/raid1/www/Hosts/bankrupt/TCRAP_Public/171201.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, December 1, 2017, Vol. 20, No. 239
Headlines
A U S T R A L I A
BMS TECHNOLOGY: Administrators to Auction AUD1MM Worth of Stock
BREEZE FNQ: First Creditors' Meeting Scheduled for Dec. 11
HEAVY HAULAGE: Second Creditors' Meeting Slated for Dec. 6
LEVI CONSULTING: First Creditors' Meeting Set for Dec. 11
LIBERTY 2017-1: Moody's Assigns (P)Ba2 Rating to Cl. F Notes
OROTONGROUP LIMITED: Placed Into Voluntary Administration
REDZED TRUST 2017-2: Moody's Assigns (P)B2 Rating to Cl. F Notes
C H I N A
UNIVERSAL SOLAR: Signs LOI to Partner with KC Contractors
YUZHOU PROPERTIES: Moody's Hikes Corporate Family Rating to Ba3
I N D I A
A. KISHORE: CRISIL Raises Rating on INR12MM Overdraft to B+
AAKRITI SUPER: Ind-Ra Affirms B+ Issuer Rating, Outlook Stable
AGGARWAL RICE: CARE Reaffirms B+ Rating on INR33.24cr LT Loan
AIR INDIA: Jet, SpiceJet May Bid for Carrier
AL AMMAR: CRISIL Lowers Rating on INR9.5MM Term Loan to D
ANDHRA PRADESH: CRISIL Reaffirms 'D' Rating on INR4.10BB Loan
BHARATI DEFENCE: Mahindra Defence, Shapoorji Pallonji May Bid
BHAVANI MODERN: CARE Assigns B+ Rating to INR6cr LT Loan
BIHAR FOUNDRY: CRISIL Withdraws D Rating on INR75.09MM Term Loan
CONCEPT CONCEIVERS: Ind-Ra Gives BB Issuer Rating, Outlook Stable
DAULAT FLOUR: CARE Reaffirms B+ Rating on INR8.96cr LT Loan
EVEREST HOLOVISIONS: CARE Reaffirms B+ Rating on INR5.25cr Loan
GRAND PRIX: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
HAJARIA SOFT: CARE Assigns B+ Rating to INR0.25cr LT Loan
HARIDWAR HIGHWAYS: CARE Cuts Rating INR981.09cr Loan to 'B'
HUBLI ELECTRICITY: CRISIL Reaffirms B- Rating on INR902.53MM Loan
JIYA EXIM: CARE Reaffirms B+ Rating on INR13.17cr LT Loan
KTC AUTOMOTIVE: CRISIL Reaffirms B Rating on INR7.32MM Cash Loan
MADHU INDUSTRIES: Ind-Ra Assigns BB+ Issuer Rating
MIL INDUSTRIES: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
MOMENTUM TECHSYS: Ind-Ra Affirms BB+ LT Issuer Rating
MUTYAM STEEL: CRISIL Reaffirms 'B' Rating on INR16MM Loan
MY CAR: CRISIL Lowers Rating on INR35MM Cash Loan to 'D'
MY CAR INDORE: CRISIL Lowers Rating on INR33.02MM Loan to 'D'
MY EQUIPMENTS: CRISIL Lowers Rating on INR13MM Loan to 'D'
R H SOLVEX: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
R.S. DREAM: CARE Assigns B+ Rating to INR12cr LT Loan
SABARI JANI: CRISIL Withdraws B Rating on INR40MM LT Loan
SARATHY AUTOCARS: Ind-Ra Assigns BB+ Issuer Rating
SASWAD MALI: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
SHREE B.S.: CRISIL Reaffirms B+ Rating on INR7MM Cash Loan
SHRI NALLAPULLIAMMAN: CRISIL Assigns B+ Rating to INR8MM Loan
SREE GOPAL: CARE Assigns B+ Rating to INR4.47cr LT Loan
SRI VIJAYA: Ind-Ra Affirms B+ Issuer Rating, Outlook Stable
TRIVITRON HEALTHCARE: NCLT Orders Insolvency Process
USHA MARTIN: Ind-Ra Downgrades Issuer Rating to 'BB+', On RWN
VEEKAS PIPES: CRISIL Reaffirms B+ Rating on INR10MM Overdraft
I N D O N E S I A
PAN BROTHERS: Fitch Revises Outlook to Stable; Affirms B IDR
M A L A Y S I A
EXPORT-IMPORT BANK: Moody's Cuts Stand-Alone Credit Profile to b1
S I N G A P O R E
Z-OBEE HOLDINGS: Shares Delisted From Singapore Exchange
X X X X X X X X
MALDIVES: Proposed Tap Issue No Impact on Moody's B2 Rating
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A U S T R A L I A
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BMS TECHNOLOGY: Administrators to Auction AUD1MM Worth of Stock
---------------------------------------------------------------
Nico Arboleda at CRN reports that the administrators of BMS
Technology are selling off at least AUD1 million worth of the
distributor's remaining stock.
According to CRN, Macks Advisory has appointed Adelaide-based
auctioneer and valuer Mason Gray Strange (MGS) to auction off all
of BMS's new stock from its three warehouses in Adelaide,
Melbourne and Perth.
The auction will start on December 15 at 10:30 a.m. at the MGS
auction complex in the Adelaide suburb of Kilkenny, the report
relates.
CRN says that among the new stock to be auctioned off includes
Toshiba laptops, Netgear network-attached storage (NAS) units,
network switches, security cameras and modem routers. Also
included are NetComm modem routers, Epson projectors, Kyocera and
Fuji Xerox printers and Eaton uninterruptible power supply (UPS)
units.
A Canon digital single-lens reflex (DSLR) camera body, toner and
inkjet cartridges, computer accessories and cables were also
listed for auction.
CRN relates that the auctioneer assigned, James Hutchinson, said
that there was "much, much more" product available for auction
aside from those listed on MGS' website.
"I've never seen such a wide range of high-end computer and
networking supplies in over 15 years of auctioning," CRN quotes
Mr. Hutchinson as saying. "With so much stock on hand and
everything being unreserved I expect there will be plenty of
bargains."
Bidders can either attend the auction in person or bid online to
place their bids prior or during the live auction, the report
states.
Inspections prior to the auction can be made on December 14 from
2:00 p.m. to 5:00 p.m., as well as shortly before the auction
starts at 10:30 a.m., CRN discloses.
Packing options would be made available for interstate purchasers
as well.
About BMS Technology
BMS Technology opened in Adelaide in 1986 and had been in
business for 31 years. Its portfolio included Canon, Intel,
Microsoft and Toshiba. The company is headquartered in Adelaide
with offices in Melbourne and Perth.
Peter Ivan Macks and Ian Wayne Burford of Macks Advisory were
appointed as administrators of BMS Technology on Oct. 10, 2017.
BREEZE FNQ: First Creditors' Meeting Scheduled for Dec. 11
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Breeze FNQ
Pty Ltd will be held at the offices of Amos Insolvency, 25/ 185
Airds Road, in Leumeah, New South Wales, on Dec. 11, 2017, at
11:00 a.m.
Peter Andrew Amos of Amos Insolvency was appointed as
administrator of Breeze FNQ on Nov. 29, 2017.
HEAVY HAULAGE: Second Creditors' Meeting Slated for Dec. 6
----------------------------------------------------------
A second meeting of creditors in the proceedings of Heavy Haulage
BMP Pty Ltd has been set for Dec. 6, 2017, at 4:00 p.m. at the
offices of offices of Bentleys Accountants, London House, 216 St
Georges Terrace, in Perth, West Australia.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 5, 2017, at 4:00 p.m.
John Maxwell Morgan and Geoffrey Davis of BCR Advisory were
appointed as administrators of Heavy Haulage on Nov. 1, 2017.
LEVI CONSULTING: First Creditors' Meeting Set for Dec. 11
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Fable
Collective Pty Ltd will be held at the offices of Levi Consulting
Pty Ltd, Level 1, 84 Pitt Street, in Sydney, New South Wales, on
Dec. 11, 2017, at 12:00 p.m.
David Joseph Levi of Levi Consulting was appointed as
administrator of Fable Collective on Nov. 29, 2017.
LIBERTY 2017-1: Moody's Assigns (P)Ba2 Rating to Cl. F Notes
------------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to the
notes to be issued by Liberty Funding Pty Ltd in respect of
Liberty Series 2017-1 Auto (Trust).
Issuer: Liberty Series 2017-1 Auto
-- AUD 34.0 million Class A1 Notes, Assigned (P)P-1 (sf);
-- AUD 161.0 million Class A2 Notes, Assigned (P)Aaa (sf);
-- AUD 38.7 million Class B Notes, Assigned (P)Aa1 (sf);
-- AUD 22.8 million Class C Notes, Assigned (P)A1 (sf);
-- AUD 15.6 million Class D Notes, Assigned (P)Baa1 (sf);
-- AUD 16.8 million Class E Notes, Assigned (P)Ba1 (sf);
-- AUD 8.1 million Class F Notes, Assigned (P)Ba2 (sf);
The AUD 3.0 million Class G Notes are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity.
The transaction is a securitisation of a portfolio of Australian
consumer auto loans, secured by motor vehicles, originated by
Liberty Financial Pty Ltd (Liberty, unrated).
This is Liberty's first auto ABS transaction issued in 2017.
RATINGS RATIONALE
The provisional ratings take into account, among other factors,
the evaluation of the underlying receivables and their expected
performance, the evaluation of the capital structure, the
availability of excess spread over the life of the transaction,
the liquidity facility in the amount of 2.00% of the initial
balance of all rated notes, the interest rate swap provided by
National Australia Bank Limited (Aa3/P-1/Aa2(cr)/P-1(cr)), and
the credit strength and experience of Liberty as servicer.
At closing, the Classes A1 and A2, Class B, Class C, Class D,
Class E and Class F Notes are supported by 35.00%, 22.10%,
14.50%, 9.30%, 3.70% and 1.00% subordination, respectively. The
notes will be repaid on a sequential basis in the initial stages
(until the subordination percentage on Class A2 Notes increases
from the initial 35.0% to 50% and once the transaction reaches
the 10% pool factor). At all other times, subject to satisfaction
of step down criteria, principal collections will be first be
distributed to Class A1 and then to Class A2, Class B, Class C,
Class D, Class E and Class F Notes on a pro rata basis. The Class
G Notes do not step down and will only receive principal payments
once all other notes have been repaid.
MAIN MODEL ASSUMPTIONS
Moody's base case assumptions are a mean default rate of 7.00%,
which translates into 7.10% on a seasoning-adjusted basis, a
coefficient of variation (CoV) of 52.5% and a recovery rate of
37.5%. Moody's assumed mean default rate and recovery rate are
stressed compared to the historical levels of 6.1% (based on
origination vintages from 2008 to 2017) and 47.8% (based on
origination vintages from 2001 to 2017) respectively. Moody's
default rate analysis focused on historical performance post 2008
which is when Liberty reduced the volume of adverse credit
history loan origination. The stress addresses the lack of
economic stress during the historical data period.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Auto Loan- and Lease-Backed ABS"
published in October 2016.
Factors that would lead to an upgrade or downgrade of the
ratings:
A factor that could lead to an upgrade of the notes is better-
than-expected collateral performance and a rapid build-up of
credit enhancement.
A factor that could lead to a downgrade of the notes is worse-
than-expected collateral performance. Other reasons that could
lead to a downgrade include poor servicing, error on the part of
transaction parties, a deterioration in the credit quality of
transaction counterparties, lack of transactional governance and
fraud.
Moody's Parameter Sensitivities:
If the default rate rises to 10.0% (2.9% higher than the Moody's
assumption of 7.1% on a seasoning adjusted basis) and recovery
rates fall to 31.5% (from Moody's assumption of 37.5%) then the
model-indicated ratings for the Classes A1, A2, B, C and D Notes
drop zero, one, three, five and four notches to (P)P-1 (sf),
(P)Aa1 (sf), (P)A1 (sf), (P)Baa3 (sf) and (P)Ba2 (sf)
respectively.
OROTONGROUP LIMITED: Placed Into Voluntary Administration
---------------------------------------------------------
Emma Koehn at SmartCompany reports that OrotonGroup Limited has
called in the administrators and suspended its quotation on the
Australian Securities Exchange after announcing restructure plans
in May.
SmartCompany relates that the retailer told shareholders on
Nov. 30 it had not found any restructure plans that were a more
viable option for the business than the appointment of
administrators.
Vaughan Strawbridge and Glen Kanevsky of Deloitte Restructuring
services have been appointed as administrators of the business,
saying in a statement the company will continue to trade while
they seek a sale or recapitalisation of the business,
SmartCompany discloses.
SmartCompany says OrotonGroup, which was founded in 1938 by
retailer Boyd Lane, has faced significant challenges in the past
12 months, including ending its relationship with GAP after
bringing the brand down under in 2013, and posting a AUD14.25
million loss for the 2017 financial year.
"Our ambition is that a stronger Oroton business will emerge from
this process," the report quotes Mr. Strawbridge as saying.
OrotonGroup Limited (ASX:ORL) -- http://www.orotongroup.com.au/-
-- is an Australia-based retail company. The Company's segments
include Oroton and Gap brands. The Company is engaged in
retailing and wholesaling of leather goods, fashion apparel and
related accessories under the OROTON brand. It is engaged in
retailing of fashion apparel under the GAP label. It is also
engaged in licensing of the OROTON brand name. The Company
operates over 80 stores across Australia, New Zealand, Singapore,
Malaysia and China. Its Gap brand includes GapKids and babyGap,
and offers wardrobe essentials. Its Oroton sells a range of
products for men and women. Oroton's offerings for women include
bags, wallets, jewelry, beauty, gifts, sunglasses and
accessories. Its offerings for men include bags, wallets,
accessories, apparel, sunglasses and gifts. The Company has a
presence as a multi-channel retailer, including online, first
retail stores, concessions, factory outlets and wholesale for
both owned brand and licensed partnerships.
REDZED TRUST 2017-2: Moody's Assigns (P)B2 Rating to Cl. F Notes
----------------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to the notes to be issued by Perpetual Trustee Company
Limited as trustee of RedZed Trust Series 2017-2.
Issuer: Perpetual Trustee Company Limited as trustee of RedZed
Trust Series 2017-2
-- AUD150.00 million Class A-1 Notes, Assigned (P)Aaa (sf)
-- AUD56.50 million Class A-2 Notes, Assigned (P)Aaa (sf)
-- AUD23.75 million Class B Notes, Assigned (P)Aa2 (sf)
-- AUD4.75 million Class C Notes, Assigned (P)A2 (sf)
-- AUD4.75 million Class D Notes, Assigned (P)Baa2 (sf)
-- AUD4.25 million Class E Notes, Assigned (P)Ba2 (sf)
-- AUD2.5 million Class F Notes, Assigned (P)B2 (sf)
The AUD3.5 million of Class G-1 and Class G-2 Notes (together,
the Class G Notes) are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity.
The transaction is a securitisation of first ranking mortgage
loans secured over residential properties located in Australia.
The loans were originated and are serviced by RedZed Lending
Solutions Pty Limited (RedZed, unrated). Around 92.3% of loans
are to self-employed borrowers, 88.3% were extended on
alternative income documentation verification (alt doc) basis,
and, based on Moody's classifications, 18.7% are to borrowers
with adverse credit history.
RATINGS RATIONALE
The provisional ratings take into account, among other factors,
evaluation of the underlying receivables and their expected
performance, evaluation of the capital structure and credit
enhancement provided to the notes, availability of excess spread
over the life of the transaction, the liquidity facility in the
amount of 1.5% of the notes balance, the legal structure, and the
experience of RedZed as servicer.
Moody's MILAN CE - representing the loss that Moody's expects the
portfolio to suffer in the event of a severe recession scenario -
is 17.4%. Moody's expected loss for this transaction is 2.3%.
Key transactional features are:
- While the Class A-2 Notes are subordinate to Class A-1 Notes in
relation to charge-offs, they rank pari passu in relation to
principal payments, on the basis of their stated amounts,
throughout the life of the transaction. This feature reduces the
absolute amount of credit enhancement available to Class A-1
Notes.
- The servicer is required to maintain the weighted average
interest rates on the mortgage loans at least at 4.25% above
BBSW, which is within the current portfolio yield of 6.3%. This
generates a high level of excess spread available to cover losses
in the pool.
- Under the retention mechanism, excess spread is used to repay
principal on the Class F Notes, up to approximately AUD750,000
limiting their exposure to losses. At the same time, retention
amount ledger ensures that the level of credit enhancement
available to the more senior ranking notes is preserved.
- Class B to Class F Notes will start receiving their pro-rata
share of principal if certain step-down conditions are met. Pro-
rata allocation is effectively limited to a maximum of two years.
- While Class G Notes do not receive principal payments until the
other notes are repaid, once step-down conditions are met, their
pro-rata share of principal will be allocated in a reverse
sequential order, starting from Class F Notes.
Key pool features are:
- The pool has a weighted-average scheduled loan-to-value (LTV)
of 70.3%, and 29.1% of loans have scheduled LTV over 80%. There
are only 0.3% of loans with scheduled LTV over 85%.
- Around 92.3% of the borrowers are self-employed. This is in
line with RedZed's business model and strategy to focus on the
self-employed market. The income of these borrowers is subject to
higher volatility than employed borrowers, and they may
experience higher default rates.
- About 88.3% of the loans were extended on an alt doc basis.
- The pool exhibits high borrower concentration, with top 20
borrowers representing 13.7% of the pool.
- Loans secured by investment properties represent 41.6% of the
pool, with further 6.2% of loans secured by both owner-
occupied and investment properties.
- Interest only loans represent 36.6% of the pool.
- Based on Moody's classifications, around 18.7% of borrowers
have adverse credit history.
- Based on Moody's classifications, 88.9% of loans are secured
by properties located in metro areas, which is higher than
market average.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2017.
Factors That Would Lead to an Upgrade or Downgrade of the
Ratings:
Factors that could lead to an upgrade of the notes include a
rapid build-up of credit enhancement, due to sequential
amortization or better-than-expected collateral performance. The
Australian jobs market and the housing market are primary drivers
of performance.
A factor that could lead to a downgrade of the notes is worse-
than-expected collateral performance. Other reasons that could
lead to a downgrade include poor servicing, error on the part of
transaction parties, a deterioration in the credit quality of
transaction counterparties or lack of transactional governance
and fraud.
Moody's Parameter Sensitivities:
Parameter Sensitivities are designed to provide a quantitative
calculation of how the initial rating might change if key input
parameters used in the initial rating process - here the MILAN
credit enhancement (CE) and mean expected loss - differed. The
analysis assumes that the deal has not aged. Parameter
Sensitivities only reflect the ratings impact of each scenario
from a quantitative/model-indicated standpoint.
In case of Class A-1 Notes, if MILAN CE increased to 25%, the
model implied rating of the notes would reduce by one notch to
Aa1. The sensitivity in the rating is due to pro-rata allocation
of principal among the Class A-1 and Class A-2 Notes, on the
basis of their stated amounts, throughout the life of the deal,
thus reducing the absolute amount of credit enhancement available
to Class A-1 Notes.
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C H I N A
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UNIVERSAL SOLAR: Signs LOI to Partner with KC Contractors
---------------------------------------------------------
Universal Solar Technology, Inc. issued a letter of intent to
establish a partnership with KC Contractors for multiple
projects, the first of which is the development of a proprietary
design of Tiny Houses, according to a Form 8-K report filed with
the Securities and Exchange Commission. KC Contractors is a
Houston based contractor with large scale project development
consisting of both commercial and residential projects. With the
intent to utilize unique design approaches to incorporate style,
energy efficiency and efficient accommodations, the partnership
will capitalize on the core strengths of both organizations to
take advantage of the ever-diversifying demands of the housing
market.
About Universal Solar
Headquartered in Zhuhai City, Guangdong Province, in the People's
Republic of China, Universal Solar Technology, Inc., was
incorporated in the State of Nevada on July 24, 2007. It operates
through its wholly owned subsidiary, Kuong U Science & Technology
(Group) Ltd., a company incorporated in Macau, the People's
Republic of China on May 10, 2007, and its subsidiary, Nanyang
Universal Solar Technology Co., Ltd., a wholly foreign owned
enterprise registered on Sept. 8, 2008 under the wholly
foreign-owned enterprises laws of the PRC. The Company primarily
manufactures, markets and sells silicon wafers to manufacturers
of solar cells. In addition, the Company manufactures
photovoltaic modules with solar cells purchased from third
parties.
Universal Solar reported a net loss of $1.28 million in 2013
following a net loss of $5.66 million in 2012.
Paritz & Company, P.A., in Hackensack, New Jersey, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2013. The independent
auditors noted that the Company had not generated cash from its
operation, had a stockholders' deficiency of $ 10,663,106 and had
incurred net loss of $11,175,906 since inception. These
circumstances, among others, raise substantial doubt about the
Company's ability to continue as a going concern.
YUZHOU PROPERTIES: Moody's Hikes Corporate Family Rating to Ba3
---------------------------------------------------------------
Moody's Investors Service has upgraded Yuzhou Properties Company
Limited's corporate family rating (CFR) to Ba3 from B1.
Moody's has revised the outlook on the CFR to stable from
positive.
At the same time, Moody's has confirmed the company's B1 senior
unsecured rating.
The rating outlook is stable.
This action also concludes the rating review for downgrade on
Yuzhou's senior unsecured rating initiated on October 27, 2017.
RATINGS RATIONALE
"The upgrade reflects Moody's expectation that Yuzhou's credit
metrics will improve over the next 12 to 18 months to levels that
are appropriate for its Ba3 CFR," says Franco Leung, a Moody's
Vice President and Senior Credit Officer, who is also the
International Lead Analyst for Yuzhou.
Moody's expects Yuzhou's EBIT/interest coverage will improve to
around 4.0x-4.5x and debt leverage - as measured by adjusted
revenue/debt - to increase above 70%-75% in the next 12 to 18
months.
These expected improvements are based on the company's stronger
contracted sales and slower debt growth.
In the first ten months of 2017, Yuzhou's contracted sales
(including those under joint ventures) grew to RMB32.4 billion,
representing a 59% year-on-year growth, putting it well on track
to achieve its revised sales target of RMB40 billion for full-
year 2017. Moody's expects the company to continue strong growth
of another 20% in contracted sales in 2018.
Accordingly, Moody's expects the company's revenues will likely
reach RMB20 billion in 2017, representing 40%-50% year-on-year
growth. The company will likely enjoy around 30%-40% year-on-year
growth in 2018.
The company has bought a substantial amount of land in 2017.
Moody's estimates that cash payments on land will increase by
more than 55% in 2017 year-over-year, and another 20% in 2018
versus 2017. Based upon such growth, Yuzhou's net debt increase
will be around RMB 3 billion -- 4 billion in 2017 and 2018.
Under this scenario, Moody's expects the company's annual
adjusted gross debt growth will slow to 11% - 12% in 2017 and
2018 compared with the annual adjusted debt growth of 48% in
2016.
Yuzhou Properties Company Limited's Ba3 corporate family rating
reflects the company's growing operating scale, improved
geographic diversifications and high gross profit margins.
The rating also takes into account the company's strong liquidity
profile.
However, Yuzhou's Ba3 CFR is tempered by the company's moderately
high debt leverage, arising from its strong appetite for land
acquisitions and strategy of keeping a high level of cash.
The company's liquidity position remains strong with a coverage
of cash to short-term debt of 3.6x as of June 30, 2017.
Yuzhou has also shown improved access to offshore funding
channels over the past 12 months. The company concluded its
second syndicated loan from offshore banks for around USD400
million in November 2017. In addition, it successfully completed
a share issue that raised around HKD1.56 billion in September
2017.
The senior unsecured rating is lower than the CFR by one notch
because of the risk of structural and legal subordination.
This risk reflects Moody's expectation that the majority of
claims will be at the operating subsidiaries' level, and will
have priority over claims at the holding company in a bankruptcy
scenario.
In addition, the holding company lacks significant mitigating
factors for structural subordination. As a result, the expected
recovery rate for claims at the holding company will be lower.
The stable outlook on Yuzhou's ratings reflects Moody's
expectation that the company will maintain contracted sales and
revenue growth, high gross margins, a strong liquidity position,
and measured debt growth.
Upward rating pressure over the medium term could emerge if the
company (1) grows in scale; (2) improves its credit metrics; (3)
maintains a strong liquidity position; and (4) establishes a
track record of access to the domestic and offshore debt markets.
Credit metrics indicative of upward rating pressure include
EBIT/interest coverage in excess of 4.0x, and revenue/adjusted
debt in excess of 90%.
On the other hand, downward rating pressure could emerge if
Yuzhou shows a weakening in its contracted sales growth,
liquidity position, profit margins or credit metrics.
Credit metrics indicative of rating downgrade pressure include:
(1) cash/short-term debt below 1.5x; (2) EBIT/interest coverage
below 2.5x - 3.0x; or (3) revenue/adjusted debt below 60% on a
sustained basis.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Yuzhou Properties Company Limited is a property developer that
focuses on residential housing in the West Strait Economic Zone
and Yangtze River Delta. The company moved its headquarters to
Shanghai from Xiamen in 2016. At the end of July 2017, it had a
land bank of over 10.1 million square meters in terms of total
saleable gross floor area.
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A. KISHORE: CRISIL Raises Rating on INR12MM Overdraft to B+
-----------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facility of A. Kishore (AK) to 'CRISIL B+/Stable' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 12 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects improvement in AK's business risk profile,
driven by significant increase in revenue, which led to better-
than-expected cash accrual, in spite of a drop in operating
margin, in fiscal 2017. Revenue and operating margin is expected
to be around INR13.9 crore and 18%, respectively for fiscal 2017,
against INR7 crores and 25.5%, respectively, in the previous
fiscal. Cash accrual rose to INR0.7 crore from INR0.3 crore
during the said period. The improved operating performance led to
better interest coverage of 1.57 times for fiscal 2017 against
1.30 times in the previous fiscal.
The rating also reflects AK's modest scale of operations in the
highly fragmented civil construction industry, and its average
financial risk profile. These weaknesses are partially offset by
the extensive experience of its proprietor in the civil
construction industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition in a fragmented industry and
modest scale of operations: AK faces intense competition in the
civil construction industry, which has large organised players
and several unorganised players. The roads, water, and irrigation
segments are highly competitive because of low entry barrier.
AK's scale of operations remained modest, indicated by expected
revenue of INR13.9 crore for fiscal 2017.
* Average financial risk profile: Owing to the modest scale of
operations and moderate operating profitability, networth is
expected to remain low at INR2.5 ' 3.0 crores over the medium
term. The capital structure is highly leveraged with gearing at
5.62 times as of March 31, 2017. Debt protection metrics is
estimated to be average with interest coverage and net cash
accrual to adjusted debt ratios of 1.57 times and 4%,
respectively.
Strength
* Extensive industry experience of the proprietor: Mr A Kishore
has been associated with the civil construction industry for over
a decade, and has established significant relationships with raw
material suppliers. The firm benefits from its proven track
record for execution of projects for public entities, when
bidding for tenders.
Outlook: Stable
CRISIL believes AK will continue to benefit from the experience
of its proprietor in the civil construction industry. The outlook
may be revised to 'Positive' if revenue and profitability
increase significantly and sustainably, leading to a better
financial risk profile. The outlook may be revised to 'Negative'
if the firm undertakes large, debt-funded capital expenditure, or
if its revenue and operating profitability decline, or if its
working capital cycle lengthens, or if significant capital
withdrawal weakens its financial profile.
Set up in 1998, AK is a proprietorship firm involved in civil
construction works, such as construction of roads and bridges,
and construction and maintenance of irrigation facilities, in
Kerala. The firm is managed by Mr A. Kishore.
AAKRITI SUPER: Ind-Ra Affirms B+ Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Aakriti Super
Snacks Private Limited's (ASSPL) Long-Term Issuer Rating at 'IND
B+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR15 mil. Fund-based working capital limit affirmed
IND B+/Stable rating; and
-- INR102.1 mil. (reduced from INR120 mil.) Long-term loan
due on March 2025 affirmed with IND B+/Stable rating.
KEY RATING DRIVERS
The ratings reflect a four-month delay in the commencement of
commercial operations at ASSPL's bakery due to a minor technical
fault in machinery.
The ratings also reflect the short operational track record of
ASSPL, given commercial operations commenced in August 2017.
The ratings, however, continue to benefit from the locational
advantage of the bakery on account of its proximity to Raipur and
the promoter's experience of around two and half decades in the
bakery business.
RATING SENSITIVITIES
Negative: Failure in the stabilisation of operations leading to
lower-than-expected capacity utilisation could result in a
negative rating action.
Positive: Stabilisation of commercial operations, along with the
maintenance of a comfortable liquidity position, will lead to
positive rating action.
COMPANY PROFILE
ASSPL was incorporated in 2012 for setting up confectionery
plants or bakery units for the production of breads, biscuits,
cakes, pastries, wafers, chocolates, patties and others.
Ashish Agarwal, Abhishek Agarwal, Satya Prakash Agarwal,
Vishwanath Agarwal and Manish Agarwal are the directors of the
company.
AGGARWAL RICE: CARE Reaffirms B+ Rating on INR33.24cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Aggarwal Rice Mills (ARM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 33.24 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 7.50 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of ARM continue to be
constrained by its small scale of operations, weak solvency
position and working capital intensive nature of operations. The
ratings are further constrained by the susceptibility to
fluctuation in raw material prices, firm's presence in a highly
fragmented and competitive industry and its constitution as a
partnership firm. These rating constraints are partially offset
by the long-standing experience of the management, moderate
profitability margins and favorable plant location. Going
forward, the ability of ARM to scale up its operations while
improving its overall solvency position and managing its working
capital requirements efficiently would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations: The total operating income of ARM
stood stable at INR 52.51 crore in FY17 (Rs. 53.95 crore in FY16)
due to absence of incremental demand from customers. The small
scale limits the firm's financial flexibility in times of stress
and deprives it from scale benefits.
Leveraged capital structure: The capital structure of the firm
continues to remain leveraged marked by overall gearing ratio of
5.92x as on March 31, 2017 (PY: 5.99x) owing to firm's dependence
upon external borrowings to meet working capital requirements of
business.
Weak debt coverage indicators: The firm continues to have weak
debt coverage indicators marked by interest coverage ratio of
1.33x in FY17 and Total debt to Gross Cash Accruals (GCA) of
40.99x for FY17 (PY: 1.31x and 61.50x, respectively). The
interest coverage ratio remained weak on account of high interest
expenses owing to high utilization of working capital limits
during the year. The same percolated into low PAT and
consequently low GCA which coupled with high debt levels lead to
weak Total debt to GCA ratio.
Working capital intensive nature of operations: The average
operating cycle of the firm stood elongated at 445 days for FY17
(PY: 412 days) owing to high inventory period. Owing to the
seasonality of rice harvest, entities engaged in the rice
processing industry have to accumulate an adequate amount of raw
material inventory to ensure uninterrupted production throughout
the year. Also, the firm maintains higher finished stock at the
year-end in anticipation of higher prices going forward.
Furthermore, the working capital limits remained fully utilized
for 12 months period ended October, 2017.
Susceptibility to fluctuation in raw material prices: Agro-based
industry is characterized by its seasonality, as it is dependent
on the availability of raw materials, which further varies with
different harvesting periods. The price of rice moves in tandem
with the prices of paddy. Since there is a long time lag between
raw material procurement and liquidation of inventory, the firm
is exposed to the risk of adverse price movement.
Fragmented nature of industry coupled with high level of
government regulation: The commodity nature of the product makes
the industry highly fragmented with numerous players operating in
the unorganized sector with very less product differentiation.
Furthermore, the raw material (paddy) prices are regulated by
government to safeguard the interest of farmers, which in turn
limits the bargaining power of the rice millers.
Constitution as partnership firm: ARM's constitution as a
partnership firm has the inherent risk of possibility of
withdrawal of the partners' capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of partners.
Key rating strengths
Long standing experience of the management: Mr. Ashok Kumar
Aggarwal has an experience of more than 25 years in rice milling
and processing industry while other partners have an experience
of around two decades in the rice processing. The firm is into
business for almost two decades which aids the firm in having
established relationship with customers and suppliers.
Moderate profitability margins: The profitability margins of the
firm stood moderate as indicated by PBILDT margin and PAT margin
of 9.88% and 1.61% respectively in FY17. (PY: 8.71% and 1.48%
respectively). The PBILDT margin improved from 8.71% in FY16 on
account of higher sales of basmati rice (relatively higher margin
giving segment). Consequently, the PAT margin, also improved from
1.48% in FY16 to 1.61% in FY17.
Favorable plant location: The firm's processing facility is
situated at Gurdaspur, Punjab which is one of the highest
producers of paddy in India. Its presence in the region gives
additional advantage over the competitors in terms of easy
availability of the raw material as well as favorable pricing
terms.
Aggarwal Rice Mills (ARM) was established in 2001 as a
partnership firm and is currently being managed by Mr. Ashok
Kumar Aggarwal along with three other partners. The firm is
engaged in processing of paddy and milling of rice at its
processing unit located at Gurdaspur, Punjab having an installed
capacity of 35,000 tonnes of paddy per annum as on September 30,
2017.
AIR INDIA: Jet, SpiceJet May Bid for Carrier
--------------------------------------------
The Times of India reports that Tata Group, which runs two JV
airlines in India, and IndiGo may not be the only Indian carriers
eventually bidding for Air India. A top government source told
TOI that other Indian carriers, especially Jet Airways, may also
join the fray for the Maharaja.
"The economics of the game will change completely for whichever
airline gets Air India. With its 14% domestic and 17-18%
international market share, getting AI will be a paradigm shift
for the successful bidder. Other airlines like Jet and possibly
even SpiceJet will have no option but to bid for AI," the top
source told TOI.
TOI relates that a SpiceJet official said that while the airline
is "too small" to bid for AI, it will decide on the same once the
final terms are known. When asked the same question, a top Jet
honcho said the thinking is on, the report says.
While IndiGo has shown interest in AI for spreading its wings in
the medium- to long-haul international markets, Tata's relatively
young and small JVs -- Vistara and AirAsia India -- will get an
inorganic growth push from the Maharaja's domestic and foreign
market share, TOI relates. Market insiders say Qatar Airways may
back IndiGo's plan as the Gulf carrier has long wanted to have a
stake in the airline. SpiceJet aspires for long-haul flights, but
whether it has the financial muscle to do so remains to be seen,
the report states.
According to the report, Jet now has the backing of big
international airlines such as Air France, KLM and Delta through
an enhanced partnership, apart from Etihad being a 24%
stakeholder in it, and may be able to raise funds for AI's
acquisition. While the Naresh Goyal-led carrier is now a distant
second to IndiGo in domestic marketshare, it wants to remain the
leading player in terms of flying people in and out of India.
In 2017, Jet flew 76.5 lakh people in and out of India and was
the single-largest airline in India in terms of international
market share. AI came in second with 57.3 lakh international
flyers, TOI discloses. AI and AI Express together flew 88 lakh,
while the Jet-Etihad combine's figure was over a crore
international flyers in and out of India. Given AI's traffic and
its international slots - both in Delhi and Mumbai and foreign
hubs like London Heathrow, New York JFK and Newark and Tokyo -
the government feels it will be a prime catch for whichever
airline bags it, says TOI.
The report notes that the Modi government is keen to divest in
AI. "The ultimate decision on privatising AI will be of PM Modi
alone. The process began with his go-ahead only. The government
is going to sell a clean AI to prospective bidders by putting all
the tricky aspects like real estate in an SPV. We have devised a
mode where the new owner will get a clean airline free of most of
its past baggage," the top government source, as cited by TOI,
said.
About Air India
Air India Ltd -- http://www.airindia.com/-- is the flag carrier
airline of India owned by Air India Limited (AIL), a Government
of India enterprise. The airline operates a fleet of Airbus and
Boeing aircraft serving various domestic and international
airports. It is headquartered at the Indian Airlines House in
New Delhi.
As reported in the Troubled Company Reporter-Asia Pacific on
March 28, 2014, The Times of India said Air India got a breather
in the form of INR1,000-crore equity infusion from the government
on March 26, 2014. According to the report, the airline's
unending financial stress had got worse as the Centre had so far
given INR6,000 crore instead of the promised INR8,500 crore for
the fiscal. As a result, AI had to bridge this gap by borrowing
money from banks at 11%-12%, which increased its debt servicing
burden, the report said. Before the infusion, the government had
injected INR12,200 crore into AI and there was a shortfall in
equity to the tune of INR3,574 crore -- despite the airline
meeting most of the milestone-linked equity targets -- leading to
a liquidity crunch, the report related.
Air India has posted continuous losses since 2007, according to
The Economic Times.
AL AMMAR: CRISIL Lowers Rating on INR9.5MM Term Loan to D
---------------------------------------------------------
CRISIL Ratings has downgraded its rating on the bank facility of
Al Ammar Frozen Foods Exports Pvt. Ltd (AAFFEPL) to 'CRISIL D'
from 'CRISIL B/Stable/Issuer Not Cooperating'. CRISIL had, on
May 30, 2017, downgraded the rating to 'CRISIL B/Stable' and
assigned the 'Issuer Not Cooperating' suffix as the company had
not provided the requisite information. The company has now
shared information.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 9.5 CRISIL D (Downgraded from
'CRISIL B/Stable/Issuer Not
Cooperating')
The downgrade reflects the company's delay meeting term loan
obligation because of stretched liquidity on account for of delay
in commercialization of its project. However, it benefits from
its promoters' extensive experience in the frozen food industry,
and long-term relationships with customers.
Key Rating Drivers & Detailed Description
Delay in servicing term loan: The Company has delayed repayment
of its term loan due to stretched liquidity.
Weakness
* Delay in commencement of commercial production: The Company was
to commence operations in April 2016, but has not yet started
operations.
Strength
* Extensive experience of the promoters in the frozen food
industry: The promoters have been in the frozen food industry for
15 years and have strong relationships with customers and
suppliers.
AAFFEPL was incorporated in June 2014 to manufacture and export
frozen meat and meat products. The company is yet to commence
production at its unit in Aligarh (Uttar Pradesh). Its promoters
are Mr Mohammad Atif and Mr Atif Qureshi.
ANDHRA PRADESH: CRISIL Reaffirms 'D' Rating on INR4.10BB Loan
-------------------------------------------------------------
CRISIL's rating on the bond issues of Andhra Pradesh Power
Finance Corporation Limited (APPFC) continue to reflect instances
of delay in meeting debt obligation.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bond LT 4,107 CRISIL D (Reaffirmed)
CRISIL had, on September 25, 2015, downgraded the rating on the
bonds, which were guaranteed by the Government of Andhra Pradesh
(GoAP), to 'CRISIL D' from 'CRISIL A(SO)', while removing the
rating from 'Rating Watch with Developing implications'. The
downgrade reflects delays in debt servicing by APPFC on account
of disputes with Telangana State Power Finance Corporation
relating to distribution of assets and liabilities. Due to this,
interest payment on some of the rated bonds was not made in full
on the due date.
Analytical Approach
The ratings were primarily based on the unconditional and
irrevocable guarantee from GoAP, guaranteeing full repayment of
the principal and payment of interest in a timely manner. The
ratings also factored in the strength of a trustee-administered
payment structure.
Key Rating Drivers & Detailed Description
Weakness
* Continued lack of clarity on division of liabilities: The
delays were on account of continuing disputes relating to
distribution of assets and liabilities. Interest payment on some
of the rated bonds was not made in full, on the due date. While
payments have now been cured, albeit with a delay, lack of
clarity regarding bifurcation of the assets and liabilities of
APPFC still remain and may result in the continuation of the
dispute with respect to servicing of debt on the rated
instruments.
* Failure of designated payment structure: The rating also
factors in the failure of the payment structure and the inability
of the trustee to ensure adherence to the trustee-administered
structure (non-invocation of guarantee).
CRISIL continues to engage with other GoAP entities, their
trustees, and the guarantor to assess any potential impact of
similar disputes on their debt servicing.
APPFC was set up to provide financial assistance to the power
sector in Andhra Pradesh.
In fiscal 2013 as well as fiscal 2012, there was no profit after
tax while total income was INR455 crores and INR250 crores,
respectively.
BHARATI DEFENCE: Mahindra Defence, Shapoorji Pallonji May Bid
-------------------------------------------------------------
The Economic Times reports that Mahindra Defence and Shapoorji
Pallonji Group may independently bid for the troubled Bharati
Defence and Infrastructure (formerly Bharati Shipyard) in the
first such bankruptcy resolution attempt under the Insolvency and
Bankruptcy Code for the security industry.
ET relates that the two companies are currently evaluating the
deal that values the target company at $350 million, said three
people with direct knowledge of the development.
According to the report, Bharati has also seen interest from
other suitors such as German Dry Docks and other companies
seeking to control individual docks along India's eastern and
western water margins.
"Mahindra Defence and Shapoorji Pallonji group have been
approached and they are currently carrying out due diligence on
the company," ET quotes one of the persons with direct knowledge
of the development as saying. EY is acting as advisor to the
lenders, the report notes.
Bankers now have to take a call on liquidating the company that
has been taken to the National Company Law Tribunal (NCLT) by the
asset reconstruction arm of Edelweiss, which has a controlling
stake in it through pledged shares, ET says.
"This opportunity has been presented to us. However, we have not
put in any formal bid as of date for Bharati Shipyard," a
Shapoorji Pallonji Group spokesperson said in an e-mailed
response to queries from ET.
"Given our significant presence and strengths in the
infrastructure sector, our strategy and business development
teams are regularly evaluating opportunities."
According to ET, Mahindra Defence considered acquiring Pipavav
Defence in a INR3,000-crore deal in 2015. However, the Anil
Ambani-led ADAG bought the company in a slump sale. "Mahindra
Defence has been actively looking at acquisition opportunities
and this could be an ideal fit," said another person with
knowledge of the development, ET relays.
Earlier this year, creditors led by Edelweiss, which owns 85% of
the INR10,000-crore debt of the company, filed a case at NCLT
seeking permission to turn around the company under new
management, ET recalls. Creditors have proposed a revival package
for the ailing company under the Insolvency and Bankruptcy Code.
This will require infusion of INR400 crore initially, ET notes.
ET says the new code requires lenders to approach NCLT with a
concrete revival plan, which, if approved, has to be set in
motion within 180 days.
Edelweiss has appointed former naval officer Narendra Kumar as
CEO of the company, the report discloses.
"Edelweiss has approached the court and got a restraining order
for the promoters from coming to the office," said another
person. ET adds that he fund is now looking at giving the company
a fresh infusion of capital to ensure some orders are delivered
to the Coast Guard and the Indian Navy.
Edelweiss's Distressed Assets Resolution Business could play a
role in the revival, ET notes. It is unclear whether CDPQ of
Canada, which has an agreement with Edelweiss, will invest in the
company, ET reported in August.
Bharati Defence and Infrastructure Limited, formerly Bharati
Shipyard Limited (BOM:532609) is engaged in the business of naval
architecture, marine engineering and ocean engineering. The
Company is also engaged in building various types of ships and
other vessels, (both with and without power), build drilling
rigs, fabricating offshore platform and other Offshore and other
structures, earth moving machinery, and all platforms and
equipment required for defense purpose. The Company operates in
Ship Manufacture segment. It is also engaged in building a Mobile
Offshore Drilling Unit capable of operating in approximately 350
feet of water. This Rig can be elevated to a height of
approximately 418 feet, and has an electric rack and pinion
system of jack up, as well as derrick skidding system. It has a
cantilever cover of 70 feet beyond the transom and drill floor
movement of approximately 30 feet side to side. It offers Self
Propelled Moduler Transport System and Computer Numeric Control
machines.
BHAVANI MODERN: CARE Assigns B+ Rating to INR6cr LT Loan
--------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Bhavani Modern Rice Mill (BMRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BMRM is tempered by
the small scale of operations with declining PBILDT margins and
thin PAT margin, leveraged capital structure and weak debt
coverage indicators, working capital intensive nature of
operations, fragmented nature of industry and low entry barriers
and partnership nature of entity.
The rating, however, derives strength from experienced promoters
in rice industry, healthy demand outlook for riceand growth in
total operating income during review period.
Going forward, the ability of the firm to increase scale of
operations and profitability margins without adversely affecting
its capital structure along with efficient management of its
working capital limits are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses Small scale of operations with declining
profitability margins, leveraged capital structure and weak debt
coverage indicators: The profitability margin of the firm has
remained thin during review period due to intensely competitive
and fragmented rice milling business with presence of numerous
players. The PBILDT margin of the firm stood at 3.92% during FY16
as compared to 5.72% during FY15 due to increase in raw material
costs. Furthermore, in line with PBILDT and due to increase in
interest charges the PAT margin also declined.
The overall gearing of the firm though improved to 2.11x as on
March 31, 2016 as compared to 2.73x as on March 31,2015 due
increase in net worth. The debt profile of the firm consists of
mainly working capital borrowing of INR4.51 crore and a term loan
of INR1.26 crore. The average monthly CC utilization was about
90% for the past 12 months ending on August 31, 2017. The debt
coverage indicators marked by interest coverage and TD/GCA
deteriorated from 2.49x and 6.57x respectively in FY14 to 1.62x
and 15.40x respectively during FY16 due to increase in debt
levels and decline in cash accruals along with increase in
interest cost.
Working capital intensive nature of operations due to seasonal
availability of paddy resulting in high inventory holding period:
Paddy in India is harvested mainly at the end of two major
agricultural seasons Kharif (June to September) and Rabi
(November to April). The millers have to stock enough paddy by
the end of each season as the price and quality of paddy is
better during the harvesting season. During this time, the
working capital requirements of the rice millers are generally on
the higher side. On account of the same, working capital limits
have been utilized upto 90% over the last 12 months ended
August 31, 2017.
Monsoon dependent operations and high level of government
regulation: BMRM's operations are dependent on agro-climatic
conditions and may get adversely impacted in case of weak monsoon
or poor crop quality. The rice industry is highly regulated by
the government as it is seen as an important sector which could
affect the food security of the country. The sale of rice in the
open market is also regulated by the government through levy
quota and fixed prices. Hence, the firm is exposed to the risk
associated with fluctuation in price of rice.
Fragmented nature of industry and low entry barriers: The rice
milling business requires limited quantum of investment in
machinery, however, has high working capital needs. Further, rice
milling is not very technology intensive and as a consequence the
industry is highly fragmented with large number of players
operating in the organized and unorganized segments. The high
level of competition has ensured limiting bargaining power, as a
consequence of which rice mills are operating at low to moderate
profitability margins.
Partnership nature of entity
Partnership nature of business has an inherent risk of withdrawal
of capital by the partners at the time of their personal
contingencies. It also has the inherent risk of business being
discontinued upon the death/insolvency of a partner. The ability
to raise funds is also very low as partnership concerns have
restricted access to external borrowings.
Key Rating Strengths
Experienced promoters in rice industry: The firm has long track
record of two decades. BMRM was started by Mr. S.Chandrasekaran
along with his sons, Mr. C.Senthilkumar and Mr. C.Palanikumar,
Due to long term presence in the market, the partners have
established relations with its customers and suppliers.
Healthy demand outlook for rice: Rice is consumed in large
quantity in India which provides favourable opportunity for the
rice millers and thus the demand is expected to remain healthy
over medium to long term. India is the second largest producer of
rice in the world after China and the largest producer and
exporter of basmati rice in the world. With growing consumer
class and increasing disposable incomes, demand for premium rice
products is on the rise in the domestic market. Demand for non-
basmati segment is primarily domestic market driven in India.
Initiatives taken by government to increase paddy and better
monsoon conditions will be the key factors which will boost the
supply of rice to the rice processing units. Rice being the
staple food for almost 65% of the population in India, it has a
stable domestic demand outlook.
Increasing operating income during review period: The total
operating income of the firm has been increasing y-o-y during the
review period.
During FY16, the total operating income increased by 39% standing
at INR25.65 crore in FY16 as compared to INR18.49 crore in FY15
due to continous demand for rice. The firm has its customers in
Coimbatore, Tirupur, Kovilpatti in Tamil Nadu and Eranakulam in
Kerala.
Bhavani Modern Rice Mill (BMRM) a partnership firm, was
established in 1998 by MrS.Chandrasekaran along with his sons.
The mill is located in Dhavalaipuram in Virudhunagar district of
Tamil Nadu. The firm is involved in hulling of paddy, converting
of paddy into rice, broken rice and bran with a total installed
capacity of approximately 60 tons per day. The actual capacity of
the mill is 48 tons per day. BMRM sells its products (rice,
broken rice and bran) to the end customers through brokers in
Coimbatore, Tirupur, Kovilpatti and Eranakulam. The firm procures
raw material, paddy, from Tamil Nadu and Karnataka. Currently,
the day to day operations of the mill are looked after by the
partners, MrC.Senthil Kumar and MrC.Palani Kumar.
BIHAR FOUNDRY: CRISIL Withdraws D Rating on INR75.09MM Term Loan
----------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facility of
Bihar Foundry and Castings Limited (BFCL). BFCL has requested
CRISIL to withdraw the rating and had also provided a NOC from
the banks. The rating action is in line with CRISIL's policy on
withdrawal of its bank loan borrowings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 53.98 CRISIL D (Withdrawn)
Funded Interest
Term Loan 3.87 CRISIL D (Withdrawn)
Letter of Credit 4.00 CRISIL D (Withdrawn)
Proposed Fund-
Based Bank Limits 18.06 CRISIL D (Withdrawn)
Term Loan 75.09 CRISIL D (Withdrawn)
Established in 1971 by Mr. Hari Krishna Budhia and his family,
BFCL manufactures silico-manganese, sponge iron, and ingots. Its
manufacturing facility is in Ranchi(Jharkhand).
CONCEPT CONCEIVERS: Ind-Ra Gives BB Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Concept
Conceivers & Executors (CCE) a Long-Term Issuer Rating of 'IND
BB'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR40 mil. Term loan due April 2022 assigned with IND
BB/Stable rating; and
-- INR80 mil. Fund-based working capital limit assigned with IND
BB/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect CCE's moderate scale of operations. In FY17,
revenue grew 35.59% to INR614 million, driven by a rise in orders
from its top customer. FY17 financials are provisional in nature.
The ratings also reflect CCE's moderate liquidity profile,
indicated by an average utilisation of the fund-based working
capital limits of 95.48% for the 12 months ended October 2017,
and a high geographical and customer concentration risk, given a
single customer contributed 82.20% to revenue in 1HFY18 (FY17:
84.49%; FY16: 41.79%).
The ratings, however, are supported by a healthy EBITDA margin
and strong credit metrics. In FY17, EBITDA interest coverage
(operating EBITDA/gross interest expense) was 7.12x (FY16: 8.40x)
and net leverage (adjusted net debt/operating EBITDAR) was 1.28x
(1.29x). The decline in EBITDA interest coverage was due to a
rise in finance cost due to the addition of a term loan. The
marginal improvement in net leverage was driven by a rise in
absolute EBITDA (FY17: INR107.97 million; FY16: INR95.57
million).
The ratings are also supported by the partners' experience of
more than three decades in the leather business.
RATING SENSITIVITIES
Negative: A stressed liquidity, lack of revenue diversification
in terms of customer and any deterioration in the credit metrics
on a sustained basis could be negative for the ratings.
Positive: Substantial revenue growth and revenue diversification
in terms of customer while maintaining the credit metrics at the
current levels on a sustained basis will be positive for the
ratings.
COMPANY PROFILE
Established in 2008, CCE is a partnership firm engaged in the
manufacturing of leather footwear at its facility in Agra, Uttar
Pradesh. It exports all products to Europe.
DAULAT FLOUR: CARE Reaffirms B+ Rating on INR8.96cr LT Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Daulat Flour Mill, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.96 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
Daulat Flour Mill and in line with the extant SEBI guidelines,
CARE reaffirmed the rating(s) of bank facilities of the firm to
'CARE B+; ISSUER NOT COOPERATING'. However, the firm has now
submitted the requisite information to CARE. CARE has carried out
a full review of the ratings and the rating(s) stand at 'CARE B+;
Stable'.
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Daulat Flour Mill
is primarily constrained by its small scale of operations coupled
with low net worth base, low profitability margins, leveraged
capital structure, volatility in raw material prices influenced
by government policies on agro commodity & monsoon dependent
operations along with highly competitive industry & low entry
barriers and partnership nature of its constitution. The rating,
however, draws comfort from experienced management, growing scale
of operations and moderate operating cycle.
Going forward; ability of DFM to profitably scale up its
operations while improving its profitability margins and capital
structure shall be the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations coupled with low net worth base: DFM's
scale of operations grew from INR20.15 crore in FY16 to INR23.12
crore in FY17 reflecting a growth rate of around 15% during FY16-
FY17. The growth in TOI was mainly attributed to increase in
quantity sold.
Despite growth on y-o-y basis, The scale of operations has
remained small marked by total operating income of INR23.12 crore
and GCA of INR0.79 crore respectively, in FY17 (refers to the
period April 1 to March 31). Furthermore, the net worth base also
remains relatively small at INR4.86 crore as on March 31, 2017.
The small scale limits the firm's financial flexibility in times
of stress and deprives it of scale benefits. Further, during
7MFY18 (refers to the period April 1 to October 31; based on
provisional results), the firm has achieved turnover of INR14.75
crore.
Low profitability margins and leveraged capital structure The
firm operates in the highly fragmented nature of industry
characterized by intense competition with limited value addition.
In this segment, the profitability margins are normally low.
Thus, the PBILDT and PAT margins stood low at 6.20% and 0.44%
respectively in FY17. The capital structure of the firm as marked
by overall gearing ratio deteriorated and stood leveraged at
1.56x as on March 31, 2017 as against 1.30x as on March 31, 2016
mainly on account of higher utilization of working capital
borrowings as on balance sheet date coupled with increase in term
loan for the purchase of plant & machinery.
Volatility in raw material prices influenced by government
policies on agro commodity and monsoon dependent operations: DFM
is primarily engaged in processing of wheat products. The main
raw material needed for production of wheat flour is wheat.
Prices of wheat are subjected to government intervention since it
is an agricultural produce and staple food. Various restrictions
including minimum support price (MSP), control on exports, wheat
procurement policies for maintenance of buffer stocks etc. are
imposed to regulate the price of wheat in the market. The price
of wheat is also influenced by the supply scenario which is
susceptible to the agro-climatic conditions. Thus any volatility
in wheat prices can have direct impact on the profitability
margins of the firm. In addition to government policies on agro
commodity, agro-based industry is characterized by its
seasonality, as it is dependent on the availability of raw
materials, which further varies with different harvesting
periods. Availability and prices of agro commodities are highly
dependent on the climatic conditions. Adverse climatic conditions
can affect their availability and leads to volatility in raw
material prices.
Highly competitive industry & low entry barriers: The flour
industry is highly fragmented with more than two-third of the
total number of players being unorganized. Due to low entry
barriers in the industry and low value added nature of products,
the flour mill units have limited flexibility over pricing their
products.
Key Rating Strengths
Experienced management with limited track record of operations:
The firm is currently being managed by Mr. Daulat Singh, his wife
Mrs. Omvati Singh and his son Mr. Raj Kumar Singh who have
limited experience of around 3 years in the processing business
of agri products through their association with this entity.
However, Mr. Daulat Singh has more than three decades of
experience in civil construction business. The partners have
ventured into agri processing industry due to the increasing
demand of packed food products due to changing needs of the
consumers. Further, the partners are supported by an experienced
team having an experience of more than a decade in the agri
processing industry.
Growing scale of operations and moderate operating cycle: DFM's
scale of operations grew from INR20.15 crore in FY16 to INR23.12
crore in FY17 reflecting a growth rate of around 15% during FY16-
FY17. The growth in TOI was mainly attributed to increase in
quantity sold. Further, the operating cycle of the firm stood
moderate as marked by 69 days for FY17. The firm is required to
maintain adequate inventory in the form of raw material to ensure
continues production due to seasonal availability of raw
material, resulting into an average inventory period of 77 days
for FY17. The firm allows an average credit period of 5 days to
its customers, whereas the firm purchases goods and raw material
mainly on cash or advance basis with maximum credit period
received of 7 days for FY17. However, the working capital
borrowings of the firm remained almost full utilized during the
past 12 months ending October, 2017.
Bulandshahr, Uttar Pradesh based Daulat Flour Mill (DFM) was
established in 2012 as partnership firm and commenced its
commercial operations in September, 2014. The firm is currently
being managed by Mr. Daulat Singh with his wife Mrs. Omvati Singh
and his son Mr. Raj Kumar Singh sharing profit and losses in the
ratio of 50:25:25 respectively. DFM is engaged in the processing
of wheat into wheat flour (atta), refined wheat flour (maida),
bran and semolina (suji). The company has an installed capacity
to process 100 ton of wheat per day as on March 31, 2017 from its
processing unit located in Bulandshahr, Uttar Pradesh. The main
raw material of the firm is wheat which is procured from local
farmers and commission agents. The firm sells its products to
wholesalers in North India states such as Delhi, Haryana and
Uttar Pradesh. DFM sells its products under the brand name of
"Double Chatta", "No.1 Daulat" and "Sanyog".
EVEREST HOLOVISIONS: CARE Reaffirms B+ Rating on INR5.25cr Loan
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Everest Holovisions Limited (EHL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2.24 CARE B+; Stable Reaffirmed
Long-term/Short-
Term Bank Facilities 5.25 CARE B+; Stable/CARE A4
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Everest
Holovisions Limited (EHL) are constrained by modest scale of
operations with low capitalization, fluctuating profit margins
with susceptibility to volatility in input prices, weak debt
coverage indicators and leveraged capital structure, working
capital intensive nature of operations and presence in the
fragmented & competitive industry.
The ratings, however, derives benefit from the long track record
of operations, experienced management with demonstrated financial
support and established relationship with reputed and diversified
clientele base.
Detailed description of Key rating drivers
Key rating Weakness
Modest scale of operations with low capitalization: The scale of
operations of the company remained modest despite improvement in
income on y-o-y basis. Improvement is due to addition of new
customers coupled with continuity of business with existing
clients having a good credit profile, especially from the
packaging industry led by the growing demand therein. Net worth
base was relatively small at INR2.04 crore as on March 31, 2017
limiting the company's financial flexibility in times of stress
and deprives it from scale benefits.
Fluctuating profit margins with volatility in input polyester
prices: The operating margin of the company has remained
fluctuating in the range of 6.25% - 7.60% during last three years
ending FY17 and remained low owing to price pressures, mainly
polyester films on account of intense competition prevalent in
the industry and low bargaining power against its customers.
Weak debt coverage indicators and leveraged capital structure:
The overall gearing remained moderately leveraged owing to high
dependence on external borrowings to support the operations.
Further the debt coverage indicators remained weak owing to the
same and low profit margins. The capital structure of the company
stood moderately leveraged marked by on account of high reliance
on external debt and low networth base.
Working capital intensive nature of operations: The operations
continue to remain working capital intensive in nature with funds
blocked in higher inventory holding in anticipation of future
orders and low credit period received from its suppliers. On
account of this, the utilization of the working capital limit
remained high.
Presence in the fragmented & competitive industry: The company
faces intense competition from the large and established players
in the rigid packaging segment. EHL is also exposed to high
fragmentation in the packaging industry, which has numerous
players at the bottom of the value chain and low entry barriers
due to low capital and technology requirements. Furthermore, due
to limited bargaining power against large clients, players like
EHL are unable to pass on the fluctuations in the raw material
prices to them.
Key rating Strengths
Long track record of operations: EHL has been in the holographic
industry since more than two decades and the company has been
member of various national and international bodies [EHL is
member of IHMA (International Hologram Manufactures Association)
and HOMAI (Hologram manufactures association of India)
furthermore it has been awarded for its work from IHMA & HOMAI].
The EHL promoted by Mr. Rajendra Surana assisted by Mrs. Nanda
Rajendra Surana and Mr Smitesh Surana, who also possess requisite
experience in the holographic industry.
Experienced management with demonstrated financial support: The
promoter directors of EHL, Mr. Rajendra Surana (B.Com, LLB, CS),
Mrs. Nanda Rajendra Surana (B.A.) and Mr. Smitesh Surana (B.Com,
LLB, CS) have more than two decades of experience in printing
industry. The directors are assisted by experienced management
team. Further the promoters have infused interest-free unsecured
loans for growing scale of operations of the company.
Established relationship with reputed clientele: Over the years
of operations, the company has established strong business
relations with its clientele from whom it receives repeat orders.
Moreover, the customer & supplier profile of the company is
reputed & well diversified with top 5 customers contributing to
19.25% of the net sales in FY17.
Established as Ojasmit Holovision Limited in 1997, Everest
Holovision Limited (EHL) is an ISO 9001:2000 certified company
and an accredited member of International Hologram Manufacturers
Association (IHMA) and Authentication Solution Providers'
Association (ASPA, erstwhile Hologram Manufacturers Association
of India). EHL is a professionally managed company by Mr. R. D.
Surana, (chairman & MD) is a highly educated businessman having
wide and rich experience in the different industries. EHL engaged
in manufacturing of holographic solutions (such as holograms
stickers, holographic films, holographic integrated labels,
holographic stamping foils, holographic shrink sleeves,
holographic strip, holographic wads, etc.). EHL operates a
manufacturing facility located at Silvassa, possessing installed
capacities of 1.50 crore sheets per annum of sticker hologram,
1,600 MTPA of embossed wide web film, 2.65 crore meters per annum
of coated products. EHL's products find application in diverse
fields of printing, pharmaceuticals, automobile and others for
brand establishment, brand protection and promotion purposes.
GRAND PRIX: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Grand Prix
Engineering Private Limited's (GPE) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the surveillance exercise despite continuous requests and follow-
ups by the agency. Therefore, investors and other users are
advised to take appropriate caution while using these ratings.
The rating will now appear as 'IND BB+(ISSUER NOT COOPERATING)'
on the agency's website. The instrument-wise rating actions are:
-- INR100 mil. Fund-based working capital facilities migrated to
non-cooperating category IND BB+(ISSUER NOT COOPERATING)/IND
A4+(ISSUER NOT COOPERATING) rating; and
-- INR215 mil. Non-fund-based working capital facilities
migrated to non-cooperating category with IND BB+(ISSUER NOT
COOPERATING)/IND A4+(ISSUER NOT COOPERATING) rating.
NOTE: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 13, 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 1989, GPE manufactures filters, strainers,
pressure vessels, gas conditioning skids and others. The company
was awarded the U and U2 certificate of authorisation by The
American Society of Mechanical Engineers in 2003 and 2006,
respectively. Moreover, the company is certified by the National
Board of Boiler and Pressure vessel inspectors.
HAJARIA SOFT: CARE Assigns B+ Rating to INR0.25cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Hajaria Soft Services Private Limited (HSSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 0.25 CARE B+; Stable Assigned
Long-term /Short-
term Bank Facilities 4.75 CARE B+; Stable/CARE A4
Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of HSSPL are
primarily constrained by short track record and small scale of
operations, leveraged capital structure and elongated collection
period. Further, the ratings are also constrained by risk
associated with dependence on availability of requisite manpower
and highly competitive nature of industry.
The rating, however, draws comfort from experienced management
and moderate profitability margins.
Going forward; ability of HSSPL to profitably increase its scale
of operations while maintaining its profitability margins and
improving its capital structure shall be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Short track record and small scale of operations: The company
started its commercial operations from June, 2015 and FY17 (refer
to the period April 1 to March 31) was first full year of
operations for the company. HSSPL has a relatively short track
record of operations as compared with other established players
and to achieve the envisaged scale of business operations in the
light of competitive nature of industry remains crucial for the
company. Furthermore, HSSPL's operations stood small as evident
from total operating income and GCA of INR3.12 crore and INR0.11
crore, respectively during FY17 (refers to the period April 1 to
March 31). Furthermore, the net worth base stood small at INR0.13
crore as on March 31, 2017. The small scale limits the company's
financial flexibility in times of stress and deprives it of scale
benefits.
Leveraged capital structure: As on March 31, 2017; the overall
debt was in form of unsecured loans. The capital structure of the
company stood leveraged as marked by overall gearing ratio which
stood at 13.33% as on March 31, 2017 mainly on account of low net
worth base coupled with high reliance on external borrowings to
meet working capital requirements.
Elongated collection period: The collection period of the company
stood elongated at 106 days for FY17. HSSPL being a small player
operating in the industry has limited bargaining power. Further,
HSSPL also has to provide extended credit period to in order
retain existing customers as well as to add new customer base.
Since, the manpower services are provided by the company at
various locations and it takes lengthy process to validate the
same which results in delay in the realization of receivables.
However, HSSPL makes payment to the employees on monthly basis.
Therefore, the company has to majorly rely on external borrowings
to meet its working capital limits requirements, the same
resulted into the average utilisation of the working capital
limits of ~95% utilized during the past 12 months ended August,
2017.
Dependence on availability of requisite manpower: The company's
services are totally dependent on availability of the requisite
manpower. To meet the increasing need of the manpower, the
company recruits on the basis of the references from its existing
employees. As the guarding service does not require high skill,
the company recruits semi-skilled or unskilled labour and
provides the requisite training through its training centers.
Besides this, given high attrition rate in this industry;
staffing of sufficient manpower remains key challenge.
Highly competitive nature of industry: Security service Industry
comprises few organized players and large number of unorganized
players. Though the gap between the pricing of organized and
unorganized players remains a key challenge for the industry,
large corporate are increasingly preferring reputed and organized
security solutions provider. With the increasing number of
domestic and foreign security agencies operating in the country,
the Government of India (GoI) felt the need for regulating the
industry and passed 'Private Security Agencies Regulation Act'
(PSARA) in 2005. With presence of various players, HSS has
limited bargaining power which exerts pressure on its margins.
Key Rating Strengths
Experienced management with moderate profitability margins:
HSSPL's operations are currently being managed by Mr. Rajbir
Singh Sangwan and Mrs. UshaSangwan. Mr. Rajbir Singh Sangwan
(aged 62 years), is a post graduate by qualification and has an
experience of nearly one decade in manpower industry through his
association with this entity and other associate namely "Hajaria
Security Service". He is ably supported by Mrs. UshaSangwan in
managing the day to day operations. The profitability margins of
the company remained moderate as marked by PBILDT and PAT margins
which stood at 7.11% and 2.79% respectively for FY17 since the
company is engaged in service sector industry.
Hajaria Soft Services Private Limited (HSSPL) is a private
limited company incorporated in April, 2015 and started its
commercial operations in June, 2015. HSSPL is being managed by
Mr. Rajbir Singh Sangwan and Mrs. UshaSangwan. The company is
engaged in providing integrated facility management services
which include housekeeping & pantry services, staffing, technical
support, office assistance, office management, pest control,
contractual manpower (both technical and non-technical staff),
etc. The company is an ISO 14001: 2015 and 9001: 2015 certified
services provider and provide manpower services across India.
"Hajaria Security Service"; is an associate concern of HSSPL;
engaged in providing manpower and security services.
HARIDWAR HIGHWAYS: CARE Cuts Rating INR981.09cr Loan to 'B'
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Haridwar Highways Project Limited (HHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 981.09 CARE B; Stable Revised
from CARE B+
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
HHPL factors in slow progress and significant delay in project
completion. The rating also continues to be constrained by
project implementation risk, inherent risks associated with a
toll-based project and weak financial risk profile of the
sponsor. The rating, however, derives comfort from about 72%
physical progress achieved on the project and experience of Era
Infra Engineering Ltd (EIEL). Going forward, handing over of
balance land from NHAI, arrangement of requisite funds and timely
completion of the project shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Significant Delay in project execution: Original SPCD of the
project was March 1, 2013. Apart from significant delays in
execution, the project had also faced delays on account of delay
in handing over of un-encumbered ROW (land) and approvals.
As per the MPR report for September 2017, the project has
achieved cumulative physical and financial progress of 72.34% as
of Sept 30, 2017 against the 57.86% as of July 2016, based on the
revised project cost. The company has incurred project cost of
INR 915.61 crore as on September 30, 2017. The company is
targeting to achieve PCOD by completing 75% of the project.
However, considering the weakened financial profile of sponsor;
timely arrangement of requisite funds and progress on the project
would be crucial. The project had suffered cost over runs mainly
due to various delays and EPC cost had been revised to INR1272.54
crore (i.e. an EPC cost overrun of INR297.7 crore) and total
project cost to INR 1,563.55 crore (initially envisaged at
INR1100.60 crore).
Experienced promoters, however weak credit profile of promoter:
As on March 31, 2017, EIEL holds 74% equity stake in BHPL while
SIBMOST holds the remaining 26% equity. SIBMOST is the technical
partner in the project and both the promoters have considerable
experience in the construction industry including construction,
operation and maintenance of roads. Majority of the promoter
contribution in the project has been made by Era Infrastructure
India Ltd (EIIL, wholly owned subsidiary of EIEL and holding
company of various road BOT projects) in the form of preference
shares. On account of deterioration in financial performance,
increased working capital requirements and debt levels, delay in
some of the group's Build Operate Transfer (BOT) road projects,
as well as overall challenging environment in the construction
industry, financial risk profile of EIEL has deteriorated. The
lenders have invoked Strategic Debt Restructuring (SDR) with
reference date February 24, 2017.
Revenue risk associated with toll projects: Being a toll-based
project, HHPL is exposed to inherent revenue risks arising from
traffic fluctuations and annual revision of toll rates which are
indexed to Wholesale Price Index (WPI). To provide cushion for
debt payments against such variability in revenue, the lenders
have stipulated maintenance of a Debt Service Reserve Account
(DSRA) equivalent of one quarters' repayment obligations to be
created from the project cash flows.
HHPL is a special purpose vehicle (SPV) promoted by Era Infra
Engineering Ltd (EIEL) and OJSC- Sibmost (Sibmost) for
augmentation of 2-lane carriageway of the existing section of NH-
58 from km 131.0 to km 211.0 to a 4-lane dual carriageway from
Muzaffarnagar to Haridwar in the state of Uttar Pradesh
&Uttarakhand under National Highways Development Programme (NHDP)
Phase III of NHAI on Design, Build, Finance, Operate & Transfer
(Toll) basis. As per the concession agreement (CA) signed between
NHAI and HHPL in February 2010, the concession period is 25 years
(including a construction period of 2.5 years) from the Appointed
Date (September 3, 2010). The original SPCD was March 1, 2013.
The total project cost was originally envisaged at INR1,100.60
crore to be funded through promoter contribution of INR200 crore,
grant of INR210 crore from NHAI, and term loans of INR690.60
crore. The project cost has been revised to INR 1563.55 crore to
be funded through promoter contribution of INR372.46 crore, grant
of INR210 crore from NHAI, and term loans of INR981.09 crore.
HUBLI ELECTRICITY: CRISIL Reaffirms B- Rating on INR902.53MM Loan
-----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Hubli
Electricity Supply Company Limited (HESCOM) for getting
information. Despite several emails and calls, the company has
not submitted any information. CRISIL had, through its letters
dated October 26, 2017, November 3, 2017 and November 17, 2017,
informed the company of the extant guidelines and requested for
cooperation. However, the issuer has continued to be non-
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 175 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of Credit 100 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Long Term Loan 902.53 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Short Term Loan 106.25 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of HESCOM. This restricts
CRISIL's ability to take a forward looking view on the credit
quality of the entity. CRISIL believes information available for
HESCOM is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL B rating
category or lower.' CRISIL has reaffirmed its 'CRISIL D/CRISIL D'
ratings on the bank facilities of KIPL, based on banker
confirmation regarding delays in servicing term loans due to weak
liquidity. The ratings on the cash credit and letter of credit
facilities have been reaffirmed at 'CRISIL B-/Stable/CRISIL A4'
as these continue to be regularly serviced.
Incorporated in 2002, HESCOM is an electricity distribution
company, wholly owned by GoK. It is responsible for supplying
power to consumers in the seven districts of Dharwad, Gadag,
Haveri, Uttar Kannada, Belgaum, Bijapur, and Bagalkot in
Karnataka. The company's service area covers 54,513 square
kilometres, with a population of over 1.4 crore and a customer
base of around 0.36 crore.
JIYA EXIM: CARE Reaffirms B+ Rating on INR13.17cr LT Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Jiya Exim Private Ltd. (JEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 13.17 CARE B+; Stable Reaffirmed
Short term Bank
Facilities 0.27 CARE A4 Reaffirmed
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of JEPL are continues
to remain constrained by its small scale of operations with thin
profit margin, project risk, volatility in raw material prices
with foreign exchange fluctuation risk, working capital intensive
nature of business, leveraged capital structure with moderate
debt coverage indicators and its presence in an intensely
competitive industry. The ratings, however, derive strength from
the promoter's extensive experience, satisfactory track record of
operations and strategic location of the plant.
The ability of the company to increase in its scale of
operations, improve profitability margins, effective management
of working capital, complete the on-going project within
stipulated time & costs and derive benefits out of it as
envisaged would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with thin profit margins: The scale of
operations of the company remained small marked by total
operating income of INR16.13 crore with a PAT of INR0.17 crore in
FY17. In H1FY18 the company has achieved a turnover of INR6.68
crore. Furthermore the profit margins of JEPL marked by operating
margin of 3.09% and PAT margin of 1.02% in FY17.
Project risk: JEPL is setting up an additional manufacturing
plant at Kolkata Leather Complex Bentala with aggregate project
cost of INR12.97 crore (including margin money for working
capital of INR1.82 crore) which is to be financed by debt equity
ratio of 2:1. The financial closure for the debt portion of the
project has already been achieved. Therefore the risk of project
funding is mitigated. JEPL has spent of INR4.24 crore till
November 13, 2017. Since the project is into initial stage of
implementation and therefore the completion of the on-going
project in time is very crucial for the company going forward.
The project is estimated to be operational by March 2018.
Exposure to volatility in raw material prices and foreign
exchange fluctuation risk: During FY17, raw material cost
remained the major cost driver for JEPL at 52.46% of the total
cost. JEPL's gross sales in FY17 were mostly export sales (around
91.13% of TOI) and majority of its raw materials requirement was
met through domestic purchases. Hence, JEPL is exposed to foreign
exchange fluctuations. However, the company sometimes adopts
forward contracts for mitigating foreign exchange fluctuations
and hence the foreign exchange fluctuation is mitigated to some
extent.
Working capital intensive nature of business: The working capital
cycle of JEPL is stretched as the payment for orders is received
only post the delivery of goods to the customer. Accordingly the
average collection period has remained in the range of 43 to 60
days during last three years (FY15-FY15). Furthermore, JEPL
maintains inventory of raw materials for smooth running of its
manufacturing process and finished goods for timely supply to its
customers. However, the company avails credit period of only
about three weeks from its suppliers. Accordingly the average
operating cycle remained moderately stretched in the range of 76
to 87 days during the last three years. The average utilization
of fund based limits was around 90% during the last twelve months
ended in October 31, 2017.
Leveraged capital structure with moderate debt coverage
indicators: The capital structure of the company remained
leveraged marked by overall gearing ratio at 2.46x as on
March 31, 2017. The debt coverage indicators of the company
marked by interest coverage to 1.95x and total debt to GCA to
17.54x in FY17. Intensely competitive industry: The industry is
essentially dominated by small scale firms with a few medium and
large sized firms. The industry is concentrated in several
leather clusters in 4-5 distinct locations in the country. Though
government policies towards the industry have been supportive
both for small-scale sector development as well export promotion,
the industry is caught up with socio political issues relating to
slaughtering of animals. With the production clustered in 4-5
locations, distribution network becomes the key to success. Many
companies in the leather products have a strong distribution
network and enter into brand building exercise to improve the
sales and market share. Hence the players in the industry do not
have pricing power and are exposed to competition induced
pressures on profitability.
Strategic location of the plant with proximity to source of raw
materials and cheap labour: The manufacturing facility of JEPL
has close proximity to the tannery situated at Kolkata Leather
Complex for sourcing of finished leather, the main raw material
for manufacturing of leather goods. Accordingly, the availability
of raw materials is not an issue. Further the manufacturing plant
has ample supply of cheap labour.
JEPL was incorporated in January 1994 in the name of Sanyam
Vyapaar Private Limited. The name of the company was changed to
Fort Exports Private Ltd in March 1996 and finally the company
got its current name 'Jiya Exim Private Ltd.' in July 2008. JEPL
has been engaged in manufacturing and exports of leather
products. The major export destinations of JEPL are Spain,
Poland, Belgium, Germany, USA, UK, Australia, Canada, France and
Middle East. JEPL is recognized as a "Star Export House" by the
Ministry of Commerce & Industry, Government of India, and has SA
8000:2008 certifications from Social Accountability
International. Being a recognized 'Star Export House' the company
is entitled to various export incentive schemes of GoI.
KTC AUTOMOTIVE: CRISIL Reaffirms B Rating on INR7.32MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of KTC Automotive Company (KTC) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 7.32 CRISIL B/Stable (Reaffirmed)
Term Loan 0.68 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect KTC's modest scale of operations
in the intensely competitive automobile dealership industry in
Kerala and its below-average financial risk profile. These
weaknesses are partially offset by the extensive experience of
the firm's promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: With revenue of INR99.8 crore in
fiscal 2017, scale of operations remains small and prevents the
firm from enjoying benefits arising from economies of scale.
Further increasing competition from other dealers also constrains
the overall revenue profile.
* Below-average financial risk profile: Networth and total
outside liabilities to tangible networth were weak at INR3.2
crore and 6.29 times, respectively, as on March 31, 2017.
Interest coverage ratio was 1.36 times due to large working
capital debt in fiscal 2017
Strength
* Extensive experience of the promoters: Benefits from the
promoters' decade-long experience in the industry through other
principals and healthy relationships with Mahindra & Mahindra
(M&M) should support business. Their experience has helped
identify potential untapped market regions for improvement in
scale and gaining traction for operations.
Outlook: Stable
CRISIL believes KTC will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if increase in accrual and a stronger capital
structure strengthens financial risk profile. The outlook may be
revised to 'Negative' if stretch in working capital cycle or any
large, debt-funded capex weakens financial risk profile.
Set up in 2002, KTC is a partnership firm and authorised dealer
for the passenger cars and light commercial vehicles of M&M for
Ernakulum, Calicut, Kannur, Wayanad and Kozhikode districts.
Promoted by Mr P V Nidhish, it has 9 showrooms in Kerala.
Net profit was INR0.8 crore on net sales of INR99.8 crore in
fiscal 2017 against net loss of INR3.9 crore and INR89 crore,
respectively, in fiscal 2016.
MADHU INDUSTRIES: Ind-Ra Assigns BB+ Issuer Rating
--------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Madhu Industries
Private Limited (MIPL) a Long-Term Issuer Rating of 'IND BB+'
with a Stable Outlook. The instrument-wise rating actions are:
-- INR220 mil. Fund-based working capital limit assigned with
IND BB+/Stable/IND A4+ rating;
-- INR5 mil. Non-fund-based working capital limit assigned with
IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect MIPL's moderate scale of operations and
credit metrics because of a slow order flow rate. Also, the
company mainly caters to the export market. In FY17, revenue
deteriorated to INR577 million (FY16: INR659 million). However,
net interest coverage (operating EBITDA/gross interest expense)
increased to 3.0x in FY17 (FY16: 2.4x) due to a decline in
interest cost and net financial leverage (total adjusted net
debt/operating EBITDAR) improved to 2.0x (6.2x) due to a decline
in debt. The operating EBITDA margins were stable at 4.5% in FY17
(FY16: 4.5%).
The ratings, however, are supported by the company's comfortable
liquidity position, as reflected in its around 65.4% average
utilisation of the working capital limits during the 12 months
ended October 2017.
The ratings are also supported by more than two decades of
experience of the company's directors in the home furnishing
textile manufacturing business.
RATING SENSITIVITIES
Negative: A decline in the profitability leading to deterioration
in the credit metrics would lead to a negative rating action.
Positive: An increase in the revenue along with maintenance of
the credit metrics would lead to a positive rating action.
COMPANY PROFILE
Incorporated in 1997, MIPL manufactures home furnishing textiles
such as bed linen, kitchen linen and table linen. The company has
its registered office located in Ahmedabad.
MIL INDUSTRIES: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed MIL Industries
Limited's (MIL) Long-Term Issuer Rating at 'IND BB+'. The Outlook
is Stable. The instrument-wise rating actions are:
-- INR22 mil. Fund-based facilities affirmed with IND BB+/Stable
rating; and
-- INR65 mil. Non-fund-based facilities affirmed IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects MIL's continued small scale of
operations and volatile operating profitability due to the
fragmented nature of the industrial lining industry. During FY17,
MIL's revenue declined to INR295 million (FY16: INR341 million)
due to a decrease in realisation of rubber lining. The company
recorded revenue of INR170 million in 7MFY18. At end-October
2017, it had an order book of INR120 million, which will be
executed before February 2018. EBITDA margins declined to 10.1%
in FY17 (FY16: 17.1%) due to fluctuations in raw material
(rubber) price.
The ratings also factor in MIL's moderate credit metrics. EBITDA
interest cover (operating EBITDA/gross interest expense)
deteriorated to 7.0x in FY17 (FY16: 14.2x) due to the decline in
the EBITDA margin. The company remained net debt negative in
FY17. The management expects the credit metrics to remain
moderate over the medium term due to absence of debt-led capex.
However, the ratings continue to benefit from MIL's comfortable
liquidity position with 57.4% average use of the fund-based
facilities for the 12 months ended October 2017.
The ratings also remain supported by the company's promoters'
more than five decades of experience in the manufacturing of
rubber and polytetrafluoroethylene lining.
RATING SENSITIVITIES
Positive: A substantial increase in revenue and operating
profitability while maintaining the credit metrics will be
positive for the ratings.
Negative: Any substantial decline in operating profitability
leading to a sustained deterioration in the credit metrics will
be negative for the ratings.
COMPANY PROFILE
MIL manufactures anti-corrosion and anti-abrasion lining and
products, such as rubber and polytetrafluoroethylene lining for
chemical and tyre manufacturing industries.
MOMENTUM TECHSYS: Ind-Ra Affirms BB+ LT Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Momentum Techsys
Private Limited's (MTPL) Long-Term Issuer Rating at 'IND BB+'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR125 mil. Non-fund-based working capital limits affirmed
with IND A4+ rating; and
-- INR75 mil. Proposed non-fund-based limits* affirmed with
Provisional IND A4+ rating.
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by MTPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The affirmation reflects MTPL's continued small scale of
operations, despite a substantial increase in revenue to
INR665.14 million in FY17 (FY16: INR330.90 million) on account of
securing additional tenders from existing and new customers.
However, operating margins continued to decline to 7.44% in FY17
(FY16: 8.16%, FY15:11.22%) due to an increase in the low margin
trading segment (FY17: 71% of revenue, FY16: 52%). Apart from
direct trading, MTPL also caters to government entities on tender
basis, which are highly competitive in nature. Thus, the company
has been foregoing margins to a certain extent to secure
additional tenders.
However, the ratings remain supported by the company's strong
credit metrics. Interest cover (operating EBITDA/gross interest
expense) improved to 11.92x in FY17 (FY16: 10.54x) owing to an
improvement in operating profit to INR49.46 million (INR26.99
million). The company maintained a net cash position in FY17.
The ratings also benefit from a significant improvement in MTPL's
net working capital cycle to 30 days in FY17 (FY16: 155 days),
led by an improvement in inventory holding period to 68 days (202
days).
RATING SENSITIVITIES
Negative: A substantial deterioration in the top line and/or a
substantial deterioration in the net working capital cycle
leading to deterioration in the credit metrics would be negative
for the ratings.
Positive: A substantial growth in the top line while maintaining
the current credit metrics will lead to a positive rating action.
COMPANY PROFILE
MTPL is an IT distribution and services provider specialising in
IT infrastructure development, unified communication networks,
electronic security and surveillance devices, and audio-visual
systems. Its branch offices are located in Noida, Lucknow, Delhi,
Gurugram, Patna and Dehradun. It also has an extensive network of
sales and services, with representatives and experienced partners
across India.
MUTYAM STEEL: CRISIL Reaffirms 'B' Rating on INR16MM Loan
---------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long term bank facility of Mutyam Steel Private Limited (MSPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Electronic Dealer
Financing Scheme
(e-DFS) 16 CRISIL B/Stable (Reaffirmed)
The rating reflects MSPL's weak financial risk profile, modest
scale of operations and its exposure to intense competition in
the steel trading industry resulting in its low profitability
margins. These weaknesses are partially offset by the extensive
experience of promoters in the steel industry.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: Total outside liabilities by
tangible net worth (TOLTNW) was high at 5.9 times as on March 31,
2017. The debt protection metrics, namely, net cash accruals to
total debt (NCATD) and interest coverage stood at 0.03 times and
1.36 times for fiscal 2017.
* Modest scale of operations: MSPL's modest of operations is
reflected in operating income of INR97.7 crore in fiscal 2017.
There is intense competition in the industry which restricts the
company's bargaining power and hence results in low margins.
* Exposure to intense competition in the steel trading industry
resulting in its low profitability margins: Due to the highly
fragmented nature of the industry and low value addition on
account of the trading nature of operations, the operating
margins of the players have been low; MSPL's operating margin has
been in the range of 1.5 to 2 per cent over the past three years
through fiscal 2017a.
Strengths
* Extensive experience of promoters in the steel industry: MSPL
is promoted by Mr. Mahendar Reddy, who has an extensive
experience of over two decades in the construction material
(cement & TMT bars) trading segment. The established regional
presence of the promoter and his long standing industry
experience has enabled MSPL to establish healthy relationship
with retail outlets in Hyderabad.
Outlook: Stable
CRISIL believes MSPL will continue to benefit from its promoters'
extensive industry experience and its established relations with
customers. The outlook may be revised to 'Positive' if
profitability margin increases substantially, or capital
structure improves considerably backed by sizeable equity
infusion from promoters. Conversely, the outlook may be revised
to 'Negative' in case of a steep decline in profitability margin,
or significant decline in capital structure caused by stretched
working capital cycle.
MSPL set up in 2012 is promoted by Mr. Mahender Reddy. The
company is an exclusive distributor for Tata Steel Ltd's
structural steel products in Andhra Pradesh and Telangana. It is
headquartered in Hyderabad (Telangana).
MY CAR: CRISIL Lowers Rating on INR35MM Cash Loan to 'D'
-------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank loan
facilities of MY Car (Bhopal) Private Limited (MCBPL) 'CRISIL D'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 35 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Inventory Funding 25 CRISIL D (Downgraded from
Facility 'CRISIL B+/Stable')
Proposed Long Term 10 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B+/Stable')
The downgrade reflects overutilization in working capital
facility owing to weak liquidity caused by stretch working
capital cycle.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile
* Low bargaining power and exposure to intense competition in the
automobile dealership business
Strength
* Established market position in automobile dealership segment in
Madhya Pradesh, supported by extensive experience of promoters
MCBPL was set up in 2003 by Mr. Saurabh Garg. The company, an
authorised dealer of MSIL, operates four showrooms in MP of which
two are in Bhopal. MCBPL also deals in MSIL's spare parts.
MY CAR INDORE: CRISIL Lowers Rating on INR33.02MM Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its ratings on the bank loan facilities of
My Car (Indore) Private Limited (MCIPL) 'CRISIL D/CRISIL D' from
'CRISIL B+/Stable/CRISIL A4'. The downgrade reflects
overutilization in working capital facility owing to weak
liquidity caused by stretch working capital cycle.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 33.02 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Term Loan .98 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile
* Exposure to intense competition
Strength
* Established market position in the automobile dealership
segment in Madhya Pradesh
MCIPL, set up in 2009 by Mr. Saurabh Garg, is an authorised
dealer of Maruti Suzuki India Ltd (MSIL) in Madhya Pradesh. It
has two showrooms in Indore. The company also deals in MSIL spare
parts.
MY EQUIPMENTS: CRISIL Lowers Rating on INR13MM Loan to 'D'
----------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank loan
facilities of My Equipments Private Limited (MEPL) 'CRISIL D'
from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Inventory Funding 13 CRISIL D (Downgraded from
Facility 'CRISIL BB-/Stable')
Term Loan 1 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
The downgrade reflects overutilization in working capital
facility & delay in repayment of term loan owing to weak
liquidity caused by stretch working capital cycle.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile
* Working capital-intensive operations
Strengths
* Extensive entrepreneurial experience of key promoter, and
benefits derived from established market position of principal
supplier JCB India Ltd (JCB)
MEPL was incorporated in June 2012, promoted by Mr. Saurabh Garg
and his family members. The company is an authorized dealer for
heavy earth-moving equipment of JCB in 11 districts of Madhya
Pradesh. MEPL has five outlets across these districts.
R H SOLVEX: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed R. H. Solvex
Private Limited's (RHSPL) Long-Term Issuer Rating at 'IND BB+'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR100 mil. Fund-based limit affirmed with IND BB+/Stable
rating;
-- INR0.30 mil. Non-fund-based limit affirmed with IND A4+
rating;
-- INR20.2 mil. (reduced from INR71.80 mil.) Term loan due on
March 2021 affirmed with IND BB+/Stable rating.
KEY RATING DRIVERS
The affirmation reflects RHSPL's continued moderate scale of
operations and credit metrics. In FY17, revenue was INR888
million (FY16: INR1,081 million), interest coverage was 2.9x
(2.2x) and net financial leverage was 4.8x (3.3x). The decline in
revenue was due to a fall in the prices of finished goods, and
the deterioration in net financial leverage was mainly due to a
fall in EBITDA (FY17: INR21 million; FY16: INR29 million).
Meanwhile, the improvement in interest coverage was on account of
a fall in interest payments.
The ratings also reflect a low and declining operating EBITDA
margin (FY17: 2.3%; FY16: 2.7%; FY15: 3.3%) on account of raw
material price fluctuations and high competition.
The ratings, however, continue to be supported by a strong
liquidity, indicated by an average utilisation of 32.2% of its
working capital limits for the 12 months ended October 2017, and
the founders' experience of over three decades in the solvent
extraction and edible oil refining business.
Moreover, the ratings continue to be supported by the company's
close proximity to the soya seed market and the promoters' long-
standing relationships with existing customers and suppliers.
RATING SENSITIVITIES
Negative: A negative rating action may result from any
deterioration in credit metrics.
Positive: A positive rating action may result from any
substantial improvement in the scale of operations, along with
any improvement in the credit metrics.
COMPANY PROFILE
Incorporated in September 2010, RHSPL is promoted by Harman
Prasad Agrawal, Meena Agrawal, Rohit Agrawal and Rahul Agrawal.
RHSPL manufactures deoiled soya cakes and refined soybean oil. It
sells the refined oil under the brand Nutririch. It has a solvent
extraction plant with a production capacity of 250 tonnes per day
(tpd) and a 50tpd edible oil refining unit in Seoni (Madhya
Pradesh).
R.S. DREAM: CARE Assigns B+ Rating to INR12cr LT Loan
-----------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of R.S.
Dream Land private Limited (RSDPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 12.00 CARE B+; Stable Assigned
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of RSDPL is
constrained by its small scale of operations, project
implementation and salability risk, risk associated with
geographical and revenue concentration, lack of proven project
execution capabilities, competition from similar type of projects
in the adjoining areas. The rating, however, derives strength
from experienced promoters and favorable project location.
The ability of the company to complete the ongoing projects as
per project schedule without any major cost overrun, sale out its
real estate properties and increase its scale of operations will
remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations: The scale of operations of the company
remained small with total operating income of INR 1.68 crore
(Rs.1.76 crore in FY16) with a PAT of INR 0.19 crore (Rs.0.17
crore in FY16) in FY17.
Project implementation and salability risk: RSDPL is currently
developing a single project at an aggregate cost of INR26.55
crore with total saleable area of 165960 square feet which is
proposed to be funded through term loans of INR12.00 crore,
customers' advances of INR7.93 crore and balance through the
capital contribution from the promoters. The project is under
development and RSDPL has incurred INR17.71 crore till
September 30, 2017. Since the company has already spent costs
around 67% of its total project costs till September 30, 2017 and
will complete remaining by March 2018 reflecting moderate project
implementation risk. However, the project is 28.47% booked as on
September 30, 2017. Accordingly, booking advance is relatively
low as compared to sale value, thereby indicating the risk
associated with timely receipt of booking advance as well as
sales of remaining flats.
Risk associated with geographical and revenue concentration:
RSDPL's business is restricted to Chhattisgarh since inception
indicating high geographical concentration risk. Being confined
only in the state of Chhattisgarh, RSDPL remains exposed to the
risk associated with slowdown in the real estate market in the
region resulting from demand supply mismatch. In recent times,
many new real estate projects have been launched in Raipur, by
organized and unorganized players due to the surge in property
prices coupled with low entry barriers which has led to high
competition in real estate market. This apart, currently
'Empressia Elite's is the sole project of RSDPL which further
expose the company to the revenue concentration risk.
Lack of proven project execution capabilities: 'Empressia Elite'
is the first real estate project which is being developed by
RSDPL. So the company has low project execution capabilities and
short track record of execution of real estate project. However,
earlier the company was doing the marketing for other real estate
companies and the promoters are having more than a decade
experience in the related line of business.
Competition from similar type of projects in the adjoining areas:
Real estate, while being one of the largest sectors of the
economy, is regional and fragmented in nature. In recent times,
many new real estate projects have been launched in Raipur, by
organized and unorganized players due to the surge in property
prices coupled with low entry barriers which has led to high
competition in real estate market.
Key Rating Strengths
Experienced promoters and favourable project location: The
promoters Mr. Khushi Ram Kundnani and Mr. Kishore Kumar Kundnani
have more than a decade of experience in real estate business.
They are looking after the day to day operations of the company
supported by a team of experienced professionals.
Raipur is on the fast track of development being the commercial
capital of the state of Chhattisgarh. Large scale influx of
professionals in the wake of rapid establishment of corporate
projects and branches in Raipur has added the necessary impetus
to the growth of real estate in Raipur. While the major growth
has been marked in the housing sector, investments in commercial
property have far exceeded even that of the housing sector. This
has resulted in surge in the population of the city thereby
creating high demand for residential properties. Furthermore,
with upgrading lifestyle and growing middle class, there is a
strong demand for new apartments and bungalows with modern
facilities for residential purpose. As the result, the property
prices have doubled in recent times. While this augurs well for
the property developers including RSDPL operating in the region.
Raipur (Chhattisgarh) based RSDPL was incorporated in January
2006. Earlier the company was doing the marketing for other real
estate companies. Since March 2014, the company has started its
own real estate project. The company is currently developing its
first project 'Empressia Elite' commonly known as E2 with an
aggregate project cost of INR26.55 crore with a saleable area of
1.66 lakh square feet. The project is located in the prime
location of Raipur, Chhattisgarh. The construction work of the
project is given to G.K. Construction and RSDPL is focusing
mainly on marketing aspects. The promoters have satisfactory
business experience of more than two decade in real estate
industry.
SABARI JANI: CRISIL Withdraws B Rating on INR40MM LT Loan
---------------------------------------------------------
CRISIL Ratings has been consistently following up with Sabari
Jani Associates (SJA) for obtaining information through letters
dated Jan. 31, 2017 and July 12, 2017 among others, apart from
telephonic communication. However the issuer has remained non-
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 40 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Withdrawal)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
CRISIL has withdrawn its rating on the proposed long-term bank
facility of SJA at the firm's request. The rating action is in-
line with CRISIL's policy on withdrawal of bank loan ratings.
SJA is a partnership firm between Mr Kusumgiri Jani and Sabari
Ventures. Part of the Sabari Group which is promoted by Mr Hiren
Bharani and family, SJA is engaged in real estate development in
Mumbai.
SARATHY AUTOCARS: Ind-Ra Assigns BB+ Issuer Rating
--------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sarathy Autocars
(SA) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is
Stable. The instrument-wise rating action is:
-- INR150 mil. Fund-based facilities assigned with IND
BB+/Stable/IND A4+ rating
KEY RATING DRIVERS
The ratings reflect SA's moderate credit metrics and liquidity
profile due to the working capital intensive nature of operations
and the trading nature of the business.
Net leverage (net adjusted debt/operating EBITDAR) improved to
4.0x in FY17 (FY16: 5.1x) and interest coverage (operating
EBITDA/gross interest expense) to 1.9x (1.4x), on account of a
significant rise in car sales and a reduction in interest
expenses due to a fall in debt to INR439 million (INR536
million). EBITDA margins were range bound between 2.7%-3.7% over
FY14-FY17. SA's average peak utilisation of the working capital
facility was 95.53% during the 12 months ended October 2017. The
working capital cycle improved to 23 days in FY17 (FY16: 34 days)
on account of improved inventory days and debtor days.
The ratings are constrained by the partnership structure of the
firm.
The ratings, however, are supported by SA's large scale of
operations. Revenue grew at a CAGR of 11.07% over FY14-FY17 and
was INR3,914 million in FY17 (FY16: INR3,399 million) on account
of a stable demand for passenger vehicles and customers'
preference of high-end cars.
The ratings are also supported by SA's promoters over 10 years of
experience in the automobile business and established position as
an authorised dealer of Maruti Suzuki India Limited, a leading
player in the passenger vehicle segment, in the Kollam district
of Kerala.
RATING SENSITIVITIES
Positive: A substantial increase in the revenue and EBITDA
margins along with an improvement in the overall credit metrics,
could lead to a positive rating action.
Negative: A decline in the revenue and EBITDA margins, along with
any debt-funded capex, leading to deterioration in interest
coverage below 1.5x on a sustained basis, could lead to a
negative rating action.
COMPANY PROFILE
Established in 1999 as a partnership firm, SA sells Maruti Suzuki
India's cars in Kerala through 14 showrooms and 11 service
centres in Kerala.
SASWAD MALI: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated The Saswad Mali
Sugar Factory Ltd's (SMSFL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
surveillance exercise, despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR764.7 mil. Cash credit limits migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING) rating; and
-- INR868.4 mil. Term loan migrated to non-cooperating category
with IND B+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Nov. 23, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SMSFL, located at Malinagar in Solapur district, Maharashtra was
incorporated in 1932. The company has daily sugarcane crushing
capacity of 3,500 metric tonnes. In addition, it has 60,000
litres/day distillery capacity and 14.8MW installed co-generation
capacity.
SHREE B.S.: CRISIL Reaffirms B+ Rating on INR7MM Cash Loan
----------------------------------------------------------
CRISIL's rating on the bank facilities of Shree B.S. Cotton
Private Limited (SBCPL)'s continues to reflect modest scale
operations in a highly competitive industry, its working-capital-
intensive operations, and weak financial risk profile, marked by
high gearing and average debt protection metrics. These rating
weaknesses are partially offset by the extensive experience of
SBCPL's promoters in the cotton ginning industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in highly fragmented industry: The
industry is highly fragmented on account of its low entry
barriers in the form of low capital and technology intensity and
low differentiation in end product.
* Working-capital-intensive operations: SBCPL's operations are
expected to remain highly working capital intensive on account of
the company's higher inventory and debtor level during season
time
Strength
* Promoters' extensive industry experience: SBCPL's promoters,
the Tayal family, have experience of more than 25 years in the
cotton industry through family-promoted entities. The family has
promoted a number of entities in the same business. This enables
the company to benefit from other established business
operations.
Outlook: Stable
CRISIL believes that SBCPL will benefit over the medium term from
its promoters' experience in the cotton industry. The outlook may
be revised to 'Positive' if there is substantial and sustained
growth in the company's revenue and profitability from the
current levels, or if there is an improvement in its capital
structure, most likely through fresh capital infusion.
Conversely, the outlook may be revised to 'Negative' if SBCPL's
liquidity weakens significantly, most likely because of
substantially less-than-expected cash accruals or large working
capital requirements.
Incorporated in 2012, SBCPL is based in Sendhwa (Madhya Pradesh).
The company is promoted by Tayal family who has more than 25
years of experience in the cotton industry. SBCPL is engaged in
the business of cotton ginning and pressing.
SHRI NALLAPULLIAMMAN: CRISIL Assigns B+ Rating to INR8MM Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
bank facilities of Shri Nallapulliamman Traders (SNT). The
ratings reflect SNT's modest scale of operations and intense
competition, its susceptibility of operating margins to adverse
government regulations and raw material price volatility and its
modest financial risk profile. These weaknesses are partially
offset by the extensive experience of the promoters in the
agricultural products industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition in the
industry: SNT's business risk profile remains constrained by its
modest scale of operations in the intensely competitive rice
milling industry. The modest scale of operations is indicated by
its revenues of INR45.3 crore for fiscal 2017.
* Susceptibility of operating margin to adverse government
regulations and raw material price volatility: The domestic rice
industry is highly regulated in terms of paddy prices,
export/import policy for rice, and rice release mechanism, which
affects the credit quality of players in the industry. The
minimum support price of paddy and prevailing rice prices are two
important factors that determine a rice mill's profitability.
* Modest Financial Risk Profile: SNT's financial risk profile is
modest with net worth and gearing INR3 crore and over 3 times as
on March 31, 2017. Interest coverage and net cash accruals to
total debt ratio (NCATD) ratio at around 1.3 times and 2 percent
for fiscal 2017.
Strengths
* Extensive industry experience of the proprietor: The market
position of the firm benefits from the extensive industry
experience of its proprietor in the rice milling business.
Extensive experience of the promoter has aided the firm to
establish healthy relationship with its customers and suppliers
over the years.
Outlook: Stable
CRISIL believes that SNT will continue to benefit over the medium
term from the long standing industry experience of its promoters.
The outlook may be revised to 'Positive' if the firm's revenues
and profitability increase substantially leading to an
improvement in its financial risk profile or in case of
significant infusion of capital into the firm resulting in
further improvement in capital structure. Conversely, the outlook
may be revised to 'Negative' if KMRM undertakes aggressive, debt-
funded expansions, or if there is a stretch in its working
capital management leading to deterioration in its financial risk
profile.
SNT engaged in the processing of paddy into rice. It is managed
by Mr. Subramani along with his family members. Its processing
facilities are located in Villupuram(Tamil Nadu). It has an
installed capacity to process about 3 tonnes per hour (tph).
SREE GOPAL: CARE Assigns B+ Rating to INR4.47cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sree
Gopal Rice Mill (SGRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 4.47 CARE B+; Stable
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of SGRM is constrained
by its short track record and small scale of operations with low
profit margins, regulation by government in terms of minimum
support price, seasonal nature of availability of raw material
resulting in high working capital intensity, partnership nature
of constitution, exposure to vagaries of nature and its presence
in fragmented and competitive nature of industry. The rating,
however, derives strength from experienced partners, close
proximity to raw material sources, favorable industry scenario
and moderate capital structure with satisfactory debt coverage
indicators. Going forward, the ability of the firm to increase
its scale of operations, improve profitability margins and
effective management of working capital will be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Short track record and small scale of operations with low profit
margins: SGRM has commenced operations from May 2015 and thus has
very short track record of operations. Furthermore, the size of
operations of the firm remained small marked by total operating
income of INR19.34 crore with a PAT of INR0.30 crore in FY16
mainly on account of first year of operations. During FY17, the
firm has booked turnover of around INR23.00 crore. In FY16, the
firm has reported PBILDT and PAT margins of 8.41% and 1.55%
respectively.
Regulation by Government in terms of minimum support price (MSP):
The Government of India (GOI), every year decides a minimum
support price (MSP-to be paid to paddy growers) for paddy which
limits the bargaining power of rice millers over the farmers. The
MSP of paddy has increased during the crop year 2017-18 to
INR1550/quintal (as suggested by the Commission for Agricultural
Costs and Prices, the apex body to advice on MSP to the
government) from INR1470/quintal in crop year 2016-17. Given the
market determined prices for finished product vis-Ö-vis fixed
acquisition cost for raw material, the profitability margins are
highly vulnerable. Such a situation does not augur well for the
firm, especially in times of high paddy cultivation.
Seasonal nature of availability of raw material resulting in
working capital intensity and exposure to vagaries of nature:
Agro product processing business is working capital intensive as
the millers have to stock paddy by the end of each season till
the next season as the price and quality of agro products are
better during the harvesting season. Accordingly, the working
capital intensity remains moderate impacting firm's
profitability. Also, agro products cultivation is highly
dependent on monsoons, thus exposing the fate of the firm's
operation to vagaries of nature.
Constitution as a partnership firm: SGRM, 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/insolvency of the proprietor.
Furthermore, proprietorship entities have restricted access to
external borrowing as credit worthiness of proprietor would be
the key factors affecting credit decision for the lenders.
Fragmented and competitive nature of the industry: SGRM's plant
is located in Uttar Balarampur, Hooghly which is in close
proximity to hubs for paddy/rice cultivating region of Hooghly.
Owing to the advantage of close proximity to raw material
sources, large number of small units is 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.
Key Rating Strengths
Experienced partners: The key partner, Mr. Tanmoy Dey has around
15 years of experience in rice milling industry, looks after the
overall management of the firm supported by other partners who
also have more than a decade of experience in the same line of
business. The firm is deriving benefits out of the long
experience of the partners.
Close proximity to raw material sources and favorable industry
scenario: SGRM's plant is located at Hooghly, West Bengal which
is close to the vicinity to a major rice growing area of West
Bengal, thus, resulting in logistic advantage. Further, rice
being a staple food grain with India's position as one of the
largest producer and consumer, demand prospects for the industry
is expected to remain good in near to medium term.
Moderate capital structure with satisfactory debt coverage
indicators: The capital structure of the firm remained moderate
marked by debt equity and overall gearing ratios of 0.86x and
1.50x respectively as on March 31, 2016. Furthermore, interest
coverage ratio of 3.43x and total debt to GCA at 4.23x in FY16.
SGRM was constituted as a partnership firm in May 2015 by Mr.
Gour Chandra Paul, Ms. Asima Paul, Mr. Debashis Nandy, Ms. Pampa
Dey and Mr. Tanmoy Dey. Since its inception, the firm has been
engaged in processing and milling of non-basmati rice (parboiled
rice). The manufacturing facility of the firm is located at Uttar
Balarampur, Hooghly in West Bengal with aggregate installed
capacity of 27250 metric ton per annum.
SRI VIJAYA: Ind-Ra Affirms B+ Issuer Rating, Outlook Stable
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Sri Vijaya
Venkateswara Cotton Mills Private Limited's (SVVCM) Long-Term
Issuer Rating at 'IND B+'. The Outlook is Stable. The instrument-
wise rating action is:
-- INR100 mil. Fund-based limit affirmed with IND B+/Stable
rating.
KEY RATING DRIVERS
The affirmation reflects SVVCM's continued small scale of
operations, along with moderate credit metrics. In FY17, revenue
was INR638 million (FY16: INR563 million), EBITDA interest
coverage was 1.6x (1.6x) and net financial leverage was 8.8x
(9.7x). Revenue growth was driven by higher execution of work
orders. The improvement in net financial leverage was due to a
decrease in the total debt.
The ratings are constrained by a declining EBITDA margin (FY17:
2.3%; FY16: 2.6%; FY15: 3.3%) due to the company's presence in a
highly competitive cotton ginning industry, which is vulnerable
to fluctuations in raw cotton prices. Moreover, SVVCM has a tight
liquidity, indicated by an average utilisation of 97% for the 12
months ended October 2017.
The ratings, however, continue to benefit from SVVCM's founders'
experience of over three decades in the cotton ginning business.
RATING SENSITIVITIES
Negative: Any deterioration in the credit metrics could lead to a
negative rating action.
Positive: Any improvement in the scale of operations and credit
metrics could lead to a positive rating action.
COMPANY PROFILE
SVVCM was incorporated in 2006 by Mr M Nagamalleswara Rao and Mr
M Rajasekhara Rao. It is engaged in the ginning and pressing of
cotton. Its processes are completely automated, with the capacity
to process 300 bales of cotton per day and operate 42 double
roller gins.
TRIVITRON HEALTHCARE: NCLT Orders Insolvency Process
----------------------------------------------------
Business Standard reports that the National Company Law Tribunal
(NCLT)'s Chennai bench has ordered the initiation of corporate
insolvency resolution process against Trivitron Healthcare,
founded by investor GSK Velu. The order follows a petition filed
by the RNB Design Arc Systems - a supplier of the firm, the
report says.
RNB Design Arc Systems has supplied and installed 90 fire-rated
doors at Trivitron's factory, Business Standard says. On Feb. 18,
2017, the supplier claimed payments worth INR8.97 lakh with an
interest rate of 18 per cent.
Business Standard relates that Trivitron, on its part, raised two
objections to the proposed claim. It argued that the assigned
work was completed by the supplier with a delay of nine months,
besides disputing the interest rate demanded by the entity.
Hearing the dispute, Ch Mohd Sharief Tariq, a judicial member of
NCLT, Chennai ordered the initiation of insolvency proceedings
against the defaulting firm, while adding that resolution process
should be completed over a period of 180 days, beginning from the
date of the NCLT verdict, according to Business Standard.
A moratorium has also been declared on various activities, the
report says.
Trivitron Healthcare Private Limited manufactures medical devices
for customers in India and internationally.
USHA MARTIN: Ind-Ra Downgrades Issuer Rating to 'BB+', On RWN
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Usha Martin
Limited's (UML) Long-Term Issuer Rating to 'IND BB+' and placed
it on Rating Watch Negative (RWN).The Outlook was Negative. The
instrument-wise rating actions are:
-- INR33,392.5 mil. (reduced from INR38,807.5 mil.) Term loan,
due on January 2018 & October 2029 downgraded; placed on RWN
with IND BB+/RWN rating;
-- INR6,000 mil. Fund-based limits downgraded; placed on RWN
with IND BB+/RWN rating;
-- INR1,500 mil. Non-fund-based limits downgraded; placed on RWN
with IND BB+/RWN rating; and
-- INR3,150 mil. Proposed term loan withdrawn (the issuer did
not proceed with the instrument as envisaged) with WD rating.
KEY RATING DRIVERS
The downgrade reflects UML's inability to improve its standalone
as well as consolidated EBITDA margins in 1HFY18, indicating
further stress on liquidity with interest cover remaining below
1x UML's consolidated EBITDA margin was sustained at 10.7% in
1HFY18 (FY17: 10.9%; 1HFY17: 13.64%) as against management's
expectation of an improvement, thereby making cash flow
insufficient to meet interest expenses. This led to weak credit
metrics for the company with interest cover at 0.83x in 1HFY18
(FY17: 0.76x; 1HFY17: 0.86x) and net leverage at 7.93x (10.1x;
8.73x). However, the company had been able to meet debt
obligations through other non-operational cash flows and
stretching creditors during 1HFY18, which includes sale of non-
core asset as envisaged.
The RWN follows the company's intention to sell its wire and wire
rope business including subsidiaries and JVs, for which it has
appointed a consultant. Ind-Ra lacks clarity regarding the
implications of the aforesaid transaction on UML's liquidity and
credit profile. UML's already tight liquidity may worsen, if the
transaction is not concluded by December 2017, which will be
negative for its ratings. However, if the transaction is
finalised, most of the sale proceeds may be used for the
retirement of debt to ease of liquidity, depending on the final
sale consideration.
UML nearly fully used its working capital limit during the 12
months ended October 2017. It reported negative fund flow from
operations both in FY16 (INR1,344 million) and FY17 (INR992
million) but cash flow from operations was positive due to the
release of working capital by reducing inventory period and
stretching creditors.
RATING SENSITIVITIES
Ind-Ra is likely to resolve the RWN once there is clarity on the
likely impact of the asset sale transaction on UML's liquidity
and credit profile. Ind-Ra will review the rating in January
2018.
The RWN indicates that the ratings may be downgraded or affirmed.
COMPANY PROFILE
Founded by the Kolkata based Jhawar family, UML commenced
operations in 1960. It is an integrated steel producer with
captive iron ore mines in Jharkhand.
VEEKAS PIPES: CRISIL Reaffirms B+ Rating on INR10MM Overdraft
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facility of
Veekas Pipes Private Limited (VPPL) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 10 CRISIL B+/Stable (Reaffirmed)
Ratings continue to reflect the company's modest scale of
operations, exposure to volatility in prices of pipes and intense
competition. However this rating weaknesses are partially offset
by extensive industry experience of the promoters, moderate
capital structure and adequate debt protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and intense competition: Scale of
operations remains modest with turnover of INR48 crore as on
March 31, 2017. With no major capital expenditure (capex) or
expansion plans, scale of operations is expected to be at similar
levels over the medium term. Scale of operations remains a
constraining factor in the highly fragmented and competitive
industry with minimal entry barriers.
* Exposure to volatility in the prices of pipes: Due to trading
nature of the business, prices of pipes play a major role in the
profitability of the company. Increase in prices can have a
positive effect, as in fiscal 2017, where the company had
inventory that it was able to sell at higher prices or it may
also have adverse effects where the profit margins could decrease
significantly.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' more than 25 years of experience in the industry,
their understanding of the dynamics of the local market, and
established relationships with customers should support business.
* Moderate financial risk profile: Financial risk profile of the
company is marked by improved debt protection metrics and
improved capital structure marked by reduced leverage. Liquidity
profile of the company remains moderate on account of average
bank limit utilization of 82%. VPPL has moderate cash accruals of
INR 0.92 Cr against no repayment obligations.
Outlook: Stable
CRISIL believes VPPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if gradual increase in revenue and profitability leads
to high cash accrual and strengthens capital structure. The
outlook may be revised to 'Negative' if low cash accrual, sizable
working capital requirement, or large debt-funded capex weakens
financial risk profile, especially liquidity.
Started in 1971 as a partnership concern, VPPL was reconstituted
as a private limited company in 1994. The company, promoted by Mr
Prakash Patel and his cousin Mr Deepak Patel, is a trader of
steel pipes such as electric resistance welded steel pipe,
galvanized steel pipe, structural-rectangulars, rounds, and
hollow section steel pipes used in housing, irrigation, and
various industries.
=================
I N D O N E S I A
=================
PAN BROTHERS: Fitch Revises Outlook to Stable; Affirms B IDR
------------------------------------------------------------
Fitch Ratings has revised the Outlook on Indonesia-based garment
manufacturer, PT Pan Brothers Tbk, to Stable from Positive and
affirmed the company's Long-Term Issuer Default Rating (IDR) at
'B'. At the same time, Fitch Ratings Indonesia has affirmed Pan
Brothers' National Long-Term Rating at 'A(idn)' with a Stable
Outlook.
The Outlook revision reflects Fitch's expectations of a more
gradual deleveraging progress over the next year or two on
account of Pan Brothers' intensifying working capital
requirements and the delay in capacity addition, which may affect
the company's operating scale and hence its bargaining power
among global apparel brands. Pan Brothers' net cash collection
cycle worsened to 239 days in September 2017, from 169 days in
the same period last year.
'A' National Ratings denote expectations of low default risk
relative to other issuers or obligations in the same country.
However, changes in circumstances or economic conditions may
affect the capacity for timely repayment to a greater degree than
is the case for financial commitments denoted by a higher rated
category.
KEY RATING DRIVERS
Working Capital Pressure: Fitch believes Pan Brothers' increasing
exposure as a logistics partner to its customers has partly
contributed to its high working capital requirements, which have
resulted in negative cash flow from operations and high leverage.
The company's advance payments to secure raw materials rose to
over USD100 million as of September 2017, from around USD75
million a year ago, increasing the company's overall working
capital intensity, as measured by net working capital/sales, to
58% from 43%.
Capacity Expansion Delay, Slower Deleveraging: Pan Brothers has
deferred part of its capacity expansion planned in 2017 until
2018. Fitch believe this may affect the company's overall
utilisation rate and subsequently, its operating scale, in the
short term. In the medium term, Fitch expects the company's
ongoing installed production capacity to expand to 117 million
polo shirts equivalent per year by end-2019, from 90 million
shirts as of September 2017. This should improve its bargaining
power with customers and create a more diversified customer base,
allowing for better working-capital management. The company's
expanded capacity will also position it to benefit from the trend
in consolidation among vendors of global apparel brands, all of
which should improve its financial profile. Fitch expects
leverage to progressively decline to around 4.0x in 2019, from
around 5.0x in 2017.
Product Range, Strong Market Position: Pan Brothers' ratings are
underpinned by its position as Indonesia's largest publicly
listed garment manufacturer by capacity, its established
relationships with global apparel brands and its non-contractual
revenue visibility over the next 12 to 18 months. Fitch believes
the company's improving expertise in apparel manufacturing, its
ability to cater for a wide product range and longstanding
relationships with global apparel brands are credit positive.
Cost Pass-Through Ability: Pan Brothers' operates under a cost-
plus pricing mechanism, where the price of its products is mostly
derived from the cost of raw materials plus a mark-up margin.
This allows Pan Brothers to pass through cost fluctuations to
customers. However, margins may be pressured during prolonged
cyclical downturns. Fitch expects the EBITDA margin to remain
stable at around 8% in the medium term.
Seasonal Cash Flow: Pan Brothers' working-capital cycle is longer
in the first half of the year due to purchases of materials to
cater for woven outerwear clothing, in particular, down jackets,
to be ready for the peak production season between April and
September. Its knitwear sales are rising, which will provide some
earning stability. Fitch has excluded an estimated USD25 million
from Pan Brothers' year-end cash balance from the year-end
leverage ratio to reflect the seasonality.
Manageable Currency Exposure: Close to 90% of Pan Brothers' sales
were from exports, while around 80% of its raw materials are
imported. This provides a natural hedge against currency
volatility, as was evident in 2015 when Pan Brothers' EBITDA
margin remained intact in the face of severe local exchange rate
volatility. Raw material costs make up around 65% of the
company's total costs.
DERIVATION SUMMARY
Pan Brothers' IDR is well-positioned compared with higher-rated
peers, such as PT Sri Rejeki Isman Tbk (Sritex; BB-/Stable). Both
companies' ratings are underpinned by dominant market positions.
However, Fitch believes Sritex's lower working capital pressure,
larger scale, wider profit margin and stronger financial profile,
as indicated by its lower leverage and higher interest coverage,
warrants a multiple-notch rating difference to Pan Brothers.
Pan Brothers' 'A(idn)' National Long-Term Rating is well-
positioned compared with companies rated on the national scale,
such as Sritex (A+(idn)/Stable) and PT Steel Pipe Industry of
Indonesia Tbk (Spindo; A-(idn)/Stable), one of Indonesia's
largest steel pipe manufacturers. Sritex is rated one-notch
higher than Pan Brothers due to its larger operating scale, more
integrated operations and stronger financial profile. Fitch
believes both Pan Brothers and Spindo have similar operating
scale, interest coverage, working-capital intensity and each is
the market leader in its industry. Nevertheless, Spindo's higher
exposure to commodity price fluctuation as well as Pan Brothers'
established customer relationships with global apparel brands and
stronger financing flexibility warrants a one-notch difference in
its National Long-Term Rating.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- Net sales growth of around 10%-12% in 2017-2018 (2016: 15%).
- EBITDA margin of around 8% in the medium term (2016: 8%).
- Capex of USD15 million in 2017 and USD44 million in 2018
(2016: USD21 million).
Key Recovery Rating Assumptions:
- Pan Brothers would be considered a going concern in bankruptcy
and would be reorganised rather than liquidated.
- Going-concern EBITDA is equal to Fitch average of estimated
EBITDA over 2017-2018 to reflect mid-cycle conditions. An
enterprise value (EV) multiple of 8.0x for the manufacturing
sector is used to calculate a post-reorganisation EV of USD337
million.
- Fully drawn working capital facilities of USD110 million,
which have priority over senior unsecured debt.
- 10% administrative claim to be applied on the going concern
EV.
- Going-concern EV to cover 91%-100% of Pan Brothers' unsecured
debt, corresponding to a 'RR1' Recovery Rating for the senior
unsecured notes after adjusting for administrative claims.
Nevertheless, Fitch has rated the senior unsecured bonds
'B/RR4' because, under Fitch Country-Specific Treatment of
Recovery Ratings criteria, Indonesia is classified under the
Group D countries in terms of creditor friendliness and the
instrument ratings of issuers with assets located in this
group are subject to a soft cap at the issuer's IDR.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage sustained below 2.0x
- Ability to maintain neutral cash flow from operation
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Failure to lower leverage to around 4.0x by end-2019 (2017F:
5.0x)
LIQUIDITY
Sufficient Liquidity: Pan Brothers had readily available cash of
USD55 million (reported cash USD80 million), short-term debt
maturities of USD2 million and a committed unused working-capital
facility of around USD135 million from its syndication revolving-
loan facility as of September 2017. The company's order book is
seasonal and therefore working capital requirements increase
during the second and third quarter of the year. Fitch has
conservatively treated USD25 million as cash that is not readily
available to service debt, being the minimum cash balance
earmarked for meeting seasonal working-capital purposes.
Therefore, Fitch exclude USD25 million cash from the calculation
of Pan Brothers' leverage.
FULL LIST OF RATING ACTIONS
PT Pan Brothers Tbk
-- Long-Term IDR affirmed at 'B'. Outlook revised to Stable from
Positive
-- National Long-Term Rating affirmed at 'A(idn)'. Outlook is
Stable
PB International B.V.
-- Senior Unsecured USD200 million 7.625% bond due 2022 affirmed
at 'B/RR4'.
===============
M A L A Y S I A
===============
EXPORT-IMPORT BANK: Moody's Cuts Stand-Alone Credit Profile to b1
-----------------------------------------------------------------
Moody's Investors Service has affirmed the A3 foreign currency
senior unsecured debt and issuer ratings of Export-Import Bank of
Malaysia Berhad (MEXIM) and the bank's (P)A3 senior unsecured MTN
program rating.
At the same time, Moody's has downgraded the bank's stand-alone
credit profile to b1 from ba3.
The outlook on MEXIM's ratings remains stable.
The full list of ratings affected by action can be found at the
end of this press-release.
RATINGS RATIONALE
AFFIRMATION OF A3 RATINGS
The A3 long-term ratings of MEXIM were affirmed because Moody's
maintains its "very high" support assumptions from the Government
of Malaysia (A3 stable), which results in multiple notches of
uplift above the bank's standalone credit profile.
Moody's very high public support probability for MEXIM is based
on the bank's government ownership, strong track record of
support, status as a development financial institution in
Malaysia, and its policy role in providing financial services to
Malaysian trade-oriented companies and cross-border businesses.
Moody's classifies MEXIM as a government-related issuer (GRI). As
a result of the application of the corresponding rating
methodology, MEXIM's A3 supported ratings benefit from a multi-
notch uplift above its b1 stand-alone credit profile.
Moody's has also affirmed the A3 long-term ratings of EXIM Sukuk
Malaysia Berhad. This company is a special purpose vehicle
established by MEXIM as part of its Multicurrency Sukuk Issuance
Programme.
WEAKENED STAND-ALONE CREDIT PROFILE
Moody's has downgraded MEXIM's stand-alone credit profile to b1
from ba3 to reflect the weaknesses in some of the bank's solvency
metrics and risk positioning, as discussed below.
MEXIM's impaired loans ratio increased to 13.2% in 2016, from
7.7% in 2015, driven by an 83% increase in the stock of impaired
loans in 2016. According to the bank, it recovered some of its
large problem exposures during the first nine months of 2017;
however, Moody's expects that asset quality will remain weak for
the following reasons:
1. Loan seasoning following very high credit growth of 31%
(three-year average growth from 2014 to 2016).
2. Very high single-party concentrations in the loan book.
3. Exposure to borrowers in higher-risk industries and/or
countries.
As a result of asset quality deterioration, the bank posted a
loss of MYR227 million in 2016, following several large asset
impairments. Moody's expects MEXIM to post improved but still low
profitability metrics in 2017 and 2018, as the bank builds its
loan loss provisions -- which weakened to 37.5% of impaired loans
in 2016, from 59.5% in 2015.
The adoption of the MFRS 9 accounting standard on 1 January 2018
-- which is Malaysia's equivalent of the IFRS 9 standard -- will
likely result in further need to increase credit provisions.
MEXIM's capital position -- while still strong -- has
nevertheless deteriorated following a period of rapid credit
expansion. The bank's tangible common equity-to-risk weighted
assets ratio declined to 18.1% in 2016, from 29.2% in 2014. The
bank expects to receive new capital from its shareholder over the
coming months, which should provide mild support to its solvency
position.
OUTLOOK STABLE
The stable ratings outlook reflects Moody's expectations that the
bank's overall credit fundamentals will remain broadly stable in
the next 12-18 months. Moody's does not expect any changes to
MEXIM's policy status and government ownership.
WHAT COULD DRIVE THE RATINGS DOWN/UP
MEXIM's A3 ratings may move in line with changes in the sovereign
A3 rating.
MEXIM's stand-alone credit profile could be upgraded if the bank
adopts a more risk-averse business strategy that results in
improved and sustainable solvency metrics.
Conversely, any signs of weakening links with the government or
diminishing policy importance could adversely affect MEXIM's A3
ratings. Its stand-alone credit profile could be downgraded if
its capital buffer deteriorates substantially.
PRINCIPAL METHODOLOGIES
The methodologies used in these ratings were Finance Companies
published in December 2016, and Government-Related Issuers
published in August 2017.
MEXIM reported total assets of MYR15.9 billion (USD3.5 billion)
at the end of December 2016.
LIST OF AFFECTED RATINGS
Issuer: Export-Import Bank of Malaysia Berhad
-- Long-term foreign currency issuer rating was affirmed at A3;
outlook maintained stable
-- Long-term foreign currency senior unsecured rating was
affirmed at A3; outlook maintained stable
-- Long-term foreign currency senior unsecured MTN rating was
affirmed at (P)A3
-- The stand-alone credit profile was downgraded to b1 from ba3
-- The outlook is stable
Issuer: EXIM Sukuk Malaysia Berhad
-- Long-term foreign currency senior unsecured rating was
affirmed at A3; outlook maintained stable
-- Long-term BACKED foreign currency senior unsecured rating was
affirmed at A3; outlook maintained stable
-- Long-term BACKED foreign currency senior unsecured MTN rating
was affirmed at (P)A3
-- The outlook is stable
=================
S I N G A P O R E
=================
Z-OBEE HOLDINGS: Shares Delisted From Singapore Exchange
--------------------------------------------------------
The Business Times reports that Z-Obee Holdings shares was
delisted from the Singapore Exchange (SGX) on Nov. 28.
For shareholders in Singapore with their shares deposited with
the Central Depository (CDP) as at the delisting date, their
relevant shares will be withdrawn from CDP, the report relates.
According to the Business Times, Z-Obee had said that it intends
to carry out future fundraising activities through the Hong Kong
stock exchange. The firm has a primary listing on the Stock
Exchange of Hong Kong, and a secondary listing on SGX, the report
notes.
But trading in Z-Obee's shares in Hong Kong has been suspended
since June 2014, after the firm appointed two provisional
liquidators in Hong Kong, the report recalls. The stock was also
suspended on the SGX in July, the report states.
Until the fulfilment of all the resumption conditions imposed by
the Hong kong exchange, trading in the shares of the group will
continue to be suspended until further notice, Z-Obee said on
Nov. 24, the Business Times reports.
===============
X X X X X X X X
===============
MALDIVES: Proposed Tap Issue No Impact on Moody's B2 Rating
-----------------------------------------------------------
Moody's Investors Service says that the Government of Maldives'
(B2 stable) announcement of a tap bond offering on its existing
$200 million 7.0% notes due 2022 will carry the B2 rating of the
senior unsecured US dollar-denominated notes issued in June 2017,
based on the preliminary prospectus.
The senior unsecured notes will rank pari passu with all of the
Government of Maldives' current and future senior unsecured debt.
The proceeds of the notes are intended to fund ongoing and/or new
development projects of the government.
The Maldives' B2 issuer rating reflects Moody's assessment of low
economic, government financial and institutional strengths, and
moderate susceptibility to event risk. Over the past year,
Maldives' economy has sustained robust growth, supported by the
tourism and construction sector. However, this has been
accompanied by twin budget and current account deficits and a
ramp-up in debt. The Sovereign Bond Ratings methodology published
December 2016, indicative rating range is Ba3-B2.
The Maldives' "Low (+)" economic strength is below the indicative
score of "Moderate (-)", to take into account the absence of a
World Economic Forum's Global Competitiveness ranking for the
country. "Low (+)" economic strength reflects the Maldives' small
size and a narrowly diversified economy, balanced by moderate per
capita income. An archipelago of islands in the Indian Ocean, the
Maldives has a nominal GDP of just $3.8 billion in 2016, one of
the smallest B-rated sovereigns. By contrast, the Maldives' GDP
per capita of $18,332 in purchasing power parity terms in 2016
has nearly tripled since 2000 and positions the country around
the middle of the group of Moody's-rated sovereigns. Whilst a
recent revision to national accounts statistics changes some of
these metrics, the overall implications for Maldives' economic
strength and credit profile are limited.
The economy is dependent primarily on tourism-related activities.
While the sector has competed effectively in the past, it is
subject to the vagaries of nature, as well as fluctuations in
tourist arrivals. Reliance on tourism makes GDP growth volatile.
For example, between 2006 and 2015, the standard deviation of GDP
growth was in the top decile of all countries rated by Moody's.
GDP growth remains healthy relative to the median for B-rated
sovereigns. Real GDP expanded by 3.9% year on year in 2016,
according to early November 2017 estimates, following a 2.8%
increase in 2015. A step-up in GDP growth over the medium term
will rest primarily on the successful implementation of the
government's planned infrastructure projects while containing
political tensions. Along with foreign investment in the sector,
this could pave the way for a continued expansion in tourism
capacity.
Our assessment of "Low" institutional strength, reflects the
challenges associated with developing institutional quality in a
small island state that is geographically spread out and diverse.
These constraints are reflected in the country's relatively low
rankings on the Worldwide Governance Indicators. Scarcity of
skilled labor also limits the sovereign's institutional
capabilities. As a sign of limited policy effectiveness,
inflation levels are volatile, as a result of a large imported
content of domestic consumption albeit low on average.
The Maldives' "Low" fiscal strength is driven by a high and
rising general government debt burden and a relatively large
proportion of foreign-currency-denominated debt, balanced by
strong debt affordability metrics. At 65.7% of GDP in 2016, debt
is significantly above the median for B-rated sovereigns and will
likely rise further over the next two to three years, with the
planned implementation of large public-sector infrastructure
projects. Nonetheless, strong revenue collection, particularly
from the tourism sector, supports debt affordability. The
rebasing of the GDP data will affect some fiscal ratios without
any material impact on Moody's assessment of fiscal strength.
A sovereign issuer's 'susceptibility to event risk' reflects the
probability of a credit-relevant event occurring, and the
severity of its impact on the sovereign's credit profile. Moody's
assessment of the Maldives' "Moderate (+)" susceptibility to
event risks is driven by domestic political risk. An escalation
of political tensions is a moderate probability scenario that is
likely to have a relatively strong impact on policy continuity
and the passage of reforms. Tensions could also durably weigh on
tourism activity, investment and growth.
High fiscal deficits and a relatively short maturity of domestic
debt implies that gross borrowing needs are sizeable. Moody's
assess government liquidity risk as "Moderate". In the absence of
a market-implied rating for the Maldives, the scorecard does not
fully capture the liquidity constraints that the government may
face.
Our assessment of the Maldives' "Moderate (-)" external
vulnerability risk, is set above an indicative score of "Low
(+)", to take into account the economy's high import dependency
and potential volatility in balance-of-payment receipts related
to tourism and FDI.
While the country's current account deficits are wide, foreign
reserves have been supported by foreign direct investment
inflows. Moody's External Vulnerability Indicator -- which
measures the adequacy of foreign reserves relative to maturing
long- and short-term debt -- will rise to 69.4% in 2018.
Meanwhile, the banking system is fairly large, but it is also
liquid and well-capitalized -- Moody's therefore assess the
Maldives' banking sector risk as "Very Low (+)".
ISSUER RATING OUTLOOK
The stable outlook on the sovereign's B2 issuer rating balances
healthy near-term growth prospects supported by large
infrastructure projects and Moody's expectation of further
improvements in competitiveness, particularly in the tourism
sector. It also takes into account a significant rise in the
Maldives' debt burden (and current account deficits) as a result
of a ramp-up in infrastructure spending, which is partially
offset by modest debt-servicing costs and a large domestic
revenue base.
WHAT COULD CHANGE THE RATING UP/DOWN
Moody's would consider upgrading the Maldives' credit rating in
the event of (1) a steady reduction in fiscal deficits and the
government debt burden; (2) a successful diversification of the
economy's productive base; and (3) a sustained period of
political stability that encourages policy continuity and drives
structural reforms.
Conversely, (1) a meaningful deterioration in fiscal and debt
metrics and worsening debt affordability; (2) a shock to the
tourism sector, stemming from geopolitical or natural disaster
risks that result in a sharp fall in growth; and (3) an
escalation in domestic political tensions that hinders effective
policy-making or undermines growth, would put negative pressure
on the rating.
*********
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
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latest balance sheets publicly available a day prior to
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
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