/raid1/www/Hosts/bankrupt/TCRAP_Public/180214.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
Wednesday, February 14, 2018, Vol. 21, No. 032
Headlines
A U S T R A L I A
AVIATION ENGINEERS: Second Creditors' Meeting Set for Feb. 20
BOB'S SOUND: First Creditors' Meeting Set for Feb. 20
GAMEDAY ENTERPRISES: First Creditors' Meeting Set for Feb. 21
MANOR HOLDINGS: First Creditors' Meeting Set for Feb. 20
MESOBLAST LTD: Ends Dec. 31 Quarter With $47.4 Million in Cash
C H I N A
HNA GROUP: Seeking to Sell More Than $6BB in Properties Worldwide
MIE HOLDINGS: S&P Affirms 'CCC-' CCR, Outlook Negative
RONSHINE CHINA: Tap Issuance No Impact on Fitch B+ Bond Rating
XINYUAN REAL ESTATE: S&P Affirms 'B' CCR, Outlook Stable
H O N G K O N G
ASIA TELEVISION: Proof of Claims Deadline Set for March 19
I N D I A
A.G. HOSPITALITIES: CARE Reaffirms B+ Rating on INR31cr Loan
AASRA FOUNDATIONS: ICRA Reaffirms D Rating on INR112.30cr Loan
ADINATH COLD: CARE Assigns B Rating to INR8.50cr LT Loan
AGRI VENTURE: CARE Cuts Rating on INR5.95cr Loan to D
ANAND MINE: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
ANONDITA HEALTHCARE: ICRA Keeps B Rating in Not Cooperating Cat.
ARJAY APPAREL: ICRA Assigns B Rating to INR3cr Fund Based Loan
ARROW CONSTRUCTION: Ind-Ra Migrates BB Rating to Non-Cooperating
BRIJ ENGINEERING: ICRA Keeps B+ Rating in Not Cooperating Cat.
CENTRAL BANK: Moody's Affirms Ba3 LT Deposit Rating, Outlook Pos.
CHIMUR COTTON: CARE Reaffirms B+ Rating on INR5.60cr LT Loan
RK DAS: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
ELEMENT CHEMILINK: Ind-Ra Affirms BB+ LT Issuer Rating
ERA HOUSING: NCLT Initiates Insolvency Proceedings
ESSAR STEEL: Two Bidders Submit Resolution Plans
JAYA POULTRY: Ind-Ra Assigns 'B' Issuer Rating, Outlook Stable
KAMAKHYA TRADERS: ICRA Keeps B Rating in Not Cooperating Category
LAXMI SAI: ICRA Reaffirms B Rating on INR2.17cr Term Loan
M P ENTERTAINMENT: Ind-Ra Migrates BB Rating to Non-Cooperating
MISHRILAL ASSOCIATES: CARE Cuts Rating on INR2cr Loan to B
NANDI VARDHANA: CARE Cuts Rating on INR24.56cr Loan to D
NAVNITLAL PRIVATE: Ind-Ra Withdraws 'B' Long Term Issuer Rating
PINAKIN PLASTOFORMING: CARE Cuts Rating on INR8cr LT Loan to D
PRATEEK ALLOYS: Ind-Ra Puts B+ Issuer Rating to Non-Cooperating
PRAVEEN ELECTRICAL: ICRA Keeps B+ Rating in Not Cooperating Cat.
RAJAT STEEL: CARE Assigns B+ Rating to INR11cr Long Term Loan
RAYBAN FOODS: ICRA Keeps B Rating in Not Cooperating Category
RD T.M.T: ICRA Moves B+ Rating to Not Cooperating Category
RK VISION: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
RSV RICE: ICRA Raises Rating on INR15cr Term Loan to B+
SANEE INFRASTRUCTURE: CARE Assigns B- Rating to INR2.90cr Loan
SARATHA ELECTRO: ICRA Keeps B Rating in Not Cooperating Category
SARDAR COTTON: CARE Lowers Rating on INR10.87cr Loan to D
SHYAMSUNDER GRAIN: CARE Assigns B+ Rating to INR15cr LT Loan
SITAPURAM POWER: CARE Lowers Rating on INR78.02cr Loan to D
SOUTHERN POWER: ICRA Keeps B- Rating in Not Cooperating Category
SREE VARASIDHI: CARE Assigns B+ Rating to INR5.40cr LT Loan
STEEL IMPEX: Ind-Ra Lowers INR230MM Loan Rating to D
SVM CERA: CARE Moves D Rating to Not Cooperating Category
SYNDICATE IMPEX: CARE Moves B+ Rating to Not Cooperating Category
THAKAR DASS: ICRA Reaffirms B+ Rating on INR5cr Overdraft
TOP IN: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
VADERA TRADELINK: ICRA Keeps B+ Rating in Not Cooperating Cat.
J A P A N
TAKATA CORP: Tort Claimant Committee Objects to Plan Disclosures
S I N G A P O R E
GLOBAL A&T: Fitch Raises Long-Term IDR to B-; Outlook Stable
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A U S T R A L I A
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AVIATION ENGINEERS: Second Creditors' Meeting Set for Feb. 20
-------------------------------------------------------------
A second meeting of creditors in the proceedings of Aviation
Engineers Pty Ltd has been set for Feb. 20, 2018, at 11:00 a.m.
at Border Room, located at Twin Towns Level 3, 2 Wharf Street, in
Tweed Heads, 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 Feb. 19, 2018, at 4:00 p.m.
Jason Tang and Andre Lakomy of Cor Cordis were appointed as
administrators of Aviation Engineers on Jan. 15, 2018.
BOB'S SOUND: First Creditors' Meeting Set for Feb. 20
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Bob's
Sound Systems Pty Ltd, trading as BSS Light Audio Visual, will be
held at the offices of Hrvatin Koch, Unit 2, 23-25 Beulah Road,
in Norwood, South Australia, on Feb. 20, 2018, at 11:00 a.m.
Tarquin Koch of Hrvatin Koch was appointed as administrator of
Bob's Sound Systems on Feb. 8, 2018.
GAMEDAY ENTERPRISES: First Creditors' Meeting Set for Feb. 21
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Gameday
Enterprises Pty Ltd will be held at 75A Brewer Street, in Perth,
WA, on Feb. 21, 2018, at 11:00 a.m.
George Aubrey Lopez and Malcolm Field of Melsom Robson were
appointed as administrators of Gameday Enterprises on Feb. 11,
2018.
MANOR HOLDINGS: First Creditors' Meeting Set for Feb. 20
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Manor
Holdings (NSW) Pty Ltd, trading as 'Ballina Manor Boutique Hotel'
& 'BMR On Norton' will be held at Ramada Hotel and Suites
Ballina, 2 Martin Street, in Ballina, NSW, on Feb. 20, 2018, at
12:00 p.m.
Alan Walker and Jason Tang of Cor Cordis were appointed as
administrators of Manor Holdings on Feb. 9, 2018.
MESOBLAST LTD: Ends Dec. 31 Quarter With $47.4 Million in Cash
--------------------------------------------------------------
Mesoblast Limited filed with the U.S. Securities and Exchange
Commission its quarterly report (for entities subject to Listing
Rule 4.7B) for the quarter ended Dec. 31, 2017.
At the beginning of the quarter, Mesoblast had cash and cash
equivalents of US$62.94 million. Net cash used in operating
activities was US$14.86 million. Net cash used in investing
activities was US$54,000. Net cash used in financing activities
was US$519,000. As a result, the Company had cash and cash
equivalents of US$47.38 million at the end of the quarter.
Mesoblast's cash and cash equivalents will be augmented by its
royalty and milestone income earned on sales of TEMCELL HS Inj.
in Japan; as well as interest income receipts.
Mesoblast is in advanced negotiations with selected
pharmaceutical companies with respect to potential partnering of
certain Tier 1 product candidates. If Mesoblast enters into a
binding transaction in the next quarter, Mesoblast expects that
one effect of the transaction is that its cash reserves are
likely to increase. Mesoblast does not make any representation
or give any assurance that such a binding transaction will be
concluded.
Mesoblast has established an equity facility with Kentgrove
Capital for up to A$120 million/US$90 million to be used at its
discretion to provide additional funds as required. In
accordance with contractual obligations to maintain this facility
for the next 18 months, 2 million reserve shares (which can only
be sold at the Company's direction) and 1.5 million incentive
rights were recently issued to Kentgrove.
A full-text copy of the Quarterly Report is available for free
at:
https://is.gd/LadXI3
About Mesoblast
Australia-based Mesoblast Limited (ASX:MSB; Nasdaq:MESO) is a
global developer of innovative cell-based medicines. The Company
has leveraged its proprietary technology platform, which is based
on specialized cells known as mesenchymal lineage adult stem
cells, to establish a broad portfolio of late-stage product
candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular conditions, orthopedic disorders,
immunologic and inflammatory disorders and oncologic/hematologic
conditions.
Mesoblast Limited reported a net loss before income tax of
US$90.21 million for the year ended June 30, 2017, a net loss
before income tax of US$90.82 million for the year ended June 30,
2016, and a net loss before income tax of US$96.24 million for
the year ended June 30, 2015. As of Sept. 30, 2017, Mesoblast
had US$671.9 million in total assets, US$112.30 million in total
liabilities and US$559.6 million in total equity.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" opinion in its report on the consolidated financial
statements for the year ended June 30, 2017, noting that Company
has suffered recurring losses from operations that raise
substantial doubt about its ability to continue as a going
concern.
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C H I N A
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HNA GROUP: Seeking to Sell More Than $6BB in Properties Worldwide
-----------------------------------------------------------------
Bloomberg News reports that HNA Group Co., the once-voracious
hunter of global trophy assets, is seeking to sell more than
$6 billion in properties worldwide as pressure intensifies for
the Chinese conglomerate to speed up disposals so it can repay
its debts.
Bloomberg relates that the group on Feb. 13 said it agreed to
sell two plots of land in Hong Kong it bought less than a year
ago for HK$16 billion ($2 billion) to the city's second-richest
man. HNA is also said to have been in talks to sell a pair of
office buildings in London's Canary Wharf district it bought for
more than $500 million and offering a raft of properties in the
U.S. valued at about $4 billion.
After spending tens of billions of dollars investing in big
stakes in Deutsche Bank AG to skyscrapers in New York, the
conglomerate that once symbolized China's insatiable appetite for
global assets is reversing course after the government soured on
overseas acquisitions and debts piled up beyond the company's
means, according to Bloomberg. The report says the group is said
to have told creditors it could have a liquidity shortfall of at
least CNY15 billion ($2.4 billion) this quarter and that it's
targeting about CNY100 billion in asset sales during the first
half.
In Hong Kong, HNA plans to sell the properties to billionaire Lee
Shau Kee's Henderson Land Development Co. by Feb. 14 for about 12
percent more than what local land registry records show HNA had
spent, Bloomberg discloses. HNA bought those plots, along with
two others, at the former Kai Tak airport area for a total
HK$27.2 billion between November 2016 and March last year,
outbidding local developers for sites that were among the most
hotly contested during that period.
"Without a doubt, HNA is making a strategy U-turn," Bloomberg
quotes Warut Promboon, managing partner at credit research firm
Bondcritic Ltd, as saying. "Developers do not buy land to only
make 12 percent gross profit, in our view. The fact that HNA
simply could not develop the land into residential properties
indicates rising execution risk within the group."
Separately, HNA has held preliminary talks with investors about
selling a pair of Canary Wharf properties at 30 South Colonnade
and 17 Columbus Courtyard, people with knowledge of the matter
have told Bloomberg. Firms including Brookfield Asset Management
Inc. are considering making bids but HNA is unlikely to recoup
the GBP366 million ($507 million) it paid for the two buildings
because the tenants of both properties intend to leave and prices
have fallen in the district since the Brexit vote, the people
said. HNA is engaged in piecemeal discussions with bidders
interested in multiple buildings around the world, they said,
Bloomberg relays.
Elsewhere, Bloomberg says the Chinese conglomerate is selling
properties valued at about $4 billion -- including the 245 Park
Ave. skyscraper it bought less than a year ago for one of the
highest prices ever paid for a building in New York -- according
to a marketing document seen by Bloomberg. The company is also
looking to sell commercial properties in Chicago, San Francisco
and Minneapolis.
In late January, HNA agreed to sell a Sydney office building to
Blackstone Group LP for AUD205 million ($161 million), Bloomberg
adds.
About HNA
China-based HNA Group Co. Ltd. offers airlines services. The
Company provides domestic and international aviation
transportation, air travel, aviation maintenance, and aviation
logistics services. HNA Group also operates holding, capital,
tourism, logistics, and other business.
Bloomberg News said HNA has been facing increasing pressure --
some banks are said to have frozen some unused credit lines to
HNA units after they missed payments -- after a debt-fueled
acquisition spree that left it with global assets ranging from
hotels and refrigerated trucks to aviation and car rentals.
MIE HOLDINGS: S&P Affirms 'CCC-' CCR, Outlook Negative
------------------------------------------------------
S&P Global Ratings affirmed its 'CCC-' long-term corporate credit
rating on China-based oil and gas producer, MIE Holdings Corp.
(MIE). The outlook is negative. At the same time, S&P lowered its
long-term issue rating on the company's senior unsecured notes
due 2019 to 'CC' from 'CCC-'.
S&P said, "We affirmed the rating on MIE to reflect our view of
the company's high non-repayment risk in the next six to 12
months. MIE's liquidity is weak and we believe the company is
highly dependent on favorable business and financial conditions
to meet its principal and interest obligations.
"We believe MIE's capital structure remains unsustainable despite
the company's repayment of its US$181 million notes due in
February 2018. MIE's ability to service interest payments in the
next six to 12 months is highly vulnerable owing to volatility in
oil prices, in our opinion. We believe the company's average
borrowing cost has materially increased after its debt-financed
acquisition of CQ Energy Canada Partnership in the fourth quarter
of 2017 and the repayment of the 2018 notes.
"We expect MIE to continue to face a material liquidity deficit
over the next six to 12 months. The company's ability to generate
operating cash flow has improved following the CQ Energy
acquisition. However, we expect its free cash on hand and free
cash flows from its two key assets--Daan oilfield and CQ Energy--
to be insufficient to cover interest and principal payments due
in the period.
"We lowered the issue rating because we see an increased
subordination risk after MIE used a substantial amount of secured
debt to fund the CQ Energy acquisition and repay the 2018 notes.
Under the current capital structure, we estimate that more than
50% of the company's debt is either secured or issued at the
subsidiary level. We view such debt as having priority over the
senior unsecured notes issued at the parent level.
"In our view, MIE will need to restructure its debt profile for
its capital structure to be sustainable. However, the company has
limited flexibility to raise new funds for refinancing because
the majority of its assets are already pledged.
"The negative outlook on MIE reflects our view that the company's
non-repayment risk remains high over the next six to 12 months in
the absence of any unanticipated significantly favorable changes
in the company's circumstances. We believe MIE's debt leverage is
unsustainable and liquidity pressure is high despite the
repayment of the 2018 notes.
"We could lower our rating on MIE if: (1) we believe the company
is almost certain to default on the principal or interest payment
of its debt; or (2) the company announces a debt restructuring
plan that we view as a distressed exchange.
"We could upgrade MIE if the company's liquidity improves such
that we do not see any non-repayment risk over the next six to 12
months."
RONSHINE CHINA: Tap Issuance No Impact on Fitch B+ Bond Rating
--------------------------------------------------------------
Fitch Ratings says Ronshine China Holdings Limited's (B+/Stable)
proposed issuance of an additional USD225 million of its USD325
million 8.25% senior notes due 2021 will not affect the 'B+'
rating on the bond and its Recovery Rating of 'RR4'.
The proposed tap issuance will carry the same terms and
conditions as the existing notes, and they are rated at the same
level as Ronshine's senior unsecured rating because they are
unconditionally and irrevocably guaranteed by the company.
Ronshine's ratings are supported by a geographically diversified
land bank, following expansion into new cities in 2017, and
strong contracted sales growth. However, the rating is
constrained by Ronshine's sustained high leverage from its
aggressive land acquisition strategy and uncertain government
policy, which Fitch believes may significantly affect the
profitability of projects built on the more expensive land bought
in 2016.
XINYUAN REAL ESTATE: S&P Affirms 'B' CCR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on China-based Xinyuan Real Estate Co. Ltd. The outlook is
stable. S&p also affirmed the 'B-' long-term issue rating on the
company's senior unsecured notes.
S&P revised its assessment of Xinyuan's liquidity to less than
adequate from adequate due to the company's recent large land
acquisitions and elevated short-term debt.
Owing to its depleting land resources, Xinyuan stepped up its
land acquisitions in 2017 to secure resources for future growth.
Based on its fourth-quarter results, the company's debt grew
significantly to US$3.3 billion in 2017, from US$2.1 billion in
2016, with 57% of the debt classified as short-term debt. S&P
believes the company faces stronger liquidity pressure, even
though its cash and cash equivalents has risen by US$541 million
for the same period.
S&P said, "In addition, we believe the payments for land
acquisitions in 2017 have not been fully reflected in the
company's books. This is because Xinyuan purchased most of its
land in the second half of the year, with some consideration to
be paid in 2018. Recently, the company has bought land more
frequently through project acquisitions, which generally have
more flexible payment schedules.
"We project that Xinyuan's capital expenditure on land
acquisitions and construction costs was high at Chinese renminbi
(RMB) 15 billion-RMB16 billion in 2017, and will be RMB18
billion-RMB20 billion in 2018. This is commensurate with the
company's growth target and the increasing number of new
projects. We therefore estimate its debt-to-EBTIDA ratio at about
8.5x in 2017 and 2018, compared with 7x in 2016."
The rating affirmation reflects Xinyuan's growth momentum and
stabilizing margins. In 2017, the company achieved about 40%
growth in contracted sales. Its margin stabilized at 23%. S&P
also views the accelerated land acquisitions as a result of its
low land replenishment in 2015 and 2016, rather than a
significant change in the company's appetite to grow.
Historically, the company has demonstrated an uneven pace of land
acquisition.
S&P said, "We assess Xinyuan's liquidity to have weakened to less
than adequate. We expect the company's liquidity sources to be
about 1.0x liquidity uses over the 12 months to December 2018.
"The stable outlook reflects our expectation that Xinyuan will
mildly increase its sales and margins over the next 12 months. We
expect the company's leverage to remain stable but high over the
period due to its need for land reserve replenishment and
construction expenditure.
"We may lower the rating if Xinyuan's leverage deteriorates and
its debt-servicing ability worsens, as indicated by an EBITDA
interest coverage of less than 1.5x or debt-to-EBITDA ratio
further weakening from our expectation of 8.5x as of 2017.
"We may also downgrade Xinyuan if the company's access to
financing weakens materially, such that its liquidity profile
deteriorates further."
The rating upside is remote in the next 12 months, given
Xinyuan's persistently high leverage. A ratio of debt to EBITDA
below 5x on a sustainable basis could lead to an upgrade.
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H O N G K O N G
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ASIA TELEVISION: Proof of Claims Deadline Set for March 19
----------------------------------------------------------
The Scheme Administrators of Asia Television Limited Mr. Man Chun
So and Mr. Yat Kit Jong of PricewaterhouseCoopers intend to make
a distribution to the Scheme Creditors by way of a dividend.
All Scheme Creditors have until March 19, 2018, to submit proofs
of claim to:
PricewaterhouseCooopers
22/F Prince's Building
Central, Hong Kong
Email: hk.atv.scheme@hk.pwc.com
Fax No: +852 2289 5300
Asia Television Limited was one of the two free television
broadcasters in Hong Kong. It was established in 1957, the first
Chinese television station in the world.
A creditor petitioned for winding up of ATV in February 2016 and
provisional liquidators were subsequently appointed by the Court
to handle the liquidation process. In April of the same year, the
television broadcasting service of ATV was suspended as a result
of the rejection of its license renewal application. With the
involvement of the new investors in the restructuring of ATV, the
Court discharged the provisional liquidators from office in May
2017, and allowed the new investor to continue the restructuring
of ATV. In July 2017, Mr. Man Chun So and Mr. Yat Kit Jong of
PricewaterhouseCoopers were appointed by the Court as the
Chairmen of the Scheme Meeting for the Scheme. Since their
appointment, the Chairmen of the Scheme Meeting have been
proactively handling the Scheme matters and affairs and assisted
ATV to communicate with its Scheme Creditors on the details of
the Scheme. On Sept. 12, 2017, the Scheme received overwhelming
support from the Scheme Creditors who voted in favour of the
Scheme. On Dec. 12, 2017, the Scheme was sanctioned by the Court
and Mr. So and Mr. Jong were appointed by the Court as the Scheme
Administrators.
Subject to the procedures of the Scheme sanctioned by the Court,
all Scheme Creditors will be distributed with their entitlement
of Scheme funds. The entire process is expected to be completed
in the second quarter of 2018.
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I N D I A
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A.G. HOSPITALITIES: CARE Reaffirms B+ Rating on INR31cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
A.G. Hospitalities Private Limited (AGH), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 31 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of AGH continues to be
tempered by project stage hotel property to be completed by March
2018, cyclicality and seasonality associated with hotel industry
and significant competition from established hotel properties in
the area. The rating continues to derive strength from promoter
qualified in hotel management, location advantage with property
located in the heart of Chennai amenable to target, business
class patrons and tourists as well, management of the hotel to be
vested with reputed hotel chains and project predominantly funded
by owners contribution by way of unsecured loans Going forward,
the company's ability to re-design and upgrade the construction
work, to obtain the requisite approvals for the enhanced capacity
and complete the project within revised timelines and cost will
be a key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weakness
Project stage hotel property to be completed by March 2018: The
initial total cost of the project stood at INR45 crore. As on
December 31, 2015 INR38.79 crore was incurred. The construction
was commenced in January 2011 and was expected to be completed by
July 2016. However, the up gradation plans of the management to
construct the property as a four star hotel has delayed the
construction procedure owing to alteration and modification of
the design, interiors, furniture, etc. In addition to the change
in strategy, the sudden floods and cyclone in Chennai during the
end of year 2015, delayed the project progress by almost 12
months owing to destruction of construction materials and
equipment lying in the basement. Due to both the reasons, the
project completion date got extended and there has been a cost
and time over-run. Hence the total project cost was revised to
INR70 crore and INR59.79 crore was incurred as on November 30,
2016. During December 2016, Chennai was hit by a cyclone, which
led to further destruction of construction materials. This lead
to increase in the project cost to INR85 crore, which is to be
funded majorly by promoter's funds and the rest by bank loans. As
on December 20, 2017, the company had incurred INR81.62 crore
towards the project, funded through bank loan of INR30.00 crore
and balance through the promoter's infusion. The project is
expected to be completed by March 2018 and AGH plans to run
trials from April, 2018.
After three months of trial run, full-fledged operations for the
project are expected to be started from June 2018. So far, 90% of
construction has been completed. At present, carpentry work,
interior decoration and polishing work is progressing.
Cyclicality and seasonality associated with hotel industry: The
demand for hotel room changes direction in direct relation to the
economy, as both business and pleasure travel are easy
expenditures to eliminate in declining economy; although, in any
local market, the hotel business is likely to have its own
dynamics. The hotel business in India is seasonal in nature, with
September-March being the peak period. This is primarily due to
the increased leisure tourism during this season. April to August
is a lean period for the hotel business due to the summer heat
and monsoons.
Key Rating Strengths
Promoter qualified in hotel management: Mr. Ashish Gupta is the
main promoter of AGH. He possesses an MBA degree. He is also the
managing director of Dr. Gupta & Company which is engaged in the
manufacture of readymade garments (kids, men and women's woven
garments). The management carried out by all the family members
and it is continued by Mr. Ashish, S/o S.K. Gupta.
Location advantage with property located in the heart of Chennai
amenable to target, business class patrons and tourists as well:
AGH has the advantage of location as the hotel is located in the
heart of the Chennai city facilitating easy accessibility to the
airport, railway station etc.) for the clients of G&C and to the
customers of AGH. Chennai is the hub for many industries and also
a gateway to industrial centers like Coimbatore, Salem, etc. It
has a number of tourist locations and also connects to many other
tourist locations across Tamil Nadu. At the same time, the area
where the upcoming property is located already has a number of
reputed hotels hence AGH is likely to face tough competition
towards ensuring occupancy levels and maintaining the room rent
and other charges.
A.G. Hospitalities (AGH) is a private limited company promoted by
Mr. S.K. Gupta, his wife Mrs. Shagun Gupta, son Mr. Ashish Gupta,
and his wife Mrs. Shwetha Gupta. AGH was promoted to establish a
three star hotel property 'Novotel' situated at Nandanam, in the
heart of Chennai (Tamil Nadu). AAPC is a part of Accor
International hotel group and has been engaged as an operator to
manage and operate the Hotel as an agent for and on behalf of AGH
under the brand name 'NOVOTEL'. The agreement will remain valid
for 15 years with option of renewal by mutual agreement. The
parties may mutually agree in writing to further terms each after
expiry of 5 years. The construction of the proposed three star
hotels commenced during January 2011. The management of AGH
changed its strategies and it has gone for an up gradation in the
construction procedure from FY17 to erect the project as a four
star hotel property against its previous plans of building a
three star hotel. Due to unfavourable climatic conditions during
December 2016, the project progress was delayed. Furthermore, the
expected date of completion of project has also been shifted from
June 2017 to March 2018.
AASRA FOUNDATIONS: ICRA Reaffirms D Rating on INR112.30cr Loan
--------------------------------------------------------------
ICRA has reaffirmed the long -term rating of [ICRA]D assigned to
the INR130.0-crore1 fund-based facilities of Aasra Foundations
(Regd.)
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 112.30 [ICRA]D; reaffirmed
Fund based-OD 17.70 [ICRA]D; reaffirmed
Rationale:
The rating reaffirmation continues to reflect the stretched
liquidity position of the society as is evident from the delays
in debt servicing. ICRA notes that the society generates moderate
cash accruals, however, stuck receivables from the Government
against the scholarship given to reserved category students have
resulted in a cash flow mismatch. The same is exacerbated by the
lumpiness of cash flows in the education sector. Further, the
rating is constrained by the low occupancy levels due to high
competition and the regulatory risks prevalent in the education
sector. ICRA, however, notes the experience of promoters in the
education sector for more than two decades as well as the diverse
revenue base of the society.
Key rating drivers:
Credit challenges
Delays in debt servicing due to high receivables: Although the
company's accruals remain sufficient to fund the repayments, the
high pending receivables from the Government against the
scholarships given to reserved category students have resulted in
cash flow mismatches and hence the delay in debt servicing. This
is despite the fact that the timing of the fee and the debt
repayment are in synchronisation, being bi-annual in nature - in
January and July.
Low occupancy due to high competition: The average occupancy
remains low at around 43% in AY2018 due to high competition.
However, the management has been able to increase the fee by
around 6% in AY2018. The revenue receipts increased by 14% due to
addition of new courses, which led to higher student strength
along with a fee hike for some courses.
Weak capital structure due to high debt taken to fund capex in
the past: The capital structure of the trust continues to remain
weak with gearing of 16.33 times as on March 31, 2017 due to high
debt taken to fund the capex in the past. Further, the net worth
deteriorated due to losses at the net level and high pre-
operative expenses.
Credit strengths
Experience of the promoters in the education sector for more than
20 years: The promoters, Dr Zora Singh and his family members
established the trust in 1996 and has been working in the
education sector for more than twenty years. Over the years, the
promoters have diversified across various courses in different
fields.
Diverse revenue base with the trust operating 105 courses: The
trust has generated revenue of INR45.92 crore in FY2017, which is
diversified across 105 courses in various fields. The high
occupancy courses include B.Sc. in Medical Laboratory Technology,
B.Sc. in Operation Theatre Technology, M.Tech in Civil Structure,
M.Tech in Mechanical, etc.
Aasra Foundations (Regd.) is a society established in 1996 by Dr
Zora Singh and his family members. It established a private
university by the name Desh Bhagat University under the Punjab
Govt's Desh Bhagat University Act. Desh Bhagat United has its
campuses at Mandi Gobindgarh, Shri Muktsar Sahib, Moga,
Chandigarh in Punjab, India and in Kenya, East Africa. The
university offers around 105 undergraduate and post-graduate
courses in the field of Agricultural Sciences, Airlines,
Animation, Applied Sciences, Art & Craft and Fashion Technology,
Ayurveda, Commerce, Computer Sciences, Education, Engineering,
Hospitality and Tourism, Hotel Management, Languages, Law,
Management, Media, Nursing, Performing arts, Physical Education,
and the Social Sciences. The university has a total capacity of
21,000 students with an average occupancy of 43%.
In FY2017, the trust reported a net loss of INR2.94 crore on an
OI of INR45.92 crore compared with a net loss of INR5.91 crore on
an OI of INR40.44 crore in the previous year.
ADINATH COLD: CARE Assigns B Rating to INR8.50cr LT Loan
--------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Adinath Cold Storage Private Limited (ACSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.50 CARE B; Stable Assigned
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facilities of ACSPL is
constrained by its modest scale of operations, thin profitability
margins owing to limited value addition along with susceptibility
of margins to fluctuation in raw material prices and seasonal
nature of business. The rating is further constrained on account
of leveraged capital structure, weak debt service coverage
indicators, working capital intensive nature of operations, its
presence in highly fragmented and regulated industry.
The rating however, derives strength from the extensive
experience of the promoters, locational advantage emanating from
proximity to raw material and support from group with presence in
related businesses.
Ability of the company to increase its scale of operations with
improvement in profitability and capital structure along with
efficient management of working capital requirement are the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with thin profit margins: The scale of
the operations of the company is moderate with total operating
income of INR35.51crore in FY17 and total capital employed of
INR12.63 core as on March 31, 2017. The moderate scale of
operation limits the financial flexibility of the company in
times of stress. Moreover, by being in the business of processing
of pulses, entailing low value additions, the companies operating
margin stood low.
Leveraged capital structure with moderate debt service coverage
indicators: The capital structure of the company is leveraged
owing to high reliance on debt and moderate net worth base.
Further, with moderate gearing levels and thin profitability
margins, the debt coverage indicators of the company were also
moderate.
Vulnerability to fluctuation in prices of raw material: ACSPL is
operating in an agro-processing industry which is characterized
by seasonality. Hence, the availability of raw material is
limited exposing the company to the risk of decline in margin due
to adverse price movement of raw material.
Working capital intensive nature of business: Operations of the
company remained working capital intensive with high gross
current assets of 105 days in FY17 owing to high inventory
period. The working capital requirements are met by the cash
credit facility availed by the company utilization of which
remained in the range of 90-95% during the peak season.
Presence in highly fragmented industry: The agro-processing
industry is highly fragmented in nature due to low entry
barriers and presence of large number of players in the organized
and unorganized sector. Fragmented nature of industry results in
intense competition and low bargaining power for the entities
operating in the industry.
Key Rating Strengths
Experienced promoters: ACSPL is promoted and managed Mr. Ramanrao
Bholla and his wife Mrs. Vijayalaxmi Bholla. The promoters are
well-versed with the intricacies of the business on the back of
about one and a half decades of experience in the industries
through the associate concerns. Long experience of the promoter
has supported the business risk profile of the company to a large
extent.
Location advantage: The processing unit of the company is located
near the pulses market of Nagpur. The proximity to raw material
fetches a location advantage of lower logistics expenditure.
Support from group with presence in related businesses: The
company belongs to the Hanuman Group of Nagpur which is managing
seven entities. ACSPL benefits from the marketing and
distribution network of its various group entities and extensive
experience and established relations of its promoters.
ACSPL, incorporated on June 29, 2010 is promoted by Mr. Ramanrao
Bholla and Mrs. Vijayalaxmi Bholla. The company is engaged in
processing of pulses and providing cold storage facility to local
farmers and traders on rental basis. The facility, with storage
capacity of around 60000 square feet is located at Nagpur
district of Maharashtra.
AGRI VENTURE: CARE Cuts Rating on INR5.95cr Loan to D
-----------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Agri Venture, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long/Short-term 5.95 CARE D/CARE D; Issuer not
Bank Facilities cooperating; Revised
from CARE B+; Stable/CARE A4;
Based on best available
Information
CARE has been seeking information from Agri Venture to monitor
the ratings vide e-mail communications / letters dated
January 19, 2018, January 2, 2018, December 6, 2017, November 16,
2017, November 1, 2017, October 3, 2017, September 4, 2017 and
numerous phone calls. However, despite our repeated requests, the
firm has not provided the requisite information for monitoring
the ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the publicly available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The ratings on Agri Venture's bank
facilities will now be denoted as CARE D/ CARE D; ISSUER NOT
COOPERATING.
The ratings have been revised on account of the delays in debt
repayment owing to weak liquidity position.
Detailed description of key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: AV has been irregular in
servicing its debt obligation due to weak liquidity position of
the firm.
Rajkot-based (Gujarat), Agri Venture was incorporated in 2014.
Agri Venture is merchant exporter of Agri commodities such as
Sesame Seeds, Turmeric Finger, Groundnut and Cumin seeds. Mr.
Chirag Mahesh Sangani, proprietor, aged 38 years who has an
experience of thirteen years, manages the overall operations of
the company. They majorly export to countries like Vietnam,
Greece, Turkey, Israel and Egypt.
ANAND MINE: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Anand Mine Tools
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
now appear as 'IND BB (ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are as follows:
-- INR60 mil. Fund-based working capital limits migrated to Non-
Cooperating Category with IND BB (ISSUER NOT COOPERATING)
rating; and
-- INR40.15 mil. Long-term loans migrated to Non-Cooperating
Category with IND BB (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 16, 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 2010, Anand Mine Tools is involved in the trading
of make pumps and pump spares.
ANONDITA HEALTHCARE: ICRA Keeps B Rating in Not Cooperating Cat.
----------------------------------------------------------------
ICRA Ratings says the rating for the INR12.00 crore bank
facilities of Anondita Healthcare Limited continues to remain in
the 'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA] B (Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 10.00 [ICRA]B (Stable) ISSUER NOT
Loan COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Fund based-Cash 2.00 [ICRA]B (Stable) ISSUER NOT
Credit COOPERATING; Rating continues
to remain in 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.
AHL is a group company of Anondita Group, engaged in the
manufacturing of surgical gloves and latex based contraceptives.
AHL is undertaking a Greenfield project at Assam for the
commencement of a surgical gloves manufacturing unit with a plant
capacity of 240 lakh pairs per annum. The total estimated cost of
the project is INR26.00 crore, to be financed through a term loan
of INR10.00 crore and the rest from shareholder contribution. The
project execution is in nascent stage with capital expenditure of
INR1.50 crore (approx) incurred till May 30, 2016 on acquisition
of land and other regulatory formalities. The construction of the
factory and placement of order with the suppliers of the plant
and machineries is yet to be done.
ARJAY APPAREL: ICRA Assigns B Rating to INR3cr Fund Based Loan
--------------------------------------------------------------
ICRA has assigned a long -term rating of [ICRA]B to the INR1.20
crore cash credit facility, INR3.00 crore overdraft facility and
INR0.20 crore temporary overdraft facility of Arjay Apparel
Industries Limited. ICRA has also assigned a short-term rating of
[ICRA]A4 to the INR1.50 crore letter of credit facility of Arjay.
The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash
Credit 1.20 [ICRA]B(Stable); Assigned
Fund based-Overdraft 3.00 [ICRA]B(Stable); Assigned
Fund based-Temporary
Overdraft 0.20 [ICRA]B(Stable); Assigned
Non-fund based-Letter
of Credit 1.50 [ICRA]A4; Assigned
Rationale
The assigned ratings favourably factor in the extensive
experience of the Arjay's promoters spanning over three decades
in the textile industry, and the relatively low counter party
risk as majority of the revenue comes from government entities.
The ratings, however, are constrained by the company's weak
financial profile characterised by leveraged capital structure
and weak debt coverage indicators as indicated by high gearing of
1.89 times, TD/OPBDITA of 7.92 times, NCA/TD of 6.06% and
interest coverage ratio of 0.83 times as on March 31, 2017. ICRA
also notes the stretched liquidity position of the company
emanating from high inventory holding period leading to high
working capital intensity of ~30% in FY2016 and FY2017.
Consequently, Arjay's reliance on working capital borrowings has
remained high. Further, the ratings are also constrained by the
company's small scale of operations which coupled with decline in
operating income has resulted in under absorption of fixed costs,
hence the low profitability. Further low value-added nature of
its business in a highly fragmented and competitive industry with
low entry barriers limit Arjay's pricing flexibility. The ratings
are also restrained by the company's concentrated customer base
with its top customer accounting for more than 55% of its total
revenue and exposure of profitability to the fluctuations in the
raw material prices.
Outlook: Stable
ICRA believes Arjay will continue to benefit from the extensive
experience of its promoters and the group. 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 cash accrual is lower than expected, or stretch in
the working capital cycle, weakens liquidity.
Key rating drivers
Credit strengths Extensive experience of the promoters in the
textile industry: Established in 1984, Arjay belongs to the
Aarjay group of companies. It deals in readymade garments and
fabrics. The promoters have more than three decades of
experience, which ensures repeat orders from reputed and
established customers.
Relatively low counter party risk as the client base mainly
consists of Government entities: Majority of the company's sales
come from government entities. Canteen store department alone
account for 55-60% of the total sales. The corporate and
ownership status of the top customer reduces the counter party
risk.
Credit challenges
Small scale of operations; moderate and declining profitability
indicators: The company has a small scale of operations and has
witnessed muted revenue growth over the last three-year period at
a CAGR of ~2%. The operating income stood at INR25.62 crore in
FY2017 as against INR26.03 crore in FY2016, translating into YoY
de-growth of ~2%. The restricted growth is due to lack of growth
in the orders received from the major customer - Canteen stores
departments. This has been due to Further small scale of
operations results in under absorption of the high fixed costs
thereby affecting the operating profit margins which stood 2.99%
in FY2017 as against 4.41% in the previous year.
High working capital intensity resulting from high inventory
holding period thereby impacting liquidity: The working-capital
management of the company remains an area of concern, with high
inventory holding period of 98 days as on March 31, 2016 and 74
days as on March 31, 2017. This led to high dependence of working
capital borrowings and high working-capital intensity as
reflected from its NWC/OI of ~30% in FY2016 and FY2017.
Financial profile characterised by leveraged capital structure
and weak debt coverage indicators: The total debt of the company
mainly consists of working capital borrowings from the bank and
interest bearing unsecured loans. Low net worth build up due to
low profitability and high dependence on debt have resulted in
leveraged capital structure and weak debt coverage indicators
with a high gearing of 1.89 times, TD/OPBDITA of 7.92 times,
NCA/TD of 6.06% and interest coverage ratio of 0.83 times as on
March 31, 2017.
High customer concentration risks with the top customer
accounting for 55-60% of the total sales in the last three
fiscals: The company has a high concentrated customer base with
the top customer accounting for 55-60% of total sales in FY2015
to FY2017. However, long established relationship with the
customer has resulted in regular repeat orders.
Thin profitability due to intense competition, given the low
complexity of work involved in the textile industry: Due to
limited entry barriers, there are numerous organised and
unorganised players in the textile business, which pose intense
competition for Arjay. The low value-added nature of its business
limits its pricing flexibility and bargaining power with
customers, thereby putting pressure on its revenues and margins.
Vulnerability of profitability to any adverse fluctuation in raw
material prices: The margins of the company are largely affected
by the raw material price fluctuation which in turn affects the
sales realisations. Any adverse movement in the price of raw
materials could have an adverse impact on the company's margins,
considering the limited ability to pass on the price hike owing
to high competitive intensity.
Arjay Apparel Industries Limited belongs to Aarjay Group, which
is into textile manufacturing and marketing of garments in 1981.
The Aarjay Group of Companies is owned by Sanghai Family. The
textile division has its production base at Tirupur in South
India with its corporate office in Mumbai. The group has its
textile export division under Someshwara Industries and Exports
Limited (Someshwara).
Arjay Apparel Industries Limited incorporated on May 17, 1984,
deals in readymade garments for men, women and children under the
brand name Love, Rambo, Little Rambo and Osmonde in the Indian
domestic market. The company gets its garments manufactured in
Tirupur factory owned by associate company Someshwara. Arjay
supplies the raw materials to the job workers which manufacturer
the garments as per the company's specifications. Readymade
garment sale accounts for 65-75% of the total sales, while rest
is fabric sales.
In FY2017, the company reported a net profit of INR0.19 crore on
an operating income of INR25.62 crore, as compared to a net
profit of INR0.13 crore on an operating income of INR26.03 crore
in the previous year.
ARROW CONSTRUCTION: Ind-Ra Migrates BB Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Arrow
Construction Limited's Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The ratings
will now appear as 'IND BB (ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are as
follows:
-- INR20 mil. Fund-based Limits migrated to Non-Cooperating
Category with IND BB (ISSUER NOT COOPERATING) rating; and
-- INR80 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 20, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1995, Arrow Construction is a Hyderabad-based
construction company promoted by Mr. S. Vijayakumar, Mr. D.V.K.V.
Prasad and Mr. S.V. Prabhaka. The company is engaged in the
construction of hospital buildings, staff quarters, irrigation
projects, government buildings, engineering projects, industrial
sheds, warehouses, etc.
BRIJ ENGINEERING: ICRA Keeps B+ Rating in Not Cooperating Cat.
--------------------------------------------------------------
ICRA Ratings says the rating for the INR7.50 crore bank
facilities of Brij Engineering Works (BEW) continues to remain in
the 'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]B+(Stable)/[ICRA]A4 ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits- 0.50 [ICRA]B+ (Stable) ISSUER NOT
Long Term COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Non-Fund Based- 7.00 [ICRA]A4 ISSUER NOT
Short Term COOPERATING; Rating continues
to remain in 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 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.
BEW was established as a partnership firm in 1978 and was
reconstituted in 2004. The current partners of the firm are Mr.
Brij Kishore Gupta, Mrs. Sheela Gupta, Mr. Swapnil Gupta and Mrs.
Shweta Gupta. The firm undertakes various civil construction
projects like construction of overhead tanks, sewerage pipelines
and many others, primarily for government clients. The firm is
located in Kanpur, Uttar Pradesh and is a registered Class-A
contractor with Uttar Pradesh Jal Nigam. The firm has largely
focused on projects within Uttar Pradesh.
CENTRAL BANK: Moody's Affirms Ba3 LT Deposit Rating, Outlook Pos.
-----------------------------------------------------------------
Moody's Investors Service has affirmed the long-term local and
foreign currency bank deposit ratings of Central Bank of India
(CBI) and Indian Overseas Bank (IOB) at Ba3, and changed the
outlook to positive from stable.
In the case of IOB, Moody's has also affirmed the bank's senior
unsecured debt rating at Ba3 and changed the outlook to positive.
It issues its senior unsecured debt out of its Hong Kong branch.
Moody's has also affirmed the two banks' baseline credit
assessments (BCA) at b3 and their counterparty risk assessments
(CRA) at Ba2(cr)/NP(cr).
In addition, Moody's has -- as indicated -- changed the outlook
on CBI as well as IOB and its Hong Kong branch to positive from
stable.
The list of affected ratings is provided at the end of this press
release.
RATINGS RATIONALE
UPWARD PRESSURE ON THE TWO BANKS' BCAs
The positive outlook reflects the upward pressure that could
develop on these banks' long-term ratings, if their credit
fundamentals -- namely their capital positions -- continue to
improve over the next 12-18 months due to capital infusions from
the Indian government (Baa2 stable).
The positive outlook also reflects Moody's view on the expected
evolution of their balance sheets, including a stabilization in
asset quality, a moderate improvement in profitability metrics,
and stable funding and liquidity positions.
According to the recapitalization plan announced in October 2017,
the government has committed to infuse INR1.53 trillion into the
public-sector banks by March 2019.
It will inject INR800 billion into 20 of such banks by March 2018
in the form of recapitalization bonds.
In addition, it will infuse another INR100 billion from budgetary
sources by March 2018.
And, after factoring in the amount already allocated, the
government will infuse another INR650 billion in new capital in
fiscal 2019. Its budget for fiscal 2019 already reflects this
amount, although the details on the timings and scale of
allocations to individual banks have yet to be released.
On January 24, the government provided details on how much
capital each public sector bank will receive in the current
fiscal year ending March 2018 (fiscal 2018).
Based on the announced allocations, CBI will receive INR51.6
billion and IOB will receive INR46.9 billion in new capital.
Moody's estimates the capital infusion will increase the common
equity tier 1 CET1 ratio for CBI by 280bps and for IOB by 320bps
compared to the reported ratios of 7.0% and 7.1%, respectively,
as of September 2017.
Furthermore, the government has made it explicit that all public
sector banks will meet their minimum regulatory capital
requirements after factoring in the provisioning requirements for
non-performing loans (NPLs), as well as requirements resulting
from the transition to IFRS 9 accounting standards in April 2018.
IMPACT ON LONG-TERM RATINGS
Moody's continues to assume a very high probability of government
support for CBI and IOB, resulting in a three-notch uplift to
their deposit ratings from their BCAs.
The positive outlook on their deposit ratings reflects a likely
ratings upgrade if the their standalone BCAs move up over the
next 12-18 months.
WHAT COULD CHANGE THE RATING UP:
Central Bank of India
Given the positive outlook, CBI's ratings could be upgraded in
the next 12-18 months, if the capital infusion helps strengthen
the bank's capital to a level above minimum regulatory
requirements (including the capital conservation buffer) under
Basel III standards, and/or the bank returns to profitability on
a sustainable basis.
Indian Overseas Bank:
Given the positive outlook, IOB's ratings could be upgraded in
the next 12-18 months, if the capital infusion helps strengthen
the bank's capital to a level above minimum regulatory
requirements (including a capital conservation buffer) under
Basel III standards, and/or the bank returns to profitability on
a sustainable basis.
WHAT COULD CHANGE THE RATING DOWN:
Central Bank of India
Downward pressure on CBI's ratings will emerge if further credit
losses worsen its capital position. Any indication that
government support has diminished beyond what Moody's anticipates
in this rating action could also lead to a ratings downgrade.
Indian Overseas Bank
Downward pressure on IOB's ratings will emerge if further credit
losses worsen its capital position. Any indication that
government support has diminished beyond what Moody's anticipates
in this rating action could also lead to a ratings downgrade.
The principal methodology used in these ratings was Banks
published in September 2017.
Central Bank of India, headquartered in Mumbai, reported total
assets of INR3.3 trillion ($51 billion) as of September 30, 2017.
Indian Overseas Bank, headquartered in Chennai, reported total
assets of INR2.5 trillion ($38 billion) as of September 30, 2017.
The ratings and outlooks of the affected financial institutions
are listed below.
Central Bank of India
Long-term local and foreign currency bank deposit ratings
affirmed at Ba3; outlook changed to positive from stable
Short-term local and foreign currency bank deposit ratings
affirmed at NP;
BCA and Adjusted BCA affirmed at b3
Long-term CRA affirmed at Ba2(cr)
Short-term CRA affirmed at NP(cr)
Outlook for the bank changed to positive from stable
Indian Overseas Bank
Long-term local and foreign currency bank deposit ratings
affirmed at Ba3; outlook change to positive from stable
Short-term foreign currency bank deposit ratings affirmed at NP
Foreign currency other short term program rating affirmed at
(P)NP
Foreign currency senior unsecured MTN program rating affirmed at
(P)Ba3
Foreign currency subordinate MTN program rating affirmed at (P)B3
Foreign currency junior subordinate MTN program rating affirmed
at (P)Caa1
BCA and Adjusted BCA affirmed at b3
Long-term CRA affirmed at Ba2(cr)
Short-term CRA affirmed at NP(cr)
Outlook for the bank changed to positive from stable
Indian Overseas Bank, Hong Kong branch
Foreign currency other short term program rating affirmed at
(P)NP
Foreign currency senior unsecured debt rating affirmed at Ba3,
outlook changed to positive from stable
Foreign currency senior unsecured MTN program rating affirmed at
(P)Ba3
Foreign currency subordinate MTN program rating affirmed at (P)B3
Foreign currency junior subordinate MTN program rating affirmed
at (P)Caa1
Long-term CRA affirmed at Ba2(cr)
Short-term CRA affirmed at NP(cr)
Outlook for the branch changed to positive from stable
CHIMUR COTTON: CARE Reaffirms B+ Rating on INR5.60cr LT Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Chimur Cotton Industry (CCI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.60 CARE B+; Stable Re-affirmed
Short-term Bank
Facilities 0.07 CARE A4 Re-affirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to CCI continues to be tempered on account
of short track record of the entity , modest scale of operations
coupled with low profitability margins, leveraged capital
structure, moderate debt coverage indicators and susceptibility
to fluctuation in the raw material price. Furthermore, the
ratings also take into consideration the limited experience of
partners in cotton ginning industry, working capital intensive
nature of operations, presence in the highly competitive and
fragmented industry and susceptibility to adverse changes in
government policies related to prices and export of cotton and
partnership nature of constitution.
However, the ratings derive strength from experience of promoters
in engineering industry and location advantage emanating from
proximity to raw material source.
Going forward, the ability of the firm to increase its scale of
operations with improvement in profitability margins and capital
structure along with efficient working capital management are the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations with low profitability margins: The
entity has a short track record of operations of only two years.
The scale of operations is modest as reflected by total operating
income (TOI) and capital employed of INR52.18 crore and INR6.01
crore respectively as on March 31, 2017. Further, TOI grew by
~218% to INR52.18 crore in FY17 owing to increase in order intake
and sales volume The profit margins remained low owing to limited
value addition nature of operations.
Leveraged capital structure with moderate debt coverage
indicators: The capital structure of the firm remained leveraged
on account of higher reliance on external borrowings to support
its increased scale of operations. Furthermore, CCI's debt
coverage indicators remained moderate due to high debt profile
and low profitability margins.
Working capital intensive operations: The operations of the
entity remained working capital intensive owing to seasonality
associated with availability of raw material. The gross current
asset days remained at 45 days during FY17. The working capital
requirements of the entity are met by the cash credit facility
and the average utilization of the CC limit was on higher side in
the peak season (October-May).
Risk associated with seasonality and fragmented nature of
industry: CCI is engaged in the ginning and pressing of cotton
which involves very limited value addition and hence results in
thin profitability. Moreover, on account of large number of
units operating in cotton ginning business, the competition
within the players remains very high resulting in high
fragmentation and further restricts the profitability. The
operation of cotton business is highly seasonal in nature, as the
sowing season is from March to July and the harvesting season is
spread from November to February.
Susceptibility to government policies related to price and export
of cotton: The price of raw cotton in India is regulated through
function of minimum support price by the government. Furthermore,
the price of raw cotton is highly volatile in nature and depends
upon factors like area under production, yield for the year,
international demand-supply scenario, export quota decided by the
government.
Partnership nature of constitution: Being a partnership firm, CCI
is exposed to the risk of withdrawal of capital by partners and
limited excess to financial market. This limits the financial
flexibility of the firm.
Key Rating Strengths
Experience of promoters in engineering industry albeit limited
experience in cotton ginning industry: CCI is promoted by Mr Anil
Dyaramji Meher, Mr Pramod Bhalme and Mr Ashwinkumar Thakare. All
the three promoters have worked in Engineering sector but have
limited experience in cotton ginning sector. The overall
operations of CCI are looked after by Mr Anil Dyaram Meher with
adequate support from other partners.
Locational advantage emanating from proximity to raw material:
The manufacturing facility of the firm is located at Chandrapur,
Maharashtra. Maharashtra produces around 21% of total cotton
production of India. Out of the total production of Maharashtra,
65% is contributed by Vidarbha region. Hence, raw material is
available in adequate quantity and also results in lower
logistics expenditure. Moreover, there is robust demand of cotton
bales and cotton seeds in the region due to presence of spinning
mills in the region.
Established in 2015 as a partnership firm, CCI is based in
Chandrapur, Maharashtra and is primarily engaged in the
business of cotton ginning & pressing and trading of cotton,
seeds, oil process at Chimur, Chandrapur and has an installed
capacity to gin and press 960 quintal of cotton per day. The
entity sells its finished goods to local dealers and wholesalers
located in close vicinity. The major raw material for the entity
is raw cotton, which is procured from farmers and local
commission agents.
RK DAS: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated R. K. Das
Jewellers' (RKDJ) 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 as follows:
-- INR2 mil. Term loan due on December 2018 migrated to Non-
Cooperating Category with IND B+ (ISSUER NOT COOPERATING)
rating; and
-- INR70 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B+ (ISSUER NOT COOPERATING)/IND A4(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 6, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
RKDJ is a proprietorship unit started in 1999 and is engaged in
trading gold and diamond jewellery. RKDJ has an authorized
Tanishq showroom in Varanasi (Uttar Pradesh).
ELEMENT CHEMILINK: Ind-Ra Affirms BB+ LT Issuer Rating
------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Element
Chemilink Private Limited's (ECPL) Long-Term Issuer Rating at
'IND BB+'. The Outlook is Stable. The instrument-wise rating
actions are as follows:
-- INR35 (increased from INR30) mil. Fund-based working capital
limits affirmed with IND BB+/Stable/IND A4+ rating;
-- INR10.8 (increased from INR9.6) mil. Term loan due on March
2021 affirmed with IND BB+/Stable rating; and
-- INR20 mil. Non-fund-based working capital limits affirmed
with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects ECPL's improving yet small scale of
operations. In FY17, its revenue grew to INR349.5 million (FY16:
INR334.2 million; FY15: INR284.1 million), driven by an increase
in the export. The ratings continue to reflect a high level of
product concentration, with three products constituting around
97% of the total revenue in FY17 (FY16: 97%; FY15: 88%).
According to 9MFY18 interim financials, the company' revenue was
INR358 million.
The ratings further reflect a debt-led capex of INR290 million
being undertaken by ECPL for setting up a new capacity. The capex
will be funded through term loans totaling INR200 million, and
unsecured loans and internal accruals totaling INR90 million.
According to the management, the new capacity will be operational
by end-July 2018. According to Ind-Ra, the debt-led capex is
likely to dent ECPL's credit metrics in FY19. However, the credit
metrics will continue to remain comfortable and commensurate with
the rating level in view of revenue contribution from the new
capacity along with scheduled repayment of the term loan.
The affirmation reflects ECPL's continued comfortable credit
metrics and healthy EBITDA margins due to the optimum utilization
of its existing capacity and absence of any major debt-led capex
during FY14-FY17 coupled with the ability to pass on the
volatility in the raw material price to its customer. ECPL's net
financial leverage (Ind-Ra adjusted net debt/operating EBITDAR)
was 0.5x in FY17 (FY16:0.4x; FY15:0.6x) and EBITDA interest
coverage (operating EBITDA/gross interest expense) was 13.7x
(10.2x; 6.3x). EBITDA margins remained in the range of 21.7%-
14.9% during FY12-FY17. The ratings continue to factor in ECPL's
operating track record of around a decade, supported by its
longstanding customer relationships.
Moreover, the company's liquidity is comfortable, with the
average peak cash credit utilization of 45% during the 12 months
ended December 2017 and positive cash flow from operations during
FY15-FY17. Its net working capital cycle was also comfortable
below 50 days during FY15-FY17.
RATING SENSITIVITIES
Negative: Any decline in profitability and/or a significant delay
in the execution of the planned capex leading to net leverage
exceeding above 4x on a sustained basis would be negative for the
ratings.
Positive: Substantial revenue growth driven by the successful
implementation of the planned capex, along with maintaining the
EBITDA margins at the current level would be positive for the
ratings.
COMPANY PROFILE
Incorporated in 2006, ECPL manufactures bromine-based
intermediaries. The company has two manufacturing units, both
situated in Ankaleswar (Gujrat), with a combined capacity of 275
metric ton/month. It is a closely held private limited company
founded by Mr. Anish Parikh.
ERA HOUSING: NCLT Initiates Insolvency Proceedings
--------------------------------------------------
The Economic Times reports that Delhi bench of the National
Company Law Tribunal has given its nod for corporate insolvency
resolution process against Era Housing and Developers (India)
Ltd.
According to the report, the insolvency process was initiated at
the request of state run IFCI Ltd which had stated that the firm
has been a non-performing asset (NPA) on its books since 2013.
The firm owes around INR150 crore.
ET relates that the NCLT bench set aside the arguments made by
the counsel of the corporate debtor that the financial creditor,
IFCI had already filed a winding up application in Delhi High
Court and further invoked action under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest (SARFAESI) Act of 2002.
The court in its judgment observed that the plea made by the
corporate debtor is devoid of any merit, the report discloses.
"In pursuance of the Section 13 (2) of the code we direct that
public announcement shall be made by the interim resolution
professional immediately with regard to admission of this
application under Section 7 of the code," it said, notes the
report.
ET relates that a senior official with IFCI said that the
committee of creditors would prefer to restructure the loan if
any developer comes with a sustainable resolution plan.
"If there is a restructuring proposal which is viable we can look
at it," he added, says ET.
As per the documents submitted to the court the encumber property
is valued at around INR229 crore, however, another official aware
of the development said that these are highly inflated numbers
given this property includes Adel Green World Project, according
to the report.
"This project has residential houses and the developer has
already sold some of the units. It will be very difficult to do
an asset strip or go for liquidation," he added, the report
relates.
The court appointed Vikram Kumar as interim resolution
professional, ET adds.
Era Housing & Developers (India) Limited engages in the
construction of airports, power projects, infrastructure,
institutional and industrial complexes, multiplexes, and
residential buildings in India. It serves public sector
undertakings, private sectors, CPWD, and banks.
ESSAR STEEL: Two Bidders Submit Resolution Plans
------------------------------------------------
BloombergQuint reports that two bidders have submitted final
resolution plans for Essar Steel Ltd., which is currently being
resolved under the Insolvency and Bankruptcy Code (IBC).
Numetal Mauritius - a special purpose vehicle (SPV) in which the
Ruia family has an interest - has submitted a bid, BloombergQuint
relates citing two people familiar with the matter. On Jan. 16,
BloombergQuint reported that a Singapore based trusteeship, of
which a Ruia family member is the beneficial owner, holds 30
percent in Numetal Mauritius. Russia's VTB Bank holds 40 percent
in the SPV, while SSG Capital holds the remaining 30 percent.
Numetal Mauritius did not immediately respond to an email sent by
BloombergQuint.
BloombergQuint says the second bidder for Essar Steel is
ArcelorMittal, which is bidding through its subsidiary
ArcelorMittal India Pvt. Ltd (AMIPL). In a press statement,
ArcelorMittal said that, in its bid, the company has detailed an
industrial plan for Essar aimed at improving its performance and
profitability.
According to people in the know, Essar Steel's liquidation value
stands between INR15,000-17,000 crore, BloombergQuint relays.
Liquidation value is the least recoverable value from an asset as
determined by an independent evaluator. A bid would have to be
higher than this value to be considered by the creditors.
BloombergQuint, citing people involved in the matter, who spoke
on conditions of anonymity, relates that the bids will now be
opened by the RP and assessed for compliance with various
provisions of the code.
Following this, by the first week of March, the bids would be
presented to a committee of creditors. The members of the
committee would then have a few weeks for internal discussions
with their respective boards.
By the end of March, the people quoted above said, there could be
a vote on the resolution plans and in April the lenders would
close the entire process with the company moving to the best
available bidder, adds BloombergQuint.
About Essar Steel
Incorporated in 1976, Essar Steel India Ltd. is a part of the
Essar Group and is having 10 MTPA integrated steel manufacturing
facilities at Hazira, Gujarat and iron ore beneficiation and
pelletisation facilities in Paradeep, Odisha (12 mtpa) and Vizag,
Andhra Pradesh (8 mtpa). The company also owns and operates two
iron ore slurry pipelines -- one each in Odisha (Dabuna to
Paradip) and Andhra Pradesh (Kirandul-Vizag), which transport the
iron ore slurry from the beneficiation plant (located near the
iron ore mines in Dabuna and Kirandul) to the pellet plant
(located near the Paradip and Vizag ports). A large portion of
the iron ore pellets produced are intended for captive
consumption by ESIL's steel plant at Hazira for cost
optimization.
The National Company Law Tribunal (NCLT), Ahmedabad, admitted
Essar Steel's insolvency case on Aug. 2, 2017. State Bank of
India's suggested interim resolution professional (IRP) Satish
Kumar Gupta, of Alvarez and Marsal India, has been appointed as
IRP.
Essar Steel owes more than INR45,000 crore to lenders, of which
INR31,671 crore had already been declared as non-performing as of
March 31, 2016, The Economic Times disclosed. The SBI-led
consortium of 22 creditors accounts for 93% of this amount. Essar
Steel owes $ 450.67 million to SCB in debt.
Both petitions filed by State Bank of India (SBI) and Standard
Chartered Bank (SCB) for initiating insolvency proceeding under
Insolvency & Bankruptcy Code (IBC) against the steel major Essar
Steel Ltd have been admitted by NCLT on Aug. 2, according to ET.
JAYA POULTRY: Ind-Ra Assigns 'B' Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Jaya Poultry
Farm (JPF) a Long-Term Issuer Rating of 'IND B'. The Outlook is
Stable. The instrument-wise rating actions are as follows:
-- INR85.1 mil. Term loan due on September 2027 assigned with
IND B/Stable rating; and
-- INR40 mil. Fund-based working capital limit assigned with
IND B/Stable/IND A4 rating.
KEY RATING DRIVERS
The ratings reflect offtake risks associated with JPF's ongoing
poultry project. During November 2017, the company purchased an
existing poultry firm with the majority of the required
infrastructure. The total project cost of INR116.5 million is
being funded through a debt and equity ratio of 2.71:1. The
project commenced operations at end-January 2018. However,
management believes the offtake risk will be mitigated to a
certain extent by the partners' experience of more than two
decades in the poultry business, which has led to established
relationships with suppliers and customers.
The ratings also take into account the inherent industry risks
including disease outbreaks, and volatile poultry and feed
prices, which can impact JPF's credit profile adversely.
RATING SENSITIVITIES
Positive: Scheduled commencement of the project and stabilization
of profitable operations, leading to generation of sufficient
cash flows will be positive for the ratings.
Negative: Any delays in the commencement of operations will lead
to a negative rating action.
COMPANY PROFILE
Incorporated in November 2017, JPF is a partnership firm engaged
in the business of poultry layer farming. The firm is located at
Warangal, Telangana.
KAMAKHYA TRADERS: ICRA Keeps B Rating in Not Cooperating Category
-----------------------------------------------------------------
ICRA Ratings says the rating for the Rs.7.0 crore bank facilities
of Kamakhya Traders (KT) continues to remain in the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA] B
(Stable) ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits-
Long Term 6.0 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Unallocated-Long
Term 1.0 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in 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 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 2001, Kamakhya Traders has been engaged in the
trading of coal especially coking coal used for metallurgical
uses as well as providing allied services such as logistics and
transportation of coal to its customers. The firm purchases the
coal domestically from Assam, Kolkata and Gorakhpur while sells
off to steel and other metal players, tyre manufacturing
companies as well as construction units. The sales are made
majorly in Gorakhpur while the firm also sells to other parts of
UP. The firm has a designated team assigned in Assam from where
the coal is loaded on the train for Gorakhpur. The firm takes
orders in advance post which the order for the specific quantity
of coal is given in Assam and Kolkata. The coal is received in
Goarkhpur by another team of Kamakhya which load the same on the
logistics units provided by the customers. Hence, major logistics
work is either carried through the train or further handled by
the customer itself reducing any logistics pressure on Kamakhya.
However in some cases, Kamakhya provides logistics services by
hiring a vehicle and charges a specific commission from the
customer.
LAXMI SAI: ICRA Reaffirms B Rating on INR2.17cr Term Loan
---------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B to the
INR2.00-crore cash-credit limits and INR2.17-crore term-loan
limits of Laxmi Sai Breeding Farms Private Limited. ICRA has also
re-affirmed the long-term rating of [ICRA]B and short-term rating
of [ICRA]A4 (pronounced ICRA A four) to the INR5.83 crore
unallocated limits of LSBFPL. The outlook on the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 2.00 [ICRA]B(Stable); reaffirmed
Term Loan 2.17 [ICRA]B(Stable); reaffirmed
Unallocated Limits 5.83 [ICRA]B(Stable)/[ICRA]A4;
Reaffirmed
Rationale
The assigned ratings are constrained by LSBFPL's small scale of
operation in the poultry industry with revenues of INR11.14 crore
in FY2017 and moderate financial risk profile of the company,
characterised by debt-service coverage ratio (DSCR) of 0.86 times
as on March 31, 2017. The ratings are also constrained by the
cyclicality associated with the poultry industry, volatility in
hatching egg price and vulnerability of profits to fluctuation in
prices of feed (primarily maize, broken rice and soya), which
accounts for more than 75% of the production cost. The ratings,
however, positively factor in the extensive experience of the
promoters in the poultry industry; and favourable long-term
demand outlook for the broiler segment of the poultry industry.
Outlook: Stable
The Stable outlook factors in ICRA's expectations that LSBFPL
will continue to benefit from the extensive experience of its
management in the poultry industry. The outlook may be revised to
'Positive' if substantial growth in revenue and profitability,
and better working-capital management strengthen the financial
risk profile. The outlook may be revised to 'Negative' if cash
accrual is lower than expected, or if any major capital
expenditure, or stretch in the working-capital cycle weakens
liquidity.
Key rating drivers
Credit strengths
Extensive experience of promoters in the poultry industry: The
company is managed by Mr. V. Narayana, Managing Director, who has
more than two decades of experience in the poultry industry. The
company has an established customer base, resulting in repeat
orders.
Favourable long-term outlook of the broiler segment of the
poultry industry: The long-term outlook of the broiler industry
is favourable, supported by increasing health awareness, changing
food habits and increasing disposable income and urbanisation.
Credit challenges
Small scale of operations in the intensely-competitive poultry
industry: The scale of operations is small with revenues of
INR11.14 crore in FY2017, which increased from INR9.72 crore in
FY2016 on account of higher sales realisations for hatching eggs
in FY2017. The poultry industry is characterised by intense
competition from the unorganised and organised players with low
entry barriers, which limit the overall pricing flexibility of
players like LSBFPL.
Financial profile characterised by weak debt-coverage indicators:
LSBFPL's financial profile is characterised by weak coverage
indicators as reflected by DSCR of 0.86 times as on March 31,
2017. LSBFPL has limited cushion available in the form of undrawn
working-capital limits. The inventory holding is high as usually
there are fluctuations in availability for feeds.
Susceptibility of margins to input feed-price fluctuations: With
poultry feed forming ~75% of the variable costs, the margins are
susceptible to price fluctuations of maize and soya, which are
the key raw materials for poultry feed.
Vulnerability of demand, revenues and margins inherent in poultry
industry: The risk of extreme climatic conditions, disease
outbreaks and seasonality in demand are inherent disadvantages in
the poultry industry.
LSBFPL was incorporated in 2010 and is involved in the business
of selling hatching eggs and day-old chicks produced by breeding
of parent chicks procured from Venkateshwara Hatcheries Pvt. Ltd.
which is a market leader in the Indian broiler industry. LSBFPL
operates through facilities located in Kowdipally Medak district,
Telangana and has a capacity of 54,000 birds.
M P ENTERTAINMENT: Ind-Ra Migrates BB Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated M P
Entertainment and Developers Private Limited's (MPEDPL) Long-Term
Issuer Rating to the non-cooperating category. The issuer did not
participate in the rating exercise despite continuous requests
and follow-ups by the agency. Therefore, investors and other
users are advised to take appropriate caution while using these
ratings. The rating will now appear as 'IND BB (ISSUER NOT
COOPERATING)' on the agency's website. The instrument-wise rating
action is as follows:
-- INR 558.7 mil. Term loan due on February 29, 2024 migrated to
Non-Cooperating Category with IND BB (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 16, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
MPEDPL was incorporated in 2006 by Mr. Gurjeet Singh Chhabra and
Mrs. Prabjot Kaur Chhabra. Its registered office is in Indore,
Madhya Pradesh. The company's Malhar Mega Mall has a total
constructed area of 350,000 square feet and a gross leasable area
250,000 square feet.
MISHRILAL ASSOCIATES: CARE Cuts Rating on INR2cr Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Mishrilal Associates Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2.00 CARE B; Issuer Not Cooperating;
Facilities Revised from CARE B+; Stable
on the basis of best available
information
Short-term Bank 8.00 CARE A4; Issuer Not Cooperating;
Facilities Based on best available
information
CARE has been seeking information from Mishrilal Associates
Private Limited to monitor the rating(s) vide e-mail
communications/ letters dated December 23, 2017, December 20,
2017, December 14, 2017 and November 27, 2017 and numerous phone
calls. However, despite our repeated requests, the company has
not provided the requisite information for monitoring the
ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the publicly available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The rating on Mishrilal Associates
Private Limited's bank facilities will now be denoted as CARE
B/A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised taking into cognizance decline in
profitability margins, deterioration in capital structure and
coverage indicators. The rating is further remained constrained
by small scale of operations with low net worth base highly
competitive industry with presence of several organized and
unorganized players along with risk associated with tender-based
orders. The rating, however, draws comfort from experienced
management and growing scale of operations.
Detailed description of the key rating drivers
At the time of last rating on November 7, 2016 the following were
the rating weaknesses and strengths (Updated for the information
available from the Registrar of companies):
Detailed description of the key rating drivers
Key Rating Weakness
Small scale of operations: The company is Engineering Procurement
Construction (EPC) contractor and is engaged in the field of
building electrical infrastructure such as rural electrification
works, distribution & transmission network for government
organizations. The ability of the company to scale up to larger-
sized contracts having better operating margins is constrained by
its comparatively low capital base of INR2.86 crore as on
March 31, 2017 and total operating income and gross cash accruals
of INR35.86 crore and INR 0.64crore respectively for FY17. The
small scale of operations in a fragmented industry limits the
pricing power and benefits of economies of scale.
Decline in profitability margins, deterioration in capital
structure and coverage indicators: The profitability varies with
the project due to tender driven nature of the business having
varied profitability margins owing to competitive bidding. The
profitability margins as marked by PBILDT and PAT margin declined
in FY17 and stood at 6.93% and 1.72% respectively as against
7.93% and 3.35% respectively in FY16. The capital structure stood
leveraged for the past three balance sheet date on account of low
net worth base against debt levels. The capital structure marked
by debt equity and overall gearing ratio deteriorated and stood
at 3.45x and 6.26x as on March 31, 2017 as against 0.74x and
2.63x respectively as on March 31, 2016. The average working
capital limits of the company remained almost fully utilized in
past 12 months ending December 2017. Further, the debt service
coverage indicators as marked by interest coverage and total debt
to GCA stood at 1.61x and 27.95x respectively for FY17 as against
2.60x and 16.11x respectively for FY16. The company receives
payment in around 6-7 months owing to delays in realization of
the receivables on account of lengthy clearance process with the
government/ semi government departments. The company normally
makes payment to suppliers as and when it receives the payment
from its customers. Further, the company maintains the adequate
inventory of finished goods for smooth execution of projects.
Highly competitive industry with presence of several organized
and unorganized players: MAPL faces direct competition from
various organized and unorganized players in the market. There
are number of small and regional players and catering to the same
market which has limited the bargaining power of the company and
has exerted pressure on its margins. Further, the award of
contracts are tender driven and lowest bidder gets the work.
Hence, going forward, due to increasing level of competition and
aggressive bidding, the profits margins are likely to be under
pressure in the medium term.
Business risk associated with tender-based orders: The company
majorly undertakes government organization, which are awarded
through the tender-based system. The company is exposed to the
risk associated with the tender-based business, which is
characterized by intense competition. The growth of the business
depends on its ability to successfully bid for the tenders and
emerge as the lowest bidder. Further, any changes in the
Government policy or Government spending on projects are likely
to affect the revenues of the company.
Key Rating Strengths
Experienced management and growing scale of operations: The
operations of MAPL are currently managed by Mr. Abhishek Agarwal
and Ms. Babita Agarwal. Mr. Abhishek Agarwal is post graduate by
qualification and Ms. Babita Agarwal is a graduate by
qualification. They both look after the overall operations of the
company and have around half decade of experience in electrical
contracting business through their association with MAPL. Prior
to this, Mr. Abhishek Agarwal has an experience of around a
decade in manufacturing of electrical equipment like conductors,
transformers etc. in his individual capacity and through his
association with other family concerns.
MAPL has witnessed growth in its TOI over the past three years
(FY14 to FY16) at a CAGR of 124.11% from INR7.04 crore in FY15 to
INR35.86 crore.
Uttar Pradesh based Mishrilal Associates Private Limited was
incorporated in 2011 by Mr Abhishek Agarwal and Ms. Banita
Agarwal. MAPL is engaged in the field of building electrical
infrastructure such as rural electrification and distribution &
transmission network. The key materials are electrical equipment
like transformers, cables, conductors electrical wires, pipe,
metal boxes, etc. which the company procures from the
manufacturers based in Delhi and near regions. The company
primarily executes projects for government organizations and
receives the orders through tender and bidding/quotation process.
NANDI VARDHANA: CARE Cuts Rating on INR24.56cr Loan to D
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Nandi Vardhana Textile Mills Limited (NVTML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 24.56 CARE D; Issuer Not Cooperating;
Facilities Based on best available
Information; Revised from
CARE BB; Stable
Short-term Bank 3.40 CARE D; Issuer Not Cooperating;
Facilities Issuer not cooperating; Based
on best available information;
Revised from CARE A4
CARE has been seeking information from NVTML to monitor the
rating(s) vide email communications dated December 20, 2017,
November 16, 2017, November 9, 2017, October 4, 2017, September
9, 2017 and numerous phone calls. However, despite our repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the extant SEBI
guidelines, CARE's rating on Nandi Vardhana Textile Mills
Limited's bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of ongoing delays in
debt servicing by the company.
Detailed description of the key rating drivers
Key rating Weaknesses
Ongoing delays in meeting of debt obligations: The company was
unable to generate sufficient cash flows leading to strained
liquidity position resulting in ongoing delays in meeting its
debt obligations in time.
NVTML was incorporated in the year 2005 by Mr P Srinivasa Rao, Mr
G Anjaiah, Mrs P Padmavathi and the relatives of the promoters.
NVTML is engaged in the manufacturing of cotton yarn with an
installed capacity of 20,448 spindles per annum at Thimmapuram,
Guntur District, Andhra Pradesh. NVTML manufactures and supplies
cotton yarn for both domestic as well as global markets. Till
FY12, a predominant portion of the finished product was sold
domestically, while around 22% was exported to countries like
Turkey, Brazil and China. However, the company started
concentrating more on exports from FY13 onwards. Export sales
contributed around 65% and 75% of the total operating income
during FY15 and FY16 respectively. The company manufactures yarn
of various counts like 20's, 32's and 40's.
NAVNITLAL PRIVATE: Ind-Ra Withdraws 'B' Long Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Navnitlal
Private Limited's (NPL) Long-Term Issuer Rating of 'IND B (ISSUER
NOT COOPERATING)'. The instrument-wise rating actions are as
follows:
-- INR6.7 mil. Term loan due on May 2016 withdrawn;
-- INR140 mil. Fund-based working capital limits withdrawn.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings for the bank
loans, as the agency has received no-objection certificates from
the lenders. This is consistent with the Securities and Exchange
Board of India's circular dated 31 March 2017 for credit rating
agencies. Ind-Ra will no longer provide analytical and rating
coverage for NPL.
COMPANY PROFILE
NPL, a manufacturer of cotton grey fabric, was set up in 1997
with its manufacturing plant in Khopoli, Maharashtra.
PINAKIN PLASTOFORMING: CARE Cuts Rating on INR8cr LT Loan to D
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Pinakin Plastoforming Limited (PPFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.00 CARE D Revised from
Facilities CARE B+; Stable
Short-term Bank 0.50 CARE D Revised from CARE A4
Facilities
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
PPFL is primarily due to irregularity in servicing its debt
obligations owing to weak liquidity position.
Establishing a clear debt servicing track record with improvement
in the liquidity position remains the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: There are on-going delays in
debt servicing. Working capital limit has remained overdrawn for
more than 30 days. The said irregularity was on account of weak
liquidity position of PPFL.
Vadodara-based (Gujarat) PPFL was incorporated in 2002 by Joshi
family as a private limited company and changed its constitution
to closely held limited company during February 2016. The
operation of PPFL is currently managed by Mr. Dinesh Joshi, Mr.
Divyesh Joshi and Ms. Pratiksha Joshi. PPFL is engaged into
manufacturing Polypropylene (PP) Disposable plastic products such
as disposable glass, cups etc. PPFL is operating from its sole
manufacturing unit located in Vadodara(Gujarat), having installed
capacity of 1,500 Metric Tonne Per Annum (MTPA) as on March 31,
2017. Siddhivinayak Industries and Shri Sainath Industries are
associated entities managed and owned by members of Joshi family.
Both entities are engaged into manufacturing and trading of
plastic disposables.
PRATEEK ALLOYS: Ind-Ra Puts B+ Issuer Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Prateek Alloys
Private Limited's (PAPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
now appear as 'IND B+ (ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are as follows:
-- INR100 mil. Fund-based working capital limits migrated to
Non-Cooperating Category with IND B+ (ISSUER NOT COOPERATING)
rating; and
-- INR120 mil. Non-fund-based working capital 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
PAPL was incorporated in 2001 by Shikhir Agarwal and Girija
Agarwal. It manufactures mild steel ingot, which is the primary
raw material for rolling mills manufacturing mild steel bars,
angels and channels. Its manufacturing facility is in Kundaim,
Goa.
PRAVEEN ELECTRICAL: ICRA Keeps B+ Rating in Not Cooperating Cat.
----------------------------------------------------------------
ICRA Ratings says the rating for the INR20.00 crore bank
facilities of Praveen Electrical Works (PEW) continues to remain
in the 'Issuer Not Cooperating' category. The rating is denoted
as "[ICRA]B+(Stable)/[ICRA]A4 ISSUER NOT COOPERATING". ICRA had
earlier moved the rating of PEW to the 'ISSUER NOT COOPERATING'
category due to non-submission of monthly 'No Default Statement'
("NDS") by the entity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term-Fund-
Based Limits 5.00 [ICRA]B+ (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long-Term-Non-
Fund Based Limits 9.00 [ICRA]B+ (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Proposed Limits 6.00 [ICRA]B+ (Stable)/A4 ISSUER
NOT COOPERATING; Rating
continues to remain in 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.
Praveen Electrical Works was established as a proprietorship firm
in 1994 by Mr. Prakash. C. Angadi. The firm is an electrical
contractor and is a registered Class I contractor with Government
of Karnataka. The firm undertakes internal and external
electrification works and caters to various Government
departments in Karnataka such as Hubli Electricity Supply Company
Limited, Karnataka Slum Development Board, Public Works
Department and The Karnataka Power Transmission Corporation
Limited among others.
RAJAT STEEL: CARE Assigns B+ Rating to INR11cr Long Term Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Rajat
Steel Syndicate (RSS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of RSS are constrained
on account of its thin profit margins, leveraged capital
structure, weak debt coverage indicators and moderate liquidity
position. The rating is also constrained due to its presence in
highly competitive and fragmented industry with threat from
integrated steel players coupled with proprietorship nature of
constitution and susceptibility of operating margins to commodity
price fluctuation.
The rating, however, derives strength from experienced promoter
and consistent increase in its scale of operations. The ability
of RSS to improve its scale of operations, profitability, capital
structure and debt coverage indicators along with better working
capital management would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Thin profit margins: Overall profit margins remained thin. During
FY17, PBILDT margin improved by 39 bps but stood thin at 2.46% as
against 2.07% in FY16. Consequently, the PAT margin has improved
marginally and stood at 0.47% in FY17 as against 0.43%
during FY16.
Leveraged capital structure and weak debt coverage indicators:
The capital structure remained leveraged marked by an overall
gearing ratio stood at 2.76 times as on March 31, 2017 as against
2.85 times as on March 31, 2016. Further, debt coverage
indicators remained weak marked by total debt to GCA of 33.58
times as on March 31, 2017 as against 27.15 times as on March 31,
2016 due to high debt level as against low GCA level. Further, an
interest coverage ratio stood at 1.25 times during FY 17 which
was in line as compared to previous year.
Moderate liquidity position: The Liquidity remained moderate
marked by current ratio of 1.38x as on as on March 31, 2017 which
was in line as compared to previous year. Operating cycle has
elongated and stood at 67 days during FY17 due to increase in the
collection period.
Presence in highly competitive and fragmented industry, with
constant threat from integrated steel players coupled with
proprietorship nature of constitution: Small players face high
degree of competition largely due to presence of unorganized
sector and fragmented nature of industry. Further, integrated
steel players are already supplying to retail customers directly
on selective basis removing trader or wholesaler intermediaries
which may further hamper competitive advantage of small traders
where business thrives on relationship with client. The
constitution as a proprietorship firm restricts capital being
withdrawn at time of personal contingency, and firm being
dissolved upon the death/retirement/insolvency of proprietor.
Susceptibility of operating margins to commodity price
fluctuation: RSS's trading product portfolio constitutes of
stainless steel, Billet, Pig Iron, Sponge, Pallet, MS Round,
flats where prices are derivative of domestic demand-supply
scenario and global volatility in base metals. RSS procures the
steel products
based on orders from the customers and also builds inventory in
order to meet unexpected demand. Therefore, the absence of any
confirmed orders or long term supply contracts with its client's
results in RSS being exposed to volatility in steel commodity
prices on its inventory.
Key Rating Strengths
Experienced promoter coupled with Location Advantage: RSS,
currently, has been managed by Mr. Rajkumar Garg, husband of Mrs.
Seema Garg (Proprietor) and her family member. And all are
holding healthy experience in the same line of business. The
trading facility of RSS is located in Ghaziabad of Uttar Pradesh.
The location provides proximity to sources of material access and
smooth supply of its products at competitive prices and lower
logistic expenditure (both on the transportation and storage). It
enjoys good road, rail and air connectivity leading to better
lead time and facilitating delivery of finished products in a
timely manner.
Gaziabad- Uttarpradesh based Rajat Steel Syndicate (RSS) is a
proprietorship and incorporated in the year 2011 by Mrs.
Seema Garg. RSS is engaged in trading of steel products like
billets, pig iron, sponge and pallet and etc from its trading
facility located at 228/4, Loha Mandi, Gaziabad, Uttar Pradesh.
RAYBAN FOODS: ICRA Keeps B Rating in Not Cooperating Category
-------------------------------------------------------------
ICRA Ratings says the rating for INR50.00-crore bank facility of
Rayban Foods Private Limited (RFPL) continues to remain in 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-Working
Capital 30.00 [ICRA]B(Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Fund Based-Term
Loan 2.69 [ICRA]B(Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Non-fund based-
Forward Contract 7.50 [ICRA]A4 ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Unallocated 9.81 [ICRA]B(Stable)/A4 ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been seeking information from the entity so as to
monitor its performance. Despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA on the basis of the best
available/dated/limited information on the issuers' performance.
Accordingly, lenders, investors and other market participants are
advised to exercise appropriate caution while using this rating
as it may not adequately reflect the credit risk profile of the
entity.
Rayban Foods Private Limited (RFPL) commenced operations in
FY2010 and is involved in the business buffalo meat processing.
The company operates from its meat processing plant located at
Hapur, Uttar Pradesh.
RD T.M.T: ICRA Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------
ICRA has moved the long term ratings for the bank facilities of
RD T.M.T Steels India Private Limited to the 'Non Co-Operation'
category. The rating is now denoted as "[ICRA]B+(Stable); ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based Cash
Credit 7.00 [ICRA]B+(Stable); ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Unallocated 3.00 [ICRA]B+(Stable); 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 based on 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.
RDTMT Steels India Pvt Ltd has been promoted by Mr. Sanjay
Agarwal, Mr. Rajesh Kumar Agarwal and Mr. Pradeep Agarwal, who
have experience in granite business in Bangalore, Karnataka since
2003. Since October 2014, RDTMT has been engaged in the
manufacturing of mild steel billets with its manufacturing
facility located at Hindupur, Andhra Pradesh.
RK VISION: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated R. K. Vision's
(RKV) Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND B+
(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating action is as follows:
-- INR130 mil. Fund-based limits Migrated to Non-Cooperating
Category with IND B+ (ISSUER NOT COOPERATING)/IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 6, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
RKV is a proprietorship unit, started in 1995. It is engaged in
the trading of large electronic appliances. RKV has a
distributorship of Samsung India Electronics for eastern Uttar
Pradesh. The firm's office is located in Varanasi, Uttar Pradesh.
RSV RICE: ICRA Raises Rating on INR15cr Term Loan to B+
-------------------------------------------------------
ICRA has upgraded the long-term rating to [ICRA]B+ from [ICRA]B
to the INR31.50-crore bank facilities of RSV Rice Industries. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 15.00 [ICRA]B+(Stable); Upgraded
from [ICRA]B
Fund based-Working
Capital Facilities 13.00 [ICRA]B+(Stable); Upgraded
from [ICRA]B
Unallocated 3.50 [ICRA]B+(Stable); Upgraded
from [ICRA]B
Rationale
The rating upgrade takes into account the successful and timely
commencement of operations and healthy ramp-up with revenues of
INR44.6 crore generated in the first eight months of operations;
revenue growth is expected to be healthy in the current year with
firm reporting INR48.5 crore sales in 8M FY2018. The rating is,
however, constrained by the modest scale in highly competitive
rice industry, agro-climatic risks which could impact the
availability and prices of paddy, and exposure of profitability
to, government policies. The rating takes comfort from the long
track record of the partners spanning over two decades in the
rice mill business, established customer and supplier base of the
firm, and location advantage with plant's proximity to the major
rice producing districts in Telangana and Andhra Pradesh.
Further, the rating factors in the comfortable liquidity position
of the firm as reflected in average utilization of 63.3% from the
period Feb-17 to Nov-17.
Outlook: Stable
ICRA believes RSV Rice Industries will benefit from the extensive
experience of its partners. 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 cash
accrual is lower than expected, or if any major debt-funded
capital expenditure, weakens liquidity.
Key rating drivers
Credit strengths
Long experience of the partners: The partners have extensive
experience in the rice mill business which enabled them to build
strong customer and supplier base.
Favorable location of the manufacturing unit: The manufacturing
unit is located at Miryalguda, Nalgonda district of Telangana, a
major rice producing belt of Telangana, providing regular and
easy access to the raw materials at lower transportation costs.
Credit weaknesses
Nascent stage and modest scale of operations: The firm started
operations in August 2016 and is in its initial stages of
operations therefore scaling up the operations remains crucial
however the firm reported healthy revenues of INR44.6 crore in
the first eight months of operations and INR48.5 crore in 8M
FY2018.
Highly fragmented industry, given the low entry barriers: The
firm faces stiff competition from other unorganised players in
the absence of entry barriers, which limits its pricing
flexibility and bargaining power with customers, thereby putting
pressure on its revenues and margins. Moreover, high competition
may lead to under utilisation of the capacity of the firm.
Inherent risks in rice mill industry: The availability of paddy
is dependent on climatic conditions prevailing during season.
Hence, the firm is exposed to the risk of fluctuations in the
availability and prices of the raw-materials. Moreover, rice
industry is highly regulated in terms of fixation of paddy
procurement price.
Inherent risks being a partnership firm: Being a partnership
firm, it is vulnerable to capital withdrawals by the partners.
Incorporated in 2015, RSV Rice Industries (RSVRI) is involved in
milling of Paddy at its unit located at Miryalaguda, Nalgonda
district. The milling capacity is 12 tonnes per hour i.e. 72,000
MTPA. The main products of the firm are Rice, Broken Rice and
Bran. The firm uses silos for paddy storage instead of
traditional godowns. The firm has its own co-generation power
plant using steam as an input.
In 8M FY2017, the firm reported a net profit of INR0.3 crore on
an operating income of INR44.6 crore.
SANEE INFRASTRUCTURE: CARE Assigns B- Rating to INR2.90cr Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sanee
Infrastructure Private Limited (SIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2.90 CARE B-; Stable Assigned
Short-term Bank
Facilities 8.00 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SIPL are primarily
constrained on account of its modest scale of operations with net
and cash loss in FY17, leveraged capital structure and stressed
liquidity position. The ratings, further, constrained on account
of moderate order book position and presence in the highly
competitive government civil construction industry.
The ratings, however, favorably take into account the vide
experience of the qualified promoters in the civil construction
industry.
The ability of the company to increase its scale of operations by
securing more contracts along with speedy execution of same with
better management of working capital would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest Scale of operations along with net and cash loss in FY17
and moderate order book position
During FY17, the scale of operations of the company stood modest
marked by Total Operating Income (TOI) of INR3.82 crore mainly on
account of lower execution of contracts due to suspension of the
registration certification for two years. With significantly
decline in TOI, SIPL has registered operating loss as well as net
loss and cash loss in FY17. After revocation of order, SIPL got
three work orders of INR52.57 crore. The on-going projects of the
company are likely to be executed within a period of 18 months,
providing medium term revenue visibility.
Weak solvency position and stressed liquidity position: The
solvency position of SIPL stood leveraged marked by overall
gearing of 2.05 times as on March 31, 2017. Further, the
operating cycles of the company has elongated mainly on account
of higher debtors as on balance sheet date.
Presence in highly competitive civil construction industry: The
construction industry is highly fragmented in nature with
presence of large number of unorganized players and a few large
organized players coupled with the tender driven nature of
construction contracts poses huge competition and puts pressure
on the profitability margins of the players.
Key Rating Strengths
Experienced and qualified management with long track record of
operations: Mr. Nilay Jain, Director, BE by qualification have
more than two decade of experience in the civil construction
industry and looks after overall affairs of the company. Mrs
Nisha Jain, Director, has also 15 years of experience in the
industry and looks after finance and accounts of the company.
They are assisted by their son, Mr Neel Jain, who B.tech by
qualification
and looks after administration of the company. With long track
record of operation of the company since 2002, the company has
established relations with private players as well as government
departments.
Bhopal-based (Madhya Pradesh) Sanee Infrastructure Private
Limited (SIPL) was formed in 2002 by Mr Nilay Jain and Mrs Nisha
Jain as a private limited company to carry out the construction
of building and roads. The company mainly executes contracts of
construction & maintenance of roads majorly in the state of
Madhya Pradesh. Prior to the incorporation of the company, it was
carrying the business in the name of M/s Sanee Construction as a
proprietorship concern; subsequently in October 2002 it had
converted into private limited company. SIPL is registered 'A'
class approved contractor with Public Works Department (PWD),
Madhya Pradesh.
SARATHA ELECTRO: ICRA Keeps B Rating in Not Cooperating Category
----------------------------------------------------------------
ICRA Ratings says the rating for the INR10.00 crore bank
facilities of Saratha Electro Plater (SEP) continues to remain in
the 'Issuer Not Cooperating' category. The rating is denoted as
[ICRA]B(Stable)/[ICRA]A4 ISSUER NOT COOPERATING. ICRA had earlier
moved the rating of SEP to the 'ISSUER NOT COOPERATING' category
due to non submission of monthly 'No Default Statement' ("NDS")
by the entity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 1.50 [ICRA]B (stable); ISSUER NOT
Based (CC) COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long term fund 4.80 [ICRA]B (stable); ISSUER NOT
based term loan COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long term and short 3.70 [ICRA]B(Stable)/[ICRA]A4;
term unallocated ISSUER NOT COOPERATING;
limits Rating continues to remain
in 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.
Promoted in 1998 by Mr. K. Mahadevan, Saratha Electro Plater
(SEP) is proprietorship firm specialized in Zinc and Zinc-Nickel
Electroplating services catering to the automobile manufacturing
industries in Tamil Nadu. The firm operates from its two plants
located in Thirumudivakkam and Kakkalur, both located on the
outskirts of Chennai, Tamil Nadu.
SARDAR COTTON: CARE Lowers Rating on INR10.87cr Loan to D
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sardar Cotton, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.87 CARE D; Issuer not cooperating;
Facilities Revised from CARE B+; Stable;
Based on best available
information
CARE has been seeking information from Sardar Cotton to monitor
the ratings vide e-mail communications/letters dated
January 2, 2018, December 6, 2017, November 16, 2017, November 1,
2017 and numerous phone calls. However, despite our repeated
requests, the firm has not provided the requisite information for
monitoring the ratings. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the publicly
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The ratings on Sardar
Cotton's bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
The rating has been revised on account of the delays in debt
repayment owing to weak liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: SC has been irregular in
servicing its debt obligation due to weak liquidity position of
the firm.
Rajkot (Gujarat)-based, Sardar Cotton (SC) is a partnership firm
incorporated in 2012 by Mr. Pravinbhai Kurjibhai Mendpara, Mr.
Ajaybhai Haribhai Zalavadiya and Mr. Dineshbhai Virjibhai Tada.
The firm is engaged into the business of cotton ginning and
pressing of raw cotton to produce cotton bales and cottonseeds.
SC spreads across 2 acres and possesses set of 24 cotton ginning
machines with an installed capacity of manufacturing 200 bales
per day.
SHYAMSUNDER GRAIN: CARE Assigns B+ Rating to INR15cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of of
Shyamsunder Grain Products Private Limited (SGPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15.00 CARE B+; Stable Assigned
Rating Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SGPPL is primarily
constrained on account of stabilization risk associated with on-
going debt funded project, susceptibility of profit margins to
fluctuation in raw material prices and presence in a fragmented
industry with low entry barriers. The rating, however, derives
strength from experienced management in the industry.
The ability of the company to timely initialize and stabilize its
operations coupled with achievement of envisaged level of
TOI and efficient working capital management would be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Stabilization risk associated with on-going debt funded project:
Initially, SHF undertook a project for greenfield project for the
processing of grain mill products (Atta, Sooji, Maida). The
project is completed and SGPPL is expected to commence its
commercial operations from last week of January, 2018. Hence,
post-implementation project risk pertaining to stabilization of
operations risk is high especially in the backdrop of a
predominantly debt-funded capex with repayment obligations
commenced from April, 2018.
Susceptibility of profit margins to fluctuation in raw material
prices: SGPPL is primarily engaged in the processing of wheat.
Wheat being an agricultural produce and staple food, its price is
subject to intervention by the government. The prices are also
sensitive to seasonality in wheat production, which is highly
dependent on monsoon. Any volatility in the prices will have an
adverse impact on the performance of the flour mill and
consequently their profit margins.
Presence in a fragmented industry with low entry barriers: The
commodity nature of the product makes the industry highly
fragmented with more than two-third of the total number of
players being in unorganized sector with very less product
differentiation.
Key Rating Strengths
Experienced management in the grain product industry: Mr. Sanjay
Kumar Chhaparia, director, looks after overall management,
strategy and policy making functions of JTPL. He wiil be equally
supported by Mr Rajeev Kumar Chhaparia and Mr Srikrishna Agarwal.
Further, the promoters of SGPPL have been engaged in the agro-
commodities industry since 2004 through its group concern, M/s
Pankaj Trading Company (PTC).
Siddharthnagar(Uttar Pradesh)-based Shyamsunder Grain Products
Private Limited (SGPPL) was formed in August 2015 as a private
limited company by Ms Srikrishna Agrawal, Mr Rajeev Kumar
Chhaparia and Mr Sanjay Kumar Chhaparia with an objective to set
up greenfield project for the processing of grain mill products
(Atta, Sooji, Maida). The plant of the firm will have installed
capacity of 90,000 Tonnes Per Annum (TPA) of processing of grain
mill products.
SITAPURAM POWER: CARE Lowers Rating on INR78.02cr Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sitapuram Power Limited (SPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 78.02 CARE D Revised from
Facilities CARE BBB; Stable
Short term Bank 10.00 CARE D Revised from
Facilities CARE A3+
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SPL are
constrained by reduced power generation and off-take resulting in
stretch on cash flow position and delays in debt servicing.
Detailed description of the key rating drivers
Key Rating Strengths
Experience of promoters in setting up and operating power plants:
SPL is a special-purpose vehicle (SPV) incorporated in 2005 by
Zuari Cements Ltd (ZCL) and KSK Electricity Financing India Pvt
Ltd (KFIPL), a wholly-owned subsidiary of KSK Energy Ventures
Limited (KEVL) which is engaged in developing, operating and
maintaining power projects and it is the holding company for a
number of power projects being developed by the KSK group.
Presence of Power Purchase agreements for partial off-take and
Fuel supply agreements: The company has PPA with ZCL for the
supply and off-take obligation of 19-20 MW at a tariff of
INR5.35/Kwh. It also has FSA with Singareni Collieries Company
Limited (SCCL) for coal linkage of 0.233 Million Tonnes Per Annum
(MTPA) which is sufficient to cater to around 63% of the total
requirement of coal (0.367 MTPA at 100% PLF level).
Key Rating Weaknesses
Weakened operational and financial performance resulting in
delays in debt servicing: The company has PPA with ZCL for supply
of 19-20 MW of Power and balance capacity was being sold to
Telangana State DISCOMs on short term basis. However, the ST PPA
got expired in May 2017 which has not been renewed thereafter.
The same has significantly impacted the revenue generation of the
company and the company was operating at a PLF of about 62%
during January-September 2017 (vis-a-vis 75% during CY16). This
apart, off-take from Zuari has also been low from Q3FY18 due to
lower production in their two manufacturing units which further
strained the cash flow of the company. Consequently, the
liquidity has been stretched and there are delays in debt
servicing.
The total operating income of the company declined by 13.23% to
INR135.54 crore y-o-y, over INR156.21 crore during CY16 mainly
due to decline in annual PLF achieved during CY16 at 74.56%
against 85.65% in CY15 on account of lower power demand from off-
takers. Accordingly, in CY16, the PBILDT margin declined by 528
bps to 15.65% (CY15: 20.93%), due to under-absorption of fixed
overheads.
Incorporated in July 2005, SPL is a special purpose vehicle
jointly promoted by Zuari Cements Limited and KSK Electricity
Financing India Private Limited (KEFIPL). KEFIPL is a 100%
subsidiary of KSK Energy Venture Limited. ZCL holds 51% equity
share in SPL, while KEFIPL holds the balance shares in the
company. SPL operates coal-based power plant of capacity 43
MW (net capacity of 39 MW) at Dondapadu, Nalgonda District,
Telangana which was commissioned on March 1, 2008.
Out of the net capacity of 39 MW, it provides captive power to
the extent of 20 MW to the cement manufacturing facilities of ZCL
located at Krishna Nagar (Yerraguntla), Andhra Pradesh [capacity-
3.8 Million Tonnes Per Annum (MTPA)] and Dondapadu (capacity-1.3
MTPA), Telangana.
SOUTHERN POWER: ICRA Keeps B- Rating in Not Cooperating Category
----------------------------------------------------------------
ICRA Ratings says the rating for the INR10.00 crore bank
facilities of Southern Power Equipment Company Private Limited
(SPECPL) continues to remain in the 'Issuer Not Cooperating'
category. The rating is denoted as "[ICRA]B- (Stable)/[ICRA]A4;
ISSUER NOT COOPERATING". ICRA had earlier moved the rating of
SPECPL to the 'ISSUER NOT COOPERATING' category due to non
submission of monthly 'No Default Statement' ("NDS") by the
entity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term-Cash 3.00 [ICRA]B- (Stable); ISSUER NOT
Credit COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long-Term-Term Loan 0.38 [ICRA]B- (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Short Term-Non Fund 6.62 [ICRA]A4; ISSUER NOT
Based COOPERATING; Rating continues
to remain in 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.
Southern Power Equipment Company Private Limited was established
in the year 1988 as a closely held private limited company under
the name 'Deccan Transformers Private Limited'. During 2001, the
name was changed to 'Southern Power Equipment Company Private
Limited'. The company is based out of Yeshwanthpur, Karnataka.
SPEC was primarily involved in the manufacturing of distribution
transformers. The company also started manufacturing power
transformers from 2004 onwards. Apart from manufacturing
transformers, the company is also engaged in testing and customer
support.
The company is a member of 'Indian Electrical Electronics
Manufacturers Association', 'Indian Transformers Manufacturers
Association' and 'Karnataka Transformers Manufacturers
Association'. It is an ISO 9001:2000 certified company.
SREE VARASIDHI: CARE Assigns B+ Rating to INR5.40cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sree
Varasidhi Vinayaka Cottons (SVVC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.40 CARE B+; Stable Assigned
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facilities of SVVC are tempered
by short track record of the firm and risk towards stabilization
of operations, partnership nature of constitution with inherent
risk of withdrawal of capital, susceptibility of profits to
volatile price fluctuation, seasonality associated with
availability of cotton and highly fragmented industry with
intense competition from large number of players. However, the
rating is underpinned by the experienced promoters for more than
two decades in cotton industry and stable outlook of cotton
industry.
Going forward, ability of the firm to stabilize the operations
and generate the revenue and profit levels as envisaged and
ability of the firm to expand its customer base shall remain the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Short track record of the firm and risk towards stabilization of
operations: The firm was established in 2017 and started its
project activities in the same year. The promoters of the firm
have set up an unit with a total estimated cost of INR 5.40 crore
which is funded by promoter's contribution of INR1.90 crore,
Venture Capital Assistance from SFAC (Small Farmers Agro Business
Consortium) of INR0.50 crore and remaining through term loan
of INR3.00 crore. The commercial operations of the firm started
from November 2017 onwards and achieved revenue of INR 7.31 crore
during November 2017 to December 2017. Therefore, the ability of
the firm to stabilize the operations and generate the revenue and
profit levels as envisaged remains critical from credit
perspective.
Partnership nature of constitution with inherent risk of
withdrawal of capital: Constitution as a partnership firm has the
inherent risk of possibility of withdrawal of the partner's
capital at the time of personal contingency which can affect its
capital structure. Further, partnership concern has restricted
access to external borrowing which limits their growth
opportunities to some extent.
Susceptibility of profits to volatile price fluctuation and
seasonality associated with availability of cotton: The cotton
prices are volatile in nature and depend upon factors like,
monsoon condition, area under cultivation, yield for the year,
international demand supply scenario, export policy decided by
the government and inventory carry forward of last year. Cotton
being a seasonal crop is sown upto October and harvesting is done
between January and may in peninsular part of India. Prices of
cotton are at their lowest in harvesting season and trend up
thereafter, depending upon supply-demand dynamics which results
into a higher inventory holding period for the business.
Furthermore, the quantum of cotton produced in a particular year
is dependent on factors such as rainfall and vagaries of nature
and government policies. Thus SSG's operations are contingent on
it sourcing the requisite quantum of cotton at an appropriate
price.
Highly fragmented industry with intense competition from large
number of players: The firm is engaged in manufacturing of cotton
bales which is highly fragmented industry due to presence of
large number of organized and unorganized players in the industry
resulting in huge competition.
Key Rating Strengths
Experienced promoters for more than two decades in cotton
industry: Mrs. Y Rajyalakshmi was a graduate in commerce and has
vast line of experience in cotton industry. She had worked as the
managing partner of M/s Vararakshmi cotton Ginning Mills
from:1990 to 2000 and later she actively took part in
administration of M/s Vijayarakshmi pressing Mills as partner.So,
she has over all experience of around 27 years in the same line
of business.
Mrs. V Revathi was a graduate in commerce and started her career
in cotton industry from 2000 onwards. She has started a
proprietorship firm by name M/s Sree Varasidhi Vinayaka Cotton
Traders, Bellary in the year 2000. So, she has more than 17 years
of experience in the same line of business. Due to long term
presence in the market by the promoters they have established
good relations with customers and suppliers.
Stable outlook of cotton industry: Amongst all the cotton growing
countries of the world, India ranks number one in cotton
cultivation area spreading out to about 95 lakh hectares.
Although only the second in cotton production in the world, India
has several distinctions to its credit. The ginning outturn of
the Indian cotton also presents a wide spectrum of variations
from 24% to 42%.The purpose of ginning is to separate cotton
fibers from the seed. The ginning process is the most important
mechanical treatment that cotton undergoes before it is converted
into yarns and fabrics. Any damage caused to the quality of
fibers during ginning cannot be rectified later in the spinning
or subsequent processes. Most of the ginneries in India were in
primitive condition and running with poor efficiency. There are
over 3500 factories in India dispersed in nine major cotton-
growing states. Out of these, over 2600 factories perform only
ginning operation and over 2000 factories has installed capacity
of as small as 6-12 double roller gins. With these developments,
ginning infrastructure in the country seems to be well on its way
to secure a firm foundation. The cotton textile industry in India
can look forward to meet its major raw material requirements
through indigenous supply of clean cotton.
Sree Varasidhi Vinayaka Cottons (SVVC), was established in 2017
as a Partnership firm by Mrs.Y.Rajyalakshmi and Mrs.V.Revathi.
The firm has a cotton ginning and pressing factory with a total
installed capacity of 1,51,200 Quintals p.a. at its manufacturing
unit located at Jogulamba Gadwal District, Telangana State. The
firm has major customers like Sri Lakshmi Saraswathi Textiles
Arni Limited (CRISIL B-;Stable/CRISIL A4 downgraded from CRISIL
B;Stable/CRISIL A4 as on Nov 21,2017) and Subbaraju Cotton Mill
Private Limited among others. SVVC purchases raw cotton from
farmers in and around Telangana state. SVVC has commenced its
operations from November 2017 onwards. The total cost incurred
for setting up the unit was INR 5.40 crore which was funded by
promoter's contribution of INR1.90 crore, Venture Capital
Assistance from SFAC (Small Farmers Agro Business Consortium) of
INR0.50 crore and remaining through term loan of INR3.00 crore.
STEEL IMPEX: Ind-Ra Lowers INR230MM Loan Rating to D
----------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Steel Impex &
Industries' (SII) bank facility as follows:
-- INR230 mil. Fund-based facilities (short-term) downgraded
with IND D rating.
KEY RATING DRIVERS
The downgrade reflects delays in foreign bill payments by SII
during the three months ended December 2017 due to a tight
liquidity position.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months
could be positive for the ratings.
COMPANY PROFILE
Based in Mumbai (Maharashtra), SII was set up as a partnership
firm in 1955. It supplies auto spare parts and accessories for
trucks, buses, tractors and passenger cars in international
markets. The product profile of the firm includes bearings,
fasteners, brake parts, engine components, and transmission and
suspension system components.
SVM CERA: CARE Moves D Rating to Not Cooperating Category
---------------------------------------------------------
CARE Ratings has been seeking information from SVM Cera Private
Limited to monitor the ratings vide e-mail communications/letters
dated January 19, 2018, January 2, 2018, December 6, 2017,
November 16, 2017, November 1, 2017 and numerous phone calls.
However, despite our repeated requests, the company has not
provided the requisite information for monitoring the ratings.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 4.50 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Short term Bank 2.40 CARE D; Issuer not cooperating;
Facilities Based on best available
information
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 SVM Cera Private
Limited's bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: SCPL has been irregular in
servicing its debt obligation as there are on-going delays due
to weak liquidity position of the company.
Ankleshwar-based (Gujarat), SVM Cera Private Limited (formerly
known as SVM Cera Tea Limited and SVM Cera Limited) was
incorporated in January, 1986. The registered office of the
company is located at 2, Biplabi Tarilokya Maharaj Sarani,
Kolkata. The management of the company is handled by Mr K.M.
Bhandari (Director) under the leadership of Mr S.V. Mohta
(Director) and Mr Ghanshyam Chomal (Director). Initially the
company was engaged into the real estate business.
In 1994, the company diversified its area of operations by
entering into the manufacturing of ceramic glaze frit by setting
up a manufacturing unit in Ankleshwar, spread across 14000 Sq.
Metres with total installed capacity of 14490 MTPA as on
March 31, 2016.
SYNDICATE IMPEX: CARE Moves B+ Rating to Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings has been seeking information from Syndicate Impex
(SI) to monitor the rating vide e-mail communications/ letters
dated August 4, 2017, August 21, 2017, November 11, 2017 and
January 13, 2018 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 has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating
Syndicate Impex's bank facilities will now be denoted as CARE B+;
Stable/CARE A4 ISSUER NOT COOPERATING; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 1.16 CARE B+; Stable; Issuer Not
Facilities Cooperating; Based on best
available information
Short-term Bank 4.30 CARE A4; Issuer Not Cooperating;
Facilities Based on best available
information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on July 26, 2016 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Small scale of operations: SI's operations are small as measured
by small size of total operating income (TOI) of INR11.02 crore
in FY15 (A) and networth of INR1.13 crore as of March 31, 2015.
SI records a CAGR growth of 51.52% for FY13-FY15 (A) on a low
base though. In FY15 (A), TOI grew by 155% due to addition of
reputed client and increased orders from them. In FY15, SI
obtained few compliances from (Business Social Compliance
Initiative (BSCI), Disney compliance and FEDEX compliance. By
obtaining the
certifications, the orders from "Orchestra" increased which
resulted in significant growth in TOI. In FY16 (Prov.), SI
achieved a total income of INR13 crore whereas in Q1FY17, SI
achieved total income of INR11.50 crore.
Client concentration risk: Till FY14, SI was exporting the
garments to Netherlands and Greece. From FY15, SI bagged orders
from fashion brands - Orchestra (based in France), Max (based in
Dubai). SI is receiving around 98% of the revenue from these
customers exposing SI to client concentration risk. However,
comfort can be derived from the repeat orders bagged by SI during
FY15 and FY16. SI had established its relationship during these
years and based on the increase of orders received, SI is
undergoing capacity expansion of 120 seats. The key client
"Orchestra" has more than 1000 outlets in Europe and is expanding
its market in US also. SI is likely to get more orders due to the
market expansion and SI has planned to obtain WRAP (Worldwide
Responsible Accredited production) certificate also.
In Q1FY17, SI achieved income of INR 11.50 crore. The order book
of SI (for winter clothing) as on July 15, 2016 stood at INR6.50
crore expected to be executed by September 2016 providing short
term revenue visibility.
Thin and fluctuating profit margins due to susceptibility of raw
materials and forex movements: The profit margins are fluctuating
due to the susceptibility of raw material prices and foreign
exchange movements. Around 85% of the orders received by SI will
be in such a way that SI is required to dispatch sample products
on receipt of orders along with the price quotation. The customer
confirms the exact order after receipt of sample product and
price quotation. This results in fluctuating profit margins.
However, SI derives comfort through forward contract facility.
The PBILDT margin improved by 485 bps to 10.21% in FY14 over FY13
due to decline in material cost incurred and other manufacturing
expenses incurred. However, the PBILDT margin dipped by 231 bps
to 7.90% in FY15 over FY14 due to higher employee cost. PAT
margin stood thin and fluctuating on the back of variations in
PBILDT margin coupled with increase in interest and depreciation
costs.
Moderate capital structure and debt protection metrics: Till
FY14, the firm didn't had long term loans on its books. In FY15,
SI availed term loan for purchase of machinery and the debt
equity ratio stood at 0.16 x as on March 31, 2015. The overall
gearing ratio has been improving and stood moderate at 2.06x as
on
March 31, 2015 compared to 2.69x as on March 31, 2013. Out of
the total debt of INR 2.75 crore, working capital facility
constitutes 85%; term loan from bank and unsecured borrowings
from friends and relatives the constitutes the remaining.
Interest coverage ratio stood moderate in the range of 1.29 times
and 1.77 times during the year FY13-FY15. Total debt/GCA stood
high albeit year on year improvement from 29.85 x in FY13 to 9.09
x in FY15.
Working capital intensive nature of operations resulting in
elongated operating cycle: The working capital intensive nature
of operations is marked by stretched operating cycle. As SI is a
100% EOU, the manufacturing of garments is based on the orders
received. Time duration of execution of orders is around
90-120 days. The raw material and the WIP inventory are held for
around 90 days. SI procures raw materials from Tirupur region and
avails credit period ranging from 0-60 days. Sales of SI were
initially based on usance letter of credit (90 days) whereas from
FY15, SI's sales are against sight LC. This led to improvement in
collection period improved from 100 days to 49 days resulting in
improvement of operating cycle.
Key Rating Strengths
Long track record of operation and experience of the promoters:
Mr. S. Jayakumar and Mr. N. Kathiresan are graduates in Fashion
Technology and have an experience of 2 years in textile industry
prior to establishment of SI. Mr. S. Jayakumar looks after raw
material procurement and finance functions while Mr. N.
Kathiresan looks after production and marketing. Mr. N.
Arunachalam takes care of outsourcing division.
Successful completion of capacity expansion: SI has recently
completed capacity expansion for a total project cost of INR1.50
crore funded by a term loan of INR1 crore (sanctioned under A-
TUFS scheme) and INR0.50 crore through capital infusion and
internal accruals.
The scope of the project was the installation of additional 120
seaters along with modernization plan by installing vacuum
ironing tables, wooden boilers and office furniture. SI is taking
initiatives towards power saving by shifting from electric boiler
to wooden boiler (the same will enable SI to save around 25% of
the power and fuel cost). The firm has sewing machines imported
from Hongkong and China. The project commenced in February 2016
and the incremental capacity became operational from July 2016.
The modernization plan will be completed in August 2016.
Syndicate Impex (SI), a Tirupur based firm was established as a
partnership firm in 2006 and the partners are Mr. N.Arunachalam,
Mr. N.Kathiresan, Mr. S.Jayakumar and Mr. S.Aruna Devi. SI, 100%
export oriented unit (EOU), is engaged in manufacturing of
hosiery knitted and woven garments (children's wear). The client
base includes major fashion brands such as Orchestra (based in
France), Max (based in Dubai). SI procures yarn count ranging
from 20's to 70's and outsources knitting, dyeing and compacting.
Stitching is carried out by SI with an installed capacity of 100
seaters as on June 30, 2016. There are around 200 regular
employees.
THAKAR DASS: ICRA Reaffirms B+ Rating on INR5cr Overdraft
---------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA] B+ on the
INR5.00-crore fund-based working capital facility of Thakar Dass
& Co. (TDC). ICRA has also reaffirmed the short-term rating of
[ICRA] A4 on the INR4.50-crore short-term non-fund based limits
of TDC. It has also reaffirmed the long-term rating of [ICRA] B+
on the INR3.00-crore unallocated facilities of TDC. The outlook
on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Overdraft facilities 5.00 [ICRA]B+(Stable); re-affirmed
Short-term non-fund
based facilities 4.50 [ICRA]A4; re-affirmed
Unallocated facilities 3.00 [ICRA]B+(Stable);re-affirmed
Rationale:
ICRA's ratings reaffirmation factors in the 17% year-on-year
(YoY) growth in TDC's operating income (OI) in FY2017, owing to
an increase in the volumes sold. However, profitability continues
to be thin due to the low value-additive trading nature of
business.
ICRA's ratings continue to be constrained by the low entry
barriers and intense competition in the trading business. The
firm's profitability remains exposed to adverse fluctuations in
foreign exchange rates and volatility in polymer prices as ~40%
of its traded good requirements are met through imports. ICRA
also takes note of the firm's modest return indicators and
subdued coverage indicators. The ratings, however, favourably
factor in the extensive experience of the partners in the polymer
trading business, its established relationships with suppliers
and customers, and its vast network of dealers which facilitates
sales.
The firm's ability to increase its scale of operations, improve
its profitability and efficiently manage its working-capital
requirements will be the key rating sensitivities.
Outlook: Stable
ICRA believes that TDC will continue to benefit from its efforts
to add customers to its overall profile. The outlook may be
revised to Positive if substantial growth in revenue and
profitability, and better working-capital management strengthen
the financial risk profile. The outlook may be revised to
Negative if there is a decline in the sales or delay in payments
from the customers stretches the working-capital cycle and
weakens the liquidity position of the firm.
Key rating drivers:
Credit strengths
Over two-decade-long experience of the partners in polymers and
chemicals trading business: The firm is primarily engaged in
trading of rubber chemicals, synthetic rubbers, carbon black etc.
with its partners having over two decades of experience in the
industry. The firm is based out of New Delhi with regional sales
office in several other cities.
Established relationships with customers and suppliers: The firm
sources its products from domestic suppliers as well as through
imports. The firm primarily sells its products to companies
operating is diversified industries and has a well-established
customer base which helps it in getting continuous orders.
Credit challenges
Small scale of operations; moderate profitability indicators: The
firm's scale of operations has remained small and its
profitability margins have continued to be low due to the trading
nature of business.
Intense competition due to low entry barriers and complexity: The
firm faces stiff competition from its industry peers, limiting
its pricing flexibility and bargaining power with customers. This
puts pressure on its revenues and margins.
Vulnerability of profitability to adverse fluctuation in raw
material prices: The firm's margins are susceptible to raw
material price fluctuation, which in turn affects sales
realisations. Any adverse movement in the price of raw materials
may negatively impact the firm's margins as it has limited
ability to pass on the price hike because of stiff competition.
The price fluctuations also impact realisation.
TDC is a partnership firm. It trades rubber chemicals, synthetic
rubbers, carbon black etc. The firm is based in New Delhi with
regional sales offices in Faridabad, Ghaziabad, Meerut, Agra,
Kanpur, Rudrapur and Punjab. It also has warehouses in Faridabad
and New Delhi. The firm sources its products from domestic
suppliers as well as through imports, and sells the products to
both traders as well as manufacturers of automobiles, footwear
etc.
In FY2017, the firm reported a net profit of INR0.92 crore on an
OI of INR69.82 crore compared with a net profit of INR0.68 crore
on an OI of INR59.63 crore in the previous year.
TOP IN: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Top In Town's
(TOPIN) Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND B+
(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating action is as follows:
-- INR50 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B+ (ISSUER NOT COOPERATING)/IND A4(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 6, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
TOPIN was established in 1999 as a proprietorship unit. It is
engaged in the trading of large appliances and Titan watches.
TOPIN has 12 retail stores across eastern Uttar Pradesh. Its
registered office is in Varanasi (Uttar Pradesh).
VADERA TRADELINK: ICRA Keeps B+ Rating in Not Cooperating Cat.
--------------------------------------------------------------
ICRA Ratings says the rating for the INR17.00 crore bank
facilities of Vadera Tradelink Private Limited continues to
remain in the 'Issuer Not Cooperating' category. The rating is
denoted as "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash 12.00 [ICRA]B+(Stable); ISSUER NOT
Credit COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Non Fund based- 5.00 [ICRA]B+(Stable)/[ICRA]A4
Bank Guarantee ISSUER NOT COOPERATING; Rating
continues to remain in 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.
VTPL was incorporated by Mr. Bhoor Chand Jain and family (Vadera
Family) in 2008. The company commenced operations in 2011 in
Barmer, Rajasthan. The company is currently engaged in diverse
businesses including manufacturing of plastic packaging, PET
containers, HDPE pipe fittings and corrugated box manufacturing.
The company is also engaged in the trading of food grains,
plastic goods and building materials. The company also executes
civil construction work for the State Government of Rajasthan.
=========
J A P A N
=========
TAKATA CORP: Tort Claimant Committee Objects to Plan Disclosures
----------------------------------------------------------------
Roger Frankel, as the legal representative for individuals who
sustain personal injuries after June 25, 2017, arising from or
related to PSAN inflators or their component parts manufactured
by TK Holdings, Inc., et al., and Shonda McCall, individually,
and as parent and natural guardian to J.G.P., joined in the
objection raised by the Official Committee of Unsecured Tort
Claimant Creditors and the Official Committee of Unsecured
Creditors to the approval of the Disclosure Statement explaining
the Debtors' Plan and the confirmation of the Plan.
The Future Claimants' Represented pointed out that the lack of
specific disclosure as to the amount the Debtors currently
anticipate contributing to the proposed PSAN PI/WD Trust is
troubling for the holders of PSAN PI/WD Claims. Also troubling is
the lack of information regarding the sources of funding for
other unsecured claims and their actual recovery, and the lack of
specificity regarding the justification for the proposed payments
to certain favored creditors (among others, NHTSA) before any
payments are made to other creditors holding claims of equal or
senior priority, the FCR said.
Ms. McCall asserts that there is no basis for the channeling
injunction under section 524(g) of the Bankruptcy Code, pointing
out that the scope of the channeling injunction runs afoul of
Bankruptcy Code section 524(g), which identifies the type of
debtor liability which may be channeled and the type of permitted
claims against non-debtor third parties which may be included in
a proposed channeling injunction. The Debtors' liability for PSAN
PI/WD Claims sought to be channeled is not premised upon filed
civil actions "in personal injury, wrongful death, or
property-damage actions seeking recovery for damages allegedly
caused by the presence of, or exposure to, asbestos or
asbestos-containing products," a prerequisite for establishing a
channeling injunction under Code section 524, Ms. McCall said in
court papers.
The FCR is represented by:
Karen B. Skomorucha Owenss, Esq.
William P. Bowden, Esq.
Katharina Earle, Esq.
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Wilmington, DE 19899-1150
Tel: (302) 654-1888
Fax: (302) 654-2067
E-mail: wbowden@ashbygeddes.com
kowens@ashbygeddes.com
kearle@ashbygeddes.com
-- and --
Richard H. Wyron, Esq.
FRANKEL WYRON LLP
2101 L St., NW, Suite 800
Washington, DC 20037
Tel: (202) 903-0700
Fax: (202) 627-3002
E-mail: rwyron@frankelwyron.com
Ms. McCall is represented by:
Daniel K. Astin, Esq.
John D. McLaughlin, Jr., Esq.
Joseph J. McMahon, Jr., Esq.
Ciardi Ciardi & Astin
1201 N. King Street
Wilmington, DE 19801
Telephone: (302) 658-1100
Facsimile: (302) 658-1300
E-mail: jmcmahon@ciardilaw.com
-- and --
Thomas P. Willingham, Esq.
POPE McGLAMRY P.C.
3391 Peachtree Road, NE, Suite 300
Atlanta, GA 30326
Tel: (404) 523-7706
Fax: (404) 534-1648
E-mail: tomwillingham@pmkm.com
About TK Holdings
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 17-11375) on June 25, 2017. Together with the bankruptcy
filings, Takata announced it has reached a deal to sell all its
global assets and operations to Key Safety Systems (KSS) for
US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and
Lazard is serving as investment banker to Takata. Ernst & Young
LLP is tax advisor. Prime Clerk is the claims and noticing
agent. The Debtors Meunier Carlin & Curfman LLC, as special
intellectual property counsel.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List) granting, among other things,
a stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The Canadian
Court appointed FTI Consulting Canada Inc. as information
officer. TK Holdings, as the foreign representative, is
represented by McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson
Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York;
and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in Washington, D.C., as its bankruptcy counsel. The
Committee has also tapped Chuo Sogo Law Office PC as Japan
counsel.
The Official Committee of Tort Claimants selected Pachulski Stang
Ziehl & Jones LLP as counsel. Gilbert LLP will evaluate of the
insurance policies. Sakura Kyodo Law Offices will serve as
special counsel.
Roger Frankel, the legal representative for future personal
injury claimants of TK Holdings Inc., et al., tapped Frankel
Wyron LLP and Ashby & Geddes PA to serve as co-counsel.
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
=================
S I N G A P O R E
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GLOBAL A&T: Fitch Raises Long-Term IDR to B-; Outlook Stable
------------------------------------------------------------
Fitch Ratings has upgraded Singapore-based Global A&T Electronics
Ltd.'s (GATE) Long-Term Foreign-Currency and Local-Currency
Issuer Default Ratings (IDRs) to 'B-', from 'D'. The Outlook is
Stable. Fitch has also assigned GATE's USD665 million 8.5%
secured notes due 2023 a rating of 'B+' with a Recovery Rating of
'RR2'.
GATE emerged from bankruptcy on 12 January 2018 with USD665
million in debt, down from USD1.1 billion at the time it sought
Chapter 11 protection in the U.S. bankruptcy courts in December
2017. Its annual interest cost has also reduced to USD57 million
from USD113 million.
Fitch rate GATE's secured notes at 'B+', two notches above GATE's
IDR, which reflects the superior recovery benefits of the
security package, which covers the majority of the assets of
GATE's parent, UTAC Holdings Ltd. (UTACH). The secured notes are
fully and unconditionally guaranteed by UTACH and its subsidiary
- UTAC Manufacturing Services Holdings Pte Ltd (UMS). UMS is the
holding company of other key operating subsidiaries in the UTACH
group.
Fitch note that the secured notes are subordinated to existing or
future trade payables at non-guarantor subsidiaries. The non-
guarantor subsidiaries include those in Dongguan, China
(Shanghai), the Cayman Islands, sales offices in Europe and Asia,
and Global A&T Finco Ltd. Fitch do not regard assets held at and
the revenue and EBITDA generated by these non-guarantor
subsidiaries as relevant for the ratings.
KEY RATING DRIVERS
Consolidated View on Guarantees: Fitch rate GATE based on the
consolidated credit profile of UTACH group due to the strong
legal linkages as UTACH and all the key operating entities in the
group guarantee the secured notes. UTACH controls the boards at
GATE and UMS, and their key operating and financial decisions.
Fitch expects management to use UMS's cash and free cash flow
(FCF) to support liquidity needs at GATE. GATE generates about
75%-80% of group's revenue and EBITDA; UMS contributes the
balance.
Weak Business Profile: UTACH's ratings are constrained by its
weak business profile due to its small size and its position as a
market challenger in the outsource assembly and test (OSAT)
market with only 4% revenue market share. The OSAT market is
characterised by limited pricing power, high capex requirements,
intense competition and cyclical demand. Smaller participants,
such as UTACH, are exposed to volatile cash generation during
industry downturns with continuous high capex requirements.
UTACH may struggle to increase its cash flow from operations
(CFO) due to consolidation among its customers and increasing
competition from Chinese companies. It closed its Shanghai
facility in 2017 due to sustained losses.
Technological Capabilities Lags Peers: UTACH lacks key
technologies such as bumping and system in package (SiP).
Relative to UTACH, the top-three OSAT operators invest
significantly more in capex and R&D and have strengthened their
technological capabilities through acquisitions and investments
in new technologies so they have a significant lead in advanced
packaging technologies, such as flip chip, wafer level and SiP.
SiP capabilities are increasingly important to meet demand from
the growing market for smaller form factor internet-connected
devices.
Reduction in Leverage: UTACH's FFO-adjusted leverage has
improved, following debt restructuring, to around 3.0x-3.2x at
end-2017, from 5.2x, prior to debt restructuring. However, Fitch
expect FFO-adjusted leverage to deteriorate to around 3.5x during
2018-2019 due to lower CFO as EBITDA growth at GATE may struggle
to offset declines at UMS.
Higher Capex: Fitch expect the group to invest almost of its CFO
in capex during 2018-2019 to expand its capacity in Thailand and
Taiwan. The group has underinvested in the last few years and
needs to catch up with larger peers to boost its assembly and
testing capacity. Fitch believe that the group may acquire
smaller OSAT companies to add technology or to expand capacity to
better serve its customers. However, Fitch think that such an
acquisition would be small and may not affect the ratings even if
debt-funded.
Stable 2018 Industry Outlook: Fitch forecast stable credit
quality for large semiconductor-backend OSAT companies, whose
cash generation should benefit from a 3%-4% annual increase in
communication device demand in 2018. Fitch expect the industry's
gross leverage to remain stable on lower but positive FCF.
Industry CFO is likely to remain robust in 2018 as capex
requirements hold steady. Most industry participants will
continue to invest in SiP and wafer-level advanced packaging
technologies to meet demand for smaller form factor in end-user
devices.
Fitch forecast the industry operating EBITDAR margin to remain
stable, as cost savings and capacity utilisation improvements
offset the continued 3%-5% annual decline in average selling
prices. Nevertheless, the market will remain very tough for
smaller operators, such as GATE, which lack the scale and
technology of the larger companies.
Recovery Rating of 'RR2': Fitch rate the USD665 million secured
notes two notches above the IDR. Fitch estimate post-
restructuring cash flow of around USD140 million, assuming
depletion of the current position to reflect the distress that
provoked a default and a level of corrective action that Fitch
assumes would have occurred during and future restructuring.
Fitch apply a 4.5x reorganisation multiple to get an adjusted
going-concern enterprise value after 10% administrative claims of
USD567 million. The value is then applied to the USD665 million
secured notes and USD5 million of undrawn revolving credit
facility, giving an estimated recovery of 85%, which corresponds
to a Recovery Rating of 'RR2'.
DERIVATION SUMMARY
GATE's 'B-' rating is based on the consolidated credit profile of
the UTACH group, given UTACH and UMS fully and unconditionally
guarantee the secured notes at GATE. UTACH group's credit profile
is constrained by its weaker business risk profile relative to
larger participants in the OSAT industry with only about 4%
revenue market share. Larger peers have consolidated and
strengthened their technology portfolios and have the financial
flexibility to invest in capex and R&D.
Compared to STATS ChipPAC Pte. Ltd. (B+/Stable), UTACH has a
smaller scale, weaker technological portfolio and limited
financial flexibility to invest in capex and R&D. UTACH's annual
capex of USD100 million-140 million is significantly lower than
that of larger peers, including Amkor Technology, Inc. and STATS'
parent, Jiangsu Changjiang Electronics Technology Co. Ltd.
(JCET), both of which invest about USD500 million-600 million
annually. However, UTACH's restructured gearing is slightly
better than the JCET group's as its FFO-adjusted leverage will be
around 3.5x, compared to JCET's 4.0x.
KEY ASSUMPTIONS
Fitch's Key Assumptions within Fitch Rating Case for the Issuer
- UTACH's revenue to remain flat in 2017 and decline by 2% during
2018-2019. GATE's revenue to grow by 1% in 2017 and remain flat
in 2018.
- Operating EBITDAR margin of UTACH and GATE of 24%-26% during
2018-2019.
- UTACH's capex/revenue to increase to 13%-16% during 2018-19
(2017 estimated: 10%-11%). GATE's capex/revenue around 16%-18%
in 2018-2019.
- GATE will not distribute any dividends to UTACH. Also, UTACH
will not pay dividends to its shareholders.
- UMS to face a price reduction of 15%, when a contract with a
major customer ends in 2019.
- Effective tax rate of 25% at UTACH.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Substantial increase in market share in the OSAT industry.
- FFO-adjusted leverage below 3.0x on a sustained basis.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- FFO-fixed charge cover sustained below 2.0x (2017 estimate:
3.4x-3.7x)
- FFO-adjusted leverage sustained above 4.5x
LIQUIDITY
Adequate Liquidity: Fitch expect liquidity at UTACH, following
the debt restructuring, to be satisfactory with estimated
unrestricted cash balance of around USD175 million-185 million
with no short-term debt maturities. Fitch also expect GATE's
liquidity to be adequate with cash around USD60 million-70
million.
Under the bond's covenants, UTACH has headroom to raise junior
debt as long as total debt/EBITDA is below 4.0x (2017 estimate:
2.9x) and EBITDA/interest is above 2.0x (2017 estimate: 4.1x).
Other than the USD5 million undrawn revolving credit facility,
the secured notes are the only debt in the group. Management does
not intend to raise any additional debt in the group.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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