/raid1/www/Hosts/bankrupt/TCRAP_Public/171214.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
Thursday, December 14, 2017, Vol. 20, No. 248
Headlines
A U S T R A L I A
ADVANCED EARTH: First Creditors' Meeting Set for Dec. 20
ADVANCED MINING: First Creditors' Meeting Set for Dec. 20
ADVANCED PIPING: First Creditors' Meeting Set for Dec. 20
APEX FIRE: Second Creditors' Meeting Slated for Dec. 19
ASPEN UNITED: First Creditors' Meeting Scheduled for Dec. 20
LIBERTY SERIES 2017-1: Moody's Hikes Class E Notes Rating to Ba1
VINCI HOLDINGS: Second Creditors' Meeting Set for Dec. 19
QUEENSLAND NICKEL: Palmer Denies Refinery was a 'Cash Cow'
C H I N A
REWARD SCIENCE: Fitch Puts 'B' LT IDR on Rating Watch Negative
REWARD SCIENCE: Moody's Lowers CFR to B3; Outlook Negative
H O N G K O N G
NOBLE GROUP: To Seek Debt-For-Equity Restructuring
I N D I A
ARVIND PIPES: ICRA Moves B- Rating to Not Cooperating Category
BAREILLY HIGHWAYS: CARE Reaffirms D Rating on INR1,400cr LT Loan
BHAGAWATI ESTATE: CARE Revises Rating on INR.77cr LT Loan to B
DEHRAUN HIGHWAYS: CARE Reaffirms D Rating on INR528.45cr Loan
EASTERN COPPER: CARE Assigns C Rating to INR3.88cr LT Loan
G.K. SALES: CARE Moves B+ Rating to Not Cooperating Category
GIRIRAJ INDUSTRIES: ICRA Moves D Rating to Not Cooperating
GRAND PINKCITY: CARE Assigns B+ Rating to INR14cr LT Loan
HBS REALTORS: ICRA Moves D Rating to Not Cooperating Category
IVRCL CHENGAPALLI: CARE Reaffirms D Rating on INR797.30cr Loan
JAIPRAKASH POWER: CARE Reaffirms D Rating on INR11,474.65cr Loan
MARIANELLA PROPERTIES: ICRA Cuts Rating on INR15cr Term Loan to D
MAX IMPEX: CARE Assigns B Rating to INR2.50cr LT Loan
MAX PROPERTIES: ICRA Moves D Rating to Not Cooperating Category
MRMC FOODS: CARE Raises Rating on INR46.38cr LT Loan to BB-
OM AASTHA: CARE Assigns B+ Rating to INR7.00cr LT Loan
PP PANDEY INFRASTRUCTURE: Ind-Ra Affirms BB+ LT Issuer Rating
RAGHURAJ EXPORTS: CARE Assigns B Rating to INR9.87cr LT Loan
REDD MICA: CARE Revises Rating on INR5.14cr Loan to B+
RELIANCE COMMUNICATION: Ericsson Taps Darius Khambata as Counsel
SHAPE ENGINEERING: Ind-Ra Moves B Rating to Not Cooperating
SHIVANGAN FOOD: ICRA Assigns B Rating to INR10cr Term Loan
SHRIRAM FOOD: ICRA Reaffirms B+ Rating on INR57cr Cash Loan
SHUNTY BUNTY: ICRA Moves B Rating to Rating to Not Cooperating
SREE VENKATESHWARA: ICRA Moves B+ Rating to Not Cooperating
SUSEE PREMIUM: CARE Assigns B Rating to INR14.48cr LT Loan
VAIDYA INDUSTRIES: CARE Revises Rating on INR13.88cr LT Loan to B
VAIDYA V & I: CARE Lowers Rating on INR4.10cr LT Loan to B+
VINAYAK INTERNATIONAL: CARE Reaffirms B+ Rating on INR1.5cr Loan
N E W Z E A L A N D
CRICHQ LIMITED: Receivers Sell Software Developer to NZ Investors
S I N G A P O R E
MAC GOLIATH: Defaults on Shipbuilding Contract Price Installment
- - - - -
=================
A U S T R A L I A
=================
ADVANCED EARTH: First Creditors' Meeting Set for Dec. 20
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Advanced
Earth Pty Ltd will be held at the offices of Australian Institute
of Company Directors, Level 1, 77 St Georges Terrace, in Perth,
WA, on Dec. 20, 2017, at 3:30 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Advanced Earth on
Dec. 8, 2017.
ADVANCED MINING: First Creditors' Meeting Set for Dec. 20
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Advanced
Mining & Civil Pty Ltd will be held at the offices of Australian
Institute of Company Directors, Level 1, 77 St Georges Terrace,
in Perth, WA, on Dec. 20, 2017, at 3:00 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Advanced Piping on
Dec. 8, 2017.
ADVANCED PIPING: First Creditors' Meeting Set for Dec. 20
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Advanced
Piping Solutions Pty Ltd will be held at the offices of
Australian Institute of Company Directors, Level 1, 77 St Georges
Terrace, in Perth, WA, on Dec. 20, 2017, at 2:30 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Advanced Piping on
Dec. 8, 2017.
APEX FIRE: Second Creditors' Meeting Slated for Dec. 19
-------------------------------------------------------
A second meeting of creditors in the proceedings of Apex Fire Pty
Ltd has been set for Dec. 19, 2017, at 10:30 a.m. at the offices
of WJ Hamilton & Co., Suites 508-509, 147 King Street, in Sydney,
NSW.
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. 19, 2017, at 9:00 a.m.
William James Hamilton of WJ Hamilton was appointed as
administrator of Apex Fire on Nov. 14, 2017.
ASPEN UNITED: First Creditors' Meeting Scheduled for Dec. 20
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Aspen
United Pty Ltd will be held at Level 5, 34 Queen Street, in
Melbourne, Victoria, on Dec. 20, 2017, at 11:30 a.m.
John Kukulovski of Chan & Naylor Partners was appointed as
administrator of Aspen United on Dec. 8, 2017.
LIBERTY SERIES 2017-1: Moody's Hikes Class E Notes Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on six classes
of notes issued by two Liberty series RMBS.
The affected ratings are:
Issuer: Liberty Series 2015-1 Trust
-- Class C, Upgraded to Aa2 (sf); previously on Feb 9, 2017
Upgraded to Aa3 (sf)
-- Class D, Upgraded to A2 (sf); previously on Feb 9, 2017
Upgraded to A3 (sf)
Issuer: Liberty Series 2017-1 Trust
-- Class B, Upgraded to Aa1 (sf); previously on Mar 27, 2017
Definitive Rating Assigned Aa2 (sf)
-- Class C, Upgraded to A1 (sf); previously on Mar 27, 2017
Definitive Rating Assigned A2 (sf)
-- Class D, Upgraded to A3 (sf); previously on Mar 27, 2017
Definitive Rating Assigned Baa2 (sf)
-- Class E, Upgraded to Ba1 (sf); previously on Mar 27, 2017
Definitive Rating Assigned Ba2 (sf)
RATINGS RATIONALE
The upgrade was prompted by an increase in credit enhancement
(from note subordination and the Guarantee Fee Reserve Account)
available for the affected notes.
Sequential amortization of the notes in both transactions since
closing led to the increase in note subordination. Liberty Series
2015-1 Trust switched to pro-rata principal repayments in June
2017.
The Guarantee Fee Reserve Account is non-amortizing and can be
used to cover charge-offs against the notes, and liquidity
shortfalls that remain uncovered after drawing on the liquidity
facility and principal.
In addition, the transaction portfolios have been performing
within Moody's expectations. Scheduled and indexed loan to value
ratios have decreased in both transactions.
Liberty Series 2015-1 Trust
Since closing, the note subordination available for the Class C
and Class D notes has increased to 6.4% and 4.2% from 3.1% and
2%.
The Guarantee Fee Reserve Account has accumulated AUD1.5 million
(0.67% of total current note balance) from excess spread.
The performance of the transaction has been within expectations
since closing. As of October 2017, 5.9% of the outstanding pool
was 30-plus day delinquent, and 3.2% was 90-plus day delinquent.
Cumulative loss amounts totaled AUD246,613.
Based on the observed performance and outlook, Moody's maintained
its expected loss assumption at 1.1% as a percentage of the
original pool balance.
Moody's decreased its MILAN CE assumption to 7.7% from 8.5% since
the last rating action, based on the current portfolio
characteristics.
Liberty Series 2017-1 Trust
Since closing, the note subordination available for the Class B,
Class C, Class D and Class E notes has increased to 8.3%, 6%,
4.2% and 2.9% from 6.9%, 5%, 3.5% and 2.4%.
The Guarantee Fee Reserve Account has accumulated AUD2.4 million
(0.36% of total current note balance) from excess spread.
The performance of the transaction has been within expectations
since closing. As of October 2017, 1% of the outstanding pool was
30-plus day delinquent, and 0.2% was 90-plus day delinquent. The
deal has incurred no losses to date.
Based on the observed performance and outlook, Moody's maintained
its expected loss assumption at 1.3% as a percentage of the
original pool balance.
Moody's decreased its MILAN CE assumption to 10.5% from 12.4%
since the last rating action, based on the current portfolio
characteristics.
The MILAN CE and expected loss assumption are the two key
parameters used by Moody's to calibrate the loss distribution
curve, which is one of the inputs into the cash-flow model.
The transactions are Australian RMBS secured by a portfolio of
prime and non-conforming residential mortgage loans. A portion of
the portfolio consists of loans extended to borrowers with
impaired credit histories or made on a limited documentation
basis.
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 ratings include (1)
performance of the underlying collateral that is better than
Moody's expectations, and (2) deleveraging of the capital
structure.
Factors that could lead to a downgrade of the ratings include (1)
performance of the underlying collateral that is worse than
Moody's expectations, (2) decrease in the notes' available credit
enhancement, and (3) deterioration in the credit quality of the
transaction counterparties.
VINCI HOLDINGS: Second Creditors' Meeting Set for Dec. 19
---------------------------------------------------------
A second meeting of creditors in the proceedings of Vinci
Holdings (WA) Pty Ltd, trading as Vinci Chrome, has been set for
Dec. 19, 2017, at 10:30 a.m. at the offices of Worrells Solvency
& Forensic Accountants, Level 3, 15 Ogilvie Road, in Mount
Pleasant, WA.
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. 18, 2017, at 5:00 p.m.
Mervyn Jonathan Kitay of Worrells Solvency was appointed as
administrator of Vinci Holdings on Nov. 15, 2017.
QUEENSLAND NICKEL: Palmer Denies Refinery was a 'Cash Cow'
----------------------------------------------------------
Sarah Elks at The Australian reports that Clive Palmer has denied
using his stricken Queensland Nickel company as a "cash cow" to
pay the debts of his corporate empire.
Queensland Nickel collapsed early last year, owing AUD300 million
and costing nearly 800 workers their jobs.
An argumentative Mr. Palmer was cross-examined under oath in the
Federal Court by Queensland Nickel's liquidators, who are trying
to claw back cash owed to the company's creditors - including
AUD70 million to federal taxpayers, according to The Australian.
He rejected a suggestion by John Peden QC, for general purpose
liquidators FTI Consulting, that Queensland Nickel had acted as a
"cash cow" for his flagship company Mineralogy, the report says.
"Absolutely not," the report quotes Mr. Palmer as saying.
"Queensland Nickel had no money."
According to The Australian, the court heard Mineralogy financial
documents showed Queensland Nickel paid Mineralogy's AUD1.2
million legal bill to Link-laters in March 2011.
The Australian relates that Mr. Palmer, a former federal MP for
the Sunshine Coast seat of Fairfax, had difficulty answering
questions about whether Mineralogy had handed over certain
financial records last week, as ordered by the Federal Court.
Mr. Peden suggested a "general journal" account was missing, that
should have detailed AUD48 million in loans that were forgiven by
Mineralogy in the financial year to June 30, 2016.
The Australian says Mr. Palmer protested his ignorance about the
internal accounting processes of his company, of which he is both
shareholder and ultimate owner.
"I don't know anything about accounts, I don't know anything at
all," Mr. Palmer, as cited by The Australian, said. "I don't know
who does everything in my companies, I've got thousands of
people."
He argued with both Mr. Peden, for FTI Consulting, and Tom
Sullivan QC, for special purpose liquidators PPB Advisory,
becoming frustrated with their questions, and at one stage
alleged FTI was "funded by the Chinese government," The
Australian relays.
FTI is being bankrolled by litigation funder Vannin Capital
(based in London with seven offices around the world, none in
China). The Australian note that the special purpose liquidator
is being paid by the federal government to try to recoup the
AUD70 million it paid to cover redundancy entitlements of
Queensland Nickel's sacked employees.
Mr. Palmer's outburst prompted Mr. Peden to remind him he was
under oath, and to "refrain from giving a speech about some other
matters," The Australian says.
The Australian adds that the Palmer United Party founder told the
court that Mineralogy currently owed him about AUD65 million. He
also said he had recently had a major court win in Western
Australia over an unrelated iron ore royalties dispute, which
would see Mineralogy be paid more than AUD100 mv this year, and
then AUD300 million annually for 30 years.
About Queensland Nickel
Queensland Nickel was engaged in the production and marketing of
nickel and cobalt. It owned and operates the Palmer Nickel and
Cobalt Refinery in Queensland, Australia. It is owned by
businessman and politician Clive Palmer.
The Company experienced financial difficulties and Palmer sought
assistance from the Queensland Government in late 2015 but was
rejected. The Company's ownership was later transferred to a new
company named Queensland Nickel Sales Pty Ltd in a joint venture
between two of Clive Palmer's companies, QNI Resources Pty Ltd
and QNI Metals Pty Ltd, with the directorship going to Palmer's
nephew Clive Theodore Mesnick.
On Jan. 19, 2016, the Company entered into voluntary
administration. John Park, Stefan Dopking, Kelly-Anne Trenfield
and Quentin Olde of FTI Consulting were appointed as voluntary
administrators of the Company.
FTI as administrators issued a report in early April 2106 that
the Company "incurred debts of AUD771 million after going
insolvent in November [2015]."
On April 22, 2016, the Companies' creditors voted for
liquidation.
FTI went from being administrators to liquidators at the second
creditors meeting in April 2016.
=========
C H I N A
=========
REWARD SCIENCE: Fitch Puts 'B' LT IDR on Rating Watch Negative
--------------------------------------------------------------
Fitch Ratings has placed Reward Science and Technology Industry
Group Co., Ltd.'s (Reward Group) Long-Term Foreign-Currency
Issuer Default Rating (IDR) and senior unsecured rating of 'B' on
Rating Watch Negative (RWN) after China's securities regulator
highlighted the Chinese consumer and dairy product producer's
misuse of bond proceeds, disclosure issues and accounting
quality, which Fitch see as an indication of internal control
weaknesses and uncertainty over the robustness of its data. Fitch
has also placed the 'B' rating on Reward International Investment
Co. Ltd's 7.25% US dollar-denominated senior notes due 2020 on
RWN.
KEY RATING DRIVERS
Disclosure Issues Flagged: The Beijing bureau of the China
Securities Regulatory Commission (CSRC) on 5 December 2017 issued
a statement flagging Reward Group's misuse of domestic bond
proceeds and issues over disclosure and accounting quality. CSRC
has asked Reward to resolve the issues, giving the company a
three-month deadline from 5 December 2017 to submit a written
report. The company has provided Fitch with an initial
explanation and is in the midst of liaising with CSRC, accounting
firms, lawyers, securities firms and other relevant parties to
review and resolve the issues.
Fitch has viewed the company's concentrated shareholding
structure and weak financial disclosure as factors constraining
its ratings and this incident further emphasises potential
corporate governance risk in terms of its internal procedures.
Fitch is likely to take further negative rating action should
Reward Group fail to submit a report to CSRC within the required
period of time.
Selection of a New Auditor: Reward Group is in the process of
selecting a new auditor for its 2017 annual report. The RWN can
be resolved if the company publishes its 2017 audited accounts
without material restatements on past figures. However, if there
is a significant restatement of past accounts or other qualified
findings from the auditor, Fitch is likely to take further
negative rating action.
Liquidity Position: Reward Group's free cash and unused credit
facilities were sufficient to repay and refinance its short-term
borrowings, according to its management accounts at end-September
2017. Fitch considers Reward Group's free cash as a main source
of loan repayment. However, if there is material deterioration in
Reward Group's liquidity position, or any restatement showing a
weaker liquidity position than previously reported, Fitch will
re-assess and take further negative rating actions.
DERIVATION SUMMARY
Reward Group's ratings reflect its smaller scale, weaker and more
volatile financial metrics compared with peers rated 'B+' or
above. Reward Group has similar revenue and EBITDA to 'B' rated
peers, such as Yasar Holding A.S. (B/Stable) and Premier Foods
plc (B/Negative). Despite Reward's better coverage and leverage
ratios, it is rated at the same level as these companies because
of its weaker business profile and accounting disclosure. Reward
Group's rating is constrained to the 'B' category due to its
shareholder concentration, limited transparency and earnings
visibility.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- Revenue to grow 15% in 2017 and 3% in 2018
- Around 15% EBITDA margin in 2017-2018
- Capital expenditure will remain at CNY450 million annually
for the next two years
- No common dividends
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to the
Removal of the Rating Watch Negative
- Publication of 2017 annual results audited by a reputable
firm, without any material restatement of 2016 figures.
- 2017 annual results in line with Fitch expectations.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Failure to submit the report to CSRC addressing the
aforementioned issues within the required period of time.
- Substantial delay in 2017 audit report release, or material
restatement of 2016 figures.
- Deterioration in the company's liquidity position.
- Funds from operations (FFO) adjusted net leverage sustained
above 3.5x
- FFO fixed-charge coverage sustained below 2.5x
- EBITDA margin sustained below 12%
LIQUIDITY
Large Cash Amounts on Hand: The company held total cash and cash
equivalents of CNY5.5 billion (including around CNY600 million in
restricted cash) at end-September 2017 and had unused credit
facilities of CNY214 million (including bank loans, bank drafts
and letters of credit) at end-November 2017, according to
management. The two sources can be used to repay and refinance
its short-term borrowings of CNY1.37 billion as at end-September
2017.
REWARD SCIENCE: Moody's Lowers CFR to B3; Outlook Negative
----------------------------------------------------------
Moody's Investors Service has downgraded to B3 from B2 the
corporate family rating (CFR) of Reward Science and Technology
Industry Group Co., Ltd., as well as the rating on the 7.25% 3-
year senior unsecured notes issued by Reward International
Investment Limited and guaranteed by Reward.
The ratings outlook remains negative.
RATINGS RATIONALE
"The downgrade reflects Moody's concerns about insufficiencies in
the company's internal controls and financial reporting
standards, which, in Moody's view, may lead to greater difficulty
in maintaining access to the domestic bank and bond markets for
funding, in light of the notice issued by the China Securities
Regulatory Commission," says Gloria Tsuen, a Moody's Vice
President and Senior Analyst.
The CSRC published an announcement last week regarding Reward's
regulatory violations, including misappropriation of funds from
onshore bond proceeds, inadequacies on information disclosure,
and weak financial management and poor accounting quality.
According to CSRC, Reward has three months to carry out
rectifications and report to the CSRC, which will then decide if
further measures in relation to the company are necessary.
"Although the company has been increasing its communications with
investors, the violations indicate that much needs to be achieved
in strengthening its financial controls and corporate governance
to regulatory standards," adds Tsuen.
Reward has sufficient liquidity for the next 12 months. Based on
its regulatory filings, it had RMB5.5 billion in cash, and RMB2.4
billion in short-term borrowings and notes payables, as of the
end of September 2017.
However, until the regulatory issues are resolved and internal
controls improved, Moody's believes that the company will likely
face increased difficulty in accessing the debt markets.
Reward's quarterly operating performance remains volatile,
although its adjusted debt/EBITDA declined to 5.4x for the 12
months ending in September 2017, compared with 9.2x for the 12
months ending in June 2017, and 6.1x as of the end of 2016.
Moody's expects leverage will remain in the 5.0x-6.0x range and
consistent with the single-B rating category.
Reward's CFR continues to be supported by its (1) sufficient
liquidity, (2) business model of a vertically integrated dairy
supply chain, which helps to ensure product safety, and (3)
growing daily consumer products business which reduces its
reliance on the dairy segment.
At the same time, the rating reflects Reward's: (1) high
ownership concentration and weak internal controls; (2) small
size and limited market shares; and (3) execution risks related
to its growth-driven business plan, including cross-border
acquisitions.
The negative outlook reflects the uncertainties in its access to
funding, its weak corporate governance and the persistent high
volatility in Reward's operating performance.
There is no upward rating pressure, given the negative outlook.
However, the outlook could return to stable if Reward (1)
addresses its internal control issues properly; (2) reduces the
volatility in its operating performance; and (3) maintains
adjusted debt/EBITDA at below 5.5x in a consistent manner.
Downward rating pressure could emerge if: (1) Reward's
operational performance or liquidity weakens; (2) its leverage
increases to above 6.0x; or (3) its corporate governance fails to
improve.
The principal methodology used in these ratings was Global
Packaged Goods published in January 2017.
Headquartered in Beijing, Reward Science and Technology Industry
Group Co., Ltd. engages in the production and marketing of dairy
and other food products, as well as daily consumer products
(mainly cleaning products), and other businesses, such as the
leasing of commercial property and hotels.
It generated RMB7.6 billion in revenue in 2016, with 60% derived
from dairy and other food products, 29% from daily consumer
products, and 11% from other businesses.
Reward is a private company 96%-owned by its founder and
chairman, Mr. Hu Keqin, and his family.
================
H O N G K O N G
================
NOBLE GROUP: To Seek Debt-For-Equity Restructuring
--------------------------------------------------
Bloomberg News reports that Noble Group is talking to creditors
about a conventional restructuring that includes a debt-for-
equity swap, according to people familiar with the negotiations,
a move that represents a change of tack as the commodities trader
fights for survival. The shares extended their surge, the report
says.
After meetings in Hong Kong last week, the company is expecting a
proposal from its creditors to restructure US$3.5 billion in
debt, including a major debt-for-equity element, the people said,
asking not to be identified discussing private talks, Bloomberg
relays. Depending on its size, the swap could wipe out a
significant portion of the shareholdings of current investors,
the report relates.
Although a deal is some way off, this is a departure from Noble's
original proposal, which involved exchanging current debt,
including bonds and a revolving credit facility, for new
maturities without a haircut on the face value and initially
preserving all the equity of the current owners, according to
Bloomberg.
Bloomberg relates that in that plan, the new debt would have come
in three types: bonds supported by cash flows from Noble Group's
Asian coal and iron ore business, an asset-backed bond secured
against other physical assets, and a mandatory convertible bond.
Under the new proposal, the company will retain some key elements
of its opening gambit, including debt supported by cash flows
from its Asian business plus the asset-backed bond. But the
balance would be through a classic debt-for-equity deal, the
traditional way for companies to reshuffle borrowings, the report
says.
Bloomberg adds that the negotiations are continuing, and the
people said that new developments in the restructuring process
could occur before a deal is reached. Noble Group and its
creditors have yet to agree on how much the current shareholders
would retain in the new company, and how much would be controlled
by management as part of an incentive package, the report states.
The company has a market value of about US$220 million, compared
with total net debt of US$3.5 billion, suggesting a significant
risk to current shareholders under a debt-for-equity scenario,
Bloomberg discloses.
According to Bloomberg, the discussions are expected to carry
over into early January, one of the people familiar with the
conversations said, describing a debt-for-equity swap as a
positive step.
If the plan works, it could save Noble Group, albeit at the
expense of its current shareholders and resulting in a much
smaller company. Another person familiar with the talks cautioned
that creditors and the company weren't close to a deal, the
report says.
Richard Elman, the veteran commodities trader who founded Noble,
is the largest shareholder, controlling almost 20% of the stock.
China Investment Corp, the sovereign-wealth fund, is also a major
shareholder at just under 10 per cent, according to data compiled
by Bloomberg.
As talks continue, Noble Group has agreed retention bonuses with
its senior executives and traders until the end of next year,
according to people familiar with the matter, Bloomberg relays.
The retention packages are payable December 2018 and include
claw-back clauses, the same people said.
While Noble shares have surged this week, they're down 87% this
year, Bloomberg notes. The bonds due in 2020 dropped 0.4 cent to
38.3 cents by 9:35 a.m., Dec. 13 in Hong Kong, while the
securities due in 2018 added 0.3 cent to 48.7 cents.
About Noble Group
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 22, 2017, Fitch Ratings downgraded Hong Kong-based
commodities trader Noble Group Limited's Long-Term Foreign-
Currency Issuer Default Rating (IDR), senior unsecured rating and
the ratings on all its outstanding senior unsecured notes to 'CC'
from 'CCC'. The Recovery Rating is 'RR4'. The downgrade follows
Noble's Nov. 15, 2017 announcement that it has commenced
discussions with stakeholders on its capital structure.
=========
I N D I A
=========
ARVIND PIPES: ICRA Moves B- Rating to Not Cooperating Category
--------------------------------------------------------------
ICRA Ratings has moved the long term ratings for the bank
facilities of Arvind Pipes & Fittings Industries Private Limited
to the 'Issuer Not Cooperating' category. The rating is now
denoted as "[ICRA]B- (Stable)/[ICRA]A4 ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 3.00 [ICRA]B- (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund based-Cash
Credit 6.75 [ICRA]B- (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund based- PC/
PCFC/FBD 1.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Non Fund Based-
Letter of Credit 7.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Proposed Limits 2.25 [ICRA]B- (Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity.
Arvind Pipe & Fittings Industries Pvt. Ltd. was incorporated in
the year 1982 as Arvind Metal Syndicate. The company commenced
commercial operations with trading in pipe fittings and flanges
and ventured into manufacturing of the aforementioned products in
1990. Subsequently, in the year 2004, APFIPL commissioned its
second unit to manufacture seamless and welded pipes. The
company's both manufacturing units are located in Waghodia near
Baroda in Gujarat and have a combined installed capacity of
around 2,000 MTPA.
BAREILLY HIGHWAYS: CARE Reaffirms D Rating on INR1,400cr LT Loan
----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Bareilly Highways Project Limited (BHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 1,400 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BHPL continues to
factor in delays in debt servicing by the company.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in Debt servicing obligation: The liquidity position of the
company continues to remain weak on account of significant delays
in completion of the project, leading to delays in debt
servicing. The lenders have invoked Strategic Debt Restructuring
(SDR) with reference date June 27, 2017.
BHPL is a special purpose vehicle (SPV) promoted by Era Infra
Engineering Ltd (EIEL) and OJSC- Sibmost (Sibmost) to undertake
4-laning of the existing 2-lane road from Km 262.0 to Km 413.2
(total project length of 156.57 km) on NH-24 from Bareilly to
Sitapur in state of Uttar Pradesh under National Highways
Development Programme (NHDP) Phase III of NHAI (rated 'CARE AAA')
on Design, Build, Finance, Operate & Transfer (Toll) basis. As
per the concession agreement (CA) signed between NHAI & BHPL in
June 2010, the concession period is for 20 years (including a
construction period of 2.5 years) from the Appointed Date
(March 1, 2011). The original scheduled project completion date
(SPCD) was August 28, 2013, which had been earlier revised to
December 31, 2016, by NHAI (subject to certain conditions). The
IE has further extended the SCOD till June 30, 2017. The total
project cost was originally envisaged at INR1951 crore to be
funded through promoter contribution of INR296 crore, grant of
INR255 crore from NHAI, term loans of INR1,350 crore and
subordinate debt (from banks) of INR50 crore. The project cost
was revised to INR2,601.89 crore, to be funded through promoter
contribution of INR550.75 crore, grant of INR255 crore from NHAI,
term loans of INR1,746.14 crore and subordinate debt (from banks)
of INR50 crore.
BHAGAWATI ESTATE: CARE Revises Rating on INR.77cr LT Loan to B
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Bhagawati Estate Warehouse (Kolaras) (BEWK), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 0.77 CARE B; Stable Revised
from CARE B+: Stable
Long-term/Short-
term Bank Facilities 4.00 CARE B; Stable/ CARE A4
Revised from CARE B+: Stable
Short-term Bank
Facilities 2.45 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The revision in the long-term rating of BEWK takes into account
significant decline in Total Operating Income (TOI), weak debt
coverage indicators and stressed liquidity position marked by
elongated operating cycle.
The ratings continue to remain constrained on account of small
scale of operations with low net worth base and leveraged
solvency position. The rating is, further constrained on account
of its risk pertaining to warehouse receipt funding, constitution
as a proprietorship firm and presence into fragmented industry.
The rating, however, derives strength from the wide experience of
the promoters through established presence of the group in
various business segments, i.e., warehousing, cold storage and
automobile distributorship within Madhya Pradesh (MP) and
improvement in profitability margins.
The ability of BEWK to increase its scale of operations, improve
its profitability and capital structure along with efficient
management of its working capital requirements will remain the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Significant decline in Total Operating Income (TOI): TOI for FY17
(refers to the period April 01 to March 31) stood at INR3.35
crore registering de-growth of 58.75% y-o-y mainly on account of
lower revenue realized due to demonetization. In FY17
demonetization affected the entire market including mandi
operations. Apart from the poor sentiment in the global commodity
markets and volatility in some commodities like chick pea,
pulses, made matters worse.
Leveraged solvency position, weak debt coverage indicators: The
capital structure of BEWK remained highly leveraged by an overall
gearing of 4.01 times as on March 31, 2017, however, improved as
against 4.99 times as on March 31, 2016 owing to repayment of
long term debt and accumulation of profits to reserves.
Debt coverage indicators also remained weak marked by total debt
to GCA of 40.85 times in FY17 as against 37.33 times in FY16
along with moderate interest coverage ratio. However, interest
coverage ratio improved marginally to 1.41 times in FY17 as
compared to 1.31 times in FY16 due to higher proportionate
increase in PBILDT as compared to increase in interest expenses.
Stressed liquidity position: The liquidity position of the
company remained stressed full utilization of its working capital
bank borrowings in past 12 months ending September, 2017. Also
the operating cycle stood elongated at 338 days in FY17 as
against 122 days in FY16 on account of higher inventory holding
period.
Current ratio remained below unity as on March 31, 2017 as
compared to 1.07 times as on March 31, 2016. Cash flow from
operating activities remained positive at INR3.15 crore in FY17
as against negative cash flow in FY16.
Risk pertaining to warehouse receipt funding and constitution as
proprietorship business: BEWK is engaged in offering finance
against warehouse receipt to farmers. Under this arrangement
goods are stored in the warehouse of BEWK against which finance
is arranged by way of warehousing receipt funding by BEWK. BEWK
would be liable to repay the finance obtained from banks against
pledge of warehouse receipts in case of non-receipt of payments
from the owners of underlying goods on due dates. As prices of
agro commodities are volatile and in the event of sharp
corrections in the prices of underlying goods the chances of
defaults may increase substantially which may have adverse impact
on the cash flows of BEWK. BEWK being a proprietorship firm is
exposed to inherent risk of proprietor's capital being withdrawn
at time of personal contingency, and firm being dissolved upon
the death/insolvency of proprietor. Moreover, proprietorship
firms have restricted access to external borrowing as credit
worthiness of proprietor would be key factor affecting credit
decision for lenders.
Key Rating Strengths
Wide experience of the promoters through established presence of
the group in various business segments within Madhya Pradesh: Mrs
Lata Singh, proprietor of BEWK holds experience of more than 8
years and looks after the administrative aspects of the business.
She is also supported by Mr Vikram Singh Kirar in the day-to-day
operations who has experience of over a decade in the agri
warehousing, agro commodity trading and warehouse receipts
funding business.
BEWK has other associate concerns namely Bhagawati Development
Services Private Limited and Bhagawati Cools Private Limited
which are engaged in similar line of business and also have
distributorship of Indo Farm tractors and Mahindra and Mahindra
(M&M) tractors respectively in Madhya Pradesh.
Another associate, Bhagawati Estate Warehouse, Ashoknagar is a
proprietorship firm owned by Mr Vikram Singh, is also engaged in
warehousing and trading of agro commodities. The group is also
engaged into dealership of Mahindra & Mahindra (M&M) vehicles and
servicing of auto parts in four districts of Madhya Pradesh (MP),
namely, Shahdol, Mandla, Dindori and Anuppur through other entity
named Bhagawati India Motorizer Private Limited.
Improvement in Profitability Margins: PBILDT Margin improved by
819 bps on account of lower cost of traded goods sales and
remained at 24.69% in FY17 as compared to 16.50% in FY16.
Moreover PAT margin also improved by 130 bps owing to higher
PBILDT margin and remained at 2.98% in FY17 as compared to 1.68%
in FY16, although both declined at absolute level.
Bhagawati Estate Warehouse (Kolaras) (BEWK) was formed as a
proprietorship firm in January 2009 by Mrs.Lata Singh to
undertake business of warehousing and trading of agro-commodities
like potatoes, wheat, pea, chickpea and lentil. BEWK has two
associate concerns namely Bhagawati Development Services Private
Limited and Bhagawati Cools Private Limited which are engaged in
similar line of business and also have distributorship of Indo
Farm tractors and Mahindra and Mahindra (M&M) tractors
respectively in Madhya Pradesh.
Another associate, Bhagawati Estate Warehouse, Ashoknagar is a
proprietorship firm owned by Mr.Vikram Singh, is also engaged in
warehousing and trading of agro commodities. The group
incorporated Bhagawati India Motorizer Private Limited in October
2013 to take up the dealership of Mahindra & Mahindra (M&M)
vehicles and servicing of auto parts in four districts of Madhya
Pradesh (MP) namely Shahdol, Mandla, Dindori and Anuppur.
DEHRAUN HIGHWAYS: CARE Reaffirms D Rating on INR528.45cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Dehraun Highways Project Limited (DHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 528.45 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of DHPL continues to
factor in delays in debt servicing by the company.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in Debt servicing obligation: The liquidity position of the
company continues to remain weak on account of significant delays
in completion of the project, leading to ongoing delays in debt
servicing.
DHPL is a Special Purpose Vehicle promoted by Era Infra
Engineering Ltd (EIEL) and OJSC- SIBMOST (Sibmost) to undertake
4-laning of Haridwar-Dehradun section from km 211.00 to km 218.20
of NH 58 and from km 165.00 to km 196.825 of NH 72 (approximately
39.03 km) in the state of Uttarakhand on BOT-Annuity basis on
Design, Build, Finance, Operate & Transfer (DBFOT) pattern under
National Highways Development Programme Phase III of National
Highways Authority of India (NHAI). DHPL entered into a
Concession Agreement (CA) with NHAI on February 24, 2010 for the
project with a concession period of 20 years (including
construction period of two years) from the appointed date
(November 1, 2011, revised from the original appointed date of
August 23, 2010 due to delays in land acquisition on part of
NHAI). The original scheduled commercial operations date (SCOD)
was November 01, 2013, which was revised to September 30, 2016 by
NHAI (subject to certain conditions). The total project cost was
originally envisaged at INR691.41 crore to be funded through term
loan of INR528.45 crore, equity of INR107.75 crore and
subordinate debt of INR55.21 crore from the promoters. The
project had witnessed time over-run due to various reasons
leading to increase in the project cost, which is INR1,020.91
crore now. The project has not achieved COD yet.
EASTERN COPPER: CARE Assigns C Rating to INR3.88cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Eastern Copper Manufacturing Company Private Limited (ECMC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3.88 CARE C; Stable Assigned
Short-term Bank
Facilities 12.00 CARE A4; Assigned
Detailed Rationale& Key Rating Drivers
The ratings assigned to the bank facilities of ECMC are primarily
constrained by its small scale of operation with new loss from
operation, weak financial risk profile marked by leveraged
capital structure and weak liquidity position, volatility in raw
material prices with highly competitive and fragmented industry
and working capital intensive nature of operation. The ratings,
however, derive strength from its experienced promoters with long
track record and reputed clientele. Going forward, the ability of
the company to improve its scale of operation along with
profitability margins and efficient management of working capital
are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation with net loss from operation: ECMC is a
relatively small player in copper products manufacturing business
with revenue of INR34.34 crore and net loss of INR0.95 crore
during FY17. The same has been declining continuously during last
three financial years on account of lower demand. Furthermore,
there has been cash loss during the said period. The total
capital employed was low at INR12.20 crore as on March 31, 2017.
The company has earned INR16.23 crore during H1FY18. The small
scale restricts the financial flexibility of the company in times
of stress.
Weak financial risk profile marked by leveraged capital structure
and weak liquidity position: The capital structure of the company
was leveraged marked by high overall gearing ratio at 2.02x as on
March 31, 2017. However, the same has improved on the back of
repayment of term loan. This apart, interest coverage ratio
remains below unity during FY17 and the company repaid the
outstanding interest from unsecured loan and sell of fixed
assets. Liquidity position of the company remains tight and the
current ratio was below unity as on March 31, 2017 due to high
current portion of long term debt.
Volatility in raw material prices with highly competitive and
fragmented industry: ECMC does not have any backward integration
for its basic raw material (copper ore or billets) for producing
copper products and the same is required to purchase the same
from open market. The finished goods as well as raw material
prices of copper products are volatile in nature. Even though raw
material prices moved in tandem with finished goods prices, it
does so with a time lag. Since, raw material is the major cost
driver, any southward movement of finished goods price with no
decline in raw material price result in adverse performance of
the company. The spectrum of the copper industry in which the
company operates is highly fragmented and competitive marked by
the presence of numerous players in India. Hence the players in
the industry do not have pricing power and are exposed to
competition induced pressures on profitability. This apart,
ECMC's products being copper related, it is subjected to the
risks associated with the industry like cyclicality and price
volatility.
Working capital intensive nature of operation: ECMC's business,
being manufacturing of copper products, is working capital
intensive. The utilization of bank borrowing is at around 98%
during the last 12 months ended on October 2017.
Key Rating Strengths
Experienced promoters with long track record: ECMC is currently
managed by Mr. Ravi Choudhary, Director, having about three
decades of experience in similar line of business. These apart,
all other two directors are also having around three decades of
experience in similar industry. The company started operation
from March 1996, thus having long track record of operation.
Reputed clientele: The company sells its products to the clients
like TATA International Ltd, Bharat Sanchar Nigam Ltd and
Chittaranjan Locomotive Works. It has long standing relationship
with clients marked by repeated orders from the said clients.
Eastern Copper Manufacturing Company Private Limited (ECMC) was
incorporated during March 1996 to initiate copper products
manufacturing business at Kolkata. The company has set up its
manufacturing unit at Baniara Industrial Estate in Howrah with an
installed capacity of 3,600 MTPA. The company manufactures
products like Copper bar, rods, wires, plates etc and sells to
the company like TATA International Ltd, Bharat Sanchar Nigam Ltd
and Chittaranjan Locomotive Works etc.
The day-to-day affairs of the company are looked after by Mr Ravi
Choudhary, with adequate support from the other two directors and
a team of experienced personnel.
G.K. SALES: CARE Moves B+ Rating to Not Cooperating Category
------------------------------------------------------------
CARE has been seeking information from G.K. Sales Corporation to
monitor the rating(s) vide e-mail communications/letters dated
November 21, 2017 and numerous phone calls. However, despite our
repeated requests, the firm has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on G.K. Sales Corporation's bank
facilities will now be denoted as CARE B+; Stable; ISSUER NOT
COOPERATING/ CARE A4;ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING
Short term Bank 1.00 CARE A4; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on August 31, 2016 the following were
the rating strengths and weaknesses
Key Rating Strengths
Experienced proprietor in trading industry: GKSC was established
in September, 2013 and is engaged in distribution of Voltas and
LG electronic products. The firm is currently being managed by
Mr. GurvirpalSingh . The proprietor has work experience of around
three decades in trading industry and has gained this experience
through his association with other regional entities.
Established distribution network: The firm has started its
operations in 2013 and has established the dealership network
since its inception in Tier I and Tier II cities. These dealers
distribute the products across cities such as Beas, Majitha,
Rayya, Attari etc. in Amritsar district of Punjab. As on August
23, 2016, the firm has 300 dealers spread across Punjab.
Key Rating Weaknesses
Small scale of operations with low net-worth base: The firm's
scale of operations has remained low marked by Total Operating
Income (TOI) of INR25.49 crore in FY16 (refers to the period
April 01 to March 31, based on unaudited results) and tangible
net worth of INR1.02 crore as on March 31, 2016. The small scale
limits the firm's financial flexibility in times of stress and
deprives it of scale benefits.
Weak financial risk profile: The financial risk profile of the
firm is weak as reflected by low PAT margin, highly leveraged
capital structure and weak debt coverage indicators.
The PBILDT margin and PAT margin of the firm stood at 3.05% and
0.50% respectively in FY16. PBILDT margin stood moderate at 3.16%
in FY16. However, PAT margin stood at below unity level during
last two financial years on account of high interest expenses.
The firm has a highly leveraged capital structure marked by
overall gearing ratio of 6.87x as on March 31, 2016. The same
deteriorated from 4.48x as on March 31, 2015 mainly on account of
higher utilization of working capital limits as on last balance
sheet date. Furthermore, net-worth base continues to be low which
also resulted in leveraged capital structure. Additionally, the
debt coverage indicators of the firm are weak marked by interest
coverage ratio of 1.19x in FY16 and total debt to GCA of 52.07x
for FY16.
Working capital intensive nature of operations: The operations of
the firm are working capital intensive in nature as reflected by
average operating cycle of 81 days for FY16. GSC is required to
maintain adequate inventory in the form of traded goods in order
to meet the immediate demand of dealers. Furthermore, product
portfolio consisting of different types of product models also
resulted in average inventory period of 52 days for FY16.
Fragmented nature of electronics goods industry: GSC faces tough
competition from other established brands i.e. from international
companies like Samsung, Daikin, Whirlpool, Hitachi, Sony, etc.
who have significant market share in Indian electronics industry.
Thus, competition in electronics goods segment might restrict the
scale of operations as well as profitability margins of Voltas
Limited and LG Electronics Inc. and consequently GKSC in short/
medium term.
Proprietorship nature of its constitution: GSC's constitution as
a proprietorship firm has the inherent risk of possibility of
withdrawal of the proprietor's capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of proprietor.
G.K. Sales Corporation (GKSC) was established as a proprietorship
firm in September 2013 and is currently being managed by Mr.
Gurvir Pal Singh. The firm is engaged in the distribution of
Voltas and LG's electronic goods in Amritsar district of Punjab.
The firm is the authorized distributor of Voltas Limited and
Life's Good Electronics Inc. (LG). G.K. Sales Corporation is sole
distributor of the products such as Voltas Air Conditioners,
Voltas Water Dispensers, LG Washing machine, LG Refrigerators and
LG Microwave in Amritsar district. and has a network of 300
independent dealers. The traded goods are procured from Voltas
Limited and Life's Good Electronics Inc. (LG).
GIRIRAJ INDUSTRIES: ICRA Moves D Rating to Not Cooperating
----------------------------------------------------------
ICRA Ratings has moved the long term ratings for the bank
facilities of Giriraj Industries (GI) to the 'Issuer Not
Cooperating' category. The rating is now denoted as "[ICRA]D
ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 1.20 [ICRA]D ISSUER NOT
Loan COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Fund based-Cash 13.80 [ICRA]D ISSUER NOT
Credit COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Fund based-Demand 2.00 [ICRA]D ISSUER NOT
Loan Against COOPERATING; Rating moved
Warehouse receipt to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Established in 1996, Giriraj Industries (GI) is engaged in
processing of raw cotton to produce cotton bales and cotton seeds
as well as trading of related commodities like cotton seed oil
and cotton seed oil cakes. The firm has a manufacturing unit in
Manavadar, Gujarat and is equipped with thirty ginning machines
and one manual pressing machine with a capacity to process 36 MT
of raw cotton per day.
GRAND PINKCITY: CARE Assigns B+ Rating to INR14cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Grand
Pinkcity Infraproject (GPI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of GPI is primarily
constrained on account of implementation risk associated with its
on-going debt funded real estate residential project and
salability risk associated with un-booked units in view of
subdued outlook for the cyclical real estate sector. The rating
is, further, constrained on account of its constitution as a
partnership concern.
The rating, however, derives strength from the experienced
management in executing real estate projects and its location
advantage.
The ability of complete to successfully complete its on-going
real estate project without any time and cost overrun along with
the timely booking of un-booked flats are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project implementation risk and saleability risk for un-booked
units: The project is envisaged to be completed by December, 2018
and hence, project implementation risk is associated with GPI to
complete the project within envisaged time and cost parameters.
The company has completed majority building construction wherein
approximately 78% of cost has been incurred. Further, saleability
risk is also associated with GPI for un-booked units. However,
the risk is mitigated to an extent through the prime location of
Radiant CASA in the Jaipur city.
Subdued outlook for the cyclical real estate sector: The real
estate industry in India is highly fragmented with most of the
real estate developers having a city-specific or region-specific
presence. Real estate investments worldwide have been driven by
one or several themes based on the economic growth. The major
drive in India is expected to come from housing, organized
retailing, hospitality etc. Strong economic growth, huge
population, large skilled workforce, growing employment and
increasing purchasing power has kick-started the growth in real
estate market in India.
Key Rating Strengths
Experienced partner with established track record in executing
real estate projects: Mr. Ajay Jain, and Mrs ManjuLoonia,
Partners have wide experience of around two and half decade of
experience in the real estate sector and constructed 14
residential as well as commercial projects and look after
construction affair of the firm. Mr.Naresh Kumar Jain and
Mr.Tarun Jain look after finance function of the firm. They are
assisted by 2nd tier management.
Jaipur (Rajasthan) based Grand PinkcityInfraproject (GPI) was
formed as partnership in April 2014 by Mr Ajay Jain, Mrs
ManjuLoonia, Mr Naresh Kumar Jain, Mr Tarun Jain in equal profit
sharing ratio. Subsequently, in May 2014, Mr Navratan Jain and Mr
Om PrakashSaraogi have joined as a partner and shares profit and
loss in the ratio of 10:10:32.5:32.5:10:5.
GPI is formed with a purpose to construct a residential project
named 'Radiant Casa' having saleable area of 225338 Sq Feet,
situated at Plot no 5, behind Jawahar Circle, Jaipur. GPI has
constructed the residential building in three blocks named The
Palm, The Maple and The Cedar each of G+11 floors and provide
amenities like swimming pool, club house, home theatre, etc. The
project has 66 flats out of which 44 flats of 3BHK specifications
and 22 flats of 4BHK specification. It has started construction
work on project from August 2014 and has envisaged that project
to be completed by December 2018. The company has envisaged total
project cost of INR67.20 crore to be funded through internal
accruals, term loans, unsecured loans from promoters and customer
advances in the proportion of 15:7:10:15. As on October 2017, the
firm has incurred total cost of INR51.53crore towards the
project.
HBS REALTORS: ICRA Moves D Rating to Not Cooperating Category
-------------------------------------------------------------
ICRA Ratings has moved the long term ratings for the Non-
Convertible Debenture of HBS Realtors Private Limited to the
'Issuer Not Cooperating' category. The rating is now denoted as
"[ICRA]D ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 53.56 [ICRA]D ISSUER NOT
Debenture Program COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity.
Incorporated in 1995, HBS Realtors Private Limited is a Mumbai-
based real estate developer involved in large scale city-centric
developments in commercial as well residential segments. The
group has a diversified product mix with a strong presence in
residential, retail, commercial, hospitality and SEZ
developments. Over the last decade, HBS has built strategic
partnerships with reputed business houses such as Phoenix Mills
Limited for the development of its 'Marketcity' projects, and
with the Mody Group of JB Chemicals and Pharmaceuticals for the
development of its pharma SEZ project. Over the years, HBS has
also attracted various financial investors like IL&FS, MPC Fund,
SREI Infrastructure Finance Ltd. and Edelweiss across its various
projects.
IVRCL CHENGAPALLI: CARE Reaffirms D Rating on INR797.30cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
IVRCL Chengapalli Tollways Limited (ICTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 797.30 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ICTL continues to
remain constrained by the weak liquidity profile owing to delay
in project completion with substantial cost and time overrun
resulting in delays in debt servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak liquidity profile: The project has been behind schedule on
account of lack of funds. This coupled with the weak liquidity
profile of the sponsor and relatively lower toll collections have
led to delays in interest servicing on term loans.
Key Rating Strengths
Established promoter group: IVRCL is an established
Infrastructure company with interests in a variety of
infrastructure projects, including Water & Environment, Roads &
Bridges, Railways, Buildings & Industrial Structures, Mining, Oil
& Gas exploration as well as Power transmission. However, the
company has a weak financial and liquidity profile with net loss
registered since last two years.
Commencement of tolling operations: The project started
collecting toll revenue from October 14, 2015. The company
collected toll revenue of INR74.42 crore during FY17 and INR44.71
crore during H1FY18. The company has received approval from NHAI
to collect toll revenue for 99% instead of 100% given the project
is incomplete for the remaining 1%. The balance portion of work
is expected to be completed by December, 2017.
ICTL, incorporated in February 2010, is a special purpose vehicle
(SPV) promoted by IVRCL Limited (IVRCL), through its subsidiary
IVRCL Assets & Holdings Limited (IAHL), which has now been merged
with IVRCL. ICTL was implementing a road project (under NHDP
Phase-II programme) envisaging 4/6 laning of the road in
Chengapalli-Coimbatore-Walayar of NH-47 in the state of Tamil
Nadu (Total length: 54.83 km) on Design, Build, Finance, Operate
and Transfer (DBFOT) toll basis for a concession period of 27
years. The project stretch is divided into two sections; from Km
102.03 to Km 144.68 of 42.64 km (Section I) and from Km 170.88 to
Km 183.01 of 12.13 Kms (Section II). The project achieved
provisional Commercial Operational Date (COD) on October 9, 2015
and has started collecting toll revenue from October 14, 2015.
JAIPRAKASH POWER: CARE Reaffirms D Rating on INR11,474.65cr Loan
----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Jaiprakash Power Ventures Limited (JPVL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11,474.65 CARE D Reaffirmed
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facilities of JPVL continues to
factor in delays in debt servicing by the company due to weak
financial performance and stretched liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak financial performance and stretched liquidity position:
During FY17, JPVL reported a net loss of INR760.18 crore on
operating income of INR2,835.75crore as against net loss of
INR246.49 crore on operating income of INR2,897.32 crore in FY16.
In H1FY18, net loss stood at INR175.57 crore. The liquidity
position of the company continues to remain weak on account of
weak financial performance, leading to ongoing delays in debt
servicing.
JPVL is engaged in power generation business and currently has
one operational hydro power project of 400 MW (Vishnuprayag in
Uttarakhand) and two thermal power projects of 1,820 MW capacity
(500 MW Bina, Madhya Pradesh and 1,320 MW Nigrie, Madhya
Pradesh). The company, through its subsidiary Prayagraj Power
Generation Ltd (PPGCL), has a 1,980 MW thermal power project in
Bara, Uttar Pradesh. JPVL also has a presence in the power
transmission business through its 74% subsidiary JaypeePowergrid
Ltd (JPL, rated 'CARE A-; Stable'), which has set up a 214-km
transmission line and has a coal mine at Amelia, Madhya Pradesh
acquired through e-auction. Further, JPVL has entered into an
agreement with Orient Cement Limited for sale of its 2 MTPA
Nilgrie cement grinding unit in May 2017. The company is
currently under the Strategic Debt Restructuring (SDR) scheme.
MARIANELLA PROPERTIES: ICRA Cuts Rating on INR15cr Term Loan to D
-----------------------------------------------------------------
ICRA Ratings has downgraded the rating for the INR15.00 crore
bank facilities of Marianella Properties Private Limited to
[ICRA]D ISSUER NOT COOPERATING from [ICRA]B (Stable) ISSUER NOT
COOPERATING. The rating continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 15.00 [ICRA]D ISSUER NOT COOPERATING;
Loan Revised from [ICRA]B Stable)
ISSUER NOT COOPERATING)
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
Rationale
The rating downgrade follows the delays in debt servicing by MPPL
to the lender due to delay in completion of the project, as
confirmed by the banker to ICRA.
Incorporated in 2008, Marianella Properties Private Limited
(MPPL) is involved in developing a retail mall in Vasai,
Maharashtra with an area of 0.97 lac square feet. The company is
promoted and managed by Mr. Lancelot D'Souza and his family. The
promoters have executed 13 projects (through Rose Builders) in
Mumbai with total saleable area of 2.5 lac square feet.
MAX IMPEX: CARE Assigns B Rating to INR2.50cr LT Loan
-----------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of M/s
Max Impex (MI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term bank
Facilities 2.50 CARE B; Stable Assigned
Short term bank
Facilities 3.50 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of MI are constrained
on account of moderate scale of operation coupled with relatively
low net worth base, moderate operating profit margin and low net
profit margin, highly leveraged capital structure and weak debt
coverage indicators and working capital intensive nature of
operation. The ratings are also constrained on account of
presence in highly competitive industry and constitution of
entity being proprietorship.
The ratings however derive strength from moderate track record
coupled with experienced promoter and reputed clientele. Ability
of the firm to increase its scale and improve its operating along
with efficient management of working capital cycle are the key
rating sensitivities.
Detailed description of Key rating drivers
Key rating Weakness
Moderate scale of operation coupled with relatively low net worth
base: MI's total operating reflected a fluctuating trend during
the period FY15-17 on account of the volatility in the raw
material prices coupled with foreign exchange fluctuations. The
total income however declined marginally in FY17 on account of
the foreign exchange fluctuation. Moderate scale of operation
coupled with low net worth limits its financial flexibility to
meet any exigency.
Moderate operating profit margin and low net profit margin: The
operating profitability margins of MI have been increasing
moderately during last 3 years. Nevertheless the same continues
to remain moderate on account of the trading nature of the
business, where margin are bound to remain low. Further, the PAT
margin remained low on account of higher interest expenses due to
higher reliance on external debt to fund its business operations.
Highly leveraged capital structure and weak debt coverage
indicators: The capital structure of MI remained highly leveraged
on account of higher reliance on external debt to fund the
business coupled with low net worth base owing to trading nature
of operation. The capital structure marked by overall gearing
though highly leveraged deteriorated marginally from 8.27x as on
March 31, 2016 to 9.37x as on March 31, 2017 on account of
accretion of profit to reserves on account of higher LC backed
creditors at the yearend coupled with higher utilization of
working capital limits.
Working capital intensive nature of operation: The working
capital intensity associated with trading business generally
remains high on account of high receivables cycle. Firm offers
credit period of 45 to 60 days to its clients & has to provide
high credit period on account of stiff competition in chemical
industry. Firm procures material directly from local chemical
manufacturer, through other traders & distributors and imports as
well Firm get credit period of 45 to 60 days from local suppliers
while in case of import firm open usance LCs for up to 90 days.
Due to the inherent mismatch on account of high receivables, the
firm has to rely heavily on working capital borrowings and
unsecured loans. The above has led to higher utilization of the
working capital limit, average utilization of the WC limit stood
at 90 % for past six months ended October 2017.
Foreign exchange fluctuation risk: MI imported around 80% of
materials mainly from Hong-Kong, Korea, Thailand and China. Hence
it's exposed to foreign exchange risk due to the timing
difference. Furthermore, the margins of MI may fluctuate
depending upon the adverse or favorable movements in forex rate
and the economic conditions, which had been volatile in nature.
Presence in highly competitive industry leading to recognized
competitors: MI operates in highly fragmented industry marked by
the presence of organized as well as unorganized sector. Thus the
ability of the company to continuously adapt the changes in the
market can have an impact on the profitability margin and scale
of operations of the company. However, through continuous
research and development being focused in marketing, the company
has been able to consolidate its strength and output to growth.
Risk of withdrawals owing to proprietorship nature of
constitution: The nature of the constitution of Max Impex is
'proprietorship' which involves the risk of withdrawals of funds.
The firm is exposed to inherent risk of net worth being withdrawn
at time of personal contingency as also it has limited ability to
raise capital and poor succession planning may result in
dissolution of firm. Due to the proprietorship constitution, it
has restricted access to external borrowing where net worth as
well as credit worthiness of promoters is key factors affecting
credit decision of lenders.
Key rating Strengths
Moderate track record of operation coupled with experienced
promoter: M/s Max Impax (MI) was established in 2008 by
Kulchandani family (promoted by Mr. JethanandKulchandani) being
engaged into trading of chemical products (such as Mon-odium
glutamate, Citric acid, titanium dioxide, sodium hydro-sulfide
and other chemical products) having more than 42 years of
experience in the chemical industry. Over the years of their
presence they have developed established relation with various
customers & suppliers.
Established relations with customers: With the vast experience of
promoter in the chemical industry, they have developed
established relation in the market with various customers and
receive repeat orders from them.
M/s Max Impex (MI), established in 2008 by Mr.
JethanandKulchandani (having more than 42 years of overall
experience), is engaged into trading of chemical and chemical
products. MI primarily imports (approx. 80% of total purchases in
FY17) chemical products from Hong-Kong, Korea, Thailand, China
and other APAC and European countries and sells in India. The
chemical products include Mon-odium glutamate, Citric acid,
titanium dioxide, sodium hydro-sulfide and other chemical
products. The application of the products is found in various
industries such as food industry, pharmaceutical industry,
textiles, paper industry, paint industry and others. MI's
registered office located at Masjid Bandar, Mumbai.
MAX PROPERTIES: ICRA Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Ratings has moved the long term ratings for the bank
facilities of Max Properties Private Limited to the 'Issuer Not
Cooperating' category. The rating is now denoted as "[ICRA]D
ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term, Fund 7.70 [ICRA]D; ISSUER NOT
based facilities COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Long-term, 1.80 [ICRA]D; ISSUER NOT
Unallocated COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity.
Max Properties Private Limited is a Madurai-based real estate
developer/construction company. It was established in 2009 by Mr.
Elango Packiaraj who was earlier executing several government
contracts in his personal capacity. Such executed projects
include construction of staff quarters in Tier II and Tier III
cities for Tamil Nadu Electricity Board, BSNL Telephones, TWAD
Board and Tamil Nadu Police Housing Corporation. MPPL undertakes
developing or co-developing on joint venture (JV) basis real
estate projects for residential or commercial-cum-residential,
multi-storied projects in Madurai and Theni. The company also
undertakes civil construction for the projects it develops and
has the necessary labor and plant & machinery for the same. The
company is closely held by the family of the company's promoter,
Mr. Elango Packiaraj. The company has not disclosed any other
associate / group companies.
MRMC FOODS: CARE Raises Rating on INR46.38cr LT Loan to BB-
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
MRMC Foods Private Limited (MFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 46.38 CARE BB-; Stable Revised
from CARE B+; Stable
Short-term Bank
Facilities 15.20 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The revision in the long-term rating assigned to the bank
facilities of MFPL factors in healthy scale-up of operations and
increased fund infusion by the promoters in FY17. The ratings
continue to derive strength from the experienced & resourceful
promotors and favorable manufacturing location.
The ratings, however, remain constrained by the weak overall
solvency position, working capital intensive nature of
operations, raw material price volatility, monsoon dependent
operations and regulatory risk with high competition.
Going forward, the ability of the company to profitably scale-up
its operations while improving its overall solvency position will
remain the key rating sensitivity. Furthermore, efficient
management of the working capital requirements will also remain
the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Healthy scale-up of operations in FY17: The operating income of
the company increased by ~43% to INR145.65 cr. in FY17. Further,
the profitability margins of the company improved in FY17, marked
by PBILDT and PAT margins of 7.92% and 0.93%, respectively (7.41%
and 0.36%, respectively, in FY16) on the back of better sales
realizations. In H1FY18 (Prov.), the company reported an
operating income of INR107.63 cr.
Experienced and resourceful promoters: The operations of the
company are currently being managed by Mr. Rajeev Mangal and Mr.
Praveen Mangal. The promoters are having experience ranging
between 11-16 years. The promotors are also running five
commission agent shops (paddy) in Ferozepur region that has also
helped them in easy procurement of paddy (raw material) for MFPL.
Further, to fund various business requirements, the promoters &
related parties infused additional funds in FY17, amounting to
INR9.60 Cr., in the form of unsecured loans, taking the total
unsecured loans (from promoters & related parties) to INR21.60
Cr., as on March 31, 2017.
Favourable manufacturing location: MFPL's manufacturing unit is
located in Ferozepur, Punjab. The area is one of the hubs for
paddy/rice, leading to its easy availability. The unit is also at
a close proximity to the grain market resulting in procurement at
competitive rates. The presence of MFPL in vicinity to the paddy
producing regions gives it an advantage over competitors in terms
of easy availability of the raw material as well as favorable
pricing terms. The favorable location also puts the company in a
position to cut on the freight component of the incoming raw
materials.
Key Rating Weaknesses
Weak overall solvency position with working capital intensive
nature of operations: The overall solvency position of the
company continues to remain weak as marked by weak overall
gearing and total debt to GCA ratios. Further, operating cycle of
the company stood elongated at ~221 days, as on March 31,
2017(PY: ~182 days) with the average cash credit and packing
credit limit utilization remaining around 80% for the last 12
months ended September-2017.
Raw material price volatility and monsoon dependent operations:
Theagro-based industry is characterized by its seasonality, due
to its dependence on raw materials whose availability is affected
directly by the vagaries of nature. The price of rice moves in
tandem with the prices of paddy. Availability and prices of agro
commodities are highly dependent on the climatic conditions. The
monsoon has a huge bearing on crop availability which determines
the prevailing paddy prices. Since there is a long time lag
between raw material procurement and liquidation of inventory,
the company is exposed to the risk of adverse price movement
resulting in lower realization than expected.
Regulatory risk with highly competitive and fragmented nature of
the industry: The commodity nature of the product makes the
industry highly fragmented with numerous players operating in the
unorganized sector with very less product differentiation. 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.
Incorporated in May, 2013, MRMC Foods Private Limited (MFPL)
started its operations in November, 2014 and is managed by Mr.
Rajiv Mangal and Praveen Mangal. The company is engaged in the
processing of paddy to rice and also sells its by-products like
bardana, bran, husk, etc., at its sole manufacturing facility in
Ferozepur, Punjab with an installed capacity of 12TPH (tonnes per
hour). The company sells ~20-30% of its product under its own
brand name "Yahas" and "Hunar". The company is also engaged in
the export of its products, with exports accounting for ~30-40%
of the total operating income in past 2 years.
OM AASTHA: CARE Assigns B+ Rating to INR7.00cr LT Loan
------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of of Om
Aastha Indo Energy Private Limited (OAIEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of OAIEPL is
constrained by its short track record with small scale of
operations, low profit margins, volatile agro-commodity (paddy)
prices with linkages to vagaries of the monsoon, regulated nature
of the industry, working capital intensive nature of business,
leveraged capital structure with moderate debt coverage
indicators and intensely competitive nature of the industry with
presence of many unorganized players. The aforesaid constraints
are partially offset by its experienced promoters, proximity to
raw material sources and favorable industry scenario.
Going forward, the ability of the company to increase its scale
of operations, improvement in profitability margins and effective
management of working capital would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operationsand short track record of operation:
OAIEPL is a relatively small player in the rice milling industry
marked by total operating income of INR20.85 crore with a PAT of
INR0.05 crore in FY16. Further, the net worth base and total
capital employed was low at INR3.16 crore and INR11.73 crore,
respectively, as on March 31, 2016. Moreover during FY17
(provisional), the company has booked turnover of INR22.29 crore
and during 8MFY18 INR18.00 crore as maintained by the management.
Low profit margins: The profit margins of the company improved
during last three years (FY14-FY16). The PBILDT margin improved
gradually over the last three years on account of better
management of cost of operations and the same stood at 4.23% in
FY16 as against 3.75% in FY15. Furthermore, the PAT margin also
improved in line with PBILDT margin during last three years
(FY14-FY16) and the same stood at 0.23% in FY16 as against 0.08%
in FY15. However, the same remains low.
Volatile agro-commodity (paddy) prices with linkages to vagaries
of the monsoon: OAIEPL is primarily engaged in the processing of
rice products in its rice mills. Paddy is mainly a 'kharif' crop
and is cultivated from June-July to September-October and the
peak arrival of crop at major trading centers begins in October.
The cultivation of paddy is highly dependent on the monsoon.
Unpredictable weather conditions could affect the output of paddy
and result in volatility in price of paddy. In view of seasonal
availability of paddy, working capital requirements remain high
at season time owing to the requirement for stocking of paddy in
large quantity.
Regulated nature of the industry: The Government of India (GoI),
every year decides a minimum support price (MSP) to be paid to
paddy growers which limits the bargaining power of rice millers
over the farmers. The MSP of paddy increased during the crop year
2017-18 to INR1550/quintal from INR1470/quintal in crop year
2016-17. The sale of rice in the open market is also regulated by
the government through levy of quota, depending on the target
laid by the central government for the central pool. Given the
market determined prices for finished product vis-a-vis fixed
acquisition cost for raw material, the profit margins are highly
vulnerable.
Working capital intensive nature of business: Paddy is mainly a
'kharif' crop and is cultivated from June-July to September-
October and the same is processed by rice millers throughout the
year. Hence, the millers are required to carry high levels of raw
material inventory in order to mitigate the raw material
availability risk, resulting in relatively high inventory period.
Accordingly the average inventory holding period remained high at
93 days during FY16 which has resulted in high working capital
intensive nature of its operations. The average utilization of
working capital limits was around 75% during last 12 months ended
April 30, 2017.
Leveraged capital structure with moderate debt coverage
indicators: The capital structure of the company remained
leveraged marked by debt equity ratio and overall gearing ratios
at 1.80x and 2.61x respectively as on March 31, 2016. Furthermore
the interest coverage ratio also deteriorated to 1.77x in FY16 on
account of high capital charges. The total debt to GCA
deteriorated as on March 31, 2016 due to increase in debt level
and remained at 17.35x as on March 31, 2016.
Intensely competitive nature of the industry with presence of
many unorganized players: Rice milling industry is highly
fragmented and competitive due to presence of many small players
operating in this sector owing to its low entry barriers, due to
low capital and technological requirements. Bhabhua and nearby
districts of Bihar are major paddy growing area with many rice
mills operating in the area. High competition restricts the
pricing flexibility of the industry participants and has a
negative bearing on the profitability.
Key Rating Strengths
Experienced Promoters: Mr. ShaileshPratap, has around 15 years of
experience in rice milling industry, looks after the day to day
operations of the company. He is supported by other promoters Mr.
Bishwambar Singh who also has around 25 years of experience in
this line of business and Mrs. SudhaPratap who also has around 10
years of experience in this line of business. The promoters are
well assisted by a team of experienced professionals.
Proximity to raw material sources and favorable industry
scenario: OAIEPL plant is located at Bhabhua district of Bihar
which is a paddy growing region in eastern India resulting in
lower logistic expenditure (both on transportation and storage),
easy availability and procurement of raw materials at effective
prices. Rice, being one of the primary food articles in India,
demand is high throughout the country and with the change in life
style and health consciousness; by-products of the same like rice
bran oil etc. are in huge demand.
OAIEPL was constituted as a private limited company in October
2011 by Mr. ShaileshPratap, Mr. Bishwambar Singh and Mrs.
SudhaPratap for setting up a rice milling unit. The company has
started its commercial operations from January 2014. The company
has been engaged in rice milling activities at its plant located
at Bhabhua, Bihar with aggregate installed capacity of 17400
MTPA. The company procures its raw material from local market and
sells its finished products across Bihar.
PP PANDEY INFRASTRUCTURE: Ind-Ra Affirms BB+ LT Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed PP Pandey
Infrastructure Private Limited's (PPPIPL) Long-Term Issuer Rating
at 'IND BB+'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR46 mil. Term loan due on March 2022 affirmed with IND
BB+/Stable rating;
-- INR80 il. Fund-based working capital affirmed with IND
BB+/Stable/IND A4+ rating; and
-- INR100 mil. Non-fund-based working capital affirmed with IND
A4+ rating.
KEY RATING DRIVERS
The ratings remain constrained by PPPIPL's small scale of
operations, despite an increase in revenue to INR576.54 million
in FY17 (FY16: INR503.05 million), due to small order sizes. In
FY17, the top line increased on account of a higher number of
increased work orders.
The ratings, however, are supported by the over two decades of
experience of PPPIPL's promoters in civil construction works. The
ratings are further supported by PPPIPL's comfortable EBITDA and
credit metrics for FY17 with EBITDA margins of 9.11% (FY16:
8.50%), interest coverage (operating EBITDA/gross interest
expense) of 4.93x (5.21x) and net financial leverage (total
adjusted net debt/operating EBITDAR) of 2.38x (1.88x). In FY17,
the EBITDA margin improved on account of a decrease in overall
expenditure, net leverage ratio deteriorated on account of an
increase in external borrowings and interest coverage ratio
deteriorated due to an increase in associated financial charges.
The liquidity of the company has been comfortable as evident
average cash credit utilisation of 85.32% during the 12 months
ended November 2017.
RATING SENSITIVITIES
Negative: A significant decline in the operating profitability
leading to deterioration in the credit metrics will be negative
for the ratings.
Positive: A significant improvement in the revenue with the
EBITDA and credit metrics being sustained will be positive for
the ratings.
COMPANY PROFILE
PPPIPL was established in July 2008 and is engaged in the
business of civil construction of roads and other allied works.
It has its head office in Lucknow. The company is registered with
various state government and central government departments as an
'A' class contractor.
RAGHURAJ EXPORTS: CARE Assigns B Rating to INR9.87cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Raghuraj Exports Private Limited (REPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.87 CARE B; Stable Assigned
Rating Rationale & Key Rating Drivers
The rating of REPL continues to remain constrained on account of
its small scale of operations and moderate profitability margins.
The rating further, continues to remain constrained on account of
its weak debt-coverage indicators, working capital intensive
nature of operations and its presence in fragmented and
competitive nature of textile industry.
The rating, however, continues to derive strength from
resourceful, qualified and experienced management and strong
group support. The rating, further, continues to derive strength
from its moderate solvency position.
The ability of REPL to increase its scale of operations while
improving profitability and improvement in the solvency position
as well as efficient management of working capital shall be the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Small scale of operations and moderate profitability margins: The
scale of operations has remained small marked by a total
operating income and gross cash accruals of INR12.40 crore and
INR0.60 crore during FY17. However, during FY17, TOI of the
company has improved significantly by 113.74% over FY16 mainly on
account of increase in sale volume.The small scale limits the
company's financial flexibility in times of stress and deprives
it from scale benefits. The company achieved total operating
income of INR2.85 crore till October; 2016.
Further, the profitability margins of the company remained
moderate marked by PBILDT and PAT margin of 16.24% and 2.92%
respectively in FY17 (23.20% and -1.94% in FY16). During FY17,
PBILDT margin of the company has declined by 696 bps over FY16
mainly due to higher material cost. However, in FY17 PAT margin
of the company has improved by 486 bps.
The gross cash accruals of the company has improved by 566.53%
and registered GCA of INR0.60 crore in FY17 as against INR0.09
crore in FY16.
Weak debt-coverage indicators and working capital intensive
nature of operations: The debt service coverage indicators stood
moderate, marked by total debt to GCA of 19.16 times as on March
31, 2017 improved from 117.43 times as on March 31, 2016 mainly
due to improvement in GCA level. Further, interest coverage ratio
has also improved and stood moderate at 1.51 times in FY17 as
against 1.07 times in FY16.
Further, the liquidity position of the company stood moderate
marked by 90% utilization in seasonal time during last twelve
months ended October, 2017. The current ratio stood moderate at
1.05 times as on March 31, 2017, however, quick ratio stood below
unity at 0.83 times as on March 31, 2017 mainly due to
maintenance of higher inventory of finished goods to meet the
customer demands. The operating cycle of the company has improved
from negative cycle of 39 days to positive cycle of 57 days
mainly due to higher inventory and debtors period which is offset
to an extent by higher creditor period.
Fragmented and competitive nature of textile industry: The
textile related products industry is characterized by numerous
small players and is concentrated in the northern part of India.
Low entry barriers and low investment requirement makes the
industry highly lucrative and thus competitive. Smaller companies
in general are more vulnerable to intense competition due to
their limited pricing flexibility, which constrains their
profitability as compared to larger companies who have better
efficiencies and pricing power considering their scale of
operations.
Key Rating Strength
Resourceful, qualified and experienced management and strong
group support: The company is currently being managed by Mr
Ganesh Rana and Mrs RenuRana who looks after the overall
operations of the company. Mr Ganesh Rana is a Chartered
Accountant by qualification and has an experience of nearly four
decades in textile industry through association with other
associate concerns (Poornima Handicrafts) engaged in similar line
of business. Mrs RenuRana is a graduate by qualification and has
an experience of nearly three and a half decades in textile
industry through her association with Poornima Handicraft.
Furthermore, the promoters are highly resourceful having combined
net worth of INR53.25 Crore
Moderate solvency position: The capital structure of the company
has remained moderate with an overall gearing of 1.05 times as on
March 31, 2017, as against 1.00 times as on March 31, 2016 mainly
on account higher increase in debt as compare to increase in net
worth base.
Jaipur-based REPL was incorporated in July, 2012 and started its
commercial operation in December, 2014. The company is engaged in
manufacturing of readymade garments like knitwear, kurtis and t-
shirts, skirts, etc. for women and girls and home furnishings
products like quilts, bed cover, chair pad, bed sheets, curtains
and table covers, etc. at its manufacturing facility located in
Jaipur. The products are sold to various wholesalers located
domestically and overseas (Korea, USA, etc.) (10% of total
sales). The company also sale the products to its associate
concern Poornima Handicrafts Private Limited.
REDD MICA: CARE Revises Rating on INR5.14cr Loan to B+
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Redd Mica Private Limited (RMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.14 CARE B+; Stable
Facilities Revised from CARE B
Long term/Short 8.75 CARE B+; Stable/CARE A4
term Bank Facilities Long-term rating revised
from CARE B and Short-term
rating reaffirmed
Detailed Rationale & Key Rating Drivers
The revision in long-term rating assigned to the bank facilities
of RMPL is on account of stabilization of overall operations
during FY17 and consequent increase in scale of operations during
7MFY18 (Provisional) along with improvement in profit level.
However, the ratings continue to remain constrained on account of
lack of prior experience of the key promoters in the laminate
manufacturing industry and susceptibility of operating margins to
variable input costs and foreign exchange rates. The ratings are
further constrained on account of its presence in a highly
fragmented industry with fortunes linked to demand from cyclical
real estate industry. The ratings also take into consideration
its existing leveraged capital structure and weak debt coverage
indicators.
The ability of RMPL to increase its scale of operations and
profit level further along with improvement in capital structure,
debt coverage indicators and liquidity position will remain the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Successful commencement of operations
RMPL successfully completed its project within envisaged cost
parameters. The commercial production which was earlier envisaged
to be commenced from April 2017 actually started from December,
2016. During its four months of operations in FY17, RMPL reported
a total operating income (TOI) of INR0.92 crore and a net loss of
INR0.40 crore. However, during 7MFY18 (Provisional), RMPL has
registered TOI of INR5.12 crore and PBILDT of INR1.60 crore. The
said improvement during 7MFY18 was on the back of stabilization
of operations.
Key Rating Weaknesses
Lack of prior experience of the key promoters in the laminate
manufacturing industry RMPL is promoted by Mr. Satya Narayan
Agrawal who has an experience in the business of petroleum
products and tractors. Mr. Sureshkumar Babulal Jani holds
experience in cotton ginning and pressing industry while Mr.
Jainam Hasmukh Agrawal has an experience in the kraft paper
industry via group company.
Leveraged capital structure, weak debt coverage indicators and
moderate liquidity position: The overall gearing ratio stood high
at 2.23 times, whereas debt to equity ratio stood at 1.93 times
as on March 31, 2017. Debt coverage indicators remained weak as
marked by low interest coverage ratio as well as weak TDGCA owing
to net loss reported during FY17. Liquidity position remained
moderate as marked by current ratio of 1.45 times as on March 31,
2017 along with moderate operating cycle of 73 days during FY17
on account of higher inventory holding due to nature of industry.
Further, average working capital utilization remained 80% for
trailing 10 month period ended September 2017.
Foreign exchange fluctuation risk and its presence in a highly
fragmented industry with fortunes linked to demand from cyclical
real estate industry: The industry is characterized by low entry
barriers and easy access to customers and suppliers. In addition,
the industry is highly dependent on demand from cyclical real
estate industry. In the case of laminates, the cost of chemicals
makes up about 40 per cent of the cost of production. Hence, any
changes in prices of raw material and RMPL's inability to pass on
the same to end customers may impact its profit margins. Further,
RMPL will purchase kraft paper domestically as well as will
import from countries like China hence the margins of RMPL are
exposed to foreign exchange fluctuation risk.
Ahmedabad-based (Gujarat) RMPL was incorporated in September 2015
by Mr Satya Narayan Agrawal, Mr Sureshkumar Babulal Jani and Mr
Jainam Hasmukh Agrawal. The unit is set up to manufacture
decorative residential and industrial laminates with an installed
capacity of around 10 lakh sheets per annum; from its facilities
located in Dehgam (Gujarat). RMPL has successfully commenced its
operation from December 2016. The laminates manufactured by RMPL
are used as an overlay over plywood or other wooden furniture.
Its group entities include M/s Naresh Tradelink Private Limited
which is involved in the trading of kraft paper, while other
group entities are involved in different businesses like cotton
ginning and pressing, petroleum products and multi-speciality
Hospital and Research Center.
RELIANCE COMMUNICATION: Ericsson Taps Darius Khambata as Counsel
----------------------------------------------------------------
The Economic Times reports that Ericsson has roped in senior
counsel Darius Khambata to represent it in its insolvency
petition against Reliance Communication (RCom) at the National
Company Law Tribunal (NCLT).
According to the report, Khambata is also representing China
Development Bank (CDB) in its insolvency plea against the Anil
Ambani owned company to recover dues worth $1.78 billion
(INR11,460 crore). ET relates that the Bombay High Court lawyer
said there was no intent to merge the cases at the moment, but
"that would eventually happen once any of the insolvency
petitions was admitted".
The acceptance of insolvency will also supersede the strategic
debt restructuring being carried out by RCom's domestic lenders,
Khambata said, ET relays. The insolvency petitions against RCom
and its subsidiaries will be heard by NCLT on December 18.
On Dec. 11, RCom's counsel told the NCLT bench represented by
Justices BSV Prakash Kumar and V Nallasenapathy that the company
had filed an affidavit contending the bank certificates filed by
Ericsson were not in accordance with the court's rules, ET says.
ET relates that the Swedish firm had filed bank certificates from
HDFC Bank and Citibank on November 16, stating the company did
not receive any amount from the Ambani-owned operator. A bank
certificate refers to a document issued by an Indian bank showing
a default in payment because money hasn't come into an account.
According to ET, sources said the RCom affidavit said the bank
certificates were issued on the basis of certificates provided by
chartered accountants, which is not permissible. The operator
said the certificates record the period from April 2017 and do
not reflect payment details before March of this year. The third
point in the affidavit, according to sources, was that Ericsson
did not file the letter it had sent to the banks with the
tribunal. RCom did not respond to an email sent by ET.
Ericsson had earlier told the tribunal that RCom had not paid its
dues for past two years and only a few postdated cheques had been
given, says ET. In September, it filed for insolvency in NCLT to
recover INR1,150 crore from the operator for services and
equipment supplied. Negotiations between the two to reach an out-
of-court settlement have failed so far, ET states.
RCom, under a debt pile of INR45,000 crore, has five insolvency
petitions filed against it, the report discloses. Apart from
Ericsson and CDB, other petitioners include Fortuna Public
Relations, which claims the telco owes it INR47.65 lakh, Manipal
Technologies, which has moved NCLAT to recover INR2.74 crore from
RCom, and IT firm Tech Mahindra, which has since agreed to settle
its demand for INR8.2 crore out of court, according to ET.
CDB, which accounts for 37.11% of RCom's total secured debt,
moved NCLT in November against both RCom and its subsidiary
Reliance Telecom since the former was the guarantor and the
latter the principal borrower, ET recalls. RCom on November 30
had said that majority of its lenders have decided to oppose
China Development Bank's insolvency filing.
In October, after its merger with Aircel fell through, Reliance
Communication applied for a fresh plan from its lenders, under
which banks could convert some debt and take 51% stake in the
telecom operator, ET says. Banks could then raise funds by
selling the telco's towers and spectrum to potential buyers,
including Reliance Jio, and monetise real estate assets, adds ET.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd (BOM:532712)
-- http://www.rcom.co.in/Rcom/personal/home/index.html-- is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile
communication (GSM) technology-based networks across India;
voice, long distance services and broadband access to enterprise
customers; managed Internet data center services, and direct-to-
home (DTH) business. Global operations comprise Carrier,
Enterprise and Consumer Business units. It provides carrier's
carrier voice, carrier's carrier bandwidth, enterprise data and
consumer voice services. The Company owns and operates Internet
protocol (IP) enabled connectivity infrastructure, comprising
over 280,000 kilometers of fiber optic cable systems in India,
the United States, Europe, Middle East and the Asia Pacific
region.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 22, 2017, Moody's Investors Service has withdrawn Reliance
Communications Limited's (RCOM) Ca corporate family rating (CFR)
and its negative outlook. At the same time, Moody's has also
withdrawn the Ca rating on RCOM's senior secured notes.
On Nov. 6, 2017, RCOM announced that pursuant to the invocation
of Strategic Debt Restructuring (SDR) scheme by the lenders of
the company as per the Reserve Bank of India guidelines agreed in
June 2017, the company is under a debt standstill period until
December 2018, as it looks to complete a corporate and debt
restructuring. Accordingly, for the time being, no payment of
interest and/or principal is being made to any RCOM lenders
and/or bondholders.
SHAPE ENGINEERING: Ind-Ra Moves B Rating to Not Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shape
Engineering Company Private Limited's (SECPL) Long-Term Issuer
Rating to the non-cooperating category. The issuer did not
participate in the rating exercise despite continuous requests
and follow-ups by the agency. Therefore, investors and other
users are advised to take appropriate caution while using these
ratings. The rating will now appear as 'IND B(ISSUER NOT
COOPERATING)' on the agency's website. The instrument-wise rating
actions are:
-- INR105 mil. Fund-based limits migrated to non-cooperating
category with IND B(ISSUER NOT COOPERATING)/IND A4(ISSUER NOT
COOPERATING) rating; and
-- INR5.80 mil. Non-fund-based limits migrated to non-
cooperating
category with IND A4(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 2, 2016. Ind-Ra is unable to provide an update as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1984, SECPL manufactures turbine parts at its
2,500MTPA manufacturing site in Haridwar, Uttarakhand. The
company procures raw materials (steel and iron ingots) from
domestic suppliers and sells turbine parts to power sector
suppliers such as Toshiba JSW Power System Pvt. Ltd., L&T Howden
Private Limited ('IND A'/Stable), Bharat Heavy Electricals
Limited ('IND AA+'/Stable) and others.
SHIVANGAN FOOD: ICRA Assigns B Rating to INR10cr Term Loan
----------------------------------------------------------
ICRA Ratings has assigned a long -term rating of [ICRA]B to the
INR15.00 crore fund based facilities of Shivangan Food and Pharma
Products Private Limited. The outlook on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 10.00 [ICRA]B (Stable); Assigned
Fund based-Working
Capital Facilities 5.00 [ICRA]B (Stable); Assigned
Rationale
The assigned rating takes into account the lack of track record
of SFPPL's operations and limited experience of promoters in the
starch manufacturing sector, though the presence of technically
qualified professionals with vast industry experience provides
some comfort. The rating is constrained by the market risk
associated with a Greenfield venture with regards to off take of
the products in the initial years of operations; competition from
established maize starch manufacturers; and vulnerability of
operations to the risks inherent in an agro-based industry like
raw material availability and crop harvest. The rating also
factors in the debt funded nature of the project which is likely
to keep the gearing level high in the near term. ICRA notes that
the term loan repayments for the company are expected to commence
from January 2018 and hence scaling up of operations at the
earliest while maintaining adequate profitability would be
crucial for timely debt servicing.
Nonetheless, the assigned rating favourably factors in the
location advantage derived on account of proximity to raw
material sources; eligibility for various fiscal incentives; and
widespread applications of the product and by-products in several
industries such as food, pharmaceuticals, textiles, paper etc.
Outlook: Stable
ICRA believes SFPPL will continue to benefit from the location
advantages and widespread applicability of its product portfolio.
The outlook may be revised to 'Positive' if substantial growth in
revenue and profitability, and better working capital management,
strengthens the financial risk profile. The outlook may be
revised to 'Negative' if lower than expected cash accruals or any
major debt funded capital expenditure or stretch in the working
capital cycle, weakens the liquidity profile.
Key rating drivers
Credit strengths
Location advantages of the unit from proximity to the source of
raw material and fiscal incentives available: The project site is
located in Dhule, Dondaicha district of Maharashtra. The location
of the plant is adjacent to one of the largest starch
manufacturers of India, Universal Starch and Allied Chemicals
Limited (USACL), with whom the company has an agreement to use
the idle capacity for converting maize into slurry. In its
initial stages, the company is relying on USACL for many
transactions like conversion of slurry from maize, providing bio
gas for steam, bye products sale etc. The main raw material,
maize, would be crushed and processed a USACL for which
processing charges will be paid to USACL. The land measuring 1.2
hectares has been taken on lease for 29 years and lies in the D+
industrial subsidy zone of Maharashtra which entitles it to
fiscal benefits like interest subsidy, exemption from electricity
duty, waiver of stamp duty and power tariff subsidy.
Widespread applicability of the product portfolio in several
industries: The company has set up a 130 Tonnes per Day (TPD)
maize starch plant for manufacture of food and pharma grade
starch, maize germ, maize gluten and fiber/husk. The product and
its bye products have widespread applications in several
industries such as food, pharmaceuticals, textiles, paper etc.
which provides some comfort with respect to the demand in the
industry.
Credit weaknesses Lack track record of SFPPL's operations and
limited experience of promoters in the starch manufacturing
sector: The promoters of the company have varied business
experience like information technology, trading of grains and
medical transcriptions; however their experience in the
manufacture of starch is limited to only 3 years. However, the
company has appointed experienced and qualified consultants who
have longstanding experience in the industry which provides some
comfort.
Sizeable debt funding for the project likely to result in higher
gearing level in the near term: The total cost of the project
(including the margin money for working capital) is INR2.08 crore
which is funded by equity share capital of INR5.00 crore,
unsecured loans from promoters of INR5.08 crore and term loans of
INR10.00 crore. Given the sizeable debt funding, the capital
structure of the company is likely to remain leveraged in the
near term.
High market risk associated with the Greenfield venture; term
loan repayments to commence shortly: The commercial production
for SFPPL has commenced from October 2017. Although the company
has made arrangements with Universal Starch and Allied Chemicals
Limited (USACL) for sales in the initial stages of operations, it
is yet to establish and widen its customer base so as to assure
adequate offtake of products. ICRA notes that the repayment of
term-loans is scheduled to commence from January 2018. Thus,
lower than anticipated ramp up of operations and therefore cash
flows may lead to re-financing risks and affect SFPPL's debt
servicing ability.
High competitive pressure given the presence of large number of
small as well as large players in the starch manufacturing
industry: Extraction of starch and starch derivatives is a
fragmented industry with a large number of small players owing to
ample availability of raw material and low entry barriers due to
ease of procurement of the technology. Nevertheless, SFPPL plans
to have a one of its kind fully automated facility which will be
a differentiator for the company. This will be particularly
useful to cater to pharmaceutical companies in the regulated
market which have stringent regulations with respect to quality.
Vulnerability of operations to agro climatic risks- The main raw
material for the company is maize which is susceptible to price
fluctuations based on crop harvest, poor monsoons etc. which may
affect the revenues and profitability of the company.
SFPPL was incorporated in 2015 and has ventured into production
of food grade and pharma grade starch from maize. The location of
the plant is adjacent to one of the largest starch manufacturers
of India, Universal Starch and Allied Chemicals Limited (USACL),
at Dondiacha in Dhule, Maharashtra. As per the agreement with
USACL, their idle capacity will be used by SFPPL for converting
maize into slurry. USACL manufactures multiple starch grades by
crushing maize. The company has set up a 130 TPD maize starch
plant for manufacture of food and pharma grade starch, maize
germ, maize gluten and fibre. The commercial operations of the
plant have started from October 2017. Once fully operational, the
plant is expected be the only fully automated unit in India
manufacturing starch in a clean room environment.
SHRIRAM FOOD: ICRA Reaffirms B+ Rating on INR57cr Cash Loan
-----------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B+ to
the INR28.50 crore long-term loans and INR57.00 crore cash credit
facilities of Shriram Food Industry Private Limited. ICRA has
also reaffirmed the short-term rating of [ICRA]A4 to the INR60.50
crore sub-limits of SFIPL. The outlook for the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term, Term
Loans 28.50 [ICRA]B+(Stable); Reaffirmed
Long-term, Cash
credit facilities 57.00 [ICRA]B+(Stable); Reaffirmed
Short-term, Capital
Expenditure LC (5.00) [ICRA]A4; Reaffirmed
Short-term, PC/PCFC (29.00) [ICRA]A4; Reaffirmed
Short-term, FDBP/FUDBP (9.50) [ICRA]A4; Reaffirmed
Short-term, Import/
Inland LC (10.00) [ICRA]A4; Reaffirmed
Short-term, Bank
Guarantee (7.00) [ICRA]A4; Reaffirmed
Rationale
The rating reaffirmation takes into consideration the significant
growth in revenues during the last two years supported by the
ability of the Greta Group to garner additional customers thereby
reducing customer concentration and the stable operational track
record of the rice mill which was commissioned on April 2016.
Further, the rating continues to factor in the significant
experience of the promoters spanning nearly two decades in the
rice trading and other businesses; and SFIPL's established
relationships with customers and suppliers developed from its
trading operations.
The rating further continues to positively factor in the
proximity of the mill to major rice growing areas, which results
in easy availability of paddy. The rating is, however,
constrained by SFIPL's reduced financial flexibility on the back
of the large debt repayment and interest expense during the near
term. Further net losses in FY2017 and modest cash accruals amid
high debt levels has resulted in a weak financial profile as
reflected by high gearing and stressed debt-coverage indicators.
The ratings are further constrained by the high working capital
intensity driven by elevated receivables resulting in increased
utilization of working capital borrowings. The ratings also take
into consideration the highly fragmented and competitive nature
of the industry resulting in thin profit margins, and the agro-
climatic risks which can affect the availability of paddy in
adverse weather conditions.
Going forward, ICRA expects SFIPL to sustain its scale of
operations and improve its profitability in the near term. The
ability of the company to maintain a prudent capital structure
through consistent debt repayment and optimise the working
capital intensity will be the key rating sensitivities.
Outlook: Stable
ICRA believes Shriram Food Private Limited will continue to
benefit from the extensive experience of its promoters to
supports its scale of operations and register higher operating
margins as witnessed in 6MFY2018. The outlook may be revised to
'Positive' if considerable growth in revenue and profitability,
and better accruals, strengthens the financial risk profile. The
outlook may be revised to 'Negative' if decline in profitability
margins, or significant weakening in the capital structure caused
most likely by large, debt-funded capital expenditure or a
stretched working capital cycle weakening its liquidity.
Key rating drivers
Credit strengths
Experienced management with more than 20 years of experience in
the rice-milling industry: The company was incorporated in the
year 2014 and is engaged in the business of rice processing,
trading, rice milling and grinding. The promoters are involved in
the business of rice milling for more than a decade, which helps
the firm in managing the business risks effectively.
Presence of the company in a major paddy-growing area, results in
easy availability of the raw-material: The company's plant is
located in Nagpur, Maharashtra, which is surrounded by paddy-
cultivated areas, resulting in easy procurement of paddy with low
transportation cost. All the paddy requirements are met locally
through direct purchases from farmers and occasionally from
traders.
Healthy growth in sales during FY2017: The company had registered
INR79.9 crore sales during FY2016 primarily from trading of rice
with export constituting the major portion of sales (90% of total
sales).
During FY2017, after commercial operations of the rice mill
operations, sales increased significantly to INR220.6 crore with
considerable increase in contribution from domestic sales (44% of
total sales). The long presence of the promoters in the industry
coupled with established network of the Greta Group in the export
market has helped the company to garner additional customers and
establish strong relationship with its suppliers and customers.
Considerable reduction in client concentration risk: During
FY2016, nearly 92% of the sales were derived from the top 5
customers resulting in high customer concentration risks.
However, with increase in the customer base and expansion of the
domestic market to Kerala and Maharashtra, the client
concentration reduced considerably with the top five customers
contributing to 56% of the total sales during FY2017.
Credit weaknesses
Leveraged capital structure on the back of high debt levels: High
debt levels on the back of sizeable debt funded capital
expendiure during the last fiscal and increased working capital
borrowings has resulted in leveraged capital structure with an
increase in gearing to 4.1 times as on March 31, 2017 from 2.4
times as on March 31, 2016.
Weak debt protection metrics in FY2017 due to high interest
expense and thin operating margin: SFIPL registered net loses
during FY2017 mainly due to high interest cost on borrowed funds
amid thin operating margins resulting in weak debt protection
metrics. With large principal repayments scheduled for the next
few fiscals, KFIPL's liquidity position would remain stretched.
Nevertheless, as per trends witnessed in the 6MFY2018, SFIPL's is
expected to sustain its scale and register higher operating
margins which will support its repayment obligations going
forward.
Intense competition in the industry keeps margins under check:
Rice-milling industry is highly competitive with presence of a
large number of organised and unorganised players.
Intense competition coupled with limited value-additive nature of
the business limits the margins. Susceptibility to agro-climatic
risks: Rice being an agricultural commodity is exposed to the
vagaries of monsoon and other agricultural risks such as disease
outbreak, lower/higher-than-projected production levels (which
impact the supply and hence the price), poor storage capacities
and quality inconsistencies. The rice-milling industry is
susceptible to agro-climatic risks, which can affect the
availability of the paddy in adverse weather conditions.
Shriram Food Industry Private Limited part of Greta group of
companies, was incorporated in the year 2014 and is engaged in
the business of rice processing, trading, rice milling &
grinding. The company operates a rice mill and optical sorting
(sortex) unit at Nagpur, Maharashtra with an installed capacity
of 96,000 MTPA and 60,000 MTPA respectively to support its
operations. SFIPL's product portfolio includes Parboiled Rice,
Long Grain Parboiled Rice, White Rice, Steam Rice, 100 % Broken
Rice, HMT Rice, Kolam Rice, BPT Rice among others. The company is
promoted by Mr. Anup Ramavtar Goyal, Mr. Ramavtar Thanuram
Agrawal & Mr. Nitesh Chaudhari.
SHUNTY BUNTY: ICRA Moves B Rating to Rating to Not Cooperating
--------------------------------------------------------------
ICRA Ratings has moved the ratings for the INR20.00-crore bank
facilities of Shunty Bunty Automobiles Private Limited to the
'Issuer Not Cooperating' category. The rating is now denoted as
"[ICRA] B (Stable)/A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 14.75 [ICRA]B (Stable); ISSUER NOT
Facilities COOPERATING; Rating moved
to the 'Issuer not
Cooperating' category
Non-fund based 0.20 [ICRA]A4; ISSUER NOT
facilities COOPERATING; Rating moved
to the 'Issuer not
Cooperating' category
Unallocated limits 5.05 [ICRA]B (Stable)/A4; ISSUER
NOT COOPERATING; Rating moved
to the 'Issuer not
Cooperating' category
Rationale
The ratings are based on limited information on the entity's
performance since the time it was last rated in May 2016. The
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as it does
not adequately reflect the credit risk profile of the entity.
HCL's credit profile may have changed since the time it was last
reviewed by ICRA but in the absence of the requisite information,
ICRA was unable to take a definitive rating action.
As a part of its process and in accordance with its rating
agreement with SBAPL, ICRA has been seeking sufficient
information from the company so as to undertake a surveillance of
the ratings. Despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of the
requisite information, and in line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated Nov. 1, 2016, ICRA's Rating
Committee has taken a rating view based on the best available
information.
Key rating drivers
Key strengths
* Long-term relationship with key customers: The company has an
established customer base from whom it has been successful in
getting continuous orders.
Key weaknesses
* Moderate scale of operations; moderate profitability
indicators: The company has a moderate scale of operations and
has witnessed moderate profitability over the years.
Incorporated in 2004, S.B. Automobiles Private Limited (part of
the S.B. group) is an authorized dealer of medium and heavy
commercial vehicles of Tata Motors Limited in Kanpur. The company
is promoted by Oberoi family. The company owns a 3S (Showroom
Spares Services) showroom in Chakarpur, Kanpur (U.P.).
Additionally, the company is also opening two service centres in
the Kanpur district, land for which has been purchased, work is
in progress and the centres are expected to be operational in
FY2017.
SREE VENKATESHWARA: ICRA Moves B+ Rating to Not Cooperating
-----------------------------------------------------------
ICRA Ratings has moved the ratings for the Rs 11.00 crore bank
facilities of Sree Venkateshwara Motors (India) Private Limited
to the 'Issuer Not Cooperating' category. The rating is now
denoted as "[ICRA]B+(Stable)/[ICRA]A4 ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limits 2.90 [ICRA]B+(Stable) ISSUER NOT
COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Inventory Funding
Limits 5.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Unallocated Limits 3.10 [ICRA]B+(Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
Rating moved to the
'Issuer Not Cooperating'
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in May 2016. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action. As part of its process and in accordance with its rating
agreement with RESPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information, and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
Nov. 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Experienced Promoters: The management has more than three
decades of experience is in the vehicle dealership business.
* Established position: SVMPL has established position as the
sole dealer of TML passenger car vehicles in the Nizamabad and
Adilabad districts of Telangana
Credit weaknesses
* Moderate scale of operations: SVMPL has moderate scale of
operations in vehicle dealership business
* Thin margins and low bargaining power: The margins on vehicles,
spares, service and accessories are thin and mostly controlled by
TML.
* High competition: SVPL faces competition from auto dealerships
of other Original Equipment Manufacturers (OEMs).
Sree Venkateswara Motors (India) Pvt. Ltd. was incorporated in
April 2008 by Mr. N. Mahipal Reddy and Ms. N. Jayaprada Reddy.
SVMPL is the sole authorised dealer of Tata Motors Limited (TML)
in Nizambad and Adilabad region. The commercial operations of TML
dealership began in September 2008. The company currently
operates through a single Sales-Spares-Service (3S) facility with
three sale points in Nizamabad and Adilabad districts.
SUSEE PREMIUM: CARE Assigns B Rating to INR14.48cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Susee
Premium Automobiles Private Limited (SPAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.48 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SPAPL is primarily
tempered by small scale of operations along with declining total
operating income, thin PAT margin and cash accruals, leveraged
capital structure and weak debt coverage indicators, working
capital intensive nature of operations, performance of SPAPL
linked to the fortunes of Ford India Private Limited and volume
driven business with intense competition in the industry.
However, the rating derives comfort from vast experience of the
promoters in managing automobile dealership, growing demand for
automobiles in India and two operational showrooms. Going
forward, the company's ability to improve its scale of
operations, profitability, capital structure and debt coverage
indicators and efficiently utilize its working capital
requirements are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations along with declining total operating
income
The firm has small size of operations marked by a low net worth
base of INR7.32 crore as of March 31, 2017, with marginal
increase from INR7.15 crore as of March 31, 2016. The total
operating income of the company has been declining since FY14 and
stood at INR27.32 crore as of FY17 on the back of decline in the
number of units sold due to non-availability of funds. However,
total operating income has improved since April 2017, due to the
additional working capital borrowing availed from banks. SPAPL
reported sales and net profit of INR20.98 crore and INR0.39 crore
respectively during H1FY18.
The majority of SPAPL's revenue is generated from the sales of
automobiles which accounted for around 42.53% of its total income
in FY17 while the balance revenue was generated through sale of
spare parts, oils and workshop income.
Thin PAT margin despite increasing: PBILDT margin The PBILDT
margin improved and continued to remain moderate at 9.25% in FY17
as against 8.44% in FY16 on the back of reduced cost of sales
owing to decline in quantity traded. The PAT margin however
declined from 0.91% in FY16 and stood at 0.57% in FY17.
Leveraged capital structure and debt coverage indicators: The
capital structure of the firm marked by overall gearing stood
leveraged at 2.21x as on March 31, 2017, deteriorated from 2.15x
as on March 31, 2016 due to higher outstanding balance of working
capital borrowings as on account closing date. The total debt/GCA
also deteriorated and stood at 23.56x in FY17 compared to 17.99x
in FY16 due to increase in debt levels. The interest coverage
ratio stood weak during review period and declined from 1.51x in
FY14 to 1.37x in FY17 due to decline in profits associated with
limited execution of orders.
Working capital intensive nature of operations: The company
purchases vehicles and spares directly from the manufacturing
units of FIPL located in Gujarat and Chennai. The oils and other
lubricants are purchased locally from FIPL's recommended dealers.
The purchase of vehicles, spares and oils is made against advance
payment and hence the average creditor days stood low at 23 days.
While on sales, customers are generally given credit of 20-25
days for making the payment on sale of vehicles and servicing.
SPAPL places orders three months in advance and reconfirms on the
same before one month of actual delivery. The ordered vehicles
remain in the showroom until booked by customers, which depend on
the market trends. This resulted in elongated inventory period of
60 days in FY17. Due to elongated inventory period, the operating
cycle also stood elongated at 55 days during FY17. The current
ratio of SPAPL stood satisfactory at 1.11x as of March 31, 2017
due to comfortable receivables position along with decline in
inventory levels due to non-availability of funds to stock
vehicles. The working capital utilization levels stood at 75% for
the last 12 months ended October 31, 2017.
Performance of SPAPL linked to fortunes of Ford India Private
Limited: SPAPL is an authorised dealer of Ford India and the
business risk profile is directly linked to that Ford India in
terms of delivery of vehicles, new product launches and marketing
effort undertaken to promote the sale of its vehicles. The market
share of Ford India stood at 3% during FY17. Also, the
profitability margins are guided by Ford India as it fixes the
ex-showroom price as well the ex-factory price.
Volume driven business with intense competition in the industry:
The Indian automobile industry is highly competitive in nature as
there are large numbers of players operating in the market.
Furthermore, the entry of global players in the Indian market has
intensified the competition. Ford India offers various discount
schemes to attract customers. Due to very high competition in the
industry, dealers are also forced to pass on discounts and
exchange schemes to attract customers as this is a volume driven
business. The dealer's fate is also linked to the industry
scenario and performance of Ford India. The automobile industry
is highly cyclical and its performance is linked to the economic
scenario. High interest rates and fuel prices may lead to subdued
demand of auto products in the medium term.
Key Rating Strengths
Vast experience of the promoters in automobile dealership line of
business: Mr. S. Jeyabalan and Mr. J. Rajiv Subramanian are the
directors of SPAPL. Prior to establishing SPAPL, the directors
were engaged in two wheeler dealership of Bajaj Auto through
their association with Susee Motor Cycles Private Limited (SMCPL)
since 1998. Later in year 1998, SMCPL was shut down and SPAPL was
incorporated for dealing with FIPL's cars, spares and services.
The associate concerns of Susee Group include SPAPL, Susee
Finance and Leasing Private Limited and Susee Auto Spares Private
limited. The long experience of the directors in the automobile
dealership segment is to benefit SPAPL at large.
Two operational showrooms: SPAPL has two showrooms operating in
the name, Rockcity Ford in Trichy and Salem, Tamil Nadu. The
models sold include Figo, Aspire, Ecosport, Endeavour and
Mustang. In the year FY17, 141 cars were sold, and sale of
Ecosport model was the highest. The showrooms have a storage
capacity of 35 cars. The showrooms have installed facilities like
lifts, wheel alignment machines and paint booths for servicing
the cars. SPAPL is the sole dealer of Ford India in Trichy and
Salem.
Growing demand for automobiles in India: The Indian automotive
aftermarket is estimated to grow at around 10-15 per cent to
reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016.
It has the potential to generate up to US$ 300 billion in annual
revenue by 2026, create 65 million additional jobs and contribute
over 12 per cent to India's Gross Domestic Product.
Susee Premium Automobiles Private Limited (SPAPL) was
incorporated in the year 2008 by Mr. S. Jeyabalan, Mr. J. Rajiv
Subramanian and Ms. J. Nirmala. SPAPL is the authorised dealer of
Ford India Private Limited (FIPL rated IND AAA; stable/IND A1+)
for vehicles and spare parts. It has two operating showrooms
named Rockcity Ford in Trichy and Salem, Tamil Nadu. The company
procures the vehicles and spare parts directly from FIPL's
manufacturing units in Gujarat and Chennai. The registered office
is located in Madurai, Tamil Nadu.
VAIDYA INDUSTRIES: CARE Revises Rating on INR13.88cr LT Loan to B
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Vaidya Industries (VI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 13.88 CARE B; Issuer Not
Facilities Cooperating; Revised
from CARE B+
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from VI to monitor the rating
vide e-mail communications/letters dated July 10, 2017,
August 16, 2017 and August 24, 2017 and numerous phone calls.
However, despite our repeated requests, the firm has not provided
the requisite information for monitoring the rating. In the
absence of minimum required for the purpose of rating, CARE is
unable to express an opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on VI's bank facilities will
now be denoted as CARE B;ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating has been revised by taking into account non-
availability of information and no due-diligence conducted.
Detailed description of the key rating drivers
At the time of last rating on August 24, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Moderate scale of operations: The scale of operations of VI has
remained moderate showing y-o-y decline with total operating
income of Rs 41.07 crore in FY16 (Prov.) as against INR43.54
crore in FY15 and a net worth base of INR6.53 crore as on
March 31, 2016 (Prov). The moderate size restricts financial
flexibility and deprives the entity of benefits of economies of
scale. Furthermore, the operating income has been fluctuating
during last 3 years due to fluctuation in orders received and
executed.
Leveraged capital structure and moderate debt coverage
indicators: The capital structure remained leveraged with overall
gearing ratio of 2.46x as on March 31, 2016 (Prov) led by
moderately high dependence on external borrowings. Moreover, with
moderate profitability and leveraged capital structure, the debt
coverage indicators of the entity remained weak at above 7x at
the end of FY16 (Prov.).
Working capital intensive nature of operations: The nature of
operations of VI can be classified as working capital intensive
with funds being blocked in debtors and inventory. The customers
of the firm are Government departments and being a small player
in the industry the firm has to provide credit period of around
3-4 months. Furthermore, the inventory is the work-in-progress
under real estate activity resulting in higher inventory days.
Moreover, due to long collection period the firm delays in making
payment to its creditors resulting in higher creditor period.
Moreover, Gross Current Asset days remained high at 197 days in
FY17 (Prov.).
Presence in highly fragmented furniture industry with intense
competition: VI operates in furniture industry which is highly
fragmented in nature with presence of large number of organized
and unorganized players. As a result, the competitive pressures
in the industry are high which adversely impacts the bargaining
power and profitability of all the players in the industry.
Proprietorship nature of constitution: Being proprietorship
nature of constitution, the firm is exposed to the risk of
withdrawal of capital by proprietor due to personal exigencies,
dissolution of firm due to retirement or death of any proprietor
and restricted financial flexibility due to inability to explore
cheaper sources of finance leading to limited growth potential.
Key Rating Strengths
Long track record of entity with experienced proprietor:VI was
established by Mr. VivekVaidya in the year 1995. Mr. Vaidya has
done his B.Tech (Mechanical) and has been in the business of
trading and manufacturing of furniture since last two decades. He
is engaged in the day to day operations of the firm. Being in the
industry for so long has helped the proprietor in gaining
adequate acumen about the industry and establishing relationships
with customers and suppliers.
Established client base: The major customers of the firm are
Government department contributing more than 90% to the total
operating income of the firm. The firm is dealing with its
existing customers since last one decade and is able to get
continuous order from them thereby providing revenue visibility
for the firm for medium term.
Moderate profitability: The PBILDT margin of VI improved by 268
bps in FY16 (prov.) on account of higher decline in operating
expenses vis-a-vis operating income. PAT margin declined and
stood at 4.80% during the aforesaid period owing to higher
increase in capital charges. The PBILDT margin has been
fluctuating and was in the range of 7.06% to 11.22% in the years
from FY14 to FY16 (Prov). Similarly, the APAT margin has been
fluctuating and was in the range of 3.84% to 4.80% in the years
from FY12 to FY16 (Prov).
Established in the year 1995, Vaidya Industries (VIS) is engaged
in manufacturing and trading of wooden and steel furniture. The
manufacturing facility of the entity is located at Nagpur
(Maharashtra). The entity procures raw material from local
suppliers and sell its products to Government agencies in
Maharashtra. The major customers of the entity include Government
agencies viz. Education office, Gadchizali, The Commissioner of
Travel Development, Nashik, The Committee of Social Welfare, Pune
and DTE Primary, Pune. The entity is also engaged in trading
activity in order to meet the urgent requirements of govt.
agencies. VIS purchases the traded goods from its group concern
i.e. Vaidya V & I Infrastructure Pvt. Ltd. (VVIPL) and sells it
to the govt. agencies.The entity has a group company namely
Vaidya V & I Infrastructure Private Limited (VVIPL). VVIPL
incorporated in the year 2006 and is engaged in manufacturing and
trading of modular table, desk, bench and modular storage.
VAIDYA V & I: CARE Lowers Rating on INR4.10cr LT Loan to B+
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Vaidya V & I Infrastructure Private Limited (VVII), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 4.10 CARE B+; Issuer Not
Cooperating; Revised
from CARE BB-
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from VVII to monitor the rating
vide e-mail communications/letters dated July 10, 2017, August
16, 2017 and August 24, 2017 and numerous phone calls. However,
despite our repeated requests, the firm has not provided the
requisite information for monitoring the rating. In line with the
extant SEBI guidelines, CARE's rating on VVII's bank facilities
will now be denoted as CARE B+; ISSUER NOT COOPERATING*
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating has been revised by taking into account non-
availability of information and no due-diligence conducted.
Detailed description of the key rating drivers
At the time of last rating on August 24, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Small scale of operations with fluctuating operating income: The
scale of operations of VVII has remained small showing y-o-y
decline with total operating income of Rs 13.26 in FY16 (Prov.)
as against INR18.08 in FY15 and a net worth base of INR5.41 crore
as on March 31, 2016 (Prov). The small size restricts financial
flexibility and deprives the entity of benefits of economies of
scale. Furthermore, the operating income has been fluctuating
during last 3 years due to fluctuation in orders received and
executed.
Fluctuating profitability: The PBILDT margin of VVII improved by
505bps in FY16 (prov.) on account of higher decline in operating
expenses vis-a-vis operating income. PAT margin declined and
stood at 2.74% during the aforesaid period owing to higher
increase in capital charges. The PBILDT margin has been
fluctuating and was in the range of 2.76% to 13.12% in the years
from FY12 to FY16 (Prov). Similarly, the APAT margin has been
fluctuating and was in the range of 2.74% to 6.46% in the years
from FY12 to FY16 (Prov).
Project execution risk: The company is undertaking a new project
of manufacturing of personal hygiene product i.e. sanitary
napkins. The commercial production of the project is expected to
start from December, 2016. Though the financial closure of the
project has been achieved, the ability of the company to complete
the project without any cost or time over run will remain
critical from credit risk perspective.
Presence in highly fragmented furniture industry with intense
competition: The company is engaged in manufacturing of furniture
which involves very limited value addition and hence results in
thin profitability. There is high competition from local players
in the market who are engaged in the similar business due to high
fragmentation and low entry barriers which further restricts the
profitability.
Key Rating Strengths
Long track record of entity with experienced proprietor:VIPL is
promoted by Mrs. Indira Prashant Tekade (Managing Director). She
is a qualified graduate having about 20 years of experience in
furniture industry. She looks after the overall operations of the
company. The other promoters of the company include Mrs.
VandanaVivekVaidya (MBA) who looks after financing activities,
Mrs. Mayadevi (M.Sc) and Mr. Prashant Tekadeare other promoter
directors who look after production activities.
Comfortable solvency position: The capital structure remained
comfortable with below unity Debt Equity Ratio and overall
gearing ratio led by low dependence on external borrowings.
Moreover, with comfortable profitability and moderate debt
profile, the debt coverage indicators of the entity remained
healthy at below 2x at the end of FY16 (Prov.).
Vaidya V&I Infrastructure Private Limited (VIPL) was established
in the year 2006 by Mrs. Indira Takade, Mr. Prashant Takade, Mrs.
MayadeviVaidya and Mrs. VandanaVaidya in Nagpur. However, the
company started commercial operations from January 2013and was
engaged in installation of grill and gate. Later on, the company
changed the line of business and started manufacturing of Modular
Table, Desk, Bench and Modular Storage from April 2014 onwards.
The manufacturing facility of the company is located at Nagpur
with an installed capacity of 42000(no's) per annum for modular
storage. The company procures raw materials like plywood, fevicol
and other hardware material from domestic market. The company
majorly (about 95%) gets work orders from Government parties and
caters to the requirements of customers located all over India.
VIPL manufactures the product based upon customer specification
as well as general sizes of products.
VINAYAK INTERNATIONAL: CARE Reaffirms B+ Rating on INR1.5cr Loan
----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Vinayak International Housewares Private Limited (VIH), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 1.50 CARE B+; Stable Reaffirmed
Short term bank
Facilities 17.00 CARE A4 Reaffirmed
Detailed Rationale& Key Rating Drivers
The ratings assigned to the bank facilities of VIH continue to
remain constrained by small scale of operations with low net
worth base, low profitability margins, leveraged capital
structure and weak coverage indicators. The ratings are further
constrained by working capital intensive nature of operations and
intense competition in the industry due to low entry barriers.
The ratings, however, continues to draws comfort from the
experienced promoters and growing scale of operations.
Going forward, the ability of the company to manage its working
capital requirement to support its scale of operations while
improving its profitability margins and capital structure, shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low net worth base: The scale of
operations has remained small marked by a total operating income
and gross cash accruals of INR69.58 crore and INR0.73 crore
respectively during FY17 (FY refers to the period April 1 to
March 31). Further, the company's networth base was relatively
small at INR4.61 crore as on March 31, 2017. The small scale
limits the company's financial flexibility in times of stress and
deprives it from scale benefits.
Low profitability margins, leveraged capital structure and weak
coverage indicators: Despite growth registered in scale of
operations, PBILDT margins declined to 4.76% in FY17 over
previous financial year due to increase in operational expenses.
Further, PAT margins continued to remain below low owing to high
finance cost. The capital structure of the company stood
leveraged marked by debt equity and overall gearing on the past
three balance sheet dates due to capex undertaken in past coupled
with high dependence on external borrowings to meet the working
capital requirements. Debt equity and overall gearing (including
creditors on LC) stood at 1.70x and 4.77x respectively as on
March 31, 2017 Furthermore, owing to high financial expenses due
to high debt levels, the debt service coverage indicators
remained weak marked by interest coverage and total debt to GCA
of 1.40x and above 30x for FY17.
Working capital intensive nature of operations: The operations of
VIH continue to remain working capital intensive in nature marked
by operating cycle of 99 days in FY17. The company maintains
sufficient inventory of raw material for the smooth production
process. Also, the company maintains inventory in form of
finished/traded goods to meet the immediate requirements of the
customers. The same resulted into average inventory period of 62
days for FY17. The company extends credit period of around three
months to its customers due to high competition and receives
payable period of around 1-2 from its suppliers due to
established relationship. The average utilization of working
capital limits remained almost fully utilized for past 12 months
period ended September, 2017.
Intense competition in the industry due to low entry barriers:
VIHL operates in a highly fragmented industry marked by the
presence of a large number of players in the unorganized sector.
The industry is characterized by low entry barriers due to low
technological inputs and easy availability of standardized
machinery for the production. This further leads to high
competition among the various players and low bargaining power
with suppliers.
Key Rating Strengths
Experienced Promoters: Mr. Rajindra Prasad Gupta holds over three
decades of experience in the manufacturing and trading of
stainless steel utensils through his association with VIH. Mr
Deepak Kumar Gupta; son of Mr. Rajindra Prasad Gupta, holds
around two decades of experience in the manufacturing and trading
of stainless steel utensils through his association with VIH and
other associate concern i.e. Vinayak Internationals.
Growing scale of operations: For the period FY15-FY17, VIH's
total operating income grew from INR53 crore in FY15 to INR69.58
crore in FY17 reflecting a compounded annual growth rate (CAGR)
of around 14.50%. The growth in TOI was due to higher quantity
sold to existing customers and addition of new customers into the
business. Further, the company has achieved TOI of INR28.82 crore
till October 31, 2017 (based on provisional results).
Vinayak International Housewares Private Limited (VIH) was
incorporated in March 2012 and was promoted by Mr. Rajindra
Prasad Gupta. The company took over the business of
proprietorship concern "Vinayak International" (established in
1996 by Mr. Rajindra Prasad Gupta). It is engaged in
manufacturing and trading of stainless steel utensils. The main
raw material for the company is stainless steel sheets which the
company procures domestically and also, imports the same mainly
from China (around 40% of the total raw material cost). The
company has manufacturing facility located in Wazirpur industrial
area, Delhi. As on Sep 30, 2017, the installed capacity of the
company is 5 lakhs pieces per month.
====================
N E W Z E A L A N D
====================
CRICHQ LIMITED: Receivers Sell Software Developer to NZ Investors
-----------------------------------------------------------------
Chloe Winter at Stuff.co.nz reports that troubled cricket scoring
company CricHQ has been sold to a group of New Zealand investors.
Receivers Neale Jackson and Brendon Gibson, of KordaMentha,
confirmed the sale of the company's business and assets on
Dec. 13, Stuff relates. They would not say how much the investors
paid for it, or who the investors were.
Stuff notes that the Wellington-based firm, which claimed to
record one in every 10 balls bowled internationally, appeared to
be taking the cricketing world by storm before its collapse
earlier this year.
According to the report, Mr. Jackson said the sale of the
business would "provide certainty for CricHQ's customers around
the world".
"It is pleasing to secure a sale in a short time, minimising any
risk of disruption for users during the Southern Hemisphere
cricket season," he said, notes Stuff.
The sale is due to settle in January, and includes the CricHQ
platform as well as its global partner services, My Action Replay
and Total Cricket Scorer, Stuff discloses.
Stuff says the company developed a cloud software platform in
2010 that automates scoring, but the loss-making firm was put
into receivership in October after it failed to raise cash.
CricHQ had been seeking to raise money for more than a year,
targeting investment funds and wealthy individuals, Stuff
relates. The company counts some of international crickets
biggest names, including Former Black Cap captain Stephen
Fleming, as shareholders.
Receivers Brendan Gibson and Neale Jackson from Korda Mentha were
appointed to CricHQ on Oct. 17.
=================
S I N G A P O R E
=================
MAC GOLIATH: Defaults on Shipbuilding Contract Price Installment
----------------------------------------------------------------
Nautilus Minerals Inc. said that Fujian Mawei Shipbuilding Ltd,
the owner of the shipyard where Nautilus' Production Support
Vessel is being built, has notified the Company that MAC Goliath
Pte Ltd ("MAC"), the buyer of the PSV, has failed to pay the
third installment of the contract price (US$18M + interest).
Under the shipbuilding contract between the Shipyard and MAC, MAC
is required to rectify the default immediately, and perform
corresponding obligations under the contract.
If MAC fails to remedy the default within 21 days of the receipt
of a notice to MAC from the Shipyard, then the Shipyard may
rescind the contract. In the event that the contract is
rescinded, the Shipyard has the right to either complete or not
complete the PSV and to sell the PSV by private sale either in a
complete or incomplete state.
In accordance with the terms of the contract, Nautilus Minerals
Singapore Pte Ltd has the option to either remedy the default on
behalf of MAC and/or replace MAC as a party to the contract by
way of a novation or assignment within fourteen days of receipt
of the notice to the Company from the Shipyard.
Nautilus notes that the current build of the PSV is progressing
well, with construction over 70% complete. The derrick
substructure was recently delivered to the Shipyard for
installation on the PSV. Foundations for two of the three Launch
and Recovery Systems (LARS) are being installed, the Bulk Cutter
winch has been installed, work on the cargo handling system is
progressing, and both the 100T and 200T cranes have now also been
installed.
Nautilus is in discussions with the Shipyard, MAC and third
parties with respect to the default and potential remedies, and
will issue further updates as matters develop.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***