nov. 22, 2017. PALLAS BRIDE: First Creditors' Meeting Set for Nov. 30 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Pallas Bride and Fashion Pty Ltd will be held at the offices of Cor Cordis, Mezzanine Level, BGC Centre, 28 The Esplanade, in Perth, West Australia, on Nov. 30, 2017, at 2:00 p.m. Jeremy Joseph Nipps and Cliff Rocke of Cor Cordis were appointed as administrators of Pallas Bride on Nov. 20, 2017. SPA TRADING: Second Creditors' Meeting Set for Dec. 1 ----------------------------------------------------- A second meeting of creditors in the proceedings of SPA Trading Pty Ltd, trading as Cremosa Espresso Bar, has been set for Dec. 1 at Level 4, 232 Adelaide Street, in Brisbane, Queensland. 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. 30, 2017, at 4:00 p.m. Peter Anthony Lucas of P A Lucas & Co was appointed as administrator of SPA Trading on Oct. 27, 2017. ========= C H I N A ========= BIOSTAR PHARMACEUTICALS: Incurs $125,000 Net Loss in Third Qtr -------------------------------------------------------------- Biostar Pharmaceuticals, Inc. filed with the Securities and Exchange Commission its quarterly report on Form 10-Q reporting a net loss of $125,186 on $0 of net sales for the three months ended Sept. 30, 2017, compared to a net loss of $1.56 million on $644,933 of net sales for the three months ended Sept. 30, 2016. For the nine months ended Sept. 30, 2017, the Company reported a net loss of $2.45 million on $0 of net sales compared to a net loss of $9.08 million on $2.06 million of net sales for the nine months ended Sept. 30, 2016. As of Sept. 30, 2017, Biostar had $41.42 million in total assets, $5.27 million in total liabilities, all current and $36.14 million in total stockholders' equity. According to Biostar, "There is substantial doubt that the Company will continue as a going concern. As of September 30, 2017, we had cash and cash equivalents of approximately $0.4 million and negative working capital of approximately $4.3 million. We had no production or sales due to preparation of GMP certification renewals at our Aoxing facility and replacing production equipment to comply with government's environmental protection requirement at our Weinan facility, which led to significantly weak results in generating cash flows during the fiscal year. While our production levels of Shaanxi Weinan products helped to offset a substantial decrease in our sales volume in 2016, due to the temporarily suspension of production in both Aoxing and Weinan, no revenue has been generated in current quarter. We have been working with our financial lenders to extend the Company's outstanding loans, while trying to collect as much of the Company's accounts receivable as possible, while waiting to restore production volumes to regular levels. As of this filing, the Company's application of the renewal of Aoxing Pharmaceutical's GMP certificate has been preliminarily approved and publicly announced by the local government in October 2017, subject to the final approval to be granted before the end of 2017, at which point we anticipate resuming production and sales. However, we cannot provide any assurance that we will be able to successfully extend our outstanding loans, and the Aoxing production will resume as anticipated and the renewal of GMP certificates will occur when anticipated, or even if they are renewed, we will be able to return to the anticipated production levels. If we are unable to renew our GMP certificates to allow production resumption as anticipated, our operations will be materially affected and we might become insolvent. "On an on-going basis, we take steps to identify and plan our needs for liquidity and capital resources, to fund our operations and day to day business operations. Our future capital expenditures will include, among others, expanding product lines, research and development capabilities, and making acquisitions as deemed appropriate. "Based on our current plans for the next 12 months, we anticipate that the sales of the Company's pharmaceutical products will be the primary organic source of funds for future operating activities. However, to fund continued expansion of our operation and extend our reach to broader markets, and to acquire additional entities, as we may deem appropriate, we may rely on more bank borrowing, if available, as well as capital raises. There is no assurance that we will find such funding on acceptable terms, if at all." Net cash provided by operating activities for the nine months ended Sept. 30, 2017 was approximately $4.6 million. This was primarily due to the Company's net loss of approximately $2.5 million, adjusted by non-cash related expenses including depreciation and amortization of approximately $0.9 million and non-cash related positive fair value adjustment on warrants of $0.3 million, then increased by favorable changes in working capital of approximately $6.4 million. The favorable changes in working capital were mainly due to decrease in accounts receivable as result of collection efforts offset by decrease in accounts payable and accrued expenses. Net cash used in investing activities for the nine months ended Sept. 30, 2017 was approximately $4.4 million which was used as deposit for intended acquisition. A full-text copy of the Form 10-Q is available for free at: https://is.gd/Kmtfuc About Biostar Pharmaceuticals Based in Xianyang, China, Biostar Pharmaceuticals, Inc., develops, manufactures and markets pharmaceutical and health supplement products for a variety of diseases and conditions in the People's Republic of China. Biostar was incorporated in the State of Maryland on March 27, 2007. The Company became the indirect holding company for Aoxing Pharmaceutical, a medical and pharmaceutical developer, manufacturer and marketer in the PRC on Nov. 1, 2007. Visit www.biostarpharmaceuticals.com for more information. Biostar incurred a net loss of $5.69 million in 2016 and a net loss of $25.11 million in 2015. Mazars CPA Limited, Certified Public Accountants, in Hong Kong, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2016, stating that the Company had experienced a substantial decrease in sales volume which resulting a net loss for the year ended Dec. 31, 2016. Also, part of the Company's buildings and land use rights are subject to litigation between an independent third party and the Company's chief executive officer, and the title of these buildings and land use rights has been seized by the PRC Courts so that the Company cannot be sold without the Court's permission. In addition, the Company already violated its financial covenants included in its short-term bank loans. These conditions raise substantial doubt about the Company's ability to continue as a going concern. GUANGZHOU R&F: Fitch Assigns Final BB Rating to US$500MM Notes -------------------------------------------------------------- Fitch Ratings has assigned Guangzhou R&F Properties Co. Ltd.'s (BB/Rating Watch Negative (RWN)) USD500 million 5.875% senior notes due 2023 a final 'BB' rating and placed the notes on RWN. The notes are issued by Easy Tactic Limited, a subsidiary of Guangzhou R&F, and are rated at the same level as Guangzhou R&F's senior unsecured rating because they constitute its direct and senior unsecured obligations. The assignment of the final rating follows the receipt of documents conforming to information already received and is in line with the expected rating assigned on 13 November 2017. Guangzhou R&F's leverage, as measured by net debt/adjusted inventory, weakened to 69% at end-1H17, from 63% at end-2016, following aggressive expansion. Fitch believes its land bank of 49 million square metres (sq m) is now sufficient for more than six years of sales and, therefore, Guangzhou R&F is likely to slow land acquisition in 2H17. However, the weakened credit metrics have made it more probable that the RWN will be resolved with, at best, a Negative Outlook on Guangzhou R&F's 'BB' ratings, if affirmed. Guangzhou R&F's ratings were put on RWN following its plan to acquire Dalian Wanda Commercial Property Co. Ltd.'s (BBB/RWN) hotel assets for CNY19 billion. Fitch believes the acquisition will push up Guangzhou R&F's total debt level and keep its leverage above Fitch's 60% threshold for negative rating action. The company's churn rate, as measured by contracted sales/gross debt, is likely to fall below 0.6x and may stay below this level, which will breach Fitch's threshold and may result in a rating downgrade if recurring EBITDA does not increase sufficiently to provide an offset. KEY RATING DRIVERS Aggressive 1H17 Expansion: Guangzhou R&F's 1H17 expansion was its fastest pace in the previous five years. Contracted sales gross floor area (GFA) increased by 21% in 7M17, compared with a CAGR of 12% between 2012 and 2016. Fitch expect GFA sales growth of 28% for full-year 2017. Guangzhou R&F expanded its land bank even more aggressively, adding 11.4 million sq m in 1H17, against 2.9 million sq m sold. This was due to a rapid expansion outside tier 1 cities, with exposure increasing to 66% as at end-1H17, from 51% at end-2016. A more diversified geographical mix is sensible, as restrictive home-purchase policies affect each city's housing market differently. Acquisition Weakens Churn Rate: The hotel acquisition, if fully funded by debt, is likely to increase Guangzhou R&F's gross debt to above CNY145 billion based on pro forma 1H17 numbers and keep its churn rate below 0.6x, even if it achieves its contracted sales target of CNY80 billion in 2017. Guangzhou R&F's 2016 pre- acquisition churn rate of 0.5x would have improved above 0.6x following strong contracted sales growth, which was up by 30% in 1H17. Higher Recurring EBITDA: Fitch expects Guangzhou R&F's post- acquisition hotel revenue to climb to more than CNY7.0 billion in 2017, from CNY1.4 billion in 2016. Its hotel EBITDA is likely to reach CNY1.5 billion and, together with rental EBITDA of CNY0.7 billion, see recurring EBITDA rise to CNY2.2 billion (2016: around CNY1.0 billion). Fitch expect recurring EBITDA/gross interest to improve above 0.3x post acquisition, from 0.2x in 2016. An improvement in Guangzhou R&F's post-acquisition hotel-business EBITDA margin is possible, as around 40% of the portfolio consists of hotels with less than three years of operation. Stronger hotel performance could offset credit-metric deterioration if interest coverage can improve to above 0.5x, which would be comparable with that of higher-rated peers, such as Longfor Properties Co. Ltd. (BBB-/Stable) and Shimao Property Holdings Limited (BBB-/Stable). Post-Acquisition Credit Profile: The resolution of the RWN will depend on whether the transaction is completed, and if so, how Guangzhou R&F's business and financial profile evolves in the following year or two. Possible outcomes are discussed in the rating sensitivities below. DERIVATION SUMMARY Guangzhou R&F's business profile is comparable with 'BB+' and 'BBB-' rated peers, but its financial profile is comparable with 'BB-' and 'B+' rated peers. Its homebuilding scale, geographical diversification and project profitability is comparable with Shimao, but Shimao had a higher churn rate of 1.0x and lower leverage of 32% at end-2016. Shimao's recurring EBITDA/interest coverage was also lower because of its lower indebtedness, as both companies generated similar rental and hotel revenue of around CNY2.3 billion in 2016. Guangzhou R&F has a superior EBITDA margin against that of highly leveraged peers, such as Greenland Holding Group Company Limited (BB/Negative, standalone assessment BB-/Negative), Sunac China Holdings Limited (BB-/Negative) and China Evergrande Group (B+/Stable). Guangzhou R&F's leverage has also been stable compared with the more volatile leverage of these peers, which is close to 60% or higher, and has a stronger business profile despite its smaller scale. This is because of the company's larger land bank, which can last for more than six years, compared with around four years for the peers. Guangzhou R&F also has meaningful recurring EBITDA/gross interest coverage of 0.2x (before the acquisition), whereas the peers have minimal coverage. No Country Ceiling, parent/subsidiary or operating environment aspects impact the rating KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Contracted sales growth sustained at 10% per annum - Land bank life reduced to and sustained at 5.5 years, from a high of almost eight years at end-1H17 - Rental rates for its investment properties remaining unchanged - Completing the acquisition of 77 hotels in 2017, with the hotels generating full-year contributions from 2018 - Dividend pay-out ratio of at least 20%, which is maintained year-on-year - Investment property capex of CNY1.5 billion per annum RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - If the transaction takes place, the ratings may be affirmed with a Negative Outlook if contracted sales/total debt remains below 0.6x over the next 12 months, but Fitch expects the ratio to be sustained above 0.6x thereafter - If the transaction takes place, the ratings may be affirmed with a Stable Outlook if contracted sales/total debt is sustained between 0.5x and 0.6x, but Fitch expects recurring income/gross interest expenses to be sustained above 0.5x from 2018 - If the transaction does not take place and contracted sales/total debt is sustained above 0.6x, the ratings may be affirmed with a Stable Outlook Developments that May, Individually or Collectively, Lead to Negative Rating Action - If the transaction takes place, the ratings may be downgraded if contracted sales/total debt remains below 0.6x for a sustained period and recurring income/gross interest expenses remain below 0.5x for a sustained period - Net debt/adjusted inventory over 60% for a sustained period LODHA DEVELOPERS: Tap Bond Issue No Impact on Moody's B2 Rating --------------------------------------------------------------- Moody's Investors Service says that Lodha Developers Private Limited's (LDPL, B2 stable) announcement of a tap bond offering on its existing $200 million 12% notes due 2020 by its wholly owned subsidiary Lodha Developers International Limited (B2 stable) is credit positive, but has no ratings impact. The bonds are unconditionally and irrevocably guaranteed by LDPL. "The proposed offering will moderately extend LDPL's debt maturity profile, as it will use the proceeds to refinance existing short-term debt," says Saranga Ranasinghe, a Moody's Assistant Vice President and Analyst. At September 30, 2017, LDPL had around INR30 billion due in the next 12 months in India (Baa2 stable). "The refinancing will also lower LDPL's interest costs -- due to the higher interest rates of the debt that is being refinanced," adds Ranasinghe. The B2 rating reflects Moody's expectation that LDPL's credit metrics will start improving from the fiscal year ending March 2018 (fiscal 2018), once it starts recognizing sales from projects launched over the last two to three years in India. At the same time, LDPL will recognize revenue and earnings from its developments in London, which will further improve its credit metrics. Consequently, Moody's expects adjusted debt/homebuilding EBITDA to improve to around 4.8x in fiscal 2018 from around 5.3x in fiscal 2017. Moody's calculation of LDPL's debt includes the debt at its London entities. The stable outlook reflects Moody's expectation that LDPL will sustain the recent improvements in its operating sales and collections. The reorganization of the group is likely to be completed by January 2018, after which the London properties will become part of the restricted group. Following the reorganization, bondholders will benefit from the diversification to the London real estate market as well as from having access to the cash flows from the London properties. The B2 rating also reflects LDPL's position as the largest residential property developer in India in terms of sales, the high quality of its projects under construction and its strong execution capability. At the same time, the rating is constrained by the company's weak liquidity profile given its sizeable short- term debt and historically weak credit metrics. The ratings could be upgraded if LDPL shows sustained improvements in its sales performance and positive free cash flow generation. In addition, the ratings could be upgraded if there is an improvement in LDPL's liquidity profile, with solid liquidity in the form of cash balances and committed facilities to cover its short-term debt maturities. Credit metrics that would support an upgrade include adjusted debt/homebuilding EBITDA below 4.0x and adjusted homebuilding EBIT/interest coverage above 2x on a sustained basis. The ratings could be downgraded if the company's operating performance and liquidity position do not improve, or if it engages in material debt-funded land acquisitions. Credit metrics indicative of downward ratings pressure include: (1) adjusted debt/homebuilding EBITDA above 5.5x; and/or (2) homebuilding EBITA/interest below 1.5x. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in April 2015. Lodha Developers Private Limited (LDPL) is the largest real estate developer in India by sales of residential apartments. LDPL is focused on residential development in the Mumbai Metropolitan Region, with some projects in nearby Pune. The company and its promoters have expanded into the London market by acquiring two properties that are now in the process of development. LDPL is privately held by the Lodha family. OCEANWIDE HOLDINGS: Fitch Rates US$300MM Senior Notes Final 'B' -------------------------------------------------------------- Fitch Ratings has assigned China-based property developer Oceanwide Holdings Co. Ltd.'s (B/Negative) US$300 million 8.5% US dollar senior notes a final rating of 'B' and a Recovery Rating of 'RR4'. The notes are issued by Oceanwide Holdings International 2017 Co., Limited, Oceanwide's wholly owned subsidiary, and are guaranteed by Oceanwide. The notes are rated at the same level as Oceanwide's senior unsecured rating as they represent the company's direct and senior unsecured obligations. The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is in line with the expected rating assigned on November 15, 2017. Oceanwide's rating is supported by its high-quality landbank, which is sufficient for more than 10 years of development. The rating is constrained by a rapid increase in leverage, which is likely to remain high for the next 18-24 months as the company ramps up development expenditure to support sales growth and continues to invest in its finance business. KEY RATING DRIVERS Leverage Higher but Manageable: Oceanwide's leverage, as measured by net debt/adjusted inventory and after deconsolidating debt from the financial business, reached 92% in 2016 (2015: 86%), which is higher than that of 'B' rated peers. Fitch expects this ratio to remain above 80% owing to Oceanwide's property- development business model, which requires more time to generate sales due to the lengthy primary-land development phase. Oceanwide's consolidated net debt jumped to CNY74 billion at end- 2016, from CNY39 billion in 2014, following higher development expenditure, the rapid expansion of its finance business, additional investment in financial assets and overseas acquisitions. Valuable Landbank: A majority of Oceanwide's large land bank was acquired many years ago and is sufficient for more than 10 years of development. Sites in tier 1 cities, like Beijing and Shanghai, affluent tier 2 cities, like Wuhan, and major cities in the US make up more than 80% of the company's land bank. Many of Oceanwide's projects in Beijing and Shanghai are in prime locations. The low land cost, together with the high quality of Oceanwide's landbank, will be the key driver supporting a solid EBITDA margin and growth for the next two to three years. Contracted Sales to Pick Up: Fitch expects Oceanwide's contracted sales to increase by 15%-20% annually in 2018, driven by project launches in Wuhan and sales from new projects in Beijing and Shanghai. This will drive the company's contracted sales to over CNY20 billion and allow it to generate positive operating cash flow from its property business to fund its financial-sector expansion. Continuing Finance Expansion: Oceanwide has been aggressively diversifying its business from pure property development to financial institutions since 2014. It has spent more than CNY20 billion on building its finance business, which includes securities, trusts, insurance and internet finance. Fitch expect Oceanwide to continue investing heavily in the finance sector with an aim to secure licenses for a full range of finance businesses, which may continue pressuring its leverage. Oceanwide is also involved in long-term equity investments and short-term trading on the secondary market. DERIVATION SUMMARY Oceanwide has a larger scale in terms of contracted sales and EBITDA than other China-based property companies rated in the 'B' category, such as Redco Properties Group Ltd (B/Stable) and Guorui Properties Limited (B/Stable). However, its leverage is comparatively higher due to its active investments in financial institutions and larger exposure to commercial development properties, which have a longer cash-collection cycle than industry average. This also drives Oceanwide's lower project churn compared with peers, but means its landbank, which was acquired years ago, is undervaluing its inventory compared with high-churn homebuilders. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Limited new land acquisitions at 0.5x of contracted sales gross floor area - Contracted sales growth driven by higher average selling prices of CNY35,000 per square metre (sq m) in 2017-2018 (2015: CNY32,000/sq m) - Property development EBITDA margin of 35%-40% in 2017-2019 (2016: 34%) Recovery rating assumptions - Oceanwide would be liquidated in a bankruptcy because it is an asset-trading company - 10% administrative claims - The value of inventory and other assets can be realised in a reorganisation and distributed to creditors - A haircut of 25% on adjusted inventory, which is in-line with domestic peers despite its higher-than-industry profit margin, as Oceanwide is also involved in overseas properties that have lower margins than domestic projects - A 20% haircut to investment properties and the net tangible assets of its financial subsidiaries - A 50% haircut to available-for-sale financial securities and land and buildings - Based on Fitch calculation of the adjusted liquidation value after administrative claims, Fitch estimate the recovery rate of the offshore senior unsecured debt to be 42%, which corresponds to a Recovery Rating of 'RR4' RATING SENSITIVITIES Negative: Developments that may, individually or collectively, lead to negative rating action include: - Contracted sales/net debt excluding financial institutions below 0.25x for a sustained period or the ratio deteriorating for a sustained period (2016: 0.16x) - EBITDA margin below 35% for a sustained period - Substantial weakening of the credit profile of its key financial institutions Positive: Positive rating action is not expected in the next 12- 18 months due to Oceanwide's high leverage LIQUIDITY Oceanwide had roughly CNY35 billion in cash and equivalents as of end-September 2017, sufficient to cover its short-term debt of roughly the same amount. The company was in a tight liquidity position in 2014 and has diversified its funding sources over the past two years and improved its liquidity position through issuing offshore bonds, tapping the onshore bond market, replacing short-term expensive trust loans with long-term debt and equity placements. Hence, Fitch have seen the company's borrowing costs gradually trend lower. SUNRISE REAL: Maturing Debt Raises Going Concern Doubt ------------------------------------------------------ Sunrise Real Estate Group, Inc., filed its quarterly report on Form 10-Q, disclosing a net loss of $2.02 million on $1.39 million of net revenues for the three months ended March 31, 2015, compared with a net loss of $1.15 million on $2.17 million of net revenues for the same period in 2014. At March 31, 2015, the Company had total assets of $103.62 million, total liabilities of $108.92 million, and -$5.31 million in total stockholders' equity. As of March 31, 2015, the Company has a working capital deficiency, accumulated deficit from recurring net losses, and significant short-term debt obligations currently in default or maturing in less than one year. These factors raise substantial doubts about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available at: https://is.gd/UoBfQx About Sunrise Real Estate Group Headquartered in Shanghai, the People's Republic of China, Sunrise Real Estate Group, Inc., and its subsidiaries' principal activities are real estate development and property brokerage services, including real estate marketing services, property leasing services; and property management services in the People's Republic of China. TIMES PROPERTY: Fitch Rates Proposed USD Notes 'B+(EXP)' -------------------------------------------------------- Fitch Ratings has assigned Times Property Holdings Limited's (Times Property; B+/Positive) proposed US dollar senior notes a 'B+(EXP)' expected rating and Recovery Rating of 'RR4'. The notes are rated at the same level as Times Property's senior unsecured rating because they constitute direct and senior unsecured obligations of the company. The final rating is subject to the receipt of final documentation conforming to information already received. Fitch revised the Outlook on Times Property to Positive from Stable on 11 January 2017 and Fitch may take further positive rating action if the company can maintain leverage below 45% and keep its land bank sufficient for three years of development. The China homebuilder's ratings are supported by its execution track record but constrained by the need to consistently replenish its land bank with quality sites, which results in a fluctuation in leverage. KEY RATING DRIVERS Larger Scale, Strong Sales: Times Property's January-October 2017 sales increased by 32% yoy to CNY31.6 billion, almost reaching its annual sales target of CNY32.5 billion, with an average selling price of CNY15,340/sq m, notably higher compared with CNY11,860/sq m in full-year 2016 and only CNY9,010/sq m in full- year 2015. The company will be able to retrieve around CNY28 billion in 2017 from the sales proceeds, assuming a historical cash-collection rate of 86%. Fitch believes that Times Property's strong cash collection from larger sales will continue to support expansion in the next three years. Better Land Bank Quality: Times Property had 14.5 million sq m of land as of end-June 2017, with 13% located in Guangzhou, 34% in Guangdong's Tier 2 cities (Foshan, Zhuhai and Zhongshan) and the rest in less-developed noncore cities - Qingyuan, Dongguan, Changsha and Huizhou. Fitch estimates that the company kept its land bank in its core markets (Guangzhou, Foshan and Zhuhai) at above 3.5 years of development activity at end-June 2017. High-Cost Acquisitions: Times Property acquired nine projects with an average cost of CNY5,043/sq m in 1H17. The developer started to acquire higher-priced land parcels in its core markets from 2015 to expand the share of products that appeal to upgraders and to solidify its foothold in Guangzhou and core Tier 2 cities such as Foshan and Zhuhai. It bought several land parcels in Foshan and Zhuhai at above CNY12,000/sq m, resulting in a weighted-average land-acquisition cost of more than CNY8,500/sq m in 2016, compared with around CNY6,000/sq m in 2015 and less than CNY3,000/sq m before 2014. However, Fitch expects Times Property to add two to three projects from urban redevelopment sites annually to complement high-cost land acquisitions from public auctions. Stable Leverage: Times Property's leverage, measured by net debt/adjusted inventory, rose to about 40% at end-June 2017, from 33% at end-2016. Fitch expects leverage to fluctuate while Times Property expands, particularly as the government has implemented a series of policies since October 2016 to curb excessive increases in housing prices. The company's sustainable sales at current levels would be key to managing the fluctuation in leverage. Fitch will consider taking positive rating action if Times Property is able to maintain its leverage below 45%. Concentration in Guangdong Province: Times Property is a regional property developer focused on Guangdong Province in southern China. Guangzhou, Foshan and Zhuhai together accounted for more than 85% of the total contracted sales in the past three years. Fitch believe that Times Property will focus on expanding within Guangdong Province and is unlikely to expand into other provinces in the near term. DERIVATION SUMMARY Times Property expanded by about 50% in 2016 to reach a contracted sales scale similar to 'BB' category peers such as Yuzhou Properties Company Limited's (BB-/Stable)'s CNY23 billion and China Aoyuan Property Group Limited's (BB-/Stable) CNY26 billion. Times Property had previously been constrained by relatively high leverage (around 40%) compared with its small scale, due to constant pressure to increase its land bank in its core markets in Guangdong province. The company has managed to keep its leverage stable while significantly boosting scale and saleable resources during the past two years to support future growth. Fitch revised the Outlook to Positive from Stable in January 2017 and will take further positive action if Times Property is able to meet positive rating sensitivities on a sustainable basis in the next 12 months. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Contracted sales sustained above CNY30 billion in the next three years - Gross profit margin (including capitalised interests) maintained at 20%-25% over 2017-2019 - Attributable land premium around 45% of total contracted sales in the next three years. Recovery rating assumptions - The recovery analysis assumes Times Property would be liquidated in a bankruptcy because it is an asset trading company. - Fitch have assumed a 10% administrative claim. - The liquidation estimate reflects Fitch's view of the value of inventory and other assets that can be realised and distributed to creditors. - Fitch applied a haircut of 40% on its adjusted inventory, in line with the norm used for its peers. - Fitch applied a haircut of 25% on its trade receivables, in line with the norm used for its peers. - Fitch also assumed Times Property will be able to use 100% of the CNY2.5 billion in restricted cash to pay debt. - Based on Fitch calculation of the adjusted liquidation value, after administrative claims, Fitch estimate the recovery rate of the offshore senior unsecured debt to be 54%, which corresponds to a Recovery Rating of 'RR3'. However, Times Property's Recovery Rating is capped at 'RR4' because debt of offshore Chinese holding companies face structural issues as the onshore operating companies do not provide upstream guarantees. RATING SENSITIVITIES Positive: Future developments that may, individually or collectively, lead to positive rating action include: - Net debt/adjusted inventory sustained below 45% - Contracted sales/total debt sustained above 1.5x (2016: 1.4x) - EBITDA margin sustained above 20% (2016: 19.4%, 1H17: 19.3%) - Land bank sufficient for three years of development Negative: Future developments that may lead to the Outlook reverting to Stable: - Failing to maintain the positive guidelines LIQUIDITY Sufficient Liquidity: Times Property had cash and cash equivalents of CNY13.1 billion (including restricted cash) as of end-June 2017, compared with its CNY2.4 billion short-term debt. The company has already issued two offshore senior notes in 2017 to refinance the USD305 million 12.625% bond due 2019 (redeemed in February 2017) and the CNY1.5 billion 10.375% bond due 2017. ========= I N D I A ========= ABT INVESTMENTS: CARE Reaffirms B Rating on INR100cr LT Loan ------------------------------------------------------------ CARE Ratings reaffirmed ratings on certain bank facilities of A B T Investments Private Limited (AIPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Non- Convertible Debentures 100 CARE B; Stable Reaffirmed Detailed Rationale& Key Rating Drivers The rating assigned to the Non-Convertible Debenture (NCD) issue of AIPL continues to be constrained by the non-operational nature of AIPL, being an investment holding company of ABT group with large part of its holding in Sakthi Sugars Limited which has a strained liquidity profile arising out of losses incurred and high debt levels. The rating however draws comfort from the vast experience of the promoters and the group's operational track record of more than eight decades. Going forward, ability of the group to generate adequate cash inflows through the planned asset sales would be the key rating sensitivity. Additionally, any changes in the financial risk profile of the investments would be a key rating sensitivity. Detailed description of the key rating drivers Key Rating Weakness Non-operational nature of AIPL: Since AIPL has no operating cash flow, the company intends to meet its repayment obligations primarily through debt repayments from ABT Madras. Weak Financial risk profile of SSL (underlying security company): The NCD issue is secured by pledging the shares of Shakti Sugars Limited (SSL) held by AIPL. As indicated by the auditors in the audit report of SSL for FY17, the company has been making delays in servicing of debt obligations (It had undergone Corporate Debt Restructuring in FY16). SSL's Operating Income has also increased by 10% from INR858 crore in FY16 to INR939 crore in FY17. The Company in FY17 has reported a Net Profit of INR10.44 crore as against a net loss of INR20.17 Crore in FY16. Exposure of security to market volatility risk: As AIPL has pledged the shares of Sakthi Sugars for the NCD issue, in case of AIPL not receiving funds from ABT Madras, the ability of the company to liquidate the shares and accumulate funds required to meet the obligations is dependent on the prevailing market conditions and macroeconomic scenarios. Key Rating Strengths Well experienced promoter group: The Sakthi group has been operational for over eight decades and has presence in diverse industries. Dr. M. Manickam, Chairman of the group is a third generation entrepreneur and has over three decades of industrial experience. He holds a MBA degree from University of Michigan. The day to day operations of the group companies are managed by his children. The promoters are supported by well-experienced management team who have been with the group for long period. A B T Investments (India) Private Limited (AIPL) belongs to the Coimbatore based Sakthi group of companies having presence in diversified industries including Sugar, Auto Components, Power, IT services, transportation & logistics, energy and textiles. The companies and divisions were setup as subsidiaries of existing group companies. ABT Limited, the parent company of the Sakthi group was setup as a bus service company in 1931 by the founder P. NachimuthuGounder. To enable independent expansion of the various divisions of the group, ABT had filed a scheme of arrangement (Demerger) with the High Court of Madras and the same was sanctioned on April 18, 2016, effective from January 01, 2015. AIPL was formed after the demerger and consolidation of the companies under ABT group. As per the scheme of arrangement, the resultant companies - ABT (Trichy) Private Limited and ABT (Madras) Private Limited ceased to exist as subsidiaries of ABT. ABT (Madras) Private Limited would be engaging in the business of real estate development. ABT Trichy was renamed as ABT Investments (India) Private Limited (AIPL) continues to be an investment company holding the shares of group companies. Various investments and security holding in the books of ABT Limited were transferred to AIPL. The Company has holdings in various group companies of ABT group. This also includes 6,74,63,540 equity shares (56.76% of the total shares issued) of Sakthi Sugars Limited. ANJANEE CEMENT: CARE Assigns B+ Rating to INR10cr LT Loan --------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Anjanee Cement Corporation (ACC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 10.00 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of ACC is constrained by its short track record and small scale of operation with moderate profitability margins, susceptible to volatility of raw material prices, working capital intensive nature of business, partnership nature of constitution, intensely competitive nature of the industry with exposure to geographical concentration risk and cyclical nature of the cement industry. The aforesaid constraints are partially offset by the extensive experience of partners, wide dealer networks, improving capacity utilization and comfortable capital structure with satisfactory debt coverage indicators. Ability of the firm to grow its scale of operations, maintain profitability margins and ability to manage working capital effectively would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record and small scale of operations with moderate profitability margins: ACC is into manufacturing of cement business since 2014 and accordingly has short track record of operations of about 3 years. Furthermore, ACC is a small player in the cement industry marked by total operating income of INR9.70 crore with a PAT of INR0.56 crore in FY17. Further, the net worth base and total capital employed was low at INR7.91 crore and INR15.03 crore, respectively, as on March 31, 2017. The firm has achieved turnover of INR9.00 crore in H1FY18. The small size restricts financial flexibility in times of stress. The PBILDT margin declined gradually over the last three years due to higher cost of operations and the same stood at 17.48% in FY17 as against 22.09% in FY16. However, the PAT margin improved on account of low capital charges and the same stood at 5.79% in FY17 as against 4.35% in FY16. Susceptible to volatility of raw material prices: ACC is engaged in manufacturing of cements and does not have its own clinker unit. Hence, it has to procure it from other cement manufacturers. The firm procures its major raw material i.e. clinker mainly from large cement players. Furthermore, it does not have any long term agreement with its suppliers. The raw material cost continues to be the major cost component of ACC constituting around 75% of the total cost of sales in FY17. Hence, any adverse movement in raw material price without any corresponding movement in finished goods price is expected to affect the profitability of the firm. Working capital intensive nature of business: The firm is into manufacturing of cement. ACC has to maintain a large quantity of raw material inventory to mitigate the raw material price fluctuations risk and smooth running of its production process. Accordingly the average inventory period of the firm remained at 50 days during FY17 though improved from 60 days in FY16. Furthermore, the firm allows around a month credit to its customers. Accordingly, the average fund based bank limit utilization remained on the higher side at about 100% during last 12 months ended September 30, 2017. Cyclical nature of the cement industry: Cement demand is derived from real estate, infrastructure & industrial sectors. The slowdown in the real estate sector and delay in take-off of various infrastructural projects took a toll on the cement demand. Spiraling cost of capital, delays in execution of infrastructure as well as industrial projects and the overall economic slowdown adversely affected the off take of cement. Partnership nature of constitution: ACC, being a partnership firm, is exposed to inherent risk of the partner's capital being withdrawn at time of personal contingency and firm being dissolved upon the death/retirement/insolvency of the partners. Moreover, partnership firms have restricted access to external borrowing as credit worthiness of partners would be the key factors affecting credit decision for the lenders. Intensely competitive nature of the industry with exposure to geographical concentration risk: ACC is operating in a highly competitive market, dominated by the large cement manufactures with wide brand acceptability. High competition restricts the pricing flexibility of the industry participants and has a negative bearing on the profitability. Furthermore, the operations of the firm are confined in the state of Assam only. Hence, presence in only a single state leads to geographical concentration risk for the firm. Key Rating Strengths Experienced partners: ACC is currently managed by Mr. Naba Kumar Basumatary who has around two decades of experience in cement industry, looks after the day to day operations of the firm. He is being duly supported by the other partners Mr. Debasis Das, Mr. Apurba Talukdar, Mr. Debi Lal Choudhary, Mr. Harish Chandra Tripathi, Mr. Mrinal Jyoti Das and Mr. Durgesh Chandra Choudhary along with a team of experienced personnel. Wide dealer network and improving capacity utilization: The firm has around 80 dealers for distribution of its products in the state of Assam. The firm has commenced operations from June 2014 and thus FY15 was the first year of operations for the firm. In FY15, the capacity utilization was at 45% which improved to 50% in FY16 and further improved to 60% in FY17. The capacity utilization of ACC remained at a moderate level of 60% in FY17. The capacity utilization improved mainly on account of higher demands of product in the market. Comfortable capital structure with satisfactory debt coverage indicators: The capital structure of the firm remained comfortable marked by debt equity and overall gearing ratios at 0.26x and 0.90x respectively as on March 31, 2017. The interest coverage ratio improved to 2.61x in FY17 due to higher increase in PBILDT levels. The total debt to GCA also improved in FY17 due to low debt level as on account closing date and higher generation of gross cash accruals and the same remained at 6.81x in FY17. ACC was established as a partnership firm in 2009 by Mr. Naba Kumar Basumatary and Debasis Das for setting up a cement grinding unit. The firm has been engaged in the business of manufacturing cement at its plant located at Baska, Assam with aggregate installed capacity of 99000 metric ton per annum. The firm has started commercial operations from June, 2014 onwards. The cement manufactured by the company is marketed under the brand name of 'NEERMAAN' in the state of Assam. ASWATH SAW MILL: Ind-Ra Moves B Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Aswath Saw Mill's (ASM) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR35 mil. Fund-based limit migrated to non-cooperating category with IND B(ISSUER NOT COOPERATING) rating; and -- INR120 mil. Non-fund-based limits migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Aug. 11, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE ASM was established in 1990 as a proprietorship concern. The company processes and supplies imported teak wood to customers in the construction and commercial vehicle manufacturing industries. ASWATH SAW MILL: Ind-Ra Corrects August 11 Release -------------------------------------------------- This announcement corrects the version published on August 11, 2016 that incorrectly mentioned the issuer name as Asawth Saw Mill. An amended version is as follows: India Ratings and Research (Ind-Ra) has assigned Aswath Saw Mill (ASM) a Long-Term Issuer Rating of 'IND B'. The Outlook is Stable. The instrument-wise rating actions are: -- INR35 mil. Fund-based facility assigned with IND B/Stable rating; and -- INR120 mil. Non-fund-based facility assigned with IND A4 rating. KEY RATING DRIVERS The ratings reflect ASM's weak credit profile and stressed liquidity. Provisional financials for FY16 indicate revenue of INR183 million (FY15: INR238 million), net leverage of 5.0x (6.5x) and EBITDA interest cover of 1.4x (1.6x). Revenue declined substantially on subdued demand from the real-estate industry. Profitability margin improved 180bp yoy to 5.2% on the introduction of a new product imported from South America. The ratings also factor in the company's stressed liquidity position with multiple instances of overutilisation of its fund-based facilities for up to 10 days during the 12 months ended June 2016. The ratings are further constrained by the company's volatile profitability with operating EBITDA margin fluctuating between 2.3% and 5.2% over the last five years on timber price movements and currency fluctuation as the firm is fully dependent on imports. The ratings are supported by the promoter's two decade-long experience in the trading and processing of wood. RATING SENSITIVITIES Positive: An increase in the scale of operations along with an improvement in the liquidity position will be positive for the ratings. Negative: Further liquidity deterioration resulting in deterioration in the credit metrics or stressed working capital cycle will be negative for the ratings. COMPANY PROFILE ASM was established in 1990 as proprietorship concern. The company processes and supplies imported teak wood to customers in the construction and commercial vehicle manufacturing industries. BHUSHAN STEEL: JFE Holdings and JSW Steel to Bid for Firm --------------------------------------------------------- Reuters reports that Japan's JFE Holdings Inc and India's JSW Steel Ltd are lining up a joint bid with a private equity firm for the assets of India's insolvent Bhushan Steel Ltd, two industry sources familiar with the matter said. Under the plans, JFE would set up a special purpose vehicle with the two partners to manage the assets, Reuters says. JFE would hold a majority stake in the vehicle, while JSW Steel would operate Bhushan Steel's plants, Reuters relates citing sources who did not want to be named as the details are not public. JFE already owns a 15 percent stake in JSW, Reuters notes. Reuters relates that the bid, if successful, will give JFE a bigger foothold in the fast-growing Indian market where it has had a presence since 2010 in partnership with JSW Steel. It will also help JSW Steel expand in northern and eastern India without overstretching its balance sheet. With unpaid debt of nearly INR450 billion ($6.9 billion), Bhushan Steel was pushed into bankruptcy proceedings a few months ago after India's central bank steered 12 of the country's biggest loan defaulters to insolvency proceedings, according to Reuters. Reuters says the final bids for Bhushan Steel are due in late December. JSW Joint Managing Director and Group CFO Seshagiri Rao would neither confirm nor deny the planned acquisition vehicle with JFE as the majority partner, but told Reuters: "It is not necessary that everything has to be built on the balance sheet of JSW." According to Reuters, Rao said JSW Steel was interested in five steelmakers that were in bankruptcy proceedings, including Bhushan Steel, but had not taken a final decision on whether to bid for all of them. He also said JSW was examining several models for possible bids. JSW Steel would look to create a structure that does not increase its debt to earnings before interest, tax, depreciation and amortization (EBITDA) ratio beyond 3.75 and its debt-equity ratio beyond 1.75, Rao told Reuters. In response to a query from Reuters, a JFE spokesman said the Japanese group was considering all possible business opportunities as part of an agreement with JSW. "But there is no concrete deal that has been firmed up," the spokesman said. India-based Bhushan Steel manufactures auto-grade steel. The National Company Law Tribunal admitted the bankruptcy plea against the steel company filed by State Bank of India on July 26. Bhushan Steel's total debt stood at around INR42,355 crore as of March 31, 2017. The insolvency resolution process for Bhushan Steel is expected to be completed by Jan. 22, 2018, LiveMint.com said. BSC C&C KURALI: CARE Lowers Rating on INR227.92cr LT Loan to D -------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of BSC C&C Kurali Toll Road Limited (BSC Kurali), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 227.92 CARE D Revised from CARE B+ Detailed Rationale& Key Rating Drivers The revision in ratings is on account of delays in meeting debt obligations due to lower than expected traffic on the toll road resulting mismatch of cash flows. Detailed description of the key rating drivers Key rating weakness Delays in meeting debt obligations, due to lower than expected traffic on the toll road resulting mismatch of cash flows The company has delayed in meeting debt obligations, primarily due to lower than expected traffic on the toll road resulting in mismatch of cash flows. Traffic on BSC Kurali's road has been lower than that envisaged earlier, primarily on account of slowdown in economic growth during the past few years. Further, with the restrictions imposed by the government on movement of overloaded vehicles from April 2017 onwards, the revenue from overloading fees reduced considerably, lowering the toll revenue. Risk associated with absence of fixed Major Maintenance agreement The company is in the process of entering into fixed price major maintenance with BSC-C&C JV. Further, the company is planning to carry out the MM cycle in FY18, therefore it is susceptible to price variation with respect to the key raw materials to carry out MM. The expenses pertaining to MM will be funded through sponsors (BSCPL) support and by availing debt from banks. Interest rate risk The cash flows of BSC Kurali shall remain exposed to variations in interest rate on the project debt as the loans are subject to interest rate resets. As a result, steep increases in the interest rate will subject the SPV to cash flow risk. Key rating strengths Experienced Promoters BSC Kurali is a SPV promoted by BSCPL and C&C. BSCPL is an ISO 9001:2000 accredited infrastructure development company and is into execution of projects for over 3 decades. BSCPL is engaged in various infrastructure developments segments such as roads, bridges, irrigation projects, airports, real estate and Hydro power plants. The company has strong execution capabilities having executed 250 projects aggregating to around 9000 lane km. BSC C&C Kurali Toll Road Limited (BSC Kurali) is a Special Purpose Vehicle (SPV) incorporated in February 2007 by BSCPL Infrastructure Limited (BSCPL;) and C&C Constructions Limited (C&C), which currently holds 51% and 49% stake in the company respectively. The project was awarded for Design, Engineering, Finance, Construction, Operation and Maintenance of Kurali Kiratpur Section from Km 28.6 to Km. 73.2 of NH-21 in the State of Punjab under National Highways Development Program (NHDP) Phase IIIA on Build, Operate and Transfer (Toll) basis" by National Highways Authority of India (NHAI). The concession Agreement (CA) was executed between BSC Kurali and NHAI on 25th June 2007 for a concession period of 20 years which includes of 2.5 years of construction. The SPV is for the purpose of widening of an existing 44.60 km long, 2- lane stretch between Kurali and Kiratpur to 4- lane and stretching and maintenance of the existing 2- lane section. The total cost of the project was INR408.10 crore. The project has achieved COD in August 2011. CHOKSEY CHEMICALS: CRISIL Reaffirms B Rating on INR6.25MM Loan -------------------------------------------------------------- CRISIL's ratings on the bank facilities of Choksey Chemicals Private Limited (CCPL) continue to reflect its small scale of operations in the construction chemicals industry and working- capital-intensive operations. The ratings also factor in the company's below-average financial risk profile, marked by below- average debt protection metrics and a high external borrowings. These rating weaknesses are partially offset by CCPL's diverse customer profile and the promoters' extensive experience in the construction chemicals industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL A4 (Reaffirmed) Cash Credit 6.25 CRISIL B/Stable (Reaffirmed) Letter of Credit 1 CRISIL A4 (Reaffirmed) Proposed Fund- Based Bank Limits 3.5 CRISIL B/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in construction chemicals industry: CCPL manufactures construction chemicals and concrete admixtures, which are used in the construction industry for enhancing attributes of end products. The construction chemicals industry is marked by the presence of a few large players. CRISIL believes that CCPL's scale of operations will remain small and that the company will continue to face competition from large players over the medium term, leading to restricted pricing flexibility. * Working-capital-intensive operations: CCPL's operations are highly working-capital-intensive, with gross current assets ranging from 165 to 200 days over past three years ending through March 31, 2017. CRISIL believes that CCPL's operations will remain working-capital-intensive over the medium term and it will continue to stretch its creditor to maintain its liquidity. * Weak financial risk profile: CCPL's financial risk profile is constrained by negative net worth, high gearing, and below- average debt protection metrics. Due to working capital intensive operations, the financial risk profile of the company is expected to remain weak over the medium term. Strength * Diverse customer profile and promoter's extensive industry experience: CCPL has been manufacturing waterproofing and related products for more than 30 years. Over the years, CCPL has begun manufacturing a wide range of construction chemicals and related products, and provides services for the application of its products. CRISIL believes that CCPL will continue to benefit from its promoter's extensive experience in the construction chemicals industry, over the medium term. Outlook: Stable CRISIL believes that CCPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case of a significant improvement in operating income and profitability, leading to an improved financial risk profile, especially debt protection metrics and TOLTNW ratio or if substantial long term funds from the promoter's shores up its liquidity. Conversely, the outlook may be revised to 'Negative' if CCPL's profitability deteriorates further or if there is a stretch in its working capital cycle resulting in liquidity pressure. CCPL, established in 1985 and promoted by Mr. Girish C Choksey, manufactures construction chemicals and concrete admixtures. The company provides a range of pre- and post-construction chemicals. It manufactures construction chemicals at its unit in Taloja (Maharashtra), and concrete admixtures at its facility in Silvassa (Dadra and Nagar Haveli). It also provides water- proofing services. GAURISANKAR ELECTRO: CARE Moves D Rating to Not Cooperating ----------------------------------------------------------- CARE has been seeking information from Gaurisankar Electro Castings Pvt. Ltd. (GECPL) to monitor the ratings vide letters/e- mails communications dated October 4, 2017, October 10, 2017, October 13, 2017 and numerous phone calls. However, despite our 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 GECPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 8.26 CARE D; ISSUER NOT Facilities COOPERATING; Revised from CARE B+ on the basis of best available information Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The rating has been revised on account of the ongoing delays in debt servicing by the company. Detailed description of the key rating drivers Key Rating Weaknesses Ongoing delays in debt servicing: There are on-going delays in servicing of debt obligations by the company due to its stressed liquidity position. GECPL, incorporated in 2001 by Mr. Ramjeet Prasad and Mr. Sunil Kumar based out of Jharkhand with the objective of manufacturing of iron & steel products. Since inception, the company is engaged in manufacturing of mild steel (MS) bars and the facility of the company is located at Giridih, Jharkhand with an annual installed capacity of 17000 Metric Tonnes per annum for M.S. Bar, 24,000 Metric Tonnes per annum for M.S. Ingot and 2000 Metric Tonnes per annum for M.S. Scrap. GAYATRI ROLLING: CRISIL Raises Rating on INR5.5MM Loan to B+ ------------------------------------------------------------ CRISIL has upgraded its rating on the long-term bank facilities of Gayatri Rolling Mills Private Limited (GRMPL) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Term Loan 3.09 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects the company's improved business risk profile because of increased scale of operations and turnaround in profitability. Net sales stood at INR70 crore in fiscal 2017, up 27% over the previous fiscal, and operating margin improved to 3.9% from a negative margin in the previous fiscal. Revenue growth is expected at 5-8% in fiscal 2018 with stable operating margin, partly supported by stabilisation of newly installed continuous casting machine. Working capital management also improved, indicated by gross current assets of 76 days as on March 31, 2017, compared to 126 days a year earlier. The rating continues to reflect the company's below-average financial risk profile, stretched liquidity, and modest scale of operations in a competitive industry. These weaknesses are partially offset by its promoters' extensive experience in the steel industry, and their funding support. Analytical Approach Unsecured loan of INR4.50 crore as on March 31, 2017, has been treated as neither debt nor equity as it is expected to remain in the business over the medium term and has less interest than the market rate. Key Rating Drivers & Detailed Description Weaknesses * Below-average financial risk profile: Networth remained small at INR5.96 crore as on March 31, 2017. Debt protection metrics improved, but remained average, with interest coverage and net cash accrual to total debt ratios at 1.9 times and 0.15 time, respectively, in fiscal 2017. Gearing was 1.3 times and total outside liabilities to tangible networth ratio was 2 time as on March 31, 2017. Liquidity remains stretched because of high bank line utilisation and sizeable annual debt obligation. * Modest scale of operations and volatile operating profitability: Despite its track record of more than 10 years, the company's topline remained modest at INR70 crore in fiscal 2017 due to intense completion in the industry. Moreover, due to volatile steel prices and low bargaining power, operating margin was volatile in the past 3-4 fiscals. Operating margin was 3.9% for fiscal 2017 against operating loss of 1.1% in the previous fiscal. Strength * Promoters' extensive experience in the steel industry, and their funding support: Presence of more than 10 years in the steel industry has enabled the promoters to establish strong relationships with clients. The promoters have also infused funds when needed to support business operations. Outlook: Stable CRISIL believes GRMPL will continue to benefit from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if sustained growth in revenue and profitability leads to higher-than-expected cash accrual and improved liquidity. The outlook may be revised to 'Negative' if stretched working capital cycle; large, debt-funded capital expenditure; or decline in profitability weakens the financial risk profile, especially liquidity. GRMPL was established as a partnership firm and was reconstituted as a private limited company in 2005. It is promoted by Raipur, Chhattisgarh-based Mr Umesh Agarwal and his family. The company manufactures steel ingots and thermo-mechanically treated (TMT) bars, and is ISO 9001:2008 certified. Most of the ingot output is used for captive consumption, and the rest is sold in the open market. GENNEXT ABASAN: CRISIL Reaffirms 'B' Rating on INR3MM Cash Loan --------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Gennext Abasan Private Limited (GAPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3 CRISIL B/Stable (Reaffirmed) Letter of Credit 10 CRISIL A4 (Reaffirmed) The rating continues to reflect weak financial risk profile because of a small networth, and below-average capital structure and debt protection metrics. The ratings also factor in a modest scale of operations, leading to low profitability. These rating strengths are partially offset by the extensive experience of promoters in the polymer trading industry. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: The financial risk profile remains weak because of small networth, and below-average capital structure and debt protection metrics. The total outside liabilities to tangible networth (TOL/TNW) ratio was at 4.01 times as on March 31, 2017 and interest coverage was weak at 0.9 times for fiscal 2017. * Modest scale of operations leading to low profitability: Scale of operation 'with revenues of INR76 crore in fiscal 2017 continues to remain modest. The fragmented and trading nature of the industry and modest scale of operations limit GAPL's ability to bargain with its suppliers and customers, leading to low operating margin and pressure on working capital management. The operating margin was at 2.2-2.5% over the three years through fiscal 2017. Strength * Extensive experience of promoters in the polymer trading industry: The promoters have over 25 years of experience in the polymer industry. Over the years, the promoters have established strong relationships with customers and suppliers and have established strong relations with the dealers and distributors of Gas Authority of India Ltd and Indian Oil Corporation Ltd, achieving a turnover growth rate of 45% over the three years ended March 31, 2017. Outlook: Stable CRISIL believes GAPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if substantial and sustained improvement in revenue or if capital structure or networth considerably improve on the back of sizeable equity infusion from its promoters. The outlook may be revised to 'Negative' if there is a steep decline in capital structure caused most likely by a large, debt-funded capital expenditure or a stretch in its working capital cycle. Established in 2007, GAPL, based in Indore, Madhya Pradesh, is a privately owned company and is promoted by Mr. Anoop Singh Yadav and his wife Ms Shashi Singh Yadav. It trades in polymer granules. GO GREEN: CARE Moves D Rating to Not Cooperating Category --------------------------------------------------------- CARE has been seeking information from The Go Green Build Tech Private Limited (GGB) to monitor the rating(s) vide e-mail communications/ letters dated October 25, 2017, and numerous phone calls. However, despite our 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 GGB's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. CARE gave these ratings: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 9.56 CARE D; ISSUER NOT Facilities COOPERATING Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of last rating on March 20, 2017, the following was the rating consideration: There was delay in stabilization of the newly set up manufacturing facilities which was also new venture for its promoters. This has resulted into liquidity stress position and ongoing delays in servicing the debt obligations. The Go Green Buildtech Private Limited (GBP) was incorporated in December 26, 2012. The company is promoted by Mr Umesh Chand Jain, Mr Rishabh Jain and Mr Nikhil Jain. GBP is a part of the "Velveleen Group" which has interests in the manufacturing of velvet and fabric, real estate infrastructure development, manufacturing of concrete bricks and education. GBP is engaged in manufacturing of civil construction materials such as fly ash bricks at its manufacturing unit at Dadri, Uttar-Pradesh with installed capacity of 5 crore pieces per annum. The commercial production of its fly ash plant was commenced in June 2014. The product finds its usage in construction of commercial building and residential building. The main raw material for manufacturing the products is fly ash. GOPAL KRISNA: Ind-Ra Migrates B Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Gopal Krishna Rice Mills'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 B(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR70 mil. Fund-based working capital limit 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 Nov. 16, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Gopal Krishna Rice Mills is a partnership entity engaged in rice milling and sorting. HANUMAN COTTON: CARE Lowers Rating on INR8.01cr LT Loan to 'D' -------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Hanuman Cotton Industries (HCI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 8.01 CARE D; ISSUER NOT Facilities COOPERATING; Revised from CARE B+; ISSUER NOT COOPERATING; Based on best available information Detailed Rationale & Key Rating Drivers Ongoing delays in Debt servicing The revision in the rating assigned to the bank facilities of Hanuman Cotton Industries is primarily due to irregularity in servicing its debt obligations. Hanuman Cotton Industries (HCI) was constituted in March 2006 as a partnership firm by Vekaria family based out of Amreli (Gujarat) by eight partners with unequal profit and loss sharing agreement among them. HCI is primarily engaged in cotton ginning & pressing activities with an installed capacity of 10,886 Metric Tonnes Per Annum (MTPA) for cotton bales, 18,380 MTPA for cotton seeds and oil-seed crushing facility with a capacity of 1381 MTPA as on March 31, 2015 at its manufacturing facility located at Savarkundla in Amreli district (Gujarat). HEADWORD PUBLISHING: CRISIL Lowers Rating on INR7MM Loan to 'B' --------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility of Headword Publishing Company Private Limited (HPCPL), to 'CRISIL B/Stable' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL B/Stable (Downgraded from 'CRISIL B+/Stable') Financial risk profile has weakened, due to a sharp increase in gearing to 4.9 times as on March 31, 2017, from 1.89 times, a year ago, as the company contracted fresh debt from non-banking finance companies (NBFCs), and got its cash credit limit enhanced in January 2017, thus taking the total debt to INR8.6 crore. Increase in the scale of operations led to a stretch in receivables, and exerted pressure on working capital management which the company met through debt financing. Interest coverage ratio has also reduced to 2 times in fiscal 2017, from 2.8 times in the previous fiscal. Liquidity has weakened, with debt raised from NBFCs in fiscal 2017, the company now has maturing debt of INR0.36 crore due in fiscal 2018 against cash accruals of INR0.6 crore. The rating reflects modest scale of operations and high working capital requirements. The financial risk profile is also weak driven by increased gearing and reduced debt protection metrics. These weaknesses are partially offset by the extensive experience of the promoters in the publishing industry. Analytical Approach CRISIL has treated unsecured loans of INR2.19 crore as on March 31, 2017, extended by HPCPL's promoters as neither debt nor equity, as the loans are non-interest bearing, and likely to remain in the business. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: Operating income of INR22.3 crore in fiscal 2017 (though higher than INR16.3 crore in fiscal 2016) reflects the modest scale of operations, which in turn, limits the bargaining power with customers and suppliers, and exerts pressure on profitability and working capital management. With revenue of INR85 lakh for the first quarter ended June 30, 2017, the scale is expected to remain modest over the medium term. * High working capital requirement: Operations remain working capital intensive, with gross current assets of 306 days as on March 31, 2017, led by large credit offered to customers, also because bulk of revenue is reported in the last quarter. * Weak financial risk profile: Financial risk profile was marked by high gearing of 4.9 times as on March 31, 2017, owing to the long-term debt raised from NBFCs. Debt protection metrics were also weaker, due to an increase in interest outgo, with interest coverage ratio at 2 times in fiscal 2017, vis-a-vis 2.83 times for the previous fiscal. Strengths * Extensive experience of the promoter: Key promoter, Mr Manzar Khan, has experience of over a decade in the publishing industry, through other companies, which includes his stint as managing director of Oxford University Press, a leading publishing company in India. He is actively involved in the functional areas of business, and has strong relationships with suppliers and customers. The company also has a diversified product portfolio, with around 100 titles in subjects such as English, social studies, science, mathematics, and computer science. Outlook: Stable CRISIL believes HPCPL will continue to benefit from the extensive experience of its promoter. The outlook may be revised to 'Positive' if the company reports substantial and sustained growth in revenue, stable profitability and better working capital management leading to substantial improvement in financial risk profile. The outlook may be revised to 'Negative' if the capital structure weakens because of lower-than-expected profitability or considerable stretch in the working capital cycle. HPCPL, incorporated in 2013, publishes books for Central Board of Secondary Education (CBSE), Indian Certificate of Secondary Education (ICSE), and Nagaland Board of School Education (NBSE). The company has been promoted by Mr Manzar Sayeed Khan and Mr. Kapil Gupta. Net profit was INR0.51 crore on net sales of INR22.35 crore in fiscal 2017, against INR0.41 crore and INR16.35 crore, respectively, in fiscal 2016. INVENTION INDIA: CRISIL Lowers Rating on INR6MM Loan to 'D' ----------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Invention India (Exports) Private Limited (IIL) to 'CRISIL D/CRISIL D' from 'CRISIL B/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Foreign Bill 6 CRISIL D (Downgraded from Discounting 'CRISIL B/Stable') Letter of Credit 1 CRISIL D (Downgraded from 'CRISIL A4') Packing Credit 2.5 CRISIL D (Downgraded from 'CRISIL A4') Proposed Long Term 1.35 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL B/Stable') The downgrade reflects a recent instance of delay in interest payment on packing credit. The rating also reflects the small scale of operations. However, it is expected to benefit from extensive promoter experience. Key Rating Drivers & Detailed Description Weakness * Delay in meeting interest obligation: Interest obligation due on October 5, 2017, has not yet been paid. * Small scale of operations: Revenue of INR14.8 crore in fiscal 2016 Strengths * Extensive promoter experience: The promoters have about four decades of experience in the industry. Their experience helps the company in establishing and maintaining good relations with customers and suppliers. IIL was incorporated in 1978 by Mr Harbhajan Singh and Mr Kulbir Singh. Its plant in Sonipat (Haryana) has manufacturing capacity of 1.8 million readymade garments per annum. The company derives most of its revenue from exports to Europe. JAI MATA: CARE Reaffirms B Rating on INR10.60cr LT Loan ------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Jai Mata Di Food Processing Private Limited (JMFP), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 10.60 CARE B; Stable Reaffirmed In the absence of minimum information required for the purpose of rating, CARE was unable to express an opinion on the ratings of JMFP and in line with the extant SEBI guidelines, CARE revised the ratings of bank facilities of the company to 'CARE B; ISSUER NOT COOPERATING'. However, the company has now submitted the requisite information to CARE. CARE has carried out a full review of the ratings and the ratings stand at 'CARE B; Stable'. Detailed Rationale& Key Rating Drivers The ratings assigned to the bank facilities of Jai Mata Di Food Processing Private Limited (JMFP) continue to be constrained by its short track record coupled with small scale of operation, highly fragmented and competitive nature of industry, high regulations by government and high working capital intensity and exposure to vagaries of nature. The ratings, however, continue to draw comfort from experienced promoters, proximity to raw material sources and subsidy entitlement. Going forward, the ability of the company to increase the scale of operations and profitability margins and ability to manage working capital effectively would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record coupled with small scale of operation: The scale of operations remained small as compared to its peers with a net loss of INR0.35 crore on total operating income of INR2.57 crore during FY17. This apart, the company has achieved turnover of INR13 crore during 7MFY18. Furthermore, the net worth base and total capital employed was low at INR5.09 crore and INR16.43 crore, respectively, as on March 31, 2017. JMFP started its commercial production in January, 2017 thus having a short track record of operation of around ten months. Highly fragmented and competitive nature of industry: JMFP's plant is located in Patna, Bihar which is one of the hubs for paddy/rice cultivating region. Owing to the advantage of close proximity to raw material sources, large number of small units are engaged in milling and processing of rice in the region. This has resulted in intense competition which is also fuelled by low entry barriers. Given that the processing activity does not involve much of technical expertise or high investment, the entry barriers are low. High regulations by government: The Government of India (GoI) decides a minimum support price (MSP - to be paid to paddy growers) for paddy every year limiting the bargaining power of rice millers over the farmers. The MSP of paddy was increased during the crop year 2017-18 to INR1550/quintal from INR1470/quintal in crop year 2016-17. Given the market determined prices for finished product vis-Ö-vis fixed acquisition cost for paddy, the profitability margins are highly volatile. Such a situation does not augur well for the company, especially in times of high paddy cultivation. High working capital intensity and exposure to vagaries of nature: Rice milling is a working capital intensive business, as the rice millers have to stock paddy by the end of each season till the next season since the price and quality of paddy is better during the harvesting season. Further, while paddy is sourced generally on cash payment, the millers are required to extend credit period to their customers. Accordingly, average working capital utilization remained moderately high at 95% during the last 12 months ended October 31, 2017. Also, paddy cultivation is highly dependent on monsoons, thus exposing the fate of the entity's operation to vagaries of nature. Key Rating Strengths Experienced promoters: The promoter of JMFP is Mr Sanjay Kumar, Director, aged about 44 years, having around decade long experience in the rice milling industry. He is being duly supported by the other promoter director MrsSabita Devi and MrsRuma Devi having experience of around 2 years in similar line of business. The promoters are actively involved in the strategic planning and running the day to day operations of the company along with a team of experienced personnel. Proximity to raw material sources: JMFP's plant is located in Patna District, Bihar which is in the midst of paddy growing region. The entire raw material requirement is met locally from the farmers (or local agents) which helps the company to save substantial amount of transportation cost and also procure raw materials at effective price. Subsidy entitlement: JMFP is entitled to receive capital subsidy of INR3.91 crore from government of Bihar. Jai Mata Di Food Processing Pvt. Ltd. (JMFP) was incorporated in November, 2014 by Mr. Sanjay Kumar, Mrs. Sabita Devi and Mrs. Ruma Devi of Patna, Bihar. The company is engaged in processing and milling of rice. The milling unit of JMFP is located at Bihta, Patna with processing capacity of 22,810 metric tonne per annum (MTPA), which is in the vicinity to a major rice growing area. The company has started commercial operations from January, 2017 onwards. Mr Sanjay Kumar (aged, 44 years), having around decade long experience in the rice milling industry, looks after the day to day operations of the company. He is supported by other directors MrsSabita Devi (aged, 41 years) and MrsRuma Devi (aged, 36 years) and a team of experienced professionals. JAY AGRO: CARE Lowers Rating on INR16.51cr LT Loan to D ------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Jay Agro Industries (JAI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 16.51 CARE D Revised from CARE B+; Facilities ISSUER NOT COOPERATING; Based on best available information Detailed Rationale & Key Rating Drivers Ongoing delays in Debt servicing The revision in the rating assigned to the bank facilities of JAI is primarily due to irregularity in servicing its debt obligations. Vadodara-based (Gujarat) JAI was promoted by Mr Nimmagadda Prasad and MsAruna Prasad for manufacturing of Pesticides in 2003. JAI's manufacturing plant is located in Vadodara district of Gujarat having an installed capacity of 2,400 metric tons per annum (MTPA) & 600 kilo liter per annum (KLPA) as on March 31, 2015 for production of Agrochemicals, Pesticides and Insecticides. JAI is an ISO 9001: 2008 and UKAS Quality Management certified firm. KEDAR COTTON: CARE Reaffirms B+ Rating on INR9.80cr LT Loan ----------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Kedar Cotton Industries (KCI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 9.80 CARE B+; Stable Reaffirmed Detailed rationale The rating assigned to the bank facilities of KCI are primarily constrained on account of low profit margins, leveraged capital structure, weak debt coverage indicators and moderate liquidity position in FY17 (refers to the period April 1 to March 31). Furthermore, the ratings are also constrained on account of susceptibility of profit margins to volatility in the raw material prices and inherent risks associated with the cotton industry such as high degree of fragmentation, seasonality and impact of the government policies. The rating however derives strength from experience of the partners in the cotton industry along with the presence in cotton producing belt of Gujarat. Further, the rating also takes into account healthy growth reported by the firm in its total operating income during FY17. KCI's ability to improve its scale of operations, profit margins, capital structure as well as better working capital management would remain the key rating sensitivities. Detailed description of key rating drivers Key Rating Weaknesses Financial risk profile marked by thin profit margins, leveraged capital Structure, weak debt protection indicators and moderate liquidity position: During FY17, profit margins have dipped and continue to remain thin marked by the PBILDT margin of 1.31%. Further, PAT margin has also remained very low owing to low value addition nature of operations. On the back of increase in the total debt against low net worth base, capital structure has deteriorated and continue to remain leveraged marked by an overall gearing ratio of 5.66x as on March 31, 2017 as against 5.36x as on March 31, 2016. Further, debt coverage indicators have also deteriorated in FY17 marked by total debt to GCA of 53.31x as on March 31, 2017 as against 41.18x as on March 31, 2016 due to higher debt level against low GCA level. Interest coverage ratio also stood low at 1.42x during FY17 which was in line as compared to previous year. The liquidity position has continued to remain moderate. During FY17, operating cycle has shortened and stood at 50 days as compared to 61 days during FY16, due to improvement in collection period. Current ratio has remained in same line and stood moderate at 1.62 times as on March 31, 2017. However, quick ratio has marginally improved and stood at 0.98 times as on March 31, 2017. The average utilization of working capital limits remained at 58% during the past 12 months ended October, 2017. Presence in a highly fragmented cotton ginning industry along with constitution as a partnership firm: High proportion of small scale units operating in the cotton value chain has resulted in the fragmented nature of the industry as well as intense competition within the players. In addition to this; the firm also faces risk of withdrawal of capital by the partners thereby limiting overall financial flexibility. Susceptibility of margins to cotton price fluctuations and supply for cotton are highly regulated by government: Profit margins of KCI remain susceptible to changes in its primary raw material i.e. raw cotton which is being agricultural commodity its prices are volatile in nature and linked to production in the domestic market. Further, the cotton prices in India are highly regulated by the government through MSP (Minimum Support Price) hence any adverse change in government policy may also impact the prices of raw cotton. Key Rating Strength Experienced promoters coupled with presence in cotton growing region of Gujarat: Promoters of KCI hold more than a decade of experience into similar line of operations. Furthermore, the manufacturing facilities of KCI are located at Kadi in Gujarat. KCI's presence in the cotton producing region results in benefit derived from lower logistic expenditure (both on transportation and storage), easy availability and procurement of raw materials at effective prices. Kadi (Gujarat) based KCI is a partnership firm established by six members of a Patel family which was taken over from Parikh Family in August 2008. Mr. Bharatbhai Patel and Mr. Laljibhai Patel are the key partners of the firm and all the partners actively look after the overall operations of the firm. KCI is involved in the cotton ginning & pressing and crushing of cotton seeds activity with main products as cotton bales, cotton seeds, cotton seed oil and cotton cake with an installed capacity of 12,750 Metric Tonnes Per Annum (MTPA) for cotton bales and 9,000 MTPA for crushing cotton seed as on March 31, 2017 at its sole manufacturing facility. KHEDUT COTEX: CARE Moves B+ Rating to Not Cooperating Category -------------------------------------------------------------- CARE Ratings has been seeking information from Khedut Cotex Private Limited to monitor the ratings vide e-mail communications/letters dated August 23, 2017, August 31, 2017, September 18, 2017, October 18, 2017, October 26, 2017, October 27, 2017, October 31, 2017 and numerous phone calls. However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. The rating on Khedut Cotex 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 8.40 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 January 12, 2017 the following were the rating strengths and weaknesses: Key Rating Weaknesses Financial risk profile marked by low profit margins, moderately leveraged capital structure, moderate debt coverage indicators and liquidity position: FY16 was the first full year of operations for KCPL. KCPL reported a total operating income (TOI) of INR10.36 crore during FY16, while PBILDT margin stood low at 3.09%. KCPL reported a net loss of INR0.20 crore during FY16 on account of higher depreciation and finance cost. KCPL's capital structure stood moderately leveraged marked by an overall gearing ratio of 1.30x as on March 31, 2016. Debt coverage indicators of the company also stood moderate at total debt to GCA of 5.69 years in FY16. Debt coverage indicators remained moderate marked by an interest coverage ratio of 2.11 times in FY16. KCPL's current ratio stood moderate at 1.38 times as on March 31, 2016 owing to high working capital borrowings. Working capital cycle remained comfortable and stood at 25 days during FY16. The company has to maintain high inventory holding period due to seasonal nature of business. The working capital limits remained utilized at 70% during past 10 months ended November 2016. Seasonality associated with cotton availability and susceptibility of margins to cotton price fluctuations and prices and supply for cotton are highly regulated by government: Prices of raw material i.e. raw cotton are highly volatile in nature and depend upon factors like, area under production, yield for the year, international demand supply scenario etc. Ginners usually have to procure raw materials at significantly higher volume to bargain bulk discount from suppliers. Further, cotton being a seasonal crop as it is available mainly from November to February results into a higher inventory holding period for the business. Presence in highly fragmented industry with short track of the company: High proportion of small scale units operating in the cotton value chain has resulted in the fragmented nature of the industry as well as intense competition within the players. KCPL commenced its operations in August, 2015 and full fledge working started from February 2016 and the entity operated only for two months in FY16. Key Rating Strengths Experienced promoter Mr. Amit Maganbhai Damasiya has an experience of eight years and Mr. Kanubhai Vashrambhai Padshala has an experience of two years in same line of business. Mr.Amit Damasiya looks after the operations of the company and Mr. Kanubhai Padshala looks after purchasing for the company. Proximity to cotton growing area of Gujarat: The manufacturing facilities of KCPL are located at Amreli in Gujarat. KCPL's presence in the cotton producing region results in benefit derived from a lower logistic expenditure (both on transportation and storage), easy availability and procurement of raw materials at effective prices and consistent demand for finished goods resulting in a sustainable and clear revenue visibility. Gondal-based (Rajkot) KCPL was established in August 2015 by Mr Amit Maganbhai Damasiya and Mr Kanubhai Vashrambhai Padshala as a private limited company which is engaged in cotton ginning and pressing. The manufacturing unit of the company is located in Amreli, Gujarat, which has an installed capacity of 216 tonnes per day as on March 31, 2016. M.G. INFRAESTATES: CRISIL Reaffirms B+ Rating on INR14MM Loan ------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of M.G. Infraestates Private Limited (MGIPL) at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 14 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect low booking status of ongoing projects and exposure to risks and cyclicality inherent in Indian real estate industry and geographic concentration. These rating weaknesses are partially offset by promoters' extensive experience in the real estate industry. Key Rating Drivers & Detailed Description Weakness * Low booking status of ongoing projects: Slowdown in the real estate sector and competition have kept bookings and customer advances for MGIPL's project low. Due to low booking, the company continues to face demand risk. Advance booking estimated is around 13 % by value as on Sept. 2017, however it is expected that advances would rise to 28% for the whole fiscal 2018. * Exposure to risks and cyclicality inherent in Indian real estate industry and geographic concentration: The real estate sector is cyclical, and marked by volatile prices and a highly fragmented market structure because of the presence of a large number of regional players. Moreover, the multiplicity of property laws and government regulations affects the project execution. Also there is geographical concentration in the revenue profile of the company as the only ongoing project is based out of Kanpur, Uttar Pradesh. Strengths * Promoters' extensive experience in the real estate industry: MGIPL is a part of the reputed Gulmohar group promoted by the Mehrotra family. The promoter has experience of over seven years and have developed more than five projects till date. Outlook: Stable CRISIL believes that MGIPL will continue to benefit over the medium term from the extensive industry experience its promoters. The outlook may be revised to 'Positive' in case of timely progress in the project within the budgeted cost, along with substantial customer bookings leading to healthy cash inflows. The outlook may be revised to 'Negative' in case of time or cost overrun in the project, lower-than-expected advances from customers leading to constrained liquidity. MGIPL, incorporated in 2012, is a real estate developer, promoted by Mr D N Mehrotra and his son Mr Arpan Mehrotra; it is a part of the Gulmohar group. The company is presently executing a residential real estate project, Gulmohar Greens, in Kanpur. The saleable area under construction is 435,945 square foot. MAA JAYCHANDI: CARE Reaffirms B Rating on INR6.40cr LT Loan ----------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Maa Jaychandi Multipurpose Cold Storage Private Limited (MJMCSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 6.40 CARE B; Stable Reaffirmed Detailed Rationale& Key Rating Drivers The ratings assigned to the bank facilities of MJMCSPL continues to remain constrained by its small scale of operations, seasonality of business and susceptibility to vagaries of nature, risk of delinquency in loans extended to farmers and high leverage ratio and presence in a highly competition industry,. The aforesaid constraints are partially offset by the extensive experience of the promoters, long track record of operations and proximity to potato growing area. Going forward, the ability of the company to increase its scale of operations, improve profitability margins and manage working capital effectively would be the key rating sensitivities. Key Rating Weaknesses Small scale of operations: The scale of operations of the company remained small marked by total operating income of INR3.09 crore (Rs.3.06 crore in FY16) with a PAT of INR0.09 crore (Rs.0.13 crore in FY16) in FY17. Seasonality of business and susceptibility to vagaries of nature: The agricultural products are seasonally harvested and preserved for the use in the off season. Accordingly MCSPL's operations are seasonal in nature. Furthermore, lower agricultural output may have an adverse impact on the rental collections as the cold storage units collect rent on the basis of quantity stored and the production of agricultural products are highly dependent on vagaries of nature. Risk of delinquency in loans extended to farmers: Against the pledge of cold storage receipts, MCSPL provides interest bearing advances to traders/farmers. Before the close of the season in November, the traders/farmers are required to pay their outstanding dues, including repayment of the loan taken, along with the interest. In view of this, there exists a risk of delinquency in loans extended to traders/farmers, in case of downward correction in potato or other stored goods prices as all such goods are agro commodities. High leverage ratio: Though, the capital structure of the company improved, the same remained leveraged marked by overall gearing ratio of 2.53xas on March 31, 2017. Highly competitive industry: In spite of being capital intensive, the entry barrier for new cold storage is low, backed by capital subsidy schemes of the government. As a result, the potato storage business in the region has become competitive, forcing cold storage owners to lure farmers by providing them interest free advances against stored potatoes which augments the business risk profile of the companies involved in the trade. Key Rating Strengths Experienced promoters and long track record of operations: The main promoter of MCSPL, Mr.Amit Kumar Samui having more than two decades of experience in the cold storage business and is actively involved in running the day to day operations of the company. He is assisted by the other directors along with a team of experienced professionals. Further, MCSPL was into cold storage business since 2008 and accordingly has long operational track record of operations. Proximity to potato growing area: The cold storage is located in potato growing belt of Paschim Medinipur district, West Bengal, having large presence of potato farmers, thereby making it suitable for them in terms of transportation and connectivity. MJMCSPL, incorporated in 2008, was promoted by the Samui family of Paschim Medinipur,West Bengal to set up a cold storage.The company is engaged in the business of providing cold storage facility primarily for potatoes. Besides providing cold storage facility the unit also works as a mediator between the farmers and marketers of potato, to facilitate sale of potatoes stored and it also provides interest free advances to farmers for farming purposes against potato stored. The cold storage unit of the company is located at Anandapur, Paschim Medinipur, West Bengal with a storage capacity of 2,00,000 quintals. MAHESHWARI INDUSTRIES: CARE Assigns B Rating to INR7cr LT Loan -------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Maheshwari Industries (MI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7.00 CARE B, Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of MI is constrained on account of modest and fluctuating scale of operations, thin profit margins, leveraged capital structure, weak debt protection metrics and working capital intensive operations. The rating is also constrained on account of its presence in highly fragmented industry leading to stiff competition and constitution of the entity as a proprietorship firm. The rating however, derives strength from experienced proprietor and long track record of operations. Ability of MI to increase its scale of operations and improve its profitability and capital structure amidst competition and efficient working capital management are the key rating sensitivities. Detailed description of the key rating drivers Key rating Weakness Modest and fluctuating scale of operations with thin profitability: MI's scale of operations remained modest and total income reflected a fluctuating trend during the period FY14-17 on account of volatility in the steel prices. However, during FY17 the total operating income of MI increased on account of improved sales realization along with several government initiatives of encouraging the domestic production as well consumption of steel. The operating profit margin of the firm has historically been on the lower side in the range of 2.26% to 3.46% due to trading nature of the business where the profit margins are susceptible to raw material prices along with intense competition in the steel industry and pricing pressure. Further the firm has reported net loss of INR0.26 crore during FY17 owing to lower PBILDT and slightly higher interest charges due to higher utilization of working capital limits during the year. Leveraged capital structure & working capital intensive nature of operations: The capital structure of the company stood leveraged in past owing to higher reliance on external debt and low net worth base. However, the capital structure has marginally improved as compared to previous accounting year on account of on account of lower debt level owing to repayment of term & vehicle loan and lower utilization of working capital borrowings as on balance sheet date. Furthermore, the debt service coverage indicators also stood weak in past due to high debt level leading to high interest charges along with low profitability. Operations of MI are working capital intensive mainly on account of funds being blocked in receivables resulting in high utilization of working capital limits. Proprietorship constitution of firm: MI being a proprietorship entity, the risks associated with withdrawal of proprietor' capital exists. The entity is exposed to inherent risk of proprietor' capital being withdrawn at time of personal contingency as also it has limited ability to raise capital and poor succession planning may result in dissolution of entity. Due to the proprietorship constitution, it has restricted access to external borrowing where net worth as well as credit worthiness of proprietor is the key factor affecting credit decision of lenders. Further, there has been instances of withdrawal in the past. Presence in highly fragmented industry leading to stiff competition: The company operates in the steel industry with a high level of competition from both the organized and largely unorganized sector. Moreover, the global & domestic macroeconomic environment continues to remain uncertain and poses a major challenge for the entities operating in the industry and having major export revenues. Key rating Strengths Experienced proprietor and long track record of operations: The proprietor of the firm i.e. Mrs. Meenakshi Maheshwari holds an experience of around two decade in the business of trading various forms of steel products through her association with MI. On account of long track record of operations and experience of the proprietor, the firm has gained a reputation and has established good relationships with its customers & suppliers. Maheshwari Industries (MI) was established in 1996 as a proprietorship firm by Mrs. Meenakshi Maheshwari. The firm is primarily engaged in trading of various forms of steel products. The product profile consists of TMT bars, angles, beams, channels, MS plates, epoxy coated steel etc. The firm caters to the domestic market primarily Maharashtra and Goa (constituting of 90% of total sales in FY17) with its clientele mostly constituting construction companies (constituting of 80% of total sales in FY17) and steel traders. The firm takes its supplies from local rolling mills (accounting for 60% of total purchases) and also other big steel manufacturers like TATA, JSW and Arcelor Mittal (accounting for 40% of total purchases). MJM INDUSTRIES: Ind-Ra Assigns B Issuer Rating, Outlook Stable -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned MJM Industries Private Limited (MJM) a Long-Term Issuer Rating of 'IND B'. The Outlook is Stable. The instrument-wise rating action is: -- INR200 mil. Proposed term loan assigned with Provisional IND B/Stable rating. The rating is provisional and shall be confirmed upon the sanction and execution of loan documents for the above facilities by MJM to the satisfaction of Ind-Ra. KEY RATING DRIVERS The ratings reflect MJM's small scale of operations due to a short operating track record. The company started operations in August 2016 and reported revenue of INR1.6 million in FY17. The operations were started on the leased premises on a pilot basis, to create product awareness and build up its marketing network and customer base before setting up a manufacturing facility. The ratings factor in high project off-take risk and project execution risk as financial closure is yet to be achieved for a proposed expansion. The company proposes to set up a manufacturing plant with an installed capacity of 0.10 million iron boxes and 0.18 million cylinders per annum. The total project cost is INR285.2 million and is proposed to be funded through a mix of debt and equity in the ratio of 2.35:1. The ratings are supported by the vast experience of the company's directors in the technical, project engineering and financial fields. RATING SENSITIVITIES Positive: Achieving financial closure and substantial progress of the project will be positive for the ratings. Negative: Non achievement of financial closure and/or any time and cost overruns in the project will be negative for the ratings. COMPANY PROFILE Incorporated in March 2013, MJM is a Telangana-based company, engaged in manufacturing liquefied petroleum gas operated iron boxes which are used to press the wrinkles and creases in clothes. It has filed a patent for the product as a title 'A Gas Operated Ironing Device'. PARAS GOTTAM: CARE Reaffirms B+/A4 Rating on INR10cr Loan --------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Paras Gottam and Company (PGC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- 10.00 CARE B+; Stable/CARE A4 term Bank Reaffirmed Facilities Detailed Rationale & Key Rating Drivers The ratings continue to remain constrained on account of its modest scale of operations of PGC in a highly competitive and fragmented Industry, weak debt coverage indicators and stressed liquidity position. The ratings are, further, constrained on account of vulnerability of margins to fluctuations in the raw material prices, its constitution as a proprietorship concern and customer concentration risk. The ratings, however, favorably take into account experienced management with established track record of operations, moderate profitability margins and comfortable capital structure. The ability of the firm to increase its scale of operations while maintaining profitability margin and improvement in debt coverage indicators with better management of working capital is key the rating sensitivities of the firm. Detailed description of the key rating drivers Key Rating Weakness Modest scale of operations with constitution as a proprietorship concern and customer concentration risk: Although, TOI of the firm has grown at a CAGR of 7.33% during FY13-FY16 on account of increase in sales volume, however, the scale of operations of PGC stood modest with TOI of INR25.28 crore and PAT of INR0.25 crore as per provisional result of FY17. Further, it has customer concentration risk as it generated around 98% of TOI from two customers. Further, its constitution as a proprietorship concern lead to limited financial flexibility and risk of withdrawal of capital. Weak debt coverage indicators and stressed liquidity position: Debt service coverage indicators of the firm stood weak with Total debt to GCA stood high at 79.48times as on March 31, 2017 and interest coverage ratio stood weak at 1.13 times in FY17. Further, the business of the firm is working capital intensive nature marked by elongated operating cycle of 738 days in FY17, deteriorated from 691 days in FY16 owing to higher inventory holding period and increase in collection period. Due to higher inventory, the current ratio stood comfortable at 2.90 times as on March 31, 2016, however, quick ratio stood below unity at 0.37 times as on March 31, 2017. Vulnerability of margins to fluctuations in raw material prices and presence in highly fragmented industry: The main raw material of the firm is rough stones and it maintains inventory for long period. Due to high inventory holding period, the firm is exposed to fluctuation in raw material prices. The sector in which firm operates is highly fragmented and unorganized. The gems and jewellery sector is highly-dependent on imports for its raw materials and among these raw materials, rough diamonds account for more than 50% of imports. These rough diamonds are cut, polished, and re-exported. Key Rating Strength Experienced management with established track record of operations: Mr. Paras Mal Jain, proprietor, is graduate by qualification and has around five decades of experience in the industry. He looks after overall affairs of the firm. The long standing experience and in-depth knowledge in stones industry of Mr. Paras Mal Jain has benefited the firm and has able to establish customer and supplier base in the market. Moderate profitability and comfortable capital structure: The profitability of the firm stood moderate with PBILDT and PAT margin of 11.74% and 0.97% respectively as per provisional result of FY17. The capital structure of the company stood comfortable with an overall gearing of 1.09 times as on March 31, 2017, deteriorated from 0.85 times as on March 31, 2016 mainly on account of increase in unsecured loans from proprietor and others. Jaipur (Rajasthan) based Paras Gottam and Company (PGC) was established in 1969 as a proprietorship concern by Mr. Paras Mal Jain. PGC is engaged in the business of processing of precious stones which includes cutting and finishing. The firm deals mainly in Emerald stones and also does processing as per requirement for other stones like Ruby, Sapphire, Diamond and etc. It procures rough stones mainly from Belgium, Zambia and Hong Kong and sells its product mainly in exports market like Belgium, New York, Hong Kong and Japan etc. Export sale has constituted around 99% of Total Operating Income (TOI) in FY17. PRABHUNATH PRASAD: Ind-Ra Assigns BB Issuer Rating -------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Prabhunath Prasad Thekedar (PPT) a Long-Term Issuer Rating of 'IND BB' with Outlook Stable. The agency has also assigned PPT's bank loans the following ratings: -- INR7 mil. Term loan due on March 2021 assigned with IND BB/Stable rating; -- INR150 mil. Non-fund-based working capital facility assigned with IND A4+ rating. KEY RATING DRIVERS The ratings reflect PPT's modest scale of operations because of the tender-driven nature of business and segment, geographical and client concentration. Revenue was INR728.70 million in FY17 (FY16: INR728.70 million). Also, its current order book of INR1,000 million provides only near-term revenue visibility. The ratings also reflect PPT's moderate and volatile operating margins (FY17: 7.78%) because it takes 15-18 months to execute an order and the contracts do not have a price escalation clause to mitigate volatility in input prices. However, the company has comfortable credit metrics because it has lower dependence on external debt and maintains adequate liquidity. In FY17, interest coverage (operating EBITDA/gross interest expense) was 12.77x (FY16: 22.59x) and financial leverage (adjusted debt/operating EBITDAR) was 0.34x (0.27x). The ratings are also supported by the firm's established track record of more than three decades in the civil construction business. RATING SENSITIVITIES Positive: Significant revenue visibility, leading to an increase in the scale of operations, and maintenance of the credit metrics will be positive for the ratings. Negative: Any decline in the revenue and EBITDA or lack of revenue visibility leading to any pressure on liquidity will be negative for the ratings. COMPANY PROFILE Established in 1992, PPT is engaged in contract-based civil construction work for public sector entities and various state government bodies. PROGNOSYS MEDICAL: CARE Assigns B+ Rating to INR2.50cr LT Loan -------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Prognosys Medical Systems Private Limited (PMSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 2.50 CARE B+; Stable Assigned Short-term Bank Facilities 7.50 CARE A4 Assigned Detailed Rationale& Key Rating Drivers The ratings assigned to the bank facilities of PMSPL are tempered by small scale of operations with fluctuating total operating income, profitability margins and operating losses during review period, weak debt coverage indicators, working capital intensive nature of operations and highly fragmented industry with intense competition from large number of players. The rating, however, derive strength by long track record of the company and experience of the promoters for more than two decades in medical supplies industry, comfortable capital structure during review period, healthy order book position and stable outlook of medical equipment industry. Going forward, ability of the company to increase its scale of operations and improve profitability margins in competitive environment, ability of the company to improve its debt coverage indicators and ability to manage working capital requirements effectively would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operations with fluctuating total operating income: The scale of operations of the company remained small marked by the total operating income (TOI) of INR16.23 crore in FY17 (Prov.). Furthermore, the net worth of the company is stood at moderate level of INR16.95 crore as on March 31, 2017(Prov.), as compared with other peers in the industry. The total operating income of the company is fluctuating during review period. The same increased from INR22.56 crores in FY15 to INR51.53 crores in FY16 at the back of increase in orders from various state governments and then decreased to INR16.23 crores in FY17(Prov.) due to lower orders received on account of demonetization. During H1FY18 (Provisional), the company has achieved total operating income of INR5.65 crore. Fluctuating Profitability margins and operating losses during review period: The company has fluctuating profitability margins and operating losses during review period. The PBILDT margin of the company increased from 5.80% in FY15 to 9.02% in FY16 due to increase in total operating income in absolute amount though increase in material cost, employee cost and overheads. The company has incurred operating and cash losses in FY17 (Prov.) due to increase in employee cost coupled with increase in material cost and cost of traded goods as percentage of total sales from 24% and 20% respectively in FY16 to 38% and 26% respectively in FY17 (Prov.), apart increase in interest cost. Weak Debt coverage indicators during review period: PMSPL has weak debt coverage indicators during review period. Total debt/GCA of the company, deteriorated from 1.96x in FY15 to 4.74x in FY16 due to increase in total debt though increase in GCA. Further to the company has incurred cash losses in FY17 (Prov.). Moreover, PBILDT interest coverage ratio has been fluctuating during the review period (FY15-FY17), the PBILDT interest coverage ratio improved from 2.58x in FY15 to 7.52x in FY16 due to increase in PBILDT though increase in interest cost. However in FY17 (Prov.) the company has incurred cash losses resulted in weak debt coverage indicators. Working capital intensive nature of operations due to high inventory holding and collection period: The company mainly utilizes unsecured loans from NBFCs and promoters to manage day to day operations. The company's working capital cycle days stood on a higher side of 227 days during FY15 and the same is declined to 150 days in FY16 due to decrease in inventory holding period from 123 days in FY15 to 82 days in FY16.The same increased to 437 days in FY17 (Prov.) due to increase in inventory holding period and collection period which stood at 181 days and 370 days respectively in FY17(Prov.). The clientele of PMSPL to the extent of 80%-95% are from Government sector, so receipts done based on fulfillment of performance and before release of payment the customer has to undergo for various quality checks. Normally the receipt period is 90 to 180 days and sometimes get stretched upto 1 year depending on the receipt of order and their installation works .Furthermore, the company makes the payment to its suppliers within 20-60 days and sometimes depending on the realization of debtors the company may avail the extension in credit period from its suppliers to 3-4 months. The average utilization of Cash Credit is almost full during the last 12 months. Profitability margins are susceptible to fluctuation in foreign exchange prices: PMSPL has 8% import purchases and 3% export sales. So the profitability margins are susceptible to fluctuation in foreign exchange prices. The company makes payment to its suppliers and receipt from customers at current exchange rate only. The company has got exchange difference income of INR0.06 crore in FY16 and 0.20 crore in FY17(Prov.). Highly fragmented industry with intense competition from large number of players: The company is engaged in designing, manufacturing, integrating and installing products related to digital radiology equipment which is highly fragmented industry due to presence of large number of organized and unorganized players in the industry resulting in huge competition. Key Rating Strengths Long track record of the company and experience of the promoters for more than two decades in medical supplies industry. PMSPL was incorporated in 2003 by Mr.V. Krishna Prasad (Managing Director), Mr.Kesava (Director) and Mr. Sunil Monga (Director). Mr.V. Krishna Prasad and Mr. Sunil Monga are Electronic Engineers and Mr.Kesava is Chartered accountant by qualification. All have more than two decades of experience in medical equipment industry. Comfortable capital structure during review period: The company has comfortable capital structure during review period marked by debt-equity and overall gearing which stood at 0.33x and 0.46x as on March 31, 2017(Prov.) due to low debt levels considering high tangible networth base. Healthy order book of INR64.42 crore to be executed by FY18: PMSPL has healthy order book of INR64.42 crore as on September 30, 2017 which translates to 3.97x of total operating income of FY17 and the same is likely to be completed by FY18. The said order book provides revenue visibility for short term period. The entire order value of INR64.42 crore pertains to various State Government medical departments. Stable outlook of medical equipment industry: India is fast growing as a key market for medical devices outsourcing. The industry has seen tremendous growth over the last decade and the current development trends indicate even greater potential in the coming years. Several joint ventures, agreements and loan licensing procedures have influenced the market. The government has also taken several reforms to develop the market by regulating it to bring out more transparency and by allowing foreign investments in the industry. Prognosys Medical Systems Private Limited (PMSPL), a Bangalore (Karnataka) based company, was incorporated in 2004 by Mr.V. Krishna Prasad (Managing Director), Mr.Kesava (Director ) and Mr. Sunil Monga (Director) at Chamarajpet, Bangalore, Karnataka. PMSPL is engaged in designing, manufacturing, integrating and installing products related to digital radiology equipment. The company is also engaged in manufacturing other related accessories, providing end-to -end solutions in the healthcare industry through the integrated delivery of medical devices, communication equipment, computers, servers, software supply, installation and maintenance of the same on a turnkey basis under the brand name of ProRad. PMSPL is an ISO 9001:2000 certified company for radiology imaging equipment and other allied healthcare products. Its major business operations range from high frequency x-ray, digital radiography systems, C-Arm, tele- radiology, telemedicine, home health and M-Health Solutions, and accessories such as automatic film processors. PMSPL covers customers in all over states of India and purchases majority of raw materials from local traders and imports to the extent of 8%.PMSPL has total installed capacity of 1000 systems p.a. RAJ HAIR: CRISIL Lowers Rating on INR10MM Bill Disc. to B+ ---------------------------------------------------------- CRISIL has downgraded its ratings on the bank loan facilities of Raj Hair International Private Limited (RHIPL) to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bill Discounting 10 CRISIL B+/Stable (Downgraded from 'CRISIL BB/Stable') Packing Credit 36 CRISIL A4 (Downgraded from 'CRISIL A4+') Proposed Long Term 1.2 CRISIL B+/Stable (Downgraded Bank Loan Facility from 'CRISIL BB/Stable') The downgrade reflects weakening of the business risk profile marked by continuous decline in the revenue levels since fiscal 2015 and the same is expected to remain constrained over the medium term. The downgrade also factors in deterioration in the financial risk profile on account of sizeable term debt availed by the company and the same is likely going to impact its liquidity risk profile over the medium term. CRISIL's ratings continue to reflect the extensive experience of promoters, and the company's strong track record in the human hair products industry. These strengths are partially offset by large working capital requirement, exposure to intense competition, and susceptibility to volatile foreign exchange (forex) rates. Key Rating Drivers & Detailed Description Weaknesses * Working capital intensity in operations: Operations are highly working capital intensive, with gross current assets of 539 days as on March 31, 2017, led by inventory of around 361 days, given the requirement to maintain different hair varieties. Though customers are offered credit of 75 to 100 days, suppliers are paid either immediately or in advance. Consequently, the bank limit remains highly utilised. * Susceptibility to intense competition and fluctuation in foreign exchange rates: Intense competition limits the scale of operations, (as reflected in revenue of around INR40 crore in fiscal 2017) and pricing power of smaller players. The entire produce is sold to overseas customers, which makes revenue and profitable also susceptible to volatility in forex rates. Strength * Strong track record in human hair products industry: The promoter, Mr R Benjamin Cherian, has been in the human hair products business for nearly three decades. He was a part of the team that was sent overseas by the Government of India in 1986, for promoting human hair exports. His strong customer-oriented skills have helped the company expand its base significantly, and maintain healthy relations with customers. This has ensured a regular flow of repeat orders, even amidst intense competition, and led to steady increase in revenue, over the years. Stable profitability and focus on value-added products, are likely to support growth over the medium term. Outlook: Stable CRISIL believes RHIPL will maintain its established position in the human hair products business over the medium term, backed by the extensive experience of its promoter. The outlook may be revised to 'Positive' if sustained increase in cash accrual leads to significant improvement in liquidity and capital structure. The outlook may be revised to 'Negative' if a decline in profitability, considerable stretch in working capital cycle, or any large debt-funded capital expenditure, weakens the financial risk profile. RHIPL was set up as proprietorship firm called Raj Impex in 1980, and was reconstituted as a private limited company with the current name in 2011. It processes and conditions human hair products. Operations are managed by the promoter, Mr George B Cherian. RAJASTHAN METALS: Ind-Ra Moves B+ Rating to Non-Cooperating ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Rajasthan Metals' Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR40 mil. Fund-based working capital limit migrated to non- cooperating category with IND B+(ISSUER NOT COOPERATING)/IND A4(ISSUER NOT COOPERATING) rating; -- INR145 mil. Non-fund-based working capital limit migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating; -- INR10 mil. Proposed fund-based working capital limit migrated to non-cooperating category with Provisional IND B+(ISSUER NOT COOPERATING)/Provisional IND A4(ISSUER NOT COOPERATING) rating; and -- INR5 mil. Proposed non-fund-based working capital limit migrated to non-cooperating category with Provisional IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Nov. 10, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Rajasthan Metals is a proprietorship concern founded in 1974, having its offices at Chawri Bazar in Delhi. The entity is involved in the business of imports and trading of copper and copper alloys. RAMI REDDY: CRISIL Reaffirms 'B' Rating on INR15MM LT Loan ---------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long- term bank facility of Rami Reddy Constructions (RRC). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long Term Loan 15 CRISIL B/Stable (Reaffirmed) The rating continues to reflect its susceptibility to risks and cyclicality inherent in the Indian real estate industry, its revenue concentration risks and its exposure to risks related to its ongoing real estate projects in Hyderabad, Telangana. These rating weaknesses are partially offset by the benefits derived from the extensive experience of RRC's promoters in the real estate development business and its moderate financial risk profile supported by moderate funding policies and a moderate DSCR. Key Rating Drivers & Detailed Description Weaknesses * Exposure to cyclicality in the Indian real estate industry and regional concentration in revenue profile: RRC business risk profile is susceptible to slowdown in the Indian real estate market and regional concentration in revenue profile with presence in Hyderabad, Telangana only. The real estate sector in India is cyclical and is marked by volatile prices, opaque transactions, and a highly fragmented market structure. * Exposure to risks related to its ongoing real estate projects in Hyderabad, Telangana: RRC is currently executing three residential projects in Hyderabad which are exposed to risks related to funding, demand and implementation. Strengths * Promoter's extensive experience in real estate development: RRC benefits from the promoters extensive experience in the real estate business. The firm is promoted and managed by Mr. PSV Rami Reddy who has more than one decade of experience in real estate business. * Moderate financial risk profile: RRC's financial risk profile is supported by the management's moderate funding policy for its ongoing projects. This is expected to result in a DSCR of over 1.2 times over the next 3 years. Outlook: Stable CRISIL believes that RRC will benefit over the medium term from its promoter's extensive experience in the real estate industry. The outlook may be revised to 'Positive' in case of a considerable increase in bookings of units and in receipt of customer advances, leading to substantial cash inflows. Conversely, the outlook may be revised to 'Negative' if RRC faces significant pressure on its liquidity because of low customer bookings or delayed receipt of customer advances for its ongoing as well as new projects or in case of substantial increase in debt. Set up in 2006, RRC is a partnership firm, engaged in residential real estate development in Hyderabad. The firm has been promoted by Mr. PSV Rami Reddy and Mrs PVR Laxmi. RATTAN KAUR: Ind-Ra Migrates BB- Issuer Rating to Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Rattan Kaur'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 ratings will now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR13.9 mil. Fund-based limits migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating; -- INR1.12 mil. Non-fund-based limits migrated to non- cooperating category with IND A4+(ISSUER NOT COOPERATING) rating; and -- INR49.76 mil. Term loans migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Oct. 3, 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 2011, Rattan Kaur is a partnership firm that provides LPG transportation services to major oil companies such as Bharat Petroleum Corporation Limited, Indian Oil Corporation Limited ('IND AAA'/Stable) and Hindustan Petroleum Corporation Limited ('IND AAA'/Stable) in the eastern region of India. Its head office is in Haldia, West Bengal. Its partners are Mrs Rattan Kaur and Mr Bhupinder Singh Gujral. RELIABLE INDUSTRIES: Ind-Ra Assigns BB+ Rating, Outlook Stable -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Reliable Industries (RI) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR430.6 mil. Fund-based working capital limits assigned with IND BB+/Stable rating; -- INR7 mil. Non-fund-based working capital limits assigned with IND A4+ rating. KEY RATING DRIVERS The ratings reflect RI's moderate credit profile and thin EBITDA margins due to the trading nature of the business. Revenue grew to INR3,204 million in FY17 (FY16: INR2,807 million) as the firm opened a new Maruti Suzuki India Limited's (NEXA) showroom in Dhanbad and sold 162 cars worth INR93.79 million. In addition, a 2% yoy and a 9% yoy increase in sales of motorcycles and cars, respectively, led to the growth in revenue. EBITDA margin was 3% in FY17 (FY16: 3.2%), EBITDAR interest coverage (operating EBITDAR/net interest expense + rents) was 1.62x (1.69x) and net leverage (total adjusted net debt/operating EBITDAR) was 4.53x (4.48x). The ratings also factor in RI's moderate liquidity position with around 88% average utilisation of working capital limits during the 12 months ended October 2017. The ratings, however, are supported by the promoters' three decades of operating experience in the automobile dealership business. RATING SENSITIVITIES Positive: A sustained improvement in EBITDAR interest coverage could be positive for the ratings. Negative: A decline in profitability, resulting in deterioration in EBITDAR interest coverage on a sustained basis will lead to a negative rating action. COMPANY PROFILE Incorporated in 1984 as a partnership firm, RI is an authorised dealer of Hero Motocorp Ltd. and Maruti Suzuki India Limited in Jharkhand. It operates five showrooms, of which one Hero Motocorp Ltd. and three Maruti Suzuki India (including NEXA) showrooms are in Dhanbad, and one Maruti Suzuki India showroom is in Deoghar. The firm is managed by Rajiv Sabhlok and Janak Sabhlok. RIDLEY IFMR: Ind-Ra Lowers Series A2 PTCs Ratings to 'C(SO)' ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has downgraded ratings of Ridley IFMR Capital 2016's (an ABS transaction) pass-through certificates (PTCs) as follows: -- INR490.27 mil Non-fund-based limits, issued on November 30, 2016, at 9% coupon rate, due on September 19, 2018, downgraded with IND BBB(SO)/Stable rating; and -- INR132.19 mil. Series A2 PTCs, issued on November 30, 2016, at 15% coupon rate, due on September 19, 2018, downgraded with IND C(SO) rating. The microfinance loan pool assigned to the trust is originated by erstwhile Disha Microfin Limited (Disha, the originator or seller). In September 2015, Disha received an in-principle approval from the Reserve Bank of India (RBI) to commence operations as a small finance bank (SFB). Disha converted itself to an SFB from a non-banking finance company (NBFC), changing its name to Fincare Small Finance Bank Limited (FSFBL) effective June 2017. KEY RATING DRIVERS Originator's Servicing, Underwriting & Collection Capabilities: The downgrade reflects adequate levels of credit enhancement (CE) to support default stresses to commensurate with the rating level; overall performance of the loans in the pool over the last nine months since the initial closing; and the servicing, collection and recovery capabilities of FSFBL. The company has increased its collection team strength at each branch level, subsequent to the demonetisation announced last year to bring back the reduced collection efficiency of its microfinance loan portfolio to pre-demonetisation levels. Additionally, the company is promoting and creating greater awareness of microfinance products in the affected regions of its portfolio, namely 200 villages by showcasing a short film titled, Pragati. The agency is of the opinion that the issuer's origination and servicing capabilities are of an acceptable standard. Higher Delinquencies: The rating downgrade is primarily driven by a continuous rise in loans delinquent by over zero days past due (0+dpd). As of August 2017 collection month, 0+dpd delinquency was 18.33% of the original pool principal outstanding (POS) and 30.16% of the current POS (including overdue principal). The average current collection efficiency observed in the pool for the last nine months' loan performance since issuance is only 74%. Higher 0+dpd delinquencies are majorly contributed by Maharashtra (24% of current POS) at 61% of the original POS mainly on account of continuing impact of idiosyncratic events such as the demonetisation announced in November 2016, followed by implementation of loan waivers by the state government of Maharashtra. Collection efficiency for Maharashtra was less than 60%, which is significantly lower than the minimum 80% collection efficiency for other states in which the company operates. The other states which saw higher 0+dpd were Madhya Pradesh (23% of current POS) and Gujarat (18% of current POS) at 20.5% and 15.8% of the original POS, respectively. Availability of External Credit Support: According to the payout report dated 20 September 2017, the available CE was INR44.06 million and the future POS was INR603.58 million. There has been no CE utilisation as of date, as the excess interest spread (EIS) in the transaction was sufficient to absorb shortfalls. However, scheduled EIS for the nine months ended September 2017 was 9.9% of the initial POS, whereas the actual EIS available was only 4.6% of the initial POS due to the significantly higher amount of delinquencies seen in the transaction. The CE is in the form of fixed deposits with RBL Bank Ltd in the name of the originator with a lien marked in favour of the trust. Key Pool Characteristics: As of 20 September 2017, the total POS was INR669.47 million (including overdue principal of INR65.9 million), signifying an amortisation of 39.2% of the pool. The peak 0+dpd delinquency bucket observed during the last nine months' loan performance since the initial closing till payout of 20 September 2017 was 21.28% of the original POS and 26.96% of the current POS, and the peak 90+ dpd delinquency bucket absorbed was 15.27% of the original POS and 26.95% of the current POS. On 20 September 2017, the pool consisting 47,207 loans had a weighted average seasoning of 12.8 months, implying a moderate repayment track record of the underlying borrowers. Also, the average current loan balance was INR13,404 with a weighted average internal rate of return of 25.2%. Key Assumptions: At the time of the initial rating, Ind-Ra has derived a base case gross default rate of 4%-6%. The agency had analysed the characteristics of the pool and established its base case assumptions through four key performance variables, viz. default rate, recovery rate, recovery timeline and prepayment rate, which collectively affect the credit risk in a transaction. As per the agency's assessment, the current available CE provides limited cushion to the Series A1 PTCs which is only commensurate with the stress level of 'IND BBB(SO)' rating, and therefore has led to the downgrade of Series A1 PTCs. Additionally, the peak default rate (0+dpd) observed in the pool for the past nine months till the payout date of 20 September 2017 is significantly higher than the base case default estimate at the initial closing; hence, the current CE is unlikely to withstand any further default-related stresses on the future POS at the 'IND B- (SO)' rating level. Therefore any corresponding shortfall in Series A2 PTCs subsequent to the complete redemption of Series A1 PTCs has resulted in the negative rating action of Series A2 PTCs as well. RATING SENSITIVITIES Ind-Ra also conducted rating sensitivity tests. If the assumptions of both base case default rate and base recovery rate were simultaneously worsened by 20%, the model-implied rating sensitivity suggests that the rating of PTCs will not be downgraded from the 'IND BBB(SO)' rating level. COMPANY PROFILE FSFBL was registered as a non-deposit accepting NBFC with the RBI on 5 April 2010. The company was converted to an NBFC- Microfinance, effective 6 December 2013. In September 2015, it received the in-principle approval from the RBI to start operations as an SFB. It commenced banking operations from 21 July 2017. In October 2016, FSFBL acquired Future Financial Services Pvt Ltd (FFSPL), a Chittoor-based NBFC, through a slump sale. FSFBL is a part of the Fincare group, which comprises FSFBL, FFSPL, Lok Management Services Pvt. Ltd., India Finserve Advisors Pvt. Ltd. and Fincare Business Services Pvt. Ltd. FSFBL's loan portfolio grew to INR13.1 billion in FY17 (FY16: INR3.2 billion). Its securitised loan portfolio stood at INR5.35 billion in FY17 (FY16: INR973.7 million). FSFBL classifies a loan as a non-performing asset if it is overdue for more than 90 days. Its gross non-performing asset ratio stood at 0.76% at FYE17 compared with 0.45% at FYE16. SAMRAKSHANA ELECTRICALS: CRISIL Cuts INR27.12MM Loan Rating to B- ----------------------------------------------------------------- CRISIL has downgraded its rating on the long term bank facilities of Samrakshana Electricals Limited (SEL) to 'CRISIL B-/Stable' from 'CRISIL B/Stable' while reaffirming the short term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.75 CRISIL A4 (Reaffirmed) Cash Credit 10 CRISIL B-/Stable (Downgraded from 'CRISIL B/Stable') Letter of Credit 4 CRISIL A4 (Reaffirmed) Proposed Long Term 27.12 CRISIL B-/Stable (Downgraded Bank Loan Facility from 'CRISIL B/Stable') The rating downgrade reflects CRISIL's belief that SEL's business and financial risk profile would remain under pressure over the medium term on account of lower revenues and profitability. SE's revenues declined to INR22.6 crores in fiscal 2017 from INR34.8 crores in fiscal 2016. The de-growth was owing to weakening in demand in the circuit breaker segment resulting in a lower order book. This resulted in lower than expected cash accruals thus impacting the company's financial risk profile. The revenue growth and profitability over the medium term would remain key rating sensitivity factors. The ratings continue to reflect SEL's modest scale and its working-capital-intensive operations, and a weak financial risk profile. These rating weaknesses are partially offset by its promoters' extensive industry experience. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: Though SEL has been operational for more than two decades, its scale of operations has remained moderate as reflected by its revenue of INR22.6 crore for fiscal 2017. The electrical equipment industry is fragmented, marked by the presence of a large number of unorganized players and, hence, SEL faces intense competition from other players. * Working-capital-intensive operations: The operations of the company have remained working capital intensive as reflected in its gross current asset (GCA) of 284 days as on March 31, 2017. The GCA's are primarily driven by stretch in receivables and moderately high inventory holding. * Weak financial risk profile: SEL's gearing was moderate at 0.7 times as on March 31, 2017 backed by its moderate net worth. SEL's debt protection metrics were negative in fiscal 2017 owing to losses incurred during the year. Strength * Promoters' extensive industry experience: SEL was established in 1987 by Mr. D J Ramesh who has more than 2 decades experience in the segment. The extensive experience of the promoter has helped the company to establish a healthy relationship with its customers and receive repeat orders. Outlook: Stable CRISIL believes SEL will continue to benefit from its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case of substantial increase in its revenue, along with healthy operating profitability and efficient working capital management. The outlook may be revised to 'Negative' if its cash accrual declines because of further decline in revenues or operating margin, or if it undertakes sizeable debt-funded capital expenditure, weakening its financial risk profile. SEL, based in Hyderabad, was set up by Mr D J Ramesh in 1987, and commenced operations in fiscal 1991. SEL manufactures oil- immersed circuit breakers, porcelain insulators, press boards, and powder paint used in transformers. SANDHYA POULTRY: CRISIL Reaffirms B Rating on INR8MM Cash Loan -------------------------------------------------------------- CRISIL has reaffirmed its rating on the bank facilities of Sandhya Poultry Farm (SPF) at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B/Stable (Reaffirmed; Removed from 'Issuer Not Cooperating') Long Term Loan 4.45 CRISIL B/Stable (Reaffirmed; Removed from 'Issuer Not Cooperating') The rating continues to reflect SPF's weak financial risk profile because of low networth, high gearing and weak debt protection metrics. Rating also factors in modest scale of operations and working capital intensive operations. These weaknesses are mitigated by the partners' experience in the poultry industry. Key Rating Drivers & Detailed Description Weaknesses Weak Financial risk profile * Networth: Net worth was modest at INR5.7 crore but is expected to improve over the medium term on account of expected revenue growth. * Gearing: Gearing is high at 3.5 times as on March 31 2017, the same is expected to reduce but should remain high over the medium term. * Debt protection metrics: The metrics are weak reflected in estimated interest coverage ratio and net cash accruals to total debt ratio of 1.81 times and 6% respectively as on March 31 2017. * Modest scale of operations: SPF has a modest scale of operations with estimated revenue of INR27.9 crore in fiscal 2017 (refers to financial year, April 1 to March 31). Revenues are expected to increase to around INR40 crore in Fiscal 2018. * Working capital intensive operations: SPF's operations are working capital intensive as reflected in GCA of 228 days as on March 31 2017. GCA days are high on account of high inventory and moderate debtors at 231days and 23 days as on March 31 2017. Inventory mainly consists of feed stock and chicks which is expected to come down to around 175 days on account of increase in scale of operations over the medium term. Any stretch in working capital cycle on account of receivables stretch or high inventory requirement may put downward pressure on the ratings. Strength * Extensive industry experience of partners: Extensive industry experience of management of over 2 decades has resulted in established relationship with the customers and suppliers resulting in uninterrupted supply of feedstock and repeated orders which supports the business risk profile of the firm. CRISIL Believes that extensive industry experience of partners should continue to support the business risk profile of the firm over the medium term. Outlook: Stable CRISIL believes SPF will continue to benefit from the partners' experience over the medium term. The outlook may be revised to 'Positive' if significant growth and sustenance in revenue and operating margin result in better-than-expected cash accrual or improvement in working capital management or sizeable fund infusion from promoters improve the liquidity of the firm. Conversely, the outlook may be revised to 'Negative' if significantly low cash accrual, stretched working capital cycle, or large, debt-funded capital expenditure weakens financial risk profile. Registered in 1997, SPF is a family-run poultry farm in Telangana. It is managed by the Narsi family and was started by Mr. A Narsimulu. The firm had a poultry farm with a capacity of 4 lacs chicken. SANMARG PROJECTS: Ind-Ra Affirms BB- Rating, Outlook Stable ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Sanmarg Projects Private Limited's (SPPL) Long-Term Issuer Rating at 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR48.03 mil. Term loan due on March 2021 assigned with IND BB-/Stable rating; -- INR25 mil. Fund-based limits affirmed with IND BB-/Stable/IND A4+ rating; and -- INR115 mil. (increased from INR40 mil.) Non-fund-based limits affirmed with IND A4+ rating. KEY RATING DRIVERS The affirmation reflects SPPL's continued small scale of operations, weak EBITDA margin and moderate-to-weak credit metrics. In FY17, revenue declined to INR404.60 million (FY16: INR512.71 million) owing to a one-off event recorded in FY16. However, EBITDA margin improved marginally to 4.77% in FY17 (FY16: 4.57%) owing to decrease in personnel and sub-contracting expenses. Net leverage (total adjusted net debt/operating EBITDAR) improved to 3.77x in FY17 (FY16: 3.97x) due to an improvement in operating profit, while net interest coverage (operating EBITDAR/net interest expense + rents) deteriorated to 2.43x (2.75x) owing to an increase in interest obligations. The ratings also factor in the company's moderate liquidity position with average cash credit utilisation of 90.90% during the 12 months ended October 2017. However, the ratings continue to be supported by the promoter's around three decades of experience in engineering services for the energy sector. RATING SENSITIVITIES Negative: Deterioration in the EBITDA margin resulting in deterioration in the credit metrics will be negative for the ratings. Positive: A significant improvement in the revenue leading to an improvement in the credit metrics will be positive for the ratings. COMPANY PROFILE SPPL was incorporated in 2007 for integrating operations and maintenance of oil and gas assets. In 2013, SPPL started providing industrial consultation and construction supervision. Its office is in Noida, Uttar Pradesh. SEA LAGOON: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Sea Lagoon Hotels Private Limited's (SLHPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND B-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR221 mil. Long-term loan migrated to non-cooperating category with IND B-(ISSUER NOT COOPERATING) rating; -- INR4 mil. Fund-based limit migrated to non-cooperating category with IND B-(ISSUER NOT COOPERATING)/IND A4(ISSUER NOT COOPERATING) rating; and -- INR5 mil. Non-fund-based limits migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Nov. 25, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE SLHPL was incorporated in October 2013. SLHPL has a total of 37 executive rooms, six deluxe rooms, two suite rooms, three bars, three restaurants (one roof top), a coffee shop, a swimming pool, a spa and health club, a banquet hall, a business centre and a board room. SHRI RAM: CARE Reaffirms B+ Rating on INR11.64cr LT Loan -------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Shri Ram Ginning Pressing Oil Mill (SGP), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 11.64 CARE B+; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of SGP continues to remain constrained on account of small scale of operations with low capitalisation and moderate profit margins, weak capital structure and debt coverage indicators and working capital intensive nature of operations. The rating is also tempered due toseasonality of business with susceptibility to the vagaries of nature coupled with availability and price volatility of the raw material, its presence in highly fragmented industry and partnership nature of business leading to limited financial flexibility. The rating, however, draws support from the qualified and technical expertise of partners in industry, location advantage emanating from presence in cotton growing area and vicinity to the target market, eligibility for interest and capital subsidy from central government as well as Maharashtra state government. The ability of the firm to achieve stabilization of operations and increase its scale of operations and improve profitability and capital structure and manage working capital requirements efficiently are the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record of the firm along with modest scale of operations and profitability margins: The scale of operations of the entity remained modest with TOI and PAT of INR23.52 crore and INR0.14crore, respectively, during FY17.The total operating income of entity increased from INR4.58 crore to INR23.52 crore in FY16-FY17,on account of FY17 being full year of operations. The net worth base of SGP remained low at INR2.78 crore, as on March 31, 2017, limiting its financial flexibility. Furthermore, owing to limited value addition nature of business and high competition, operating profit margins of the entity remained modest in FY17. Weak capital structure and debt coverage indicators: The capital structure of the entity remained weak owing to increased reliance on external borrowings to support the operations. Furthermore, the debt coverage indicators of entity continued to remain weak. Working capital intensive nature of operations: The operations of the entity remained working capital intensive owing to seasonality associated with availability of raw material. Gross current asset days remained at 128 days during FY17. As the entity has to maintain higher inventory, the working capital requirements of the entity are met by the cash credit facility and the average utilization of the CC limit was on higher side in the peak season. Susceptibility of margins to raw material price fluctuation: The price of raw cotton in India is regulated through function of MSP by the government. Furthermore, the price of raw cotton is highly volatile in nature and depends upon factors like area under production, yield for the year, international demand-supply scenario, export quota decided by government and inventory carried forward from previous year. Hence, any adverse change in government policy that is higher quota for any particular year, ban on the cotton or cotton yarn export may negatively impact the prices of raw cotton in domestic market and could result in lower realizations and profit for SGP. Presence in seasonal and fragmented industry: Operation of cotton business is highly seasonal in nature, as the sowing season is from March to July and the harvesting season is spread from November to February. Furthermore, the cotton industry is highly fragmented with large number (approx 80%) of players operating in the unorganized sector. Hence, SGP faces stiff competition from other players operating in the same industry, which further result in its low bargaining power against its customers. Partnership nature of constitution: Being a partnership firm, SGP is exposed to the risk of withdrawal of capital by partners due to personal exigencies, dissolution of firm due to retirement or death of any partner and restricted financial flexibility due to inability to explore cheaper sources of finance leading to limited growth potential. This also limits the firm's ability to meet any financial exigencies. Key Rating Strengths Satisfactory experience of partners: SGP is promoted by Mr. Mahipal Choukasey and his son Mr .Saurabh Choukasey. The key partner has an experience of more than two decades in tourist industry and looks after the operations of the firm. He is aided by his son Mr. Saurabh Choukasey who is an engineer (IT) with an experience of three years in the cotton ginning and pressing industry. Location advantage emanating from proximity to raw material: The manufacturing unit is located in the Vidarbha region of Maharashtra. The state produces around 21% of total cotton production of India. Out of the total production of Maharashtra, 65% is contributed by Vidarbha region. Hence, raw material is available in adequate quantity and also results in lower logistics expenditure. Shri Ram Ginning Pressing and Oil Mill (SGP) is a Nagpur (Maharashtra) based partnership firm established by Mr. Mahipal Choukasey and his son Mr. Saurabh Choukasey in December 2014. The commercial operations of the firm commenced from January 2016andis engaged in the business of cotton ginning and pressing. The plant is located at Nagpur, Maharashtra with an installed capacity to gin and press 15,000 bales per annum. The plant runs for 125 days in a year owing to seasonal nature of raw material. SGP procures the raw material i.e. raw cotton from Agricultural Produce Market Committee (APMC), brokers and local farmers, while the finished product i.e. cotton bales and cotton seeds is sold to various distributors and brokers located in and around Nagpur. SOUTH INDIA: CARE Assigns 'B' Rating to INR25cr LT Loan ------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of South India Finvest Private Limited (SIF), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 25.00 CARE B; Stable Assigned Detailed Rationale& Key Rating Drivers The rating assigned to the bank facilities of SIF is constrained by its small scale of operations with a modest earning profile, geographically concentrated portfolio with operations only in the State of Tamil Nadu, weak resource profile, inherently weak credit risk profile of borrowers and competition from other MFIs. The rating, however takes into account promoter's experiencein the micro credit business, well developed internal control system commensurate with its size, good asset quality with moderately seasoned portfolio and comfortable capitalization for the present scale of operation. Going forward, the ability of the company to scale up of operation while maintaining good asset quality and healthy capitalization, and measured geographic diversion, will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced and resourceful promoters: Presently Mr SenthilKumar V and Mr Natrajan R. manage the overall operations of the company. Both of them have an experience of over two decades in multiple industry sector, with more than 8 years of experience in running micro-finance activities through their another entity NS Finance and Investments (NSFI). The promoters are supported by a second line of management which has experience in the financial services sector.Mr Natrajan R is also working as a professional in the capacity of director at Zamil Industrial (conglomerate in Saudi Arabia) and has personal business ventures of medical hospital, financial services rice mill, and poultry managed by him and his family members. Well-developed internal control system: SIF has well established MIS systemcommensurate with its size to monitor its operations. The company has put in credit appraisal, collection and monitoring systems to ensure smooth functioning of its operations. The company has a separate internal audit team that conducts field audit at frequent intervals. Key Rating Weaknesses Small scale of operations with a modest earning profile: SIF's scale of operations was small at around INR5.06 crore as on July 2017, which was around INR0.35 crore as on March 31, 2017.SIF incurred a net loss of INR0.01 crore on a total operating income of INR0.03 crore in FY17. Going forward, increasing competition may lead to pressure on the revenue and profitability of the entity over the medium-term as most of the large MFI players are offering loans at a lower interest rate as compared to the rate offered by SIF. High regional concentration and weak credit profile of borrowers: As on July 31, 2017, the entire portfolio of SIF is concentrated in Tamil Nadu, which is one of the highly MFI penetrated states in India. SIF has 3 branches with presence spread across three districts in Tamil Nadu, as a result risk of natural disasters, social unrests, or political upheavals to a specific state persists. Moreover borrowers belong to low income segment, customers are more prone to default. Competition from other MFIs and unorganized sector lending: SFI faced stiff competition from the existing MFI's/newly formed SFBs who enjoy economies of large scale operations. SIF was incorporated in the years 1998, by Mr. Narasimhuluchetty Sakala and got registered as non-deposit-taking non-banking finance company (NBFC) with the Reserve Bank of India (RBI) in the year 2000 and was prior involved in loans to small/medium business owners. In May 2017, was acquired by Mr.Natrajan R and Mr Senthil Kumar V. During July 31, 2017, promoters transferred assets from NSFI (sister entity) to SIF.Presently SIF is primarily engaged in providing micro loans based on the Joint Liability Group (JLG) model to women residents of urban, semi- urban and rural areas belonging to weaker section. SIF's area of operations is spread across three districts of Tamil nadu covering three branches, and has more than 11,000 active borrowers belonging to around 244 groups. STARWOOD VENEERS: CRISIL Reaffirms B Rating on INR2MM Loan ---------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Starwood Veneers Pvt Ltd (SVPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Export Packing Credit 1.1 CRISIL B/Stable (Reaffirmed) Export & Bills Negotiation/Foreign Bill discounting Inland/Import 6 CRISIL A4 (Reaffirmed) Letter of Credit Overdraft 2 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 0.9 CRISIL B/Stable (Reaffirmed) The rating reflects the modest scale of operations, exposure to risks related to project implementation, and below-average financial risk profile. These weaknesses are partially offset by the extensive experience of promoters, and benefits accruing from STG (Santosh Timber Group) group legacy. Key Rating Drivers & Detailed Description Weakness * Exposure to risks related to project implementation: Capital expenditure (capex) of INR3 crore, towards installing machinery for manufacture of plywood, is being undertaken. Though the civil work has been completed, the company could face hurdles during the procurement and installation stages. On the funding end of the project, term debt worth INR2.25 crore is yet to be sanctioned, also, timely infusion of promoters' funding will remain a critical factor. * Modest scale of operations: Established in 1997, SVPL has a modest scale of operations as reflected in its revenues worth INR 17.23 crore in fiscal 2017on account of intense competition and fragmentation in the industry. * Weak financial risk profile: Financial risk profile is weak marked by low net worth (Rs 1.57 crore as on March 31, 2017), high TOLTNW ratio (8.72 times as on March 31, 2017), however, debt protection metrics is average with interest coverage ratio of 1.79 times as on March 31, 2017. Strength * Extensive experience of the promoters, and benefits from association with STG group: The three decade-long experience of the promoters, and their healthy relationships with customers and suppliers, will continue to support the business risk profile. SVPL is a part of the STG group, which includes Santosh Timber Trading Co Ltd (rated 'CRISIL B+/Stable/CRISIL A4'), trading in timber, doorskins, medium density fiberboards and plywood and Sanwood Shoppe Pvt Ltd, a retail outlet for the sale of above- mentioned items. Outlook: Stable CRISIL believes SVPL will continue to benefit from the longstanding presence of its promoters, and benefits from the STG group's legacy. The outlook may be revised to 'Positive' if timely implementation of the project, leads to substantial growth in revenue and profitability, or if better working capital management strengthens the business and financial risk profiles. The outlook may be revised to 'Negative' if there is a significant decline in topline or margin, due to intense competition, if a delay in project implementation weakens the business risk profile, or if there significant stretch in the working capital cycle, or any sizeable capex, weakens the financial risk profile. Incorporated in 1997, SVPL processes teak veneer and timber. The company has been promoted by Mr Ashish Agarwal and his family. It has a sawing unit at Gandhidham, Gujarat, and a veneer processing facility at Sampla, Haryana. The company has veneer processing capacity of 1 lakh square metres per month. SUBHA-SOUMYA COLD: CRISIL Reaffirms B- Rating on INR6.40MM Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the bank facilities of Subha-soumya Cold Storage Pvt Ltd (SSPL) at 'CRISIL B- /Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.15 CRISIL A4 (Reaffirmed) Cash Credit 6.40 CRISIL B-/Stable (Reaffirmed) Long Term Loan 2.13 CRISIL B-/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 4.88 CRISIL B-/Stable (Reaffirmed) Working Capital Loan 1.44 CRISIL B-/Stable (Reaffirmed) CRISIL's ratings on the bank facilities of SSPL continue to reflect below-average financial risk profile, with small networth and high gearing, and weak liquidity profile. These rating weaknesses are partially offset by the extensive industry experience of SSPL's promoters. Key Rating Drivers & Detailed Description Weakness * Below average financial risk profile: Financial risk profile remained constrained marked by low networth and high gearing of INR2.57 crore and 3.53 times respectively as on 31st March, 2017 as compared to INR3.37 crore and 4.27 times respectively in last year. Debt protection metrics of the company remained weak with ICR and NCATD remained at 0.99 times and 0.06 time and it was mainly due to the company's modest profitability level. * Weak liquidity position: Liquidity profile of SSPL is marked by tightly matched net cash accruals vis-a-vis its term debt obligation of INR70 lakh. In FY18, the company is estimated to generate NCA of INR0.71 crore as against term loan obligation of INR0.70 crore. SSPL also does not derive any comfort from bank lines which are highly utilised. Strengths * Extensive experience of promoter in cold storage business: The promoters have been trading in potatoes since 22 years and have been in the cold storage business for 6 years. Over the years, they established healthy relationships with traders and farmers, and developed good industry understanding. Outlook: Stable CRISIL believes SSPL will benefit over the medium term from its promoters' extensive experience in the cold storage business. The outlook may be revised to 'Positive' if efficiently-managed farmer credit financing and significantly increased scale of operations improves its profitability. Conversely, the outlook may be revised to 'Negative' if liquidity is pressurised because of delayed repayments by farmers, significantly low cash accrual, or any large debt-funded capital expenditure. SSPL was incorporated on 28th May 2011 by Mr. Kartick Ghosh and it commenced its operation from March 2012. The company has set up a cold storage facility in Paschim Mednipur, West Bengal with a capacity of 18000 MT (2chambers of 9000 MT each) for storing potatoes. SURGICOINMEDEQUIP: CARE Moves D Rating to Not Cooperating --------------------------------------------------------- CARE Ratings has been seeking information from SurgicoinMedequip Private Limited (SMPL) to monitor the rating(s) vide e-mail communications/ letters dated October 25, 2017, and numerous phone calls. However, despite our 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 SMPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. CARE gave these ratings: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 7.00 CARE D; 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 March 03, 2017, the following was the rating consideration: There have been delays in payments by the customers, mainly government hospitals, due to procedural delays. The non-realisation of debtors has resulted in liquidity stretch and reflected in delays in debt servicing. Sonipat-based (Haryana) SurgicoinMedequip Private Limited (SMPL) was incorporated January 27, 1986 under the name of Super Cardiac Breaths Private Limited by MrNaresh Grover. Later on February 02 2006, the name of the entity was changed to SurgicoinMedequip Private Limited. The company is currently managed by MrNaresh Grover. The firm is engaged in manufacturing and trading of medical equipment like operation Theatre Equipment, Respiratory Apparatus, Electro Medical Equipment, Patients ward Equipment and other medical products. The company has its manufacturing facility located at Rai, Sonipat and it is an ISO 9001:2000 and ISO 13485:2003 certified. SMPL supplies equipment and other products to government hospitals on a PAN India basis. U. C. JAIN: CARE Moves D Rating to Not Cooperating Category ----------------------------------------------------------- CARE Ratings has been seeking information from U. C. Jain Foundation Trust(UCJ) to monitor the rating(s) vide e-mail communications/ letters dated October 25, 2017, and numerous phone calls. However, despite our 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 UCJ's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING*. CARE gave these ratings: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 9.00 CARE D; 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 March 20, 2017 following rating consideration: Weak financial risk profile marked by losses on account of lower receipts received due to lower enrolment of students was considered. Further, due to this the corpus fund of the trust eroded due to the losses tahte further resulted in financial stress in the trust and hence resulted in ongoing delays in the debt obligation. U.C. Jain Foundation Trust (UCJ) is an educational trust and was formed in July 2012 by Mr U. C. Jain (aged 63 years) and his sons; Mr Rishab Jain (aged 32 years) and Mr Nikhil Jain (37 years) with the objective to provide education services. Mr U.C. Jain has a decade of experience in the education sector. For imparting education, the trust started school under the name of Wisdom Global School in June 2012 affiliated from Central Board of Secondary Education (CBSE). The first academic session was started in April 2014. UNIMECH INDUSTRIES: Ind-Ra Affirms 'BB-' Rating, Outlook Stable --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Unimech Industries Pvt Limited's (UMIPL) Long-Term Issuer Rating at 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR97.5 mil. Fund-based working capital limits affirmed with IND BB-/Stable rating; -- INR34.6 mil. Long-term loans withdrawn (repaid in full) with WD rating; and -- INR78 mil. Non-fund-based limits affirmed with IND A4+ rating. KEY RATING DRIVERS The affirmation reflects UMIPL's sustained small scale of operations and moderate credit metrics. Revenue grew to INR580 million in FY17 (FY16: INR553 million) driven by an increase in orders from existing customers. However, EBITDA margins contracted to 6.3% during FY17 (FY16: 7.0%) on account of a decline in job work revenue, where margins are comparatively higher than contractual manufacturing. Interest coverage (operating EBITDA/gross interest expense) was almost stable at 1.4x in FY17 (FY16: 1.3x), while net financial leverage (total adjusted net debt/operating EBITDA) deteriorated to 3.6x (3.1x) owing to a decline in absolute EBITDA. The ratings are also constrained by the company's moderate liquidity position with 91% utilisation of fund-based limits during the 12 months ended October 2017. However, the ratings continue to draw support from UMIPL's promoters' three decades of experience in the manufacturing of auto components. RATING SENSITIVITIES Negative: A further decline in the profitability leading to deterioration in the credit metrics on a sustained basis will be negative for the ratings. Positive: An increase in the scale of operations and expansion of the EBITDA margins leading to a sustained improvement in the credit metrics will be positive for the ratings. COMPANY PROFILE Established in 1978, UMIPL has its registered office and manufacturing facilities in Coimbatore, Tamil Nadu. The company manufactures machine components for automobiles and tractors, and has been exporting these to France and the US since 2007. WAGNER TRIDENT: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Wagner Trident Precision Components Pvt Ltd's (WTPCPL) 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 actions are: -- INR45 mil. Fund-based working capital limits migrated to non- cooperating category with IND B+(ISSUER NOT COOPERATING)/IND A4(ISSUER NOT COOPERATING rating; -- INR41.5 mil. Long-term loans migrated to non-cooperating category with IND B+(ISSUER NOT COOPERATING) rating; and -- INR5 mil. Non-fund-based working capital limits with IND A4(ISSUER NOT COOPERATING rating. migrated to non-cooperating category Note: ISSUER NOT COOPERATING: The ratings were last reviewed on May 14, 2015. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 2007, WTPCPL is engaged in manufacturing, trading and supply of pre-finished automobile components, modules and castings. The company's manufacturing facility is located in Dharwad (Karnataka). * INDIA: Cabinet OKs Amendments to Insolvency and Bankruptcy Code ----------------------------------------------------------------- Reuters reports that India's cabinet on November 22 approved amendments to the Insolvency and Bankruptcy Code, the finance minister said, changes that are designed to prevent wilful defaulters from bidding for stressed assets. Finance Minister Arun Jaitley announced approval for the amendments following a cabinet meeting but did not provide details, the report says. Local media has widely reported that the amendments will stop wilful defaulters from buying stressed assets that they previously owned. Reuters notes that the government is striving to cut a record $147 billion of soured loans accumulated in the banking sector by making it easier to force companies into insolvency. Under Indian law, wilful defaulters are classified as firms or individuals who own large businesses and deliberately avoid repayments, Reuters discloses. Reuters adds that the finance ministry has already asked banks to ensure that wilful defaulters are prevented from buying back assets. ========= J A P A N ========= TAKATA CORP: Exclusive Plan Filing Period Moved to January 21 ------------------------------------------------------------- The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware, at the behest of TK Holdings Inc. and its affiliated debtors, has extended the exclusive periods during which the Debtors have the exclusive right to file a chapter 11 plan and solicit acceptance of its plan, through January 21 and February 27, 2018, respectively. The Troubled Company Reporter has previously reported that the Debtors sought for exclusivity extension asserting that Takata's insolvency requires the coordination of multiple insolvency proceedings across a number of jurisdictions. In addition to the Chapter 11 Cases, Takata Corporation, the Debtors' ultimate corporate parent, together with Takata Kyushi K.K. and Takata Service Corporation (the "Japanese Debtors"), commenced civil rehabilitation proceedings under the Civil Rehabilitation Act of Japan in the 20th Department of the Civil Division of the Tokyo District Court on the Petition Date. The Japanese Debtors have sought recognition of the Japan Proceedings with the Court under chapter 15 of the Bankruptcy Code. In addition, both the Debtors and the Japanese Debtors have also commenced ancillary proceedings under the Companies' Creditors Arrangement Act (Canada), in the Ontario Superior Court of Justice (Commercial List) in Ontario, Canada. These international proceedings require coordination and communication to ensure a successful outcome of the Debtors' Chapter 11 Cases. If the size and geographic reach of the Debtors were not complicated enough, as the Court is aware, the Debtors are in the midst of the largest recall in U.S. automotive history relating to certain airbag inflators containing phase-stabilized ammonium nitrate ("PSAN Inflators") manufactured by Takata that have ruptured during deployment. As of the Petition Date, over 60 million PSAN Inflators in the U.S., and more than 64 million PSAN Inflators outside of the U.S., have been or will be subject to recalls based on announced schedules. By December 31, 2019, all vehicles in the U.S. containing non-desiccated PSAN Inflators will be subject to NHTSA's recalls. In addition to managing their ongoing day-to-day operations, manufacturing sufficient replacement kits to ensure compliance with their ongoing NHTSA obligations, and ensuring the safety of end-users of those Takata airbags containing PSAN Inflators, since the Petition Date, the Debtors have been diligently working and negotiating with Key Safety Systems, Inc. ("Plan Sponsor") and a group of fourteen of Takata's original equipment manufacturer customers ("Consenting OEMs"). The Debtors said that they were already on the verge of executing transaction documents with the Plan Sponsor for the sale of substantially all of Takata's worldwide assets. The Debtors, the Plan Sponsor, and the Consenting OEMs have agreed in principle to this sale of the Debtors' assets to the Plan Sponsor, which, with respect to the Debtors, will be consummated pursuant to a Chapter 11 Plan and an asset purchase agreement ("U.S. Acquisition Agreement"), which the Debtors expect to be filed with the Court shortly. The Debtors told the Court that the Plan Sponsor has agreed to an aggregate purchase price of $1.588 billion for all of Takata's assets. Additionally, the Debtors have worked to finalize, in support of the Plan, a restructuring support agreement among the parties, which they anticipate filing with the Court with the Plan and the U.S. Acquisition Agreement. The Plan and RSA, as well as the sale through the U.S. Acquisition Agreement, will have the support of the Consenting OEMs, which are the Debtors' largest creditor group. In addition to the U.S. Acquisition Agreement, which governs the sale to the Plan Sponsor by the Debtors, certain Takata entities and the Plan Sponsor have entered into additional acquisition agreements for the sale of assets in Europe, Japan, and other regions. As the Court is aware, a sale of substantially all of the Debtors' assets must be completed by no later than February 28, 2018 in order to satisfy the payment of the remaining $850 million restitution payment that TKJP is obligated to pay pursuant to the Plea Agreement entered into by TKJP, the Department of Justice, Criminal Division, Fraud Section, and the U.S. Attorney's Office for the Eastern District of Michigan in connection with the criminal investigation of Takata. Accordingly, the Debtors claimed that the requested extension fulfills the crucial purpose of providing the Debtors with an opportunity to finalize the Global Transaction Documents, including the Plan. The filing of the Plan is not merely possible, but high likely, because the Debtors, the Consenting OEMs, and the Plan Sponsor have finalized several critical Global Transaction Documents that support the Plan. The Global Accommodation Agreement and the RSA signify the Consenting OEMs' support and willingness to compromise in furtherance of a executing the Global Transaction. With these agreements, the Debtors can diligently seek approval to solicit acceptances and secure confirmation after filing the Plan. About Takata Corp Japan-based Takata Corporation (TYO:7312) -- http://www.takata.com/en/-- develops, manufactures and sells safety products for automobiles. The Company offers seatbelts, airbags, steering wheels, child seats and trim parts. Headquartered in Tokyo, Japan, Takata operates 56 plants in 20 countries with approximately 46,000 global employees worldwide. The Company has subsidiaries located in Japan, the United States, Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea, China and other countries. Takata Corp. filed for bankruptcy protection in Tokyo and the U.S., amid recall costs and lawsuits over its defective airbags. Takata and its Japanese subsidiaries commenced proceedings under the Civil Rehabilitation Act in Japan in the Tokyo District Court on June 25, 2017. Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S. and Mexican affiliates each filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.17-11375) on June 25, 2017. Together with the bankruptcy filings, Takata announced it has reached a deal to sell all its global assets and operations to Key Safety Systems (KSS) for US$1.588 billion. Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese proceedings. Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are serving as counsel in the U.S. cases. PricewaterhouseCoopers is serving as financial advisor, and Lazard is serving as investment banker to Takata. Ernst & Young LLP is tax advisor. Prime Clerk is the claims and noticing agent. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel, KPMG is serving as financial advisor, Jefferies LLC is acting as lead financial advisor. UBS Investment Bank also provides financial advice to KSS. On June 28, 2017, TK Holdings, as the foreign representative of the Chapter 11 Debtors, obtained an order of the Ontario Superior Court of Justice (Commercial List) granting, among other things, a stay of proceedings against the Chapter 11 Debtors pursuant to Part IV of the Companies' Creditors Arrangement Act. The Canadian Court appointed FTI Consulting Canada Inc. as information officer. TK Holdings, as the foreign representative, is represented by McCarthy Tetrault LLP. The U.S. Trustee has appointed an Official Committee of Unsecured Trade Creditors and a separate Official Committee of Tort Claimants. The Official Committee of Unsecured Creditors has selected Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F. Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington, Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Washington, D.C., as its bankruptcy counsel. The Committee has also tapped Chuo Sogo Law Office PC as Japan counsel. The Official Committee of Tort Claimants selected Pachulski Stang Ziehl & Jones LLP as counsel. Gilbert LLP will evaluate of the insurance policies. Sakura Kyodo Law Offices will serve as special counsel. Roger Frankel, the legal representative for future personal injury claimants of TK Holdings Inc., et al., tapped Frankel Wyron LLP and Ashby & Geddes PA to serve as co-counsel. Takata Corporation ("TKJP") and affiliates Takata Kyushu Corporation and Takata Services Corporation commenced Chapter 15 cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9, 2017, to seek U.S. recognition of the civil rehabilitation proceedings in Japan. The Hon. Brendan Linehan Shannon oversees the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP, serves as Takata's counsel in the Chapter 15 cases. TOSHIBA CORP: Goldman to Get $180 Million Payday With Sale Deal --------------------------------------------------------------- Takahiko Hyuga at Bloomberg News reports that Goldman Sachs Group Inc. is poised to receive JPY20 billion ($180 million) in fees for managing Toshiba Corp.'s emergency share sale, according to a person with knowledge of the matter. According to Bloomberg, the U.S. firm is arranging the JPY600 billion private placement of new shares for loss-making Toshiba, which faces a March deadline from Tokyo's exchange to reverse its negative equity or be delisted. About 60 funds, including David Einhorn's Greenlight Capital and Daniel Loeb's Third Point, are planning to invest, Toshiba said in a statement on Nov. 19. While Goldman Sachs's fee as a percentage of the amount raised isn't extraordinary -- 3.3 percent compared with about 4 percent for the average initial public offering in Japan -- what's unusual is that the firm is doing the deal on its own, Bloomberg says. In 10 other secondary share sales in Japan of at least this size over the past decade, a minimum of three banks split the fees, according to data compiled by Bloomberg. Bloomberg says the fee from the Toshiba sale is almost equivalent to the local Goldman Sachs unit's entire profit for last year. Goldman Sachs approached Toshiba with a plan to raise money quickly from a relatively small group of investors, said the person, who asked not to be identified discussing private talks, Bloomberg relates. Bloomberg notes that Toshiba, which is struggling to recover from multibillion-dollar losses at its U.S. nuclear business, is raising the cash because it is uncertain whether the sale of its memory-chip unit will be completed in time to reverse its negative shareholders' equity by the end of March. A public offering would have been tough to carry out because of questions over the company's prospects as a going concern, Toshiba said in the statement. Bloomberg relates that Toshiba said it will sell 2.28 billion new shares at JPY262.8 apiece, about 10 percent lower than its closing price on Nov. 17. It expects the transaction to be completed in early December. The shares have risen 3.8 percent since the announcement, Bloomberg notes. Goldman Sachs's overseas affiliates met with potential investors to gauge demand, before selecting candidates and negotiating with them individually, Toshiba said, according to Bloomberg. Those discussions took into consideration "our complicated and difficult situation," the Tokyo-based company added. The transaction may help Goldman Sachs end the year as the top manager of Japan equity offerings for the first time since Bloomberg began compiling the data almost two decades ago. The deal vaulted the firm past Nomura Holdings Inc., according to the data, which exclude equity-linked securities such as convertible bonds. Led by Masanori Mochida, Goldman Sachs's Japan operation has long been one of the most profitable foreign investment banks in the country, Bloomberg discloses. Mochida has been president of the unit since 2007 and also sits on the U.S. firm's management committee. Goldman Sachs also advised Toshiba on the $18 billion sale of its memory-chip unit to a consortium led by Bain Capital, Bloomberg reports. The deal has been complicated by legal action from Western Digital Corp., which has argued it should have veto rights because of its partnership with Toshiba, adds Bloomberg. About Toshiba Corp Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Oct. 6, 2017, S&P Global Ratings said that it has affirmed its 'CCC-' long-term corporate credit and 'C' short-term corporate credit and commercial paper program ratings on Japan-based capital goods and diversified electronics company Toshiba Corp. S&P also removed the ratings from CreditWatch. The outlook is negative. S&P said, "At the same time, we raised the senior unsecured rating one notch to 'CCC-' from 'CC' following completion of our review of the rating. The review follows our publication of our revised issue rating criteria, "Reflecting Subordination Risk In Corporate Issue Ratings" on Sept. 21, 2017, after which we placed the rating "under criteria observation" (UCO). With our criteria review complete, we are removing the UCO designation from the rating. We also removed the senior unsecured rating from CreditWatch with negative implications following our affirmation of the long-term corporate credit rating and resolution of the CreditWatch." TOSHIBA CORP: JPY600BB Shares Issue is Credit Pos., Moody's Says ---------------------------------------------------------------- Moody's Japan K.K. says that Toshiba Corporation's (Caa1 negative) announced JPY600 billion equity financing exercise is credit positive because the proceeds will be used to eliminate cash obligations related to the parent company guarantee associated with nuclear power construction projects in the US and, at the same time, will improve its negative net worth position significantly. On November 19, 2017, Toshiba announced its intention to issue new shares through a private placement which is expected to close between December 5, and 8, 2017. Toshiba expects the issuance will result in a net cash inflow of JPY573.8 billion, which, it will use for an early payment of Toshiba's parent guarantee of USD5.2 billion (JPY580 billion, expected at end-2017). In addition, Toshiba can expect at least JPY240 billion as an additional contribution to equity from tax reductions if the sale of the claims including reimbursement against Westinghouse Electric Company LLC, a former nuclear power construction subsidiary which filed for bankruptcy in March 2017, and interest related to Westinghouse is completed by FYE3/2018. This tax reduction effect together with the JPY600 billion shares issuance will help offset the negative JPY750.0 billion in shareholders' equity that Toshiba had previously forecasted for FYE3/2018. The equity financing follows Toshiba's decision to sell its wholly owned memory-chip subsidiary Toshiba Memory Corporation (TMC) for JPY2 trillion to bolster liquidity and resolve its negative net worth status. However, this sale still faces execution risk, arising from Toshiba's continued dispute with Western Digital Corporation (Ba1 stable), TMC's JV partner, and legal procedures in key jurisdictions relating to competition laws. Moody's believes a significant delay in completing the sale of TMC could pressure Toshiba's liquidity and increase business risk, as the memories business requires sizable capital expenditure on an ongoing basis in order for Toshiba to maintain its product and cost competitiveness, and from the volatile characteristics of its NAND flash memory market. Toshiba's FYE3/2018 first half results showed a significant improvement in operating profit from the same period last year, thanks to its memories business. This business, reported 36.5% for its operating profit margin and accounted for 88% of consolidated operating profit. Since the sale of TMC was announced, no material new issues have been reported from its other businesses, such as Energy Systems & Solutions; Infrastructure Systems & Solutions; Retail & Printing Solutions; and Storage & Electronic Devices Solutions. However, uncertainty remains whether Toshiba can generate sustainable earnings and cash flow from its remaining businesses after losing material earnings with the sale of TMC. Upward rating pressure could arise if Toshiba successfully secures funding through its planned new shares issuance, strengthens its capital, and stabilizes its earnings and cash flow. On the other hand, downward rating pressure could arise if the sale of its memories business is not successful and/or there is increased evidence of a strained liquidity position or a non- curable breach in its bank debt covenants. In addition, the rating could be pressured if Toshiba's revised corporate governance structure fails to function properly, leading to a further deterioration in its financial metrics. Evidence of further material accounting irregularities would also pressure the rating. Toshiba Corporation, headquartered in Tokyo, is one of the largest integrated electronics companies in Japan. ==================== N E W Z E A L A N D ==================== DC ROSS: Scott Technology Buys Firm Out of Receivership ------------------------------------------------------- Rebecca Howard at BusinessDesk reports that Scott Technology outbid an overseas buyer when it bought Dunedin-based engineering firm DC Ross out of receivership, a six-monthly report from the receivers shows. BusinessDesk relates that DC Ross, which supplies precision metal formed parts, was tipped into receivership in September 2016 and in June this year Scott Technology said it had entered an unconditional agreement to purchase all the assets of the company for a total purchase price expected to be less than NZ$500,000. In its annual report, Scott Technology, also based in Dunedin, said it paid NZ$375,000 for DC Ross, and its tool room and tool design capability has already enabled it to undertake significant work for an appliance manufacturer in Australia, BusinessDesk relays. It also noted the inventories, plant and equipment of the DC Ross business were purchased from DC Ross' receivers for an agreed total value which was less than market value, resulting in a fair-value gain on acquisition, BusinessDesk adds. According to BusinessDesk, DC Ross's receiver Malcolm Hollis of PwC said in their latest report that they had corresponded with multiple interested parties and attracted an overseas buyer. He did not identify the company and was not immediately available for comment. However, prior to settlement, it received a "large offer from a third party," he said in the report. "We consulted with our appointer, who agreed this was the best possible offer received to date and retained employment for all staff," Mr. Hollis, as cited by BusinessDesk, said. BusinessDesk relates that Mr. Hollis also said the receivers are in negotiations with third secured creditor Fletcher Steel regarding the quantum of its purchase money security interest claim - which gives it the right to receive debtor proceeds up to the value of steel contained in the part sold. According to the report, Fletcher Steel is owed NZ$609,670, BusinessDesk relays. "Once we have undertaken a review of the calculations we intend to make a final distribution to Fletcher Steel," BusinessDesk quotes Mr. Hollis as saying. The first secured creditor is Bank of New Zealand, which is owed NZ$4.3 million while the second secured creditor is Aorangi Laboratories, owed NZ$13.8 million, BusinessDesk discloses. According to Mr. Hollis' report "based on the realisations to date there will be a significant shortfall to the secured creditor and therefore no funds available for a distribution to unsecured creditors," BusinessDesk relays. ==================== S O U T H K O R E A ==================== LEO MOTORS: Reports US$2.9 Million Net Loss in Third Quarter ------------------------------------------------------------ Leo Motors, Inc. filed with the Securities and Exchange Commission its quarterly report on Form 10-Q reporting a net loss of US$2.88 million on US$988,582 of revenues for the three months ended Sept. 30, 2017, compared to a net loss of US$1.62 million on US$792,037 of revenues for the three months ended Sept. 30, 2016. For the nine months ended Sept. 30, 2017, Leo Motors recognized a net loss of US$5.82 million on US$1.82 million of revenues compared to a net loss of US$2.77 million on US$2.34 million of revenues for the same period a year ago. As of Sept. 30, 2017, Leo Motors had US$4.25 million in total assets, US$9.91 million in total liabilities and a total deficit of US$5.65 million. Cost of revenues for the three months ended Sept. 30, 2017 and 2016 were US$783,186 and US$503,484, respectively. Cost of revenues for the nine months ended Sept. 30, 2017 and 2016 were US$1,574,605 and US$1,484,572, respectively. Operating expenses for the three months ended Sept. 30, 2017 and 2016 were US$1,076,492 and US$1,759,520, respectively. Operating expenses for the nine months ended Sept. 30, 2017 and 2016 were US$4,160,535 and US$3,676,871, respectively. The above expenses include depreciation and amortization amounts of US$78,547 and US$20,864 for the three months ended Sept. 30, 2017 and 2016, respectively, and US$123,969 and US$66,286 for the nine months ended Sept. 30, 2017 and 2016, respectively. Other income (expense) was US$(2,013,997) and US$(153,212) for the three months ending Sept. 30, 2017 and 2016 respectively. Other income (expense) was US$(1,907,170) and $41,151 for the three months ending Sept. 30, 2017 and 2016 respectively. The major difference was the write off of goodwill in the third quarter of 2017 of US$2,613,486. This category includes income and expense from non-operational sources and the effects of currency transaction gains or (losses). The reason for the fluctuations in the currency gains/losses is the change in valuation of the Korean Won. The non-controlling interest portion of the net loss for the three months ended Sept. 30, 2017 and 2016 was US$(157,484) and $(126,853), respectively. The non-controlling interest portion of the net loss for the nine months ended Sept. 30, 2017 and 2016 was US$(744,960) and US$(86,890), respectively. Comprehensive income (loss) includes the Company's net income (loss) plus the unrealized currency translation gain (loss) for the period. For the three months ended Sept. 30, 2017 and 2016, the Company recorded comprehensive gain or (loss) of US$(2,984,650) and US$(1,830,133), respectively, which were made up of unrealized losses on currency translation. For the nine months ended Sept. 30, 2017 and 2016, the Company recorded comprehensive gains or (losses) of US$(5,854,974) and US$(2,806,417), respectively, which were made up of unrealized losses on currency translation. As of Sept. 30, 2017, the Company had a negative working capital of US$(6,477,682), comprised of current assets of US$2,714,862 and current liabilities of US$9,192,545. This represents a decrease of $2,208,807 from the working capital (deficit) maintained by the Company of US$(4,268,875) as of Dec. 31, 2016. Net cash provided by (used in) operations for the nine months ended Sept. 30, 2017 was US$698,326 compared with US$(1,778,400) for the nine months ended Sept. 30, 2016. Net cash (used) in investing activities for the nine months ended Sept. 30, 2017 and 2016 was US$(1,320,951) and US$(61,608), respectively. Net cash provided by financing activities for the nine months ended Sept. 30, 2017 and 2016 was US$1,861,529 and US$3,093,970, respectively. The applicable portion of the earnings or loss attributable to non-controlling interests is offset in this section. In the nine months ended Sept. 30, 2017 and 2016, the attributable portion to non-controlling interests were US$(744,960) and US$(86,890) respectively. A full-text copy of the Form 10-Q is available for free at: https://is.gd/TwcW3K About Leo Motors Leo Motors, Inc. -- http://www.leomotors.com/-- is a Nevada Corporation incorporated on Sept. 8, 2004. The Company established a wholly-owned operating subsidiary in Korea named Leo Motors Co. Ltd. on July 1, 2006. Through Leozone, the Company is engaged in the research and development (of multiple products, prototypes, and conceptualizations based on proprietary, patented and patent pending electric power generation, drive train and storage technologies. Leozone operates through four unincorporated divisions: new product research & development, post R&D development such as product testing, production, and sales. Significant losses from operations have been incurred by the Company since inception and there is an accumulated deficit of $(29,776,217) as of Dec. 31, 2016. Continuation as a going concern is dependent upon attaining capital to achieve profitable operations while maintaining current fixed expense levels. DLL CPAs LLC issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2016. The auditors said the Company has suffered recurring losses from operations and negative cash flows from operations the past two years. These factors raise substantial doubt about its ability to continue as a going concern. Leo Motors reported a net loss of US$6.41 million in 2016, a net loss of US$4.49 million in 2015, and a net loss of US$4.48 million in 2014. ********* 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. 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