/raid1/www/Hosts/bankrupt/TCRAP_Public/180305.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
Monday, March 5, 2018, Vol. 21, No. 045
Headlines
A U S T R A L I A
ADTC ENVIRONMENTAL: First Creditors' Meeting Set for March 12
ARAN AUSTRALIA: First Creditors' Meeting Set for March 12
CORONADO AUSTRALIA: Moody's Rates New $700MM Sr. Sec. Loan (P)B1
FMG RESOURCES: S&P Rates New Senior Unsecured Notes 'BB+'
HEATHCOTE SERVICES: First Creditors' Meeting Set for March 13
PNA DEVELOPMENTS: Second Creditors' Meeting Set for March 9
VCS CIVIL: Second Creditors' Meeting Set for March 13
VCS HOLDINGS: Second Creditors' Meeting Set for March 13
C H I N A
FANTASIA HOLDINGS: S&P Rates New US Dollar Sr. Unsec. Notes 'B+'
GREENLAND HOLDING: Fitch Lowers LT IDR to BB-; Outlook Negative
HNA GROUP: Plans to Sell US$1.4 billion Stake in Hilton Hotels
JIANGSU NEW: S&P Rates New Guaranteed Senior Unsecured Notes 'BB'
LOGAN PROPERTY: Proposed Note Issue No Impact on Moody's Ba3 CFR
I N D I A
AGRA OIL: ICRA Assigns B+ Rating to INR12.50cr Fund-based Debt
ARYA COTTON: ICRA Removes B+ Rating From Issuer Not Cooperating
BHADRA INTERNATIONAL: ICRA Reaffirms D Rating on INR304.53cr Loan
BTM CORP: CARE Migrates 'D' Rating to Not Cooperating Category
BTM INDUSTRIES: CARE Moves D Rating to Not Cooperating Category
DEMBLA TIMBER: Ind-Ra Ups LT Issuer Rating to B+, Outlook Stable
DHARESHWAR GINNING: CARE Reaffirms B+ Rating on INR6.24cr LT Loan
DIGNUS INFRA: CARE Lowers Rating on INR3cr LT/ST Loan to D
FOMENTO RESOURCES: Ind-Ra Assigns BB Long-Term Issuer Rating
GEMINI EQUIPMENTS: CARE Moves D Rating to Not Cooperating Cat.
GLENMARK PHARMACEUTICALS: S&P Lowers CCR to BB-, Outlook Stable
GOOD LUCK: ICRA Assigns B+ Issuer Rating; Outlook Stable
GREENVISION TECHNOLOGIES: Ind-Ra Rates INR120MM Loan 'BB'
GUJARAT PEANUT: ICRA Removes B+ Rating From Not Cooperating Cat.
HANSA METALLICS: Ind-Ra Raises LT Issuer Rating to BB+
HOTEL JAYAPUSHPAM: Ind-Ra Corrects Sept. 30 Ratings Release
INRHYTHM ENERGY: Ind-Ra Affirms B+ LT Rating, Outlook Stable
JAI BHAGWATI: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
JSW STEEL: Fitch Alters Outlook to Stable and Affirms BB IDR
KHANDOBA DISTILLERIES: CARE Cuts Rating on INR65cr Loan to D
KRC CONSTRUCTION: Ind-Ra Gives BB-Issuer Rating on INR60MM Limit
LATA EXPORTS: CARE Moves D Rating to Not Cooperating Category
MADHAV TEXTILES: CARE Lowers Rating on INR7cr Bank Loan to D
MARINELINES SHIP: ICRA Keeps B+ Rating Under Not Cooperating Cat.
MCNALLY SAYAJI: CARE Reaffirms D Rating on INR173.75cr LT Loan
NICE SESAME: ICRA Keeps B+ Rating Under Issuer Not Cooperating
PANSARI STEELS: ICRA Assigns B+ Rating to INR8cr Cash Loan
PERFECTO ELECTRICALS: ICRA Removes B Rating from Not Cooperating
PETRON ENGINEERING: Ind-Ra Lowers Long Term Issuer Rating to 'D'
PONGALUR PIONEER: Ind-Ra Migrates BB+ Rating to Non-Cooperating
PRAGATEJ BUILDERS: ICRA Moves D Rating to Not Cooperating Cat.
PUNEET IRON: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
RAICHUR POWER: Ind-Ra Gives Prov. BB+ Rating to INR17,120BB Loans
RATHI GRAPHIC: ICRA Lowers Rating INR6.5cr Loan to D
RITA INT'L: Ind-Ra Raises LT Rating on INR90MM Loan to 'B+'
RK POULTRIES: Ind-Ra Assigns BB Rating to INR60MM Facilities
RUCHI WORLDWIDE: CARE Moves D Rating to Not Cooperating Category
RUNGTA IRRIGATION: ICRA Cuts Rating on INR14cr Cash Loan to B
S.S. CONSTRUCTION: ICRA Reaffirms B- Rating on INR5.95cr Loan
SAGAR METALLICS: Ind-Ra Migrates BB- Rating to Non-Cooperating
SAN MARINE: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
SANKHESWARAA GOLD: CARE Cuts Rating on INR12.5cr Loan to B-
SHARWIN COTTEX: CARE Moves B+ Rating to Not Cooperating Category
SHREE RAGHUVANSHI: ICRA Moves D Rating to Not Cooperating Cat.
SHRI RAM: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
SKYPOINT MULTITRADE: CARE Moves D Rating to Not Cooperating Cat.
UNIWORTH ENTERPRISES: Ind-Ra Assigns BB+ LT Issuer Rating
I N D O N E S I A
SRI REJEKI: Fitch Affirms BB- Long-Term IDR; Outlook Stable
STAR ENERGY: Fitch Assigns BB- Rating to US$650MM Secured Notes
M A L A Y S I A
DAYA MATERIALS: Falls Into PN17 Status
MULTI SPORTS: Seeks Another Extension to Issue Financial Reports
M O N G O L I A
MONGOLYN ALT: Waiver Extension No Effect on Fitch CCC+ IDR
STATE BANK: Fitch Affirms and then Withdraws B- Long-Term IDR
P A K I S T A N
PAKISTAN: Banking System Outlook is Stable, Moody's Says
S I N G A P O R E
KRISENERGY LTD: Narrows FY17 Net Loss to US$139.2 Million
SWISSCO HOLDINGS: 4 Hong Kong Units in Voluntary Liquidation
S O U T H K O R E A
KUMHO TIRE: Creditors to Sell Firm to Doublestar Via Rights Issue
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A U S T R A L I A
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ADTC ENVIRONMENTAL: First Creditors' Meeting Set for March 12
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of ADTC
Environmental Engineering Pty Ltd will be held at the offices of
Hall Chadwick Chartered Accountants, Level 40, 2 Park Street, in
Sydney, NSW, on March 12, 2018, at 11:00 a.m.
David Allan Ingram of Hall Chadwick was appointed as
administrator of ADTC Environmental on Feb. 28, 2018.
ARAN AUSTRALIA: First Creditors' Meeting Set for March 12
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Aran
Australia Projects Pty Ltd will be held at the offices of Level
4, 232 Adelaide Street, in Brisbane, Queensland, on March 12,
2018, at 12:00 noon.
Peter Anthony Lucas of P A Lucas & Co was appointed as
administrator of Aran Australia on Feb. 28, 2018.
CORONADO AUSTRALIA: Moody's Rates New $700MM Sr. Sec. Loan (P)B1
----------------------------------------------------------------
Moody's Investors Service assigned provisional (P) B1 ratings to
the new proposed senior secured term loans totaling $700 million
issued by Coronado Australia Holdings Pty Ltd, a subsidiary of
Coronado Group LLC. The new ratings are assigned on a provisional
basis, pending the conclusion of the acquisition of the Curragh
mine in Australia.
The company expects to use the $700 million proceeds of the new
term loans, along with $180 million new equity contribution, to
finance the US $473 million purchase price of the Curragh mine in
Australia, to repay Coronado's existing debt, and retain over
$200 million of cash on balance sheet, $150 million of which will
be used to collateralize Curragh's reclamation obligations.
All existing ratings under Coronado Group LLC remain under
review, pending the closing of the transaction. If the
transaction concludes as planned, Moody's expect to upgrade the
CFR to B1, and withdraw the existing B3 rating on the existing
senior secured bank credit facility.
"The rating action reflects the transformative nature of the
transaction, as well as Moody's expectation of continued
conservative credit metrics." -- said Anna Zubets-Anderson, VP-
Senior Analyst.
Assignments:
Issuer: Coronado Australia Holdings Pty Ltd
-- Senior Secured Bank Credit Facilities, Assigned (P)B1 (LGD4)
Outlook Actions:
Issuer: Coronado Australia Holdings Pty Ltd
-- Outlook, Assigned Stable
RATINGS RATIONALE
The rating action reflects Moody's expectation that the
transaction, if it proceeds as planned, will improve the
operational diversity of the company as Coronado will expand its
production to one of the world's largest metallurgical coal mines
in Australia. Curragh is one of the world's largest metallurgical
coal mines, with production of 8.5 million tonnes per annum
(mtpa) of export metallurgical coal and 3.5 mtpa of thermal coal
which is sold to the Queensland Government's Stanwell
Corporation. Curragh's cost structure is comparable to the
company's existing Buchanan mine, which is one of the most
competitive producers of low-vol, high quality metallurgical coal
in the United States.
The transaction will allow the company to offer a greater
diversity of products to a broader base of metallurgical coal
customers across diverse geographies. The transaction would more
than double Coronado's annual production volumes, positioning it
as one of the larger global met coal producers. Following the
transaction, Coronado will sell over 20 million tonnes of coal
per year. Roughly 70% of the combined company's production will
be high quality coking and PCI coals, with 25% coming from
Buchanan and 60% coming from Curragh. Roughly half of met coal
production will be sold into the growing Asian markets, and about
30% in North America.
The ratings reflect Moody's expectation that the company Debt/
EBITDA, as adjusted, would be maintained at around 2x, assuming
positive free cash flows in 2018 are directed towards debt
repayment, and met benchmark prices are sustained at around $120
per tonne. The ratings reflect high potential volatility in the
company's margins depending on metallurgical coal prices, which
have been highly volatile and unpredictable in recent years. The
metallurgical coal benchmark settlements have fluctuated between
$82 and $285/mt over the past two years, and the ratings
incorporate pricing sensitivities ranging from $95 to $145/mt.
Moody's expect the company to have good liquidity, including cash
balance of roughly $200 million pro-forma for the transaction and
expected full availability under the $100 million ABL facility.
The senior secured term loan is not expected to have any
financial covenants. Moody's expect positive free cash flows over
the next twelve months at current prices.
The (P) B1 rating on the senior secured term loans reflects the
preponderance of secured term loan in the capital structure. The
term loans have first-priority lien on substantially all tangible
and intangible assets other than the ABL Priority Collateral, and
are guaranteed on a senior secured basis by the company and each
of its direct and indirect subsidiaries.
The ratings of Coronado Group LLC remain under review for upgrade
pending the conclusion of the transaction.
The ratings could be upgraded if metallurgical coal markets were
to show more stability and predictability. The ratings could also
be upgraded in the event of material growth in scale and
diversity in line with the proposed transaction.
The ratings could be downgraded if Debt/ EBITDA, as adjusted,
increased above 3x on a sustained basis, if free cash flows
turned negative, or if liquidity deteriorated.
The principal methodology used in these ratings was Global Mining
Industry published in August 2014.
Headquartered in Beckley, West Virginia, Coronado Group LLC
(Coronado) operates seven active mines within three main mining
complexes, which consist of one longwall mine and two continuous
mines in the Central Appalachian region. The company produces and
exports metallurgical ("met") coal for a customer base of blast
furnace steel producers.
FMG RESOURCES: S&P Rates New Senior Unsecured Notes 'BB+'
---------------------------------------------------------
S&P Global Ratings said that it had assigned its 'BB+' rating
with a recovery rating of '4' on FMG Resources (August 2006) Pty
Ltd.'s new senior unsecured notes. S&P said, "We also raised the
long-term issue credit rating on the company's existing senior
unsecured notes due 2022 and 2024 to 'BB+', from 'BB'. At the
same time, we revised the recovery rating on the existing notes
to '4' from '5'. FMG Resources (August 2006) Pty Ltd. is a
wholly-owned financing vehicle of Fortescue Metals Group Ltd.
(BB+/Stable)."
S&P said, "In our opinion, Fortescue's gradual shift from secured
to unsecured debt should improve the recovery prospects of the
company's unsecured notes in the event of a hypothetical default.
As such, the ratings on the outstanding unsecured notes and new
unsecured issuance are now equal to the 'BB+' corporate credit
rating on Fortescue."
These rating actions follow Fortescue's successful refinancing of
its US$2.16 billion senior secured notes due in 2022 with a
US$1.4 billion senior secured term loan due 2022 and US$500
million senior unsecured note due 2023. S&P's 'BBB-' rating on
Fortescue's senior secured notes and 'BB+' corporate credit
rating on the company remain unchanged.
The corporate credit rating on Fortescue is unaffected by the
proposed new note issuance. The rating reflects Fortescue's low-
cost position on the global iron ore cost curve, as well S&P's
view of the company's ability to sustain credit metrics in line
with the 'BB+' rating level even under a moderate stress
scenario.
HEATHCOTE SERVICES: First Creditors' Meeting Set for March 13
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Heathcote
Services & Citizens Club Ltd will be held at the offices of BDO
Level 11, 1 Margaret St, in Sydney, NSW, on March 13, 2018, at
10:00 a.m.
Andrew Thomas Sallway and James Michael White of BDO were
appointed as administrators of Heathcote Services on March 1,
2018.
PNA DEVELOPMENTS: Second Creditors' Meeting Set for March 9
-----------------------------------------------------------
A second meeting of creditors in the proceedings of PNA
Developments Pty Ltd has been set for March 9, 2018, at 1:30 p.m.
at the offices of Levi Consulting Pty Ltd, Level 1, 84 Pitt
Street, in Sydney, NSW, on March 9, 2018, at 1:30 p.m.
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 March 7, 2018, at 4:30 p.m.
David Joseph Levi of Levi Consulting was appointed as
administrator of PNA Developments on Feb. 2, 2018.
VCS CIVIL: Second Creditors' Meeting Set for March 13
-----------------------------------------------------
A second meeting of creditors in the proceedings of VCS Civil and
Mining Pty Ltd has been set for March 13, 2018, at 10:30 a.m. at
Meeting Rooms 5 and 6, Level 5, Pan Pacific Perth, 207 Adelaide
Terrace, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by March 12, 2018, at 5:00 p.m.
Cameron Shaw and Richard Albarran of Hall Chadwick were appointed
as administrators of VCS Civil and Mining on March 5, 2018.
VCS HOLDINGS: Second Creditors' Meeting Set for March 13
--------------------------------------------------------
A second meeting of creditors in the proceedings of VCS Holdings
(Aust) Pty Ltd has been set for March 13, 2018, at 10:00 a.m. at
Meeting Rooms 5 and 6, Level 5, Pan Pacific Perth, 207 Adelaide
Terrace, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by March 12, 2018, at 5:00 p.m.
Cameron Shaw and Richard Albarran of Hall Chadwick were appointed
as administrators of VCS Holdings on March 5, 2018.
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C H I N A
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FANTASIA HOLDINGS: S&P Rates New US Dollar Sr. Unsec. Notes 'B+'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' long-term issue rating to a
proposed issuance of U.S. dollar-denominated senior unsecured
notes by Fantasia Holdings Group Co. Ltd. (B+/Stable/--). S&P
said, "The issue rating is the same as the long-term corporate
credit rating on Fantasia because we have identified no sources
of significant subordination. The ratings are subject to our
review of the final issuance documentation."
S&P said, "We expect Fantasia to use the proceeds primarily to
refinance debt, including, but not limited to, the company's
US$200 million 11.5% senior notes and the US$487 million 5.5%
senior notes due June 2018. In February 2018, Fantasia issued
364-day US$300 million 7.25% senior notes due 2019. We expect
Fantasia to use the proceeds to refinance the senior notes due in
June 2018. The refinancing could improve the company's funding
costs, lengthen its maturity profile, and help it meet debt
repayments.
"We estimate that Fantasia's leverage weakened to a certain
extent at the end of 2017 but should improve in the next 12-24
months once more projects are complete. The company's revenue
from property development could have picked up in the second half
of 2017 owing to an increase in project deliveries. However, we
estimate that Fantasia's land acquisition costs for the year were
moderately higher than our expectation. The growth in debt from
land acquisitions could have slightly outpaced the increase in
revenue.
"In our view, Fantasia's cash burden could increase and its
liquidity may weaken due to sizable puttable domestic bonds in
2018. The company has about Chinese renminbi (RMB) 6 billion
bonds for which investors could renegotiate for a revised coupon
or repayment in 2018. Nonetheless, we believe the company's large
cash position and good refinancing record could temper such
risks.
"The rating on Fantasia is constrained by the company's high
leverage and smaller operating scale than peers' that we rate the
same. Fantasia's stable growth in property sales, rising
recurring income from property management, and cautious land
acquisitions support our stable rating outlook on the company."
GREENLAND HOLDING: Fitch Lowers LT IDR to BB-; Outlook Negative
---------------------------------------------------------------
Fitch Ratings has downgraded Chinese homebuilder Greenland
Holding Group Company Limited's (Greenland) Long-Term Foreign-
and Local-Currency Issuer Default Ratings (IDRs) to 'BB-' from
'BB' following the publication of Fitch Government-Related
Entities Rating (GRE) Criteria on February 7, 2018. The Outlook
is Negative.
Fitch has also downgraded Greenland's senior unsecured rating and
the ratings of all outstanding bonds to 'BB-' from 'BB'. All the
ratings have been removed from Rating Watch Negative (RWN), which
was placed on 29 November 2017.
Greenland is assessed to have a support score of 10 under the new
GRE criteria, which means its ratings do not receive further
notching uplift from parent support. Previously, Greenland's
ratings were lifted by one notch from its standalone credit
profile based on the bottom-up approach under Fitch's Parent and
Subsidiary Rating Linkage criteria as Fitch prior assessment took
into account a moderate operational and strategic linkage with
its parent, the State-owned Assets Supervision and Administration
Commission (SASAC) of Shanghai municipality.
The Negative Outlook and the standalone rating are driven by
Greenland's persistently high leverage of above 60% as the
company has remained aggressive in expanding its land bank and
took on more debt for its non-property businesses. Leverage, as
measured by net debt to adjusted inventory, had reached
approximately 77% by end-June 2017 - a level at which Fitch may
consider further negative rating action if it is sustained over a
12-month period.
KEY RATING DRIVERS
No Exceptional Government Support: Greenland's support score of
10 under the new GRE criteria is the lowest category under Fitch
notching guidelines and implies only a standalone rating with no
further notching from parent support. The score reflects Fitch
assessment of the company's status, support track record and the
financial implications of a default as moderate and the socio-
political implications of a default as weak.
Hard to Deleverage: Fitch's expectation of leverage exceeding 70%
in 2017 and 2018 is due to aggressive land banking and high
construction expenditure. Greenland added 20.1 million sq m of
gross floor area (GFA) on an attributable basis to its land bank
in 2017 compared with 14.7 million sq m of GFA in 2016. Leverage
increased even though its total cash collection from commercial
properties that have been sold, which have a slower sales
collection rate than for residential properties, rose 32% yoy to
CNY108.7 billion in 1H17. Its residential to commercial property
ratio in terms of contracted sales for 1H17 remained similar to
2016 at 69:31.
Large Construction Expenditure: Fitch believes Greenland's rapid
construction pace will continue to pressure leverage. Greenland's
new construction start GFA totalled 29.5 million sq m in 2017,
outpacing its land acquisition GFA of 20.1 million sq m, while
the 2017 completed GFA was 21.4 million sq m. The build-up of
unsold completed properties can be a cash drain and a persistent
increase in unsold completed properties may also indicate
uncertainty over its property sales.
Non-Property Adds to Leverage Pressure: Fitch believes
Greenland's non-property businesses are still immature and will
need to be funded with cash flow generated from the property
business. Greenland has made extensive investments in the
financial institution, consumer goods and infrastructure
industries, which have contributed to the increase in leverage.
Benefits of Large Scale: Greenland is one of the top property
developers in China as measured by contracted sales. Its
property-development business is well diversified in over 80
cities in China and overseas. Despite the Chinese authorities'
increasingly strict measures to curb property prices and restrict
residential property transactions, Greenland's contracted sales
rose by 20% yoy to CNY306 billion in 2017 and the company intends
to grow its contracted sales by 15%-20% in 2018, translating to a
range of CNY352 billion-367 billion.
Moderate Status, Ownership and Control: Shanghai SASAC has a less
than 50% stake in Greenland but has influence over the company's
financial and operational activities. Shanghai SASAC is the
single largest shareholder (46%) followed by the employee union
(29%) led by Greenland's chairman. Shanghai SASAC controls five
out of 15 board seats, which include five independent directors,
although the company operates independently.
Moderate Support Track Record: Greenland's track record shows
limited financial support from the government despite its
financial profile being more leveraged than industry peers. The
Shanghai government has shown support to Greenland through
building its land bank (quantity and quality) but the support
only has a limited positive impact on Greenland's highly
leveraged profile because its nationwide operation is
significantly larger than the support it has received.
Weak Socio-Political Implications of Default: Homebuilding in
China is a highly fragmented and market-driven industry - the
market share of the largest developer was around 5% in 2017.
There is an established market mechanism in the case of a
financial default in which any private-sector company or GRE
could have its development projects acquired and continued by
other market participants seeking to expand their businesses.
Therefore, the default of a GRE homebuilder in China is assessed
as having limited political or social importance.
Moderate Financial Implications of Default: Homebuilding is a
sector that may pose a material systemic risk. Greenland is the
largest Shanghai-based homebuilder and one of China's top 10
developers by sales and a default may exert immediate pressure on
borrowing costs for the whole sector. However, Greenland's size
is moderate relative to the Shanghai municipality's budget and a
default would only have a moderate impact on the financing of the
Shanghai government.
DERIVATION SUMMARY
Greenland's rating is supported by its business profile,
including its scale, measured by contracted sales and EBITDA, and
its market position. However, its rating is constrained by higher
leverage than most of the 'BB', 'BB-' and 'B+' category peers and
relatively low contracted sales efficiencies (measured by
contracted sales/gross debt) due to its higher exposure to the
commercial property segment. Greenland's large-scale peers
include China Evergrande Group (B+/Stable) and Sunac China
Holdings Limited (BB-/Negative), which are similarly aggressive
in expanding their scale, and are among the five largest Chinese
homebuilders.
Greenland's leverage is higher than that of Evergrande but
Greenland has a large amount of uncollected sales to mitigate its
high leverage. Greenland, as a state-owned enterprise, has a
stronger position in acquiring land at low costs, especially for
new city districts that local governments are keen to develop.
This is one factor that enhances Greenland's business profile
over that of Evergrande and Sunac.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch Rating Case for the Issuer
- Contracted sales to increase by 15% yoy in 2018.
- Property EBITDA margin of roughly 18% in 2018
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action Include:
- Evidence of strengthening linkage between the government and
the company and/or increased incentives to support the company
may result in upward notching being considered
- The Outlook on the standalone rating may be revised to Stable
if the negative guidelines are not met in the next 12 months.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
- Net debt/adjusted inventory sustained above 65% (Fitch
estimate for 1H17: 77%)
- Property EBITDA margin sustained below 15% (Fitch estimate for
1H17: 18%)
- Contracted sales/total debt sustained below 0.8x (Fitch
estimate for 2017: 1.1x)
LIQUIDITY
Adequate Liquidity: Greenland had total cash (readily available
and restricted) of about CNY60 billion at end-June 2017, which
was insufficient to cover its short-term debt of about CNY123
billion. However, the company had CNY118.5 billion of available
bank facilities as of 30 June 2017 and the capability to raise
funds through multiple channels domestically and internationally.
FULL LIST OF RATING ACTIONS
Greenland Holding Group Company Limited
- Long-Term Foreign-Currency IDR downgraded to 'BB-' from 'BB'
and removed from RWN; Outlook Negative
- Long-Term Local-Currency IDR downgraded to 'BB-' from 'BB' and
removed from RWN; Outlook Negative
- Senior unsecured rating downgraded to 'BB-' from 'BB' and
removed from RWN
- USD3 billion medium-term note programme downgraded to 'BB-'
from 'BB' and removed from RWN
- USD2 billion medium-term note programme downgraded to 'BB-'
from 'BB' and removed from RWN
Issued by Greenland Hong Kong Holdings Limited with Keepwell from
Greenland Holding Group Company Limited
- USD450 million 3.875% senior notes due 2019 downgraded to
'BB-' from 'BB' and removed from RWN
Issued by Greenland Global Investment Limited and Guaranteed by
Greenland Holding Group Company Limited
- USD300 million 3.5% senior notes due 2019 downgraded to 'BB-'
from 'BB' and removed from RWN
- USD400 million 3.75% senior notes due 2019 downgraded to 'BB-'
from 'BB' and removed from RWN
- USD600 million 5.875% senior notes due 2024 downgraded to
'BB-' from 'BB' and removed from RWN
HNA GROUP: Plans to Sell US$1.4 billion Stake in Hilton Hotels
--------------------------------------------------------------
Don Weinland and Hudson Lockett at The Financial Times report
that HNA Group plans to sell "some or all of" its 25% stake in
Park Hotels & Resorts, signalling an unwinding of part of the
acquisitive company's $6.5 billion stake in Hilton Worldwide.
The company that over the past year became the largest
shareholder in Deutsche Bank has in recent months faced a squeeze
on liquidity, struggling to repay some debts it has racked up
during its $40 billion buying spree, the FT says.
According to the FT, the purchase of a 25% stake in Hilton
Worldwide from Blackstone in October 2016 was one of several
landmark transactions over the past three years made by HNA,
which started as a small, regional airline in the 1990s in
China's southern island province of Hainan.
The 25% stake in Park Hotels, valued at about $1.4 billion, was
accrued as it took the larger stake in Hilton, the report notes.
The FT relates that Hilton announced earlier this year plans to
carve out its Hilton Grand Vacations timeshare business,
including its property, and turn it into a real estate investment
company called Park Hotels & Resorts.
The plans for the sale, announced in a regulatory filing by Park
Hotels, come as HNA begins to sell down several of its key
investments, the FT says.
In February, HNA cut its stake in Deutsche Bank from 9.9% to 8.8%
and said in a regulatory filing that it had lent out some of its
remaining shares in Germany's largest lender to raise funds, the
report recalls.
According to the report, the company also announced last month
that it had pledged 1.4 billion shares worth nearly $400 million
from one of its subsidiaries to borrow from private equity
company Pacific Alliance Group, in addition to flagging its sale
of two Hong Kong land parcels to developer Henderson Land for
almost $2 billion.
In late January, one of its US units sold its 12% stake in US-
listed shipping group Dorian LPG, a disposal that came at a loss
for the Chinese group, the FT 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.
JIANGSU NEW: S&P Rates New Guaranteed Senior Unsecured Notes 'BB'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term issue rating to
the proposed U.S. dollar denominated senior unsecured notes that
Jiangsu New Headline Development Group Co. Ltd. (NHL: BB/Stable/-
-) will unconditionally and irrevocably guarantee. Xinhailian
Group (BVI) Co. Ltd. (XHL) will issue the notes. XHL is an
indirect wholly owned subsidiary of NHL that was established
purely for the purpose of the offshore debt issuance. The issue
rating is subject to S&P's review of the final issuance
documentation.
The notes are subject to early redemption upon the occurrence of
certain events. These events mainly include change of control and
failure to complete the registration of the guarantee with State
Administration of Foreign Exchange within 90 business days of the
issue date. S&P expects NHL to use the issuance proceeds to
refinance its U.S. dollar denominated senior unsecured notes due
in January 2019.
S&P said, "We equalize the issue rating with the corporate credit
rating on NHL to reflect our view that the group's guarantee is
unconditional and irrevocable, and therefore qualifies for rating
substitution treatment. The equalization also reflects our
expectation that, in the event of a default of NHL, the group's
senior unsecured debt holders will not necessarily be
disadvantaged relative to secured debt holders in terms of
recovery prospects.
"We do not apply a notching adjustment although NHL's priority
debt ratio exceeds 50%, our quantitative threshold for a
potential notch-down. We estimate that, as of end-2017, NHL has
Chinese renminbi (RMB) 12.7 billion of priority debt, including
RMB6.3 billion of unrated secured debt and RMB6.4 billion of
unrated unsecured debt issued at the subsidiaries' level. The
group also has RMB8.7 billion of unsecured debt issued at the
parent level. Nevertheless, we believe the potential government
support that NHL will receive will mitigate the subordination
risk associated with the issuance. We expect NHL to maintain an
extremely high likelihood of receiving extraordinary support from
Lianyungang government (in Jiangsu province) if the group comes
under financial distress."
LOGAN PROPERTY: Proposed Note Issue No Impact on Moody's Ba3 CFR
----------------------------------------------------------------
Moody's Investors Service says that Logan Property Holdings
Company Limited's announcement of its plan to issue USD senior
notes will not immediately affect its Ba3 corporate family rating
or B1 senior unsecured debt rating.
The ratings outlook remains stable.
The proceeds of the proposed issuance will be used to refinance
Logan Property's existing indebtedness and for general corporate
purposes.
"The proposed senior notes will lengthen Logan Property's debt
maturity profile," says Cedric Lai, a Moody's Assistant Vice
President and Analyst.
"In addition, Moody's expect that the issuance of Logan
Property's proposed senior notes will not materially affect the
company's credit metrics, because part of the proceeds will be
used to refinance its existing debt," adds Lai, who is also
Moody's Lead Analyst for Logan Property.
Moody's says that the company's revenue/debt should trend towards
70% over the next 12 months, and EBIT/interest coverage will
likely register around 4.0x-4.5x over the same period. Such
results will support its Ba3 corporate family rating.
Logan Property's liquidity position is strong. At June 30, 2017,
its cash balance totaled RMB23.45 billion, which covered 440% of
its short-term debt as of that date.
Moody's notes that Logan Property continued its strong sales
growth momentum in 2017. During 2017, it achieved a 51.2% year-
on-year growth in contracted sales to RMB43.42 billion,
benefiting from a 43% growth in its average selling price.
Logan Property's Ba3 corporate family rating reflects its proven
track record of developing mass market residential properties in
Guangdong, Guangxi and Shenzhen.
The rating also considers the company's high gross profit margin
- when compared to its Ba-rated domestic property development
peers - supported by its strong cost management and low cost land
bank.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Established in 1996, Logan Property Holdings Company Limited is a
property developer based in Shenzhen. The company's principal
focus is on residential projects in Shenzhen, Shantou, Nanning
and Huizhou.
Logan Property listed on the Hong Kong Stock Exchange in December
2013. At June 30, 2017, its land bank totaled 14.75 million
square meters in gross floor area in Singapore, Hong Kong, and
across cities in China, including Shenzhen, Shantou, Nanning, and
other cities in the Pearl River Delta.
=========
I N D I A
=========
AGRA OIL: ICRA Assigns B+ Rating to INR12.50cr Fund-based Debt
--------------------------------------------------------------
ICRA Ratings has assigned a long-term rating of [ICRA]B+ on the
INR12.50-crore (enhanced from INR11.10 crore) fund-based
facilities of Agra Oil & General Industries Limited. The outlook
on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 12.50 [ICRA]B+ (Stable);
Working Capital Assigned/Outstanding
Facilities
Rationale:
The ratings reaffirmation factors in ~11% decline in the
operating income (OI) in FY2017 owing to volume decline in sale
of self-manufactured mustard oil. The ratings also note the thin
profitability margins that have declined to 1.05% in FY2017 from
2.09% in FY2016. However, the margins have remained range bound
within ~1-2% over the past few years, as is inherent to edible
oil-refining business. The ratings also factor in the weak credit
profile of the company with highly leveraged capital structure
with a gearing of 3.14 times and stretched coverage metrics with
Net Cash Accruals/Debt of 2% and interest coverage of 0.45 times
in FY2017. The ratings continue to be affected by high product-
concentration risk as the company's product portfolio includes
only mustard oil and cake. The ratings continue to be constrained
by the highly-fragmented nature of the mustard oil industry, and
the vulnerability of the company's profitability to agro-climatic
risks that may impact the availability as well as price of
mustard oil and oilseeds.
Nevertheless, ratings favorably factor in the long track record
of the promoters in mustard oil-refining business. The ratings
also derive comfort from the company's favorable location for raw
material purchase of mustard oil seeds. Moreover, the ratings
take comfort from the favorable demand outlook in the domestic
market, especially northern and north-eastern India for mustard
oil, which is one of the most widely-consumed edible oils in the
country.
Outlook: Stable
ICRA believes AOGIL will continue to 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 capital expenditure, or
stretch in the working capital cycle, weakens liquidity.
Key rating drivers:
Credit strengths
Established track record of the promoters in edible oil business:
The promoters have more than four decades of experience in the
edible oil-refining business. The company is a part of the Goyal
Group with a number of Group companies involved in the similar
line of business.
Location advantage: The company's manufacturing facility is
located in proximity to regions growing its primary raw material.
Most of the mustard seeds are procured domestically from
neighbouring states like Rajasthan, UP, and Haryana. In addition,
the entire raw material is domestically procured and import of
mustard oil is almost nil, which protects the domestic mustard
oil producers.
Absence of long-term debt: AOGIL has cushion to absorb any
adverse spikes in the business to a certain extent due to
negligible long-term loan liabilities.
Favourable demand prospects for edible oil industry: Edible oils
constitute an important component of food expenditure of Indian
households and the demand for edible oils is expected to increase
with growing population and per capita increase in consumption.
The consumption of mustard oil is largely impacted by regional
tastes and preferences and climatic conditions, besides price
effectiveness. The eastern and north-eastern regions constitute a
sizeable market for mustard oil due to taste preference.
Credit challenges
Moderate scale of operations: The OI of the company has declined
in FY2017 as a result of a decline in volumes sold. The topline
of the company has remained flat over the past few years as it
has not been able to increase the production of mustard oil.
Weak credit profile: Adverse capital structure, moderate
interest-coverage indicators on account of low net worth and thin
margins.
Thin profitability as is inherent in edible oil-refining
industry: Decline in profitability in FY2017 as a result of high
volumes traded and highly fragmented and competitive edible oil
industry results in limited pricing power and inherently thin
profitability. The company's operating profitability has been
range bound between 1% and 2% over the past few years.
High product-concentration risk: With only mustard oil in AOGL's
portfolio, its business is vulnerable to supply-side risks such
as agro-climatic risks and geo-political risks. This is mainly
because most of the demand is met domestically.
Intensely competitive market: Stiff competition from cheaper
varieties of imported edible oils and vulnerability to movements
in global edible oil prices. Forex fluctuation and adverse
changes in duty structure can also impact competitiveness.
AOGIL was incorporated in 1972 as a proprietorship firm and was
later converted into a public limited company. The company
manufactures mustard oil and mustard cake at its unit in Agra,
UP, which has a seed-crushing capacity of 32,000 metric tonne per
annum (MTPA). It is also involved in the trading of mustard oil
and cake. Along with manufacturing operations, the company is
involved in trading of mustard oil and cake. In edible oil, 100%
of the company's sales are in the branded segment, named
'Krishna' and 'Swastik'. AOGIL is the flagship company of the
Goyal Group, which encompasses various business such as mustard
oil production as well as trading of cattle feed, packaging
products, refrigeration of agro product, mushroom growing,
manufacturing of soap noodles, allied chemicals and real-estate
development for around four decades.
In FY2017, the company reported a net profit of INR0.12 crore on
an OI of INR62.49 crore compared with a net profit of INR0.55
crore on an OI of INR70.45 crore in the previous year.
ARYA COTTON: ICRA Removes B+ Rating From Issuer Not Cooperating
---------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ to
the INR15.00 crore fund-based facility of Arya Cotton Industries.
The outlook on the long-term rating is Stable. ICRA has removed
the rating from issuer not cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash 15.00 [ICRA]B+ (Stable); Reaffirmed,
Credit removed from issuer not
cooperating category
Rationale
The rating reaffirmation takes into account firm's weak financial
profile characterised by fluctuating operating income, sub-
optimal capacity utilisation levels, thin profitability margins
and weak coverage indicators. The rating also factors in the
vulnerability of the firm's profitability to any fluctuations in
raw material prices (raw cotton) considering the inherently low
value-added nature of the ginning business and stiff competition.
Further, it is also exposed to the regulatory risks with regards
to the minimum support price (MSP), which is set by the
Government. ICRA notes the partnership constitution of ACI as
well, wherein any significant withdrawals from the capital
account could adversely impact its net-worth and thereby its
credit profile.
The rating, however, continues to favorably factor in the
extensive experience of the partners in the cotton ginning
industry and the proximity of the firm's manufacturing unit to
raw material source.
Outlook: Stable
ICRA expects Arya Cotton Industries to benefit from the extensive
experience of its promoters. The outlook may be revised to
Positive in case of substantial growth in revenue and
profitability and better working capital management strengthens
the financial risk profile. The outlook may be revised to
Negative in case of significant decline in scale and
profitability leading to lower than expected cash accruals, or
any major capital withdrawals or stretch in the working capital
cycle, weakens the liquidity profile.
Key rating drivers
Credit strengths
Experience of promoters in the cotton industry: The promoters of
ACI have over a decade of experience in the cotton ginning
industry, leading to established relationships with customers and
suppliers.
Locational advantages: The firm benefits in terms of lower
transportation cost and easy access to quality raw material due
to its proximity to raw material suppliers.
Credit challenges
Weak financial risk profile: The operating income of the firm
remained volatile and has moderated over the past few fiscals
with the capacity utilisations remaining low at 39% in FY2017.
The low value added nature of cotton ginning operations resulted
in low operating profitability at 1.52% in FY2017 (compared to
2.46% in FY2016) and consequently low net profit margins at
0.78%. Low profitability and high debt level resulted in weak
debt protection metrics with TD/OPBITDA of 8.97 times, NCA/TD of
3% and interest coverage at 1.78 times as on March 31, 2017.
Further, the working capital intensity remained high as reflected
by NWC/OI at 23% in FY2017 owing to high inventory holding.
Profitability remains vulnerable to fluctuations in raw material
prices and regulatory changes: The profit margins are exposed to
fluctuations in raw cotton prices, which depend upon various
factors like seasonality, climatic conditions, global demand and
supply situation, export policy, etc. Further, it is also exposed
to the regulatory risks with regards to the MSP set by the
Government.
Intense competition and fragmented industry structure: The firm
faces stiff competition from other small and unorganised players
in the industry, which limits its bargaining power with customers
and suppliers, and hence, exerts pressure on its margins.
Risks associated with being a partnership concern: Any capital
withdrawal, given the partnership nature of the constitution,
could adversely impact the capital structure of the firm.
Established in 2005, Arya Cotton Industries (ACI) is involved in
ginning and pressing of raw cotton to produce cotton bales and
cotton seeds from its manufacturing facility in Kutch (Gujarat).
The firm is equipped with 38 ginning machines and a pressing
machine with an installed processing capacity of 350 bales per
day (24~ hour operations).
BHADRA INTERNATIONAL: ICRA Reaffirms D Rating on INR304.53cr Loan
-----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]D on
the INR304.53-crore term-loan facilities and INR30-crore fund-
based working capital facilities of Bhadra International (India)
Private Limited. ICRA has also reaffirmed the short-term rating
of [ICRA] D on the INR78-crore non-fund based working capital
facilities of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Term
Loans 304.53 [ICRA]D; Re-affirmed
Long-term Non-
fund Based 30.00 [ICRA]D; Re-affirmed
Short-term-Non-
fund Based 78.00 [ICRA]D; Re-affirmed
Rationale
The rating reaffirmation factors in the continued delays in
servicing of interest and principle dues on the outstanding term
loans by Bhadra International, due to its stretched liquidity.
Further, the impasse on the implementation of the new National
Civil Aviation Policy (NCAP, 2016) has resulted in weaker-than-
expected business performance due to competition from non-
entitled players, thereby impacting the financial health of the
company. Although Bhadra International's operating profits
registered an year-on-year (Y-o-Y) improvement in FY2017 backed
by growth in the top-line, the same continues to remain weak due
to high fixed operating overheads, large royalty commitments to
the Airport Authority of India (AAI) and relatively low capacity
utilisation levels. Net losses, coupled with an eroded net worth
and significant debt continues to weigh on the company's
financial profile. ICRA takes note of its exposure to regulatory
risks, given the impasse on the implementation of the erstwhile
ground handling policy (now NCAP), which is constraining the
company's ability to scale up operations and also restricting its
pricing power.
Notwithstanding the weak financial metrics, the business profile
of the company derives strength by virtue of its presence at two
of the top-five busiest airports (Kolkata and Chennai) in India;
reputed client base comprising leading international airlines.
The business profile derives strength from its strong
infrastructure and state-of-the-art equipment which has supported
the healthy growth in operating revenues over the last five
years, despite a delay in implementation of the policy.
Going forward, the ability of the company to regularise delays in
debt servicing and improve its cash flows with higher operating
leverage, in line with further scale up in operations will remain
the key rating drivers. While ICRA acknowledges the suit filed by
the company against AAI, for losses caused due to its failure to
implement the policy, a timely and favourable conclusion to the
on-going arbitration proceedings3 remains a rating sensitivity.
Key rating drivers
Credit strengths
30% revenue growth in FY2017; operating profitability increases
by 5.5 times albeit on low base: Bhadra International's operating
income (OI) comprising mainly revenues from cargo handling and
ramp-handling services, has registered a Y-o-Y growth of 30% in
FY2017 and a CAGR of 28% over the last five years, from INR76
crore in FY2013 to INR201 crore in FY2017. Despite operational
challenges and the impasse on the implementation of the ground-
handling policy, the company has been able to register a healthy
Y-o-Y growth aided by new client addition as well as higher
business from existing clients. The operating profits of the
company increased from INR1.3 crore in FY2016 to INR8.8 crore in
FY2017 on account of healthy improvement in top-line. Given the
competition from un-entitled entities resulting in limited
pricing power, it is focussing on cost-control measures to drive
profitability. This includes efficient utilisation of manpower
and equipment and reduction in interest burden through conversion
of high cost rupee debt into foreign currency denominated debt.
The initiatives taken have already started yielding results, with
operating profits in 9M FY2018 at INR10.5 crore.
Presence at two of the top-five busiest airports in India offer
high growth potential: Bhadra International offers ground-
handling services at Kolkata, Chennai, Calicut, Coimbatore,
Mangalore, Trichy and Trivandrum, all of which are international
airport locations. Of the seven locations, Chennai and Kolkata
airports continue to contribute more than three-fourths of the
total revenues and being metro airports, these are likely to
remain the key revenue drivers. Chennai International Airport is
a strategic location for transit cargo from Western countries to
the east of Asia, which offers high growth potential for the
company. Bhadra International earns more than 80% of its revenues
from servicing international airlines. As per the data reported
by the AAI, Kolkata, Calicut and Coimbatore reported 23%, 34% and
38% increase in international aircraft movement in 9M FY2018,
albeit on a lower base, while Chennai witnessed a modest 1.4%
growth in the same period.
Strong infrastructure and state-of-the-art equipment provides
competitive edge in attracting new clients; enables high on time
turnaround for aircrafts: The equipment used by Bhadra
International is in line with international standards and it
conforms to the standards laid down by the International Air
Transport Association, which helps to tap the niche international
airlines segment. The company has a proven track record of on-
time turnarounds and high-quality services, which has helped to
win accolades and top-vendor rankings from players such as
Lufthansa and Air Arabia. Bhadra International's client base has
grown steadily over the last five years increasing from 19
players in FY2012 to 49 players as in FY2017 including leading
international players such as Qatar Airways, Air Arabia, Cathay
Pacific etc. Given the healthy growth in client base, the client
concentration risks of the company have consistently reduced over
the last five years.
The company has filed claims, in excess of INR3000 crore, against
AAI for losses suffered over the last seven years due to delay in
implementation of the Ground Handling Policy (restricting the
pricing power, given the competition from non-entitled players)
and claiming a reduction in the royalty percentage payable to AAI
to match that being paid by Air India, retrospectively.
Credit challenges
Delays in debt servicing due to stretched liquidity: Bhadra
International went into corporate debt restructuring (CDR) in
FY2013, as the business failed to scale up as anticipated. While
the repayments on restructured loans commenced from September
2014, the company continued to face liquidity constraints due to
its inability to scale-up its operations because of competition
from non-entitled players. Resultantly, there have been continued
delays in meeting repayment obligations. As per the management,
on an average, these delays average between 60 to 80 days.
Weak financial profile results in erosion in net worth and
significant near-term debt repayment obligations: The net worth
of the company has fully eroded due to significant operating
losses. Bhadra International had undertaken aggressive debt-
funded capex in the past towards equipment required for
undertaking ground-handling operations at various airport
locations. Consequently, it has significant repayment
obligations, ranging between INR45-55 crore per annum over the
next 3-4 years. Given the poor liquidity conditions, the company
has been delaying the payment of its statutory dues and payables
(of over INR150 crore, outstanding as on March 31, 2017) which
primarily comprise royalty payments to AAI, to service its debt
obligations.
Exposed to regulatory risk due to impasse on implementation of
NCAP 2016: The NCAP, 2016 provides for the replacement of
existing Ground Handling Policy by a new framework, which
includes, inter alia, cap on the number of ground handlers at
each airport, requirement for Air India's subsidiary/JV to match
royalty/revenue share offered by other ground handlers, right to
domestic airlines to self-handle at all airport locations etc.
Having retained the key points of the previous policy, NCAP is
likely to be a positive for the Ground Handling Agencies (GHAs).
However, a delay in its implementation, due to an appeal filed by
the Federation of Indian Airlines in the honorable Supreme Court
challenging certain provisions (outcome of which is awaited),
continues to adversely impact the business and financial profiles
of players like Bhadra International.
Bhadra International is promoted by Mr. Prem Bajaj who holds a
62.5% of the total equity of the company, while the balance is
held by GPC Mauritius IX LLC. Incorporated in 2000, Bhadra
International is involved in providing ground-handling services,
ramp services and allied services at airports across India. The
company entered into a technical collaboration with Novia
International Consulting ApS (Denmark) in 2007 and was awarded
concession from the AAI to provide comprehensive ground-handling
services at seven airports including, Chennai, Trichy,
Coimbatore, Kolkata, Calicut, Trivandrum and Mangalore. Bhadra
International's clientele includes international players
operating out of these locations like Qantas, British Airways,
Cathay Pacific, Thai Airways, etc. The company has its corporate
offices in New Delhi and Chennai.
In 9M FY2018, as per provisional numbers, the company made gross
operating profits of INR10.5 crore on an OI of INR178.3 Crore.
BTM CORP: CARE Migrates 'D' Rating to Not Cooperating Category
--------------------------------------------------------------
CARE Ratings has been seeking information from Btm Corp Limited
(BCL) to monitor the ratings vide e-mail communications dated
November 1, 2017, November 27, 2017, January 15, 2018, and
numerous phone calls. E-mail communications and letter dated
February 7, 2018, seeking information are attached as Annexure
II. 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. Further, BCL has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. The rating
on BCL's bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 27.00 CARE D; 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(s).
The ratings continue to take into account delays in debt
servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in debt servicing: As per banker interaction, there have
been ongoing delays in debt servicing and the client has
confirmed the same. Further, the company has stopped its
operations.
Bhilwara (Rajasthan) based BCL was incorporated in October, 2005
by Tekriwal brothers as a closely held public limited company.
Mr. Rajeev Tekriwal is the Managing Director and the other two
brothers Mr. Anil Tekriwal and Mr. Sanjeev Tekriwal are the
Directors on the board of BCL. The company is engaged in the
business of manufacturing of grey (cotton, polyester and
synthetic) fabrics. All of the weaving activities are done in-
house while the processing of the finished fabric is outsourced
to various process houses. The company markets its products under
the brand name of "BTM". The plant of BCL is located at Bhilwara,
Rajasthan which is a textile cluster and has 96 single width Air
Jet looms as on March 31, 2016. The company markets its products
directly and also through various dealers who supply its products
all over country and overseas mainly to Afghanistan and Egypt.
BTM INDUSTRIES: CARE Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
CARE Ratings has been seeking information from Btm Industries
Limited (BTMIL) to monitor the ratings vide e-mail communications
dated November 1, 2017, November 27, 2017, January 15, 2018, and
numerous phone calls. E-mail communications and letter dated
February 7, 2018, seeking information are attached as Annexure
II. 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. Further, BTMIL has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. The rating
on BTMIL's bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 27.00 CARE D; 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(s).
The ratings continue to take into account irregularity in cash
credit account owing to stressed liquidity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Irregularities in Cash Credit account: The cash credit account
has been over utilized and banker has confirmed the same and
account has been classified as NPA. The client has confirmed the
same that there are delays in debt servicing and at present the
company has stopped its operations.
Incorporated in 1998, BTMIL is part of "BTM group" based out of
Bhilwara. BTMIL is engaged in the business of processing of
synthetic grey fabrics and trading of finished fabrics. The
processing facility at Bhilwara has an installed capacity of 360
Lakh Meters Per Annum (LMPA) as on March 31, 2016 and capacity
utilized remained at 91% in FY16 (FY refers to the period April 1
to March 31).
BTM group consists of BTM Corp Limited (BCL) and Prestige
Suitings Private Limited (PSPL) which are also engaged in
manufacturing of synthetic grey fabric.
DEMBLA TIMBER: Ind-Ra Ups LT Issuer Rating to B+, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Dembla Timber
Company Private Limited's (DTCPL) Long-Term Issuer Rating to 'IND
B+' from 'IND B(ISSUER NOT COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR30 mil. Fund-based working capital limitLong-term rating
upgraded; Short-term rating affirmed with IND B+/Stable/IND
A4 rating; and
-- INR216.1 mil. (increased from INR166.1 mil.)Non-fund-based
limit affirmed with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects Ind-Ra's expectation of a significant growth
in DTCP's revenue in FY18. During 10MFY18, the company achieved
revenue of INR464.92 million on the back of higher orders from
existing and new customers. However, the scale of operations
remained small. Ind-Ra expects DTCP to achieve revenue of INR520
million in FY18 on the back of an order book of around INR30
million, which will be executed by end-February 2018.
During FY17, revenue declined to INR443.69 million (FY16:
INR455.19 million) owing to a decrease in orders. However,
interest coverage (operating EBITDA/gross interest expense)
improved to 1.26x in FY17 (FY16: 1.16x) and net financial
leverage (total adjusted net debt/operating EBITDA) to 3.08x
(3.71x) due to an increase in operating EBITDA margin to 3.82%
(2.45%), mainly driven by foreign exchange gains.
The ratings also benefit from DTCP's comfortable liquidity
position as reflected by 91% average utilization of its working
capital facilities during the 12 months ended January 2018.
The ratings are also supported by the promoter's more than two
decades of experience in the timber business.
RATING SENSITIVITIES
Positive: A substantial growth in the top line or operating
margin, while maintaining the credit metrics will be positive for
the ratings.
Negative: Any deterioration in the credit metrics or operating
margin on a sustained basis could be negative for the ratings.
COMPANY PROFILE
Incorporated in 2003, DTCPL is engaged in purchasing and
processing of Malaysian timber wood, which is imported from
Singapore and New Zealand. The company imports logs and processes
it as per customer demand and specifications.
DHARESHWAR GINNING: CARE Reaffirms B+ Rating on INR6.24cr LT Loan
-----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Dhareshwar Ginning Industries (DGI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.24 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of DGI continues to
remain constrained on account of its financial risk profile
marked by modest scale of operations along with thin profit
margins, moderate capital structure, weak debt coverage
indicators and moderate liquidity position. The rating also
continue to remain constrained owing to susceptibility of
operating margins to cotton price fluctuations, its presence in
the highly fragmented, seasonal and regulated cotton industry.
The rating, however, continues to derive strength from
experienced partners and proximity to cotton growing out of
Gujarat.
DGI's ability to increase its scale of operations, improve
profitability and solvency position along with efficient working
capital management would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations along with thin profit margins:
The scale of operation of DGI stood modest marked by total
operating income (TOI) of INR32.47 crore and tangible networth
base of INR4.22 crore as on March 31, 2017. The profit margin of
DGI remained thin as marked by PBILDT margin and PAT margin of
2.77% and 0.22% respectively on account of limited value addition
and presence in the highly competitive segment of the cotton
industry.
Moderate capital structure, weak debt coverage indicators and
moderate liquidity position: On account of high total debt along
with moderate networth base, capital structure stood moderate
marked by overall gearing ratio of 1.64 times as on March 31,
2017. As a result of its thin profitability, the debt coverage
indicators remained weak marked by high ratio of total debt to
GCA of 19.48 times during FY17. The liquidity position stood
moderate marked by current ratio of 1.42 times as on March 31,
2017.
Susceptibility of operating margins to cotton price fluctuations:
The profitability of DGI is exposed to fluctuations in raw
material prices, which is being agricultural commodity its prices
are volatile in nature and linked to production in the domestic
market. Further, the supply of key raw materials is primarily
dependent upon monsoon during a particular year as well as
overall climatic conditions. Hence any adverse movement in cotton
prices would impact profitability of the firm.
Presence in the highly fragmented, seasonal and regulated cotton
industry: DGI operates in industry characterized by low entry
barriers, high fragmentation, the presence of a large number of
players in the organized and unorganized sector and very low
bargaining power against its customers puts pressure on the
profitability margins. Further, cotton being a seasonal crop as
it is available mainly from November to February results into a
higher inventory holding period for the business. Furthermore,
the cotton prices in India are highly regulated by government
through MSP (Minimum Support Price) fixed by government, though
due to huge demand supply mismatch the prices have rarely been
below the MSP. Hence, any adverse change in government policy may
negatively impact the prices of raw cotton in domestic market and
could result in lower realizations and profit.
Key rating strengths
Experienced partners: The overall operation of DGI is managed by
seven partners named Mr. Nathabhai Bhimani, Mr. Keshavjibhai
Vansjaliya, Mr. Ashishbhai Mendapara, Mr. Chiragbhai Mendapara,
Mr. Amrishbhai Mendapara, Mr. Dayalal Mendapara, and Mr.
Chhaganbhai Mendapara. All partners hold on an average 6 years of
experience in cotton ginning and pressing business.
Proximity to cotton growing area of Gujarat: The manufacturing
facilities of DGI are located at Rajkot (Gujarat). Gujarat
produces around 30% of total national production of cotton;
hence, DGI's presence in the cotton producing region results in
benefit derived from a lower logistic expenditure (both on
transportation and storage), easy availability and procurement of
raw materials at effective prices and consistent demand for
finished goods resulting in a sustainable and clear revenue
visibility.
Rajkot (Gujarat) based Dhareshwar Ginning Industries (DGI) is a
partnership firm established in 2013. The firm is engaged in
cotton ginning and pressing. The manufacturing unit of the
company is located in Rajkot, Gujarat which has an installed
capacity of 11736 Metric tonnes per annum as on March 31, 2017.
DIG sells the manufactured product to local traders and it has
started its commercial production from April, 2014.
DIGNUS INFRA: CARE Lowers Rating on INR3cr LT/ST Loan to D
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Dignus Infra Private Limited (DIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2.35 CARE D; Revised from CARE B+;
Facilities Stable, on the basis of best
available information
Long term Bank 3.00 CARE D; Revised from CARE B+;
Facilities/Short Stable, on the basis of best
term Bank available information
Facilities
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from DIPL to monitor the
rating(s) vide e-mail communications/letters dated February 5,
2018 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
Dignus Infra 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(s).
The rating has been revised on account of the ongoing delays in
debt servicing of the company due to its stretched liquidity
position.
Detailed description of the key rating drivers
The revision in the ratings takes into consideration the
following factors
Key Rating Weaknesses
Ongoing delays in debt servicing: There are ongoing delays in
servicing the term debt obligation i.e. in both principle and
interest amount. The same is settled within a period of 30-40
days. The delays are on account of weak liquidity position as
the company is unable to generate sufficient funds in a time
manner.
Positive outlook for construction material industry: Investment
in the infrastructure sector plays a crucial role in the growth
of the economy. In order to sustain the economic growth momentum,
Government of India (GOI) has been focusing on increasing
investment to augment the infrastructure in the country. Thus,
the outlook remains positive for players in construction material
industry.
Dignus Infra Private Limited (DIPL) was incorporated in February
2013 as private limited company and is currently being managed by
Mr Niraj Kumar Singh, Mr Satyendra Kumar Shahi, Mr Ram Shiromani
Patel and Mr Satpal Dagar. The company is engaged in the
manufacturing of construction material like Polyurethane foam
(Puf) panels, roofing panels and various profile sheets like Hi-
Rib profile, tile profile, curved profile, etc. at its
manufacturing unit in Mohali, Punjab with total installed
capacity of 1.40 lakh SQMTR PUF panels per annum and 10.87 lakh
SQMTR profile sheets per annum as on December 31, 2017.
FOMENTO RESOURCES: Ind-Ra Assigns BB Long-Term Issuer Rating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Fomento
Resources Private Limited (FRPL) a Long-Term Issuer Rating of
'IND BB'. The Outlook is Stable. The instrument-wise rating
actions are given below:
-- INR3,000 mil. Term loan due on October 2022 assigned with IND
BB/Stable rating;
-- INR1,100 mil. Fund-based working capital limits assigned with
IND BB/Stable rating; and
-- INR100 mil. Forward contract limits assigned with IND A4+
rating.
To arrive at the ratings, Ind-Ra has taken a consolidated view of
FRPL and its subsidiary Eyestar Finance and Leasing Pvt Ltd (EFL)
because a similar line of business.
KEY RATING DRIVERS
The ratings reflect the Supreme Court's recent judgment to cancel
all iron ore mining operations in Goa from mid-March 2018 and
issue fresh licenses for the commencement of mining activities.
The ability of the FRPL group to re-purchase its existing mining
license and stabilize the operations will determine the rating
direction over the next 12 months.
The ratings also reflect the group's volatile revenue,
profitability and overall credit metrics, because of changing
government regulations and volatile iron ore prices. In FY17, the
consolidated top line increased to INR5,196 million (FY16:
INR1,560 million) and EBITDA margins to 17.2% (15.4%) because of
better realization, leading to gross EBITDA interest cover of
3.2x (0.8x) and net leverage of 2x (10.4x). However, mining
volumes could decline during FY18-FY19 amid government stringency
and volatile iron prices, which would put pressure on revenues,
profitability and credit metrics.
Ind-Ra, however, draws comfort from the group's healthy liquidity
profile with cash and liquid investments in excess of INR10
billion as against the annual repayment obligations of INR384
million in FY19. Also, the group has over 60 years of operating
presence in the iron ore business.
Also, FRPL is part of the Fomento group which has been mining and
exporting iron ore for over 60 years. The group in FY17 had five
mining leases, of which four were for iron ore mines in Goa
(which are now cancelled) and one is a bauxite mine in
Maharashtra which continues. FRPL is a trading arm of the group
which is involved in the purchase of iron ore from its own mines
as well as other mines in Goa and Maharashtra, which is then sold
in the domestic market or exported. EFL is a subsidiary of FRPL
which has a mining lease of an iron ore mine in Goa. The lease
will be cancelled mid-March 2018.
The mining activities of the group include resource development
(exploration, mine planning, excavation, and mineral processing),
logistics (surface and marine), and sales (international and
domestic). The group also has diversified interests in the
mineral resource industry, steel making, hotels, shipping and
hydro power.
Ind-Ra believes the group will continue to benefit from their
longstanding presence in the iron ore business.
RATING SENSITIVITIES
Positive: Demonstrated ability to avail new licenses and
stabilize mining activities leading to stable and sustained cash
flows along with healthy credit metrics could be positive for the
ratings.
Negative: Inability to avail new licenses and/or further
disruption in mining activities leading to deterioration decline
in the EBITDA margins and credit metrics could be negative for
the ratings. Any higher-than-expected financial support to
associate concerns could also lead to a negative rating action.
COMPANY PROFILE
Incorporated in 2010, FRPL is involved in the purchase of iron
ore from its own mines as well as other mines in Goa and
Maharashtra, which is then sold in the domestic market or
exported. EFL's mining lease has over 100 million tones mine in
Goa.
GEMINI EQUIPMENTS: CARE Moves D Rating to Not Cooperating Cat.
--------------------------------------------------------------
CARE Ratings has been seeking information from Gemini Equipments
and Rentals Private Limited (GERPL) to monitor the rating(s) vide
e-mail communications/letters dated October 17, 2017, February 1,
2018, February 2, 2018 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. CARE's rating on
GERPL's bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 10.20 CARE D; ISSUER NOT COOPERATING
Facilities Issuer not cooperating; Based
on best available Information
Short term Bank 0.60 CARE D; ISSUER NOT COOPERATING
Facilities Issuer not cooperating; 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(s).
Detailed description of the key rating drivers
At the time of last rating on March 31, 2017 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Strengths
Financial support from the PE investors: GEAR is promoted by
Berggruen Holdings Inc (BH) and Cycladic Capital Management (CCM)
having a considerable track record of investing in a wide range
of industries, continents and asset classes.
Key Rating Weaknesses
On-going delay in debt servicing: GEAR has been delaying the
repayment of equipment finance loan since February 2016 owing to
stressed liquidity position.
Incorporated in 2007, Gemini Equipment and Rental Private Limited
(GEAR) is engaged in renting and leasing of construction
equipment (CE; viz. concreting, earth moving, cranes and others)
and material handling equipment (MHE; viz. forklifts and others).
GEAR owns around 687 equipment and employs around 1,400 people
across 145 client sites in India. The company also offers
customized operating lease packages and lease & sale back
arrangement to its end users.
GLENMARK PHARMACEUTICALS: S&P Lowers CCR to BB-, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings lowered its long-term corporate credit rating
on India-based generic drugmaker Glenmark Pharmaceuticals Ltd. to
'BB-' from 'BB'. The outlook is stable. S&P also lowered its
long-term issue rating on the company's senior unsecured notes to
'BB-' from 'BB'.
S&P said, "The downgrade reflects our view that Glenmark's
leverage is likely to remain elevated over the next 24 months due
to the company's weak operating performance.
"We estimate that Indian pharmaceutical companies such as
Glenmark will continue to face severe pricing pressure and margin
erosion in the U.S. generic drugs market, leading to an overall
subdued operating performance. The better operating performance
of Glenmark's non-U.S. businesses will temper this weakness. We
believe the company's business is fairly well diversified.
"We estimate that Glenmark's leverage measured by the ratio of
funds from operations (FFO) to debt will be about 20% in fiscal
2019 (the year ending March 31, 2019). We estimate that
Glenmark's leverage could improve to about 25% only by the end of
fiscal 2020, provided the company significantly improves its
operating performance by launching new products or through
potential out-licensing deals using its innovative pipeline."
Glenmark's revenue for the third quarter of fiscal 2018 fell by
13.1% while its EBITDA margins slid sharply to below 15.0%. A
40.2% year-over-year decline in U.S. sales largely overshadowed
good growth momentum elsewhere. A large part of the decline in
revenue and margin compression was also due to the lack of new
product launches in fiscal 2018, after one-time exclusive Zetia
sales in fiscal 2017. S&P expects the price erosion in the U.S.
market to continue over the next 12-18 months.
S&P said, "We believe Glenmark has a strong slate of 18-20
products, which should help the company regain growth in fiscals
2019 and 2020, and push the EBITDA margin back to the 18%-20%
range.
"We expect Glenmark's working capital cycle to remain longer than
that of most of its peers. This factor, coupled with continuing
capital expenditure (capex) and novel drug related research and
development expenses, is likely to limit deleveraging
opportunities over the next 12-18 months. We estimate that the
company's reported debt will broadly remain unchanged over the
next two years.
"Our stable outlook on Glenmark reflects our expectation that the
company's FFO-to-debt ratio will be steady at 20%-25% over next
12-18 months supported by modest growth and stable EBITDA margins
of 18%-20%. We also expect the company's liquidity to remain
adequate over this period. In our base case, we do not foresee
any new adverse U.S. FDA-related observations or proceedings.
"We may lower the rating if Glenmark's ratio of FFO to debt stays
below 20% and free operating cash flows turn materially negative.
This could happen if: (1) new product revenues fail to boost
revenues and support margins; (2) working capital and capex
increase significantly higher than our base case; or (3) the
company engages in debt-fueled acquisitions or shareholder
distributions.
"We may upgrade Glenmark if the ratio of FFO to debt approaches
30%. The company's revenue growing by close to 20% and EBITDA
margins staying above 22%, supported by steady working capital
and capex spending, could result in such a situation. Measures
such as out-licensing and use of cash to reduce debt could lead
to such improvement."
GOOD LUCK: ICRA Assigns B+ Issuer Rating; Outlook Stable
--------------------------------------------------------
ICRA Ratings has assigned the issuer rating of [ICRA] B+ to Good
Luck Financial Inclusion Private Limited (GLFIPL). The outlook on
the rating is Stable.
Rationale
The rating factors in the small scale of operations of the
company with the net worth of INR5.45 crore and portfolio of
INR13.18 crore as on December 31, 2017 and a moderate asset
quality with the 150-day delinquency at 0.93% as on December 31,
2017 along with low credit concentration as a result of the loans
being small ticket size and retail focused.
The ratings are however constrained by the relatively low track
record of operations of the company with the company starting its
operations in August 2015 and much of growth achieved in FY2017,
its relatively small size and high geographical concentration
along with the low profitability indicators (return on average
net worth at 4.56% in FY2017) and limited financial flexibility
in light of the entire borrowings of the company being from the
promoters in addition to the concerns regarding marginal borrower
profile.
Going forward, the company's ability to raise resources (both
debt and equity) for portfolio expansion while maintaining the
asset quality and improve profitability indicators would be a key
rating sensitivity.
Outlook: Stable
The outlook may be revised to positive if the company is able to
continue to profitably grow its portfolio while maintaining
control over the asset quality. The outlook may be revised to
negative if there is a significant deterioration in the asset
quality or solvency profile of the company.
Key rating drivers
Credit strengths
Experienced Promoters: The promoters of the company have adequate
amount of experience in the nature of the business operations
along with a good amount of knowledge related to the demographic
profile of the borrowers in the region of operations.
Moderate Capitalisation
Profile for current scale of operations: The capitalisation
profile of the company is moderate with a gearing of 1.50 times
as on December 31, 2017 though increased slightly from 1.30 times
as on March 31, 2017 as a result of the portfolio growth being
funded by incremental borrowings of the company. Nevertheless,
the overall scale of operations for the company remains small
with a net worth of INR5.45 crores and portfolio of INR13.18
crore as on December 31, 2017.
Moderate Asset Quality Indicators: The asset quality of the
company on a relatively small portfolio size stands comfortable
with a 150-days past due at 0.93% as on December 31, 2017, albeit
with a relatively short track record of operations. Given the
relatively weak borrower profile, the asset quality indicators
are likely to remain volatile. Going forward the ability of the
company to profitably expand business operations while keeping
its asset quality intact will be a key monitorable.
Credit weaknesses
Small Size and Geographically concentrated portfolio: The
company's scale of operations is relatively small with the
portfolio of INR13.18 crores as on December 31, 2017. The entire
portfolio of the company is concentrated in Delhi region. The
ability of the company to grow the business volumes while
maintaining control over slippages would be a key rating
sensitivity.
Limited financial flexibility: The entire funding profile of the
company constitutes of the loans given by the promoters of the
company and it currently does not hold any banking relationship
thereby providing limited financial flexibility. The ability of
the company to raise resources (both debt and equity), which
would be required for further business growth is yet to be
established.
Weak Borrower Profile: The rating factors in the risks associated
with marginal borrower profile, unsecured lending business and
political risks, along with challenges associated with high pace
of growth. While access to credit bureaus and regulatory ceiling
on borrower indebtedness has reduced concerns on overleveraging
and multiple lending, however, issues related to multiple
identity proofs as well as gaps in information available with the
bureaus (lack of data related to the SHG programme, non NBFC-
MFIs, lending through business correspondent model) remain.
Low profitability indicators: The company reported low
profitability indicators with return on average assets of 2.17%
and return on average net worth of 4.56% in FY2017 owing to high
operating expanses of 16.44% of the average total assets in
FY2017 given the nascent stages of operations. ICRA notes that
the profitability of the company is likely to be positively
affected with moderation of expenses as a result of increased
scale of operations in the short term, however meaningful impact
on profitability would only be visible over the medium term.
Good Luck Financial Inclusion Pvt. Ltd., Formerly Good Luck
Securities Services (P) Ltd. is Non- Banking Financial Company in
which we provide financial services of loan. The company was
incorporated in 1994 but began its operations only in August
2015.The company operates only in a few focused parts of Delhi
where the promoters of the company have a working experience. The
operations are conducted with the help of one head office in
Rohini, Delhi and three other branches. The company gives loans
under the Microfinance category to the marginalised section of
society having a ticket size of INR5000 to INR50,000. The company
categorizes its loans into four categories as follows: Loans to
SHGs, Personal Finance, Two-wheeler loan and Asset Loans. With
majority of loans being in the category of asset loans.
GREENVISION TECHNOLOGIES: Ind-Ra Rates INR120MM Loan 'BB'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Greenvision
Technologies Private Limited (GTPL) a Long-Term Issuer Rating of
'IND BB'. The Outlook is Stable. The instrument-wise rating
actions are as follows:
-- INR120.0 mil. Fund-based limits assigned with
IND BB/Stable/IND A4+ rating; and
-- INR125.0 mil. Non-fund-based limits assigned with IND A4+
rating.
KEY RATING DRIVERS
The ratings reflect GTPL's modest scale of operations, marked by
revenue of INR779 million in FY17 (FY16: INR728 million). The
improvement is owing to a healthy customer demand. Ind-Ra expects
the revenue to surge in FY18 as GTPL booked revenue of INR880
million in 10MFY18 and has an order book of INR70 million to be
executed till February 2018.
The ratings are constrained by GTPL's limited track record of
profitability. The EBITDA margins increased sharply to 13% in
FY17 (FY16: negative 2.05%), on account low operating costs due
to product design improvements. Consequently, GTPL's interest
coverage (operating EBITDA/gross interest expense) increased to
1.31x in FY17 (FY16: negative 0.11x) and net leverage (adjusted
net debt/operating EBITDA) reduced to 1.66x (negative 11.03x).
However, the company expects the margins and credit metrics to
improve further in FY18 on the expected improvement in the top
line and operating cost management.
The ratings factor in GTPL's comfortable liquidity with its
average maximum utilization of the fund-based limits being 93%
for the 12 months ended January 2018. The net cash cycle of GTPL
was comfortable at 10 days on account of a long payable period.
The ratings are supported by GTPL's 10-year-long association with
its major customer i.e. Compuage Infocom Limited ('IND A-
'/Stable) and promoter's experience of more than two decades in
manufacturing and trading batteries.
RATING SENSITIVITIES
Positive: Any substantial growth in the top line with an
improvement in EBITDA margin while maintaining the credit profile
could be positive for the ratings.
Negative: Any substantial deterioration in the operating
profitability and/or deterioration in the credit metrics and
working capital cycle could be negative for the ratings.
COMPANY PROFILE
Incorporated in 2008 and managed by Mr. Biju Bruno, Mr. Bipin
Shaparia and Mr. Aditya Ajay Mehta, GTPL manufactures lead acid
batteries and trades tubular batteries.
GUJARAT PEANUT: ICRA Removes B+ Rating From Not Cooperating Cat.
----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ to
the INR4.50 crore fund-based (reduced from INR5.89 crore)
facilities and the INR1.89 crore (increased from nil) unallocated
limits of Gujarat Peanut Products Private Limited. The outlook on
the long-term rating is Stable. ICRA has also removed the rating
from the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash 4.50 [ICRA]B+ (Stable); Rating
Credit reaffirmed and removed from
the 'Issuer Not Cooperating'
category
Unallocated Limits 1.89 [ICRA]B+ (Stable); Rating
reaffirmed and removed from
the 'Issuer Not Cooperating'
category
Rationale
The reaffirmation of the rating continues to factor in the weak
financial profile of GPPPL as reflected by its modest scale of
operations, low profitability margins, weak capitalisation and
debt coverage indicators, as well as high working capital
intensity of operations. The rating continues to remain
constrained by the high customer concentration risk; exposure to
high competitive intensity in the trading and processing of agro-
commodity business; and vulnerability of GPPPL's profitability to
any adverse regulatory changes and availability of agro-
commodities as the same is linked to seasonality and crop
harvest.
The ratings, however, continue to favourably consider the long-
standing experience of the promoters in the agro-commodities
business through their association with other entities engaged in
similar business, and favourable location of GPPPL in the
agricultural area of Gujarat, enabling easy procurement of
various agro products.
Outlook: Stable
ICRA expects GPPPL to continue to benefit from the experience of
its promoters in the agro-commodities business as well as the
operational support from its other group concerns engaged in the
same business sector. The outlook may be revised to Positive if
substantial growth in scale and profitability and improvement in
capital structure strengths the financial risk profile. The
outlook may be revised to Negative in case of any substantial de-
growth in revenues and profitability, or stretch in working
capital cycle weakens the liquidity, and hence the financial risk
profile of the company.
Key rating drivers
Credit strengths
Longstanding experience of promoters in the agro-commodity
industry: The promoters, Mr. Arun Chang and Mr. Sagar Chag, have
extensive experience of more than three decades in the trading
and processing of agro-commodities through their association with
another entity, Sagar International.
Favourable location benefits in terms of procurement of agro-
commodities: The company's production facility is located in the
agricultural belt of Rajkot (Gujarat), which ensures easy
availability of various agro-commodities like groundnut, cumin
seeds, wheat, etc.
Credit challenges
Weak financial risk profile: The financial risk profile of GPPPL
remains weak as evident from its relatively small scale of
operations, low profit margins given its low value-added
operations and stiff competition, and weak capitalisation and
debt coverage indicators. The company reported sharp decline of
~29% in operating income in FY2017 due to low sales volume. As on
March 31, 2017, the company's gearing stood high at 2.65 times
and debt coverage indicators remained weak with interest coverage
of 1.87 times, NCA/Total Debt of 6% and Total Debt/OPBDITA of
6.62 times. The working capital intensity also stood high and
increased to 34% as on March 31, 2017 due to increased inventory
level. The liquidity position of the company also remained weak
as reflected by average monthly utilisation of ~94% during the
October 2016 to December 2017 period.
High customer concentration risk: The company faces high customer
concentration risk, which has increased over the years, reflected
by its top 10 customers accounting for ~97% of the total revenue
in FY2017 (95% in FY2016), wherein the share of its group company
stood at ~40%.
Exposure to agro-climatic conditions and regulatory changes: The
agro-commodity trading and processing business remains dependent
on the performance of the agricultural sector, which is further
impacted by a combination of factors like climatic conditions,
prevailing demand-supply scenario, regulatory changes pertaining
to export incentive, etc. The company's revenues as well as
profitability remain vulnerable to these external factors.
Intense competition due to low entry barriers: The company faces
stiff competition from other small and unorganised players in the
industry, which limits its bargaining power with customers and
suppliers, and hence, exerts pressure on its margins.
Incorporated in 2005, Gujarat Peanut Products Private Limited
(GPPPL) is involved in the processing and trading of agro-
commodities such as groundnut seeds, wheat, sesame seeds, cumin
seeds, chickpeas, and coriander seeds, among others. The
company's processing facility at Rajkot (Gujarat), mainly
undertakes cleaning and sorting activities. The promoters of the
company, Mr. Arun Chag and Mr. Sagar Chag, have extensive
experience of more than three decades in the agro-commodities
business through their association with Sagar International,
which is also engaged in trading agro-commodities.
In FY2017, the company reported a profit after tax of INR0.07
crore on an operating income of INR22.39 crore, as compared to a
profit after tax of INR0.01 crore on an operating income of
INR31.39 crore in FY2016.
HANSA METALLICS: Ind-Ra Raises LT Issuer Rating to BB+
------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Hansa Metallics
Ltd.'s (HML) Long-Term Issuer Rating to 'IND BB+' from 'IND BB
(ISSUER NOT COOPERATING)'. The Outlook is Stable. The instrument-
wise rating actions are as follows:
-- INR770 mil. Fund-based working capital limits Long-term
upgraded; Short-term affirmed with IND BB+/Stable/IND A4+
rating;
-- INR175 mil. Non-fund-based working capital limits assigned
with IND BB+/Stable/IND A4+ rating; and
-- INR13 (reduced from INR229.2) mil. Term loan due on March 31,
2018 upgraded with IND BB+/Stable rating.
KEY RATING DRIVERS
The upgrade reflects a substantial change in HML's business
profile. Initially, the company sold around 70% of its output to
cycle companies. However, with the change in market dynamics, it
has considerably increased its presence in the auto ancillary
sector. About 60% of its supplies now are towards the auto
ancillary sector and 40% to the cycle industry. This along with a
shift of consumer preference towards organized players post Goods
and Service Tax implementation helped HML reduce its end-user
industry concentration and resulted in 25% yoy revenue growth to
INR1,016 million in 1HFY18 (FY17: INR1,626 million). However, the
scale of operations remains small. Ind-Ra expects the company to
achieve steady revenue growth in the near to medium term, driven
by a further improvement in realizations due to the contribution
of the auto sector.
The upgrade is further supported by an improvement in HML's
EBITDA margin and credit metrics, though the levels remain
moderate. The margins and metrics remain constrained by intense
industry competition and the company's small market position in
the auto ancillary sector. It however mitigates raw material
price volatility by passing on the fluctuations to customers with
a minor lag.
EBITDA margin improved to 13.3% in 1HFY18 and 12.4% in FY17
(FY16: 13.0%) from 10.9% in FY14, supported by its increasing
penetration in the better -margin auto sector. Slight weakening
in FY17 margins was driven by lower sales volume, resulting in
lower absorption of fixed costs. HML's leverage ratio (net
debt/operating EBITDAR) reduced to 4.67x in FY17 (FY16: 4.64x)
from the peak of 6.13x in FY15 and gross interest coverage
increased to 1.72x (FY16: 1.65x) from 1.48x, due to higher EBITDA
and lower debt and thus lower interest expense. Ind-Ra expects a
further modest improvement in profitability and thus credit
metrics in 2018.
The ratings are constrained by HML's tight liquidity due to high
working capital intensity. The company's use of the fund-based
limits was around 100% on average over the 12 months ended
January 2018 and working capital cycle was 174 days in FY17.
RATING SENSITIVITIES
Negative: Gross coverage reducing below 1.4x on a sustained basis
and/or continued liquidity stress could lead to a negative rating
action.
Positive: Gross coverage exceeding 2.5x on a sustained basis
could lead to a positive rating action.
COMPANY PROFILE
Established in 1997, HML manufactures of ERW (electric resistance
welding) cold rolled precision tubes. It has an installed
capacity of 48,000MT in Lalru, Punjab.
HOTEL JAYAPUSHPAM: Ind-Ra Corrects Sept. 30 Ratings Release
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) issued a correction on a
ratings release on Hotel Jayapushpam Private Limited published on
September 30, 2016 that incorrectly mentioned the FY16 net
financial leverage as 3.6x instead of 2.9x.
An amended version of the Sept 30 release is as follows:
India Ratings and Research (Ind-Ra) has affirmed Hotel
Jayapushpam Private Limited's (Hotel JP) Long-Term Issuer Rating
at 'IND BB'. The Outlook is Stable. The instrument-wise rating
action is as follows:
-- INR84.6 mil. (reduced from INR 120.9 mil.)Long-term loan due
on March 2021 affirmed with IND BB/Stable rating.
KEY RATING DRIVERS
The affirmation reflects Hotel JP's marginal growth in revenue
while maintaining the credit metrics at similar levels. In FY16,
the company's revenue was INR160 million (FY15: INR150 million;
FY14: INR146 million). Interest coverage (operating EBITDA/gross
interest expense) was 3.0x in FY16 (FY15: 2.3x, FY14:2.5x) and
net financial leverage (total Ind-Ra adjusted net debt/operating
EBITDAR) was 2.9x (3.3x, 2.5x). Hotel JP's ratings are
constrained by continued deterioration in its EBITDA margin over
FY14-FY16 (FY16:22%, FY15:23% and FY14:33%) due to increase in
the administrative and maintenance costs.
The management expects the credit metrics to improve further on
scheduled repayment of term loan. Net leverage is expected to
reach less than 2.5x by end of FY17 with improved profitability
on reduction in wastage of food (reduced items on the menu size
to avoid wastage).
The ratings continue to be constrained by the company's small
size and its single-property dependent operations.
RATING SENSITIVITIES
Positive: A significant increase in revenue and profitability
leading to sustained improvement in the credit metrics could be
positive for the ratings.
Negative: A significant decline in revenue and profitability
leading to sustained deterioration in the credit metrics could be
negative for the ratings.
Feb. 26 Ratings Release
Subsequently, in a Feb. 26, 2016 release, India Ratings and
Research (Ind-Ra) upgraded Hotel Jayapushpam Private Limited's
(Hotel JP) Long-Term Issuer Rating to 'IND BB+' from 'IND
BB(ISSUER NOT COOPERATING)'. The Outlook is Stable. The
instrument-wise rating action is as follows:
-- INR70 mil. (reduced from INR84.6 mil.)termloan due on March
2021 upgraded with IND BB+/Stable rating.
KEY RATING DRIVERS
The upgrade reflects Hotel JP's improved credit profile. In FY17,
net financial leverage (total adjusted net debt/operating EBITDA)
improved to 2.3x (FY16: 2.9x) due to scheduled repayment of term
loan and gross interest coverage (EBITDA/gross interest expense)
increased to 4.4x (3.0x) due to an increase in EBITDA margin.
Hotel JP's revenue increased to INR183 million in FY17 from
INR160 million in FY16 as the contribution of the food and
beverages segment to the total revenue increased to 66% from 64%.
The company's EBITDA margin improved slightly to 22.4% in FY17
from 22.0% in FY16 due to the increase in revenue which absorbs
fixed cost expenses. Hotel JP's scale of operations, however,
remained small, and credit metrics continued to be modest on
account of its small size and dependence on single-property
operations.
The ratings reflect Hotel JP's modest liquidity position. Hotel
JP's cash flow from operations declined to INR16 million in FY17
from INR26 million in FY16 due to a stretch in the working
capital cycle. The net cash conversion cycle was comfortable but
had deteriorated to 4 days in FY17 from negative 28 days in FY16
due to a decrease in the creditor days ( FY17: 15 days; FY16: 28
days).
The ratings, however, are supported by a decade of experience of
Hotel JP's founders in the hotel business.
RATING SENSITIVITIES
Negative: A significant decline in revenue and liquidity or a
decline in the profitability leading to a sustained deterioration
in the credit metrics could be negative for the ratings.
Positive: A significant increase in revenue and liquidity while
maintaining the profitability leading to a sustained improvement
in the credit metrics could be positive for the ratings.
COMPANY PROFILE
Hotel JP, founded by J.Ashok, is a three-star hotel with 94 rooms
in Chennai. As of March 2017, 90 of its rooms were operational.
The hotel has a restaurant, a lounge bar, two pubs, a roof top
restaurant and seven banquets halls.
INRHYTHM ENERGY: Ind-Ra Affirms B+ LT Rating, Outlook Stable
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed InRhythm Energy
Limited's (IEL) Long-Term Issuer Rating at 'IND B+'. The Outlook
is Stable. The instrument-wise rating action is as follows:
-- INR240 mil. Non-fund-based working capital facilities
affirmed with IND A4 rating.
KEY RATING DRIVERS
The affirmation reflects IEL's continued modest scale of
operations, weak margins and modest credit metrics owing to
intense competition in the coal industry and the trading nature
of business. Revenue declined to INR912 million in FY17 (FY16:
INR1,238 million) as the company stopped exports to other
countries and solely concentrated on domestic orders. It booked
revenue of INR927 million in 9MFY18. As of February 2018, IEL had
an order book of INR338 million, which will be executed by FY18.
EBITDA margin declined to 1.2% in FY17 (FY16: 2.0%) on account of
a decrease in variable cost. EBITDA interest coverage (operating
EBITDA/gross interest expense) deteriorated to 0.9x in FY17
(FY16: 1.4x) owing to a decline in absolute EBITDA to INR11
million (INR25 million). However, net leverage (Ind-Ra-adjusted
net debt/operating EBITDAR) improved to 1.5x in FY17 (FY16: 6.2x)
owing to a decline in debt.
The ratings, however, continue to be supported by the company's
comfortable liquidity position, as indicated by about 31.5%
utilization of the cash credit limits during the 12 months ended
January 2018.
The ratings also continue to be supported by the founders' over
25 years of experience in the coal trading business.
RATING SENSITIVITIES
Negative: Any decline in the EBITDA margin leading to a sustained
deterioration in the credit metrics could be negative for the
ratings.
Positive: Substantial growth in revenue while maintaining the
operating profitability at the current level, leading to a
sustained improvement in the credit metrics will be positive for
the ratings.
COMPANY PROFILE
Incorporated in 1992, IEL is engaged in coal trading. It imports
coal from Indonesia and Australia, and sells to domestic
customers.
JAI BHAGWATI: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Jai Bhagwati Tex
Print Private Limited's (JBTPL) 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 the rating. The rating will now
appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR50 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
February 17, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1997, Gujarat-based JBTPL has a fabric dyeing and
printing in Surat. Its promoters are Mr. Vinay Kumar Choudhary
and Mr. Arun Kumar Choudhary.
JSW STEEL: Fitch Alters Outlook to Stable and Affirms BB IDR
------------------------------------------------------------
Fitch Ratings has revised the Outlook on JSW Steel Limited's
(JSWS) Long-Term Issuer Default Rating (IDR) to Stable from
Negative and affirmed the rating at 'BB'. The agency has also
affirmed JSWS's senior unsecured rating and the rating on its
senior unsecured notes at 'BB'.
The Outlook revision reflects Fitch view that robust
profitability from improved industry fundamentals and a measured
approach to capacity expansion will enable JSWS to deleverage
steadily over the next few years. Fitch estimate that the
company's leverage will remain relatively high, with funds from
operations (FFO) adjusted gross leverage at over 4.0x over the
next two years, but risks are partly offset by JSWS's healthy
EBITDAR margin, which should stay at over 20% to be well above
the median for 'BB' rated steel companies. JSWS benefits from
efficient operations that cater to structural demand growth in
India amid the industry's better demand-supply balance following
Chinese capacity cuts.
KEY RATING DRIVERS
Sustained Profitability: JSWS' standalone operations contribute
over 90% of its consolidated EBITDA. Standalone steel sales
volume was up by 5% yoy in the first nine months of the financial
year ending March 2018 (FY18) and EBITDA per tonne (t) remained
healthy, at around INR7,630/t (USD120/t). Domestic steel prices
followed the rise in international prices with a lag, improving
EBITDA/t to INR9,000/t in 3QFY18, from approximately INR6,300/t
in 1QFY18. The company has sustained its healthy profitability
since FY17, when average EBITDA/t on a standalone basis jumped by
around 50% from the FY16 low, as pressure from imports reduced
and fundamentals for the broader industry improved.
Improved Industry Fundamentals: China's hot-rolled steel-sheet
spot prices have increased to USD650/t, from around USD450/t in
April 2017, due to the improved demand/supply balance in the
world's largest market and higher raw material costs. Chinese
steel exports were down by around 30% in 2017, despite record
steel output. China stated in February 2018 that it aims to meet
its target of cutting steel capacity by 150 million t in 2018,
two years earlier than planned. Fitch expects producers' margins
to be largely sustained in 2018, although prices may moderate
over the year.
India's steel demand is steady, at around 5% in 9MFY18, and the
rate should be sustained in the near term due to government
infrastructure spending, improved agriculture-sector income and
an overall acceleration in economic activity. Robust
international steel prices have rendered India's anti-dumping
duties ineffective. However, risks to Indian steelmakers' margins
are relatively lower due to regulatory protection should global
steel prices trend downward.
Steady Execution, Spending Discipline: JSWS plans to invest
around INR270 billion over FY18-FY21 on several projects,
including steelmaking capacity expansion at its Dolvi plant by
five million t per year by 2020, at a cost of INR150 billion. In
addition, JSWS intends expand downstream facilities and revamp
existing capacity. Projects that were announced in FY16 are
proceeding as planned and are scheduled for completion in FY19.
These include a pipe conveyor system for JSWS's key Vijayanagar
plant to cut iron ore transportation costs, a tin plate mill and
a 1.5 million t per year coke-oven plant. Successful completion
should boost the company's sales volume and profitability.
JSWS is considering acquiring assets, including those under
insolvency proceedings in India. The company has shown interest
in three Indian assets, intending to keep a minority stake and
ringfence itself from their liabilities. JSWS has a record of
disciplined investment, which has at times meant it was not the
highest bidder in competitive bids. Fitch believe this alleviates
risk to its leverage profile from its growth ambitions.
Robust Operational Profile: JSWS is India's largest steelmaker by
sales volume. The company has a dominant market share in southern
and western India, where its plants are located, supported by a
rising share of value-added products. Its highly efficient
operations are characterised by robust yields and low labour
costs, which partly offset its lack of meaningful vertical
integration. The company won mining rights for five iron ore
mines in Karnataka in 2016. It has commenced production from one
mine in February 2018 and aims to produce 4.7 million t of iron
ore, or about 20% of the amount needed by its Vijayanagar plant,
by FYE19. Captive iron-ore production should improve supply
certainty for JSWS and reduce costs to some extent.
Lower Leverage, Improved FCF: Fitch expect FFO adjusted gross
leverage to moderate below 4.5x by FYE19 (FYE17: 4.9x, FYE16:
8.0x) due to sustained EBITDA strength from higher sales volume
and better performance by subsidiaries. FCF is likely to be
modesty positive over the next two years, despite capex pick-up
in line with management guidance. Fitch assume acquisition
spending in FY19 and use equity method accounting for minority
stakes in assets, with debt that does not have recourse to JSWS.
A more aggressive inorganic growth strategy is a risk to Fitch
forecasts. Fitch have also revised the sensitivities and moved to
a gross leverage metric, as Fitch believe this better captures
JSWS's financial profile.
Senior Unsecured Rating: Around 60% of JSWS's consolidated debt,
including acceptances, was secured as of 9MFY18, resulting in a
secured debt/annualised EBITDA ratio of around 2.5x. This
indicates the possibility of subordination and lower recoveries
for unsecured debt, but further bespoke recovery analysis
suggests above-average recovery prospects for senior unsecured
creditors. Therefore, Fitch have rated senior unsecured debt and
notes at the same level as the IDR.
DERIVATION SUMMARY
JSWS can be compared with domestic peer, Tata Steel Limited (TSL,
BB/Rating Watch Evolving), which is rated 'BB-' when excluding a
one-notch uplift for potential parental support. TSL's standalone
rating is based on a combination of robust operations in India
and a much weaker operating profile in Europe. TSL plans to cut
its European exposure with a proposed joint venture with
thyssenkrupp AG (BB+/Rating Watch Positive), to which it will
transfer its European flat-steel assets. However, to resolve the
Rating Watch, Fitch awaits details on the joint venture after the
signing of definitive agreements. Both TSL and JSWS have
business-profile strengths in India, with vertical integration a
key advantage for TSL and JSWS's key assets being a position as
the market leader in steel sales and cost-efficient operations.
The two companies also have a similar leverage outlook.
ArcelorMittal S.A. (BB+/Positive) is rated higher than JSWS, as
it is larger and more diversified than JSWS and has lower
leverage. However, notching differential is limited by
ArcelorMittal's lower margin due to its global manufacturing
facilities, including in locations with structurally high costs,
such as Europe and the US.
KEY ASSUMPTIONS
Fitch's Key Assumptions within Fitch Rating Case for the Issuer
- Standalone sales volume compound annual growth rate of 6% over
FY18-FY21 (FY17: 22%)
- Standalone EBITDA per t of around INR8,100 on average over
FY18-FY21
- Cumulative capex, including acquisition spending, of around
INR280 billion over FY18-FY21
- Average dividend pay-out of INR8 billion over FY18-21
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- FFO gross leverage below 3.5x on a sustained basis
- Sustained neutral or positive FCF
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- FFO gross leverage above 4.5x for a sustained period
- Negative FCF for a sustained period
- Evidence of shift in focus on maintaining investment
discipline
LIQUIDITY
Manageable Liquidity: JSWS reported cash and cash equivalents of
around INR15 billion and debt of INR435 billion at end-2017. It
also had available undrawn credit facilities (fund and non-fund
based) of around INR115 billion and revenue and capital
acceptances totalling around INR100 billion. Fitch estimate
short- and long-term debt due over the next 12 months at over
INR100 billion, in addition to the acceptances. Fitch expect JSWS
to rely on refinancing, given its inadequate FCF generation, cash
balance and undrawn credit facilities. However, the company's
banking relationships and access to diverse funding sources,
supported by improved industry fundamentals, should allow it to
manage its liquidity needs.
FULL LIST OF RATING ACTIONS
JSW Steel Limited
- Long-Term IDR affirmed at 'BB'; Outlook revised to Stable from
Negative
- Senior unsecured rating affirmed at 'BB'
- USD500 million 4.75% senior unsecured notes due 2019 affirmed
at 'BB'
- USD500 million 5.25% senior unsecured notes due 2022 affirmed
at 'BB'
KHANDOBA DISTILLERIES: CARE Cuts Rating on INR65cr Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Khandoba Distilleries Limited (KDL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 65.00 CARE D Revised from CARE BB;
Facilities Issuer Not Cooperating
Detailed Rationale & Key Rating Drivers
The revision in ratings assigned to the bank facilities of KDL,
factors in the ongoing delays in debt servicing by KDL as
indicated by the company vide its no-default statement (NDS) for
the month ended January 2018 received on February 8, 2018. Any
improvement in the liquidity and subsequent delay free track
record with curing period will be key monitorable.
Detailed description of the key rating drivers
Key Rating Weakness
Ongoing delays in debt servicing: There are ongoing delays in
debt servicing by KDL as indicated by the company vide its no-
default statement (NDS) for the month ended January 2018 received
on February 8, 2018.
KDL was incorporated in the year 2008 as a 100% subsidiary of XL
Energy Limited (XEL) to undertake manufacturing of Rectified
Spirit (RS), Extra Neutral Alcohol (ENA), Denatured Spirit (DS)
and other related products. Due to some financial issues with the
holding company (XEL), the project was taken over by Ganga Udyog
Pvt. Ltd. (GUPL) under an auction from Reliance Asset
Reconstruction Company Limited (RARCL) along with all the assets
and shares of KDL, making KDL 100% subsidiary of GUPL as on May
27, 2013.KDL is promoted by Mr. Laxman Nivruttirao More, Chairman
and Managing Director (CMD) and Mr. Avinash Laxmanrao More
(Executive Director). Presently KDL is undertaking a green field
distillery project with a capacity of 110 kilo liters per day
(KLPD) at an expected project cost of INR84.46 crore to be funded
through a debt equity mix of 1.77.The distillery unit is located
at MIDC Tembhurni, Taluka Madha, Solapur, Maharashtra.
KRC CONSTRUCTION: Ind-Ra Gives BB-Issuer Rating on INR60MM Limit
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned K.R.C.
Constructions Private Limited (KCPL) a Long-Term Issuer Rating of
'IND BB-'. The Outlook is Stable. The instrument-wise rating
actions are as follows:
-- INR60 mil. Fund-based working capital limit assigned with
IND BB-/Stable rating; and
-- INR185 mil. Non-fund-based working capital limit assigned
with IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect KCPL's small scale of operations and weak
EBITDA margin and credit metrics owing to a highly concentrated
order book by customer and geography. A single entity,
Chhattisgarh State Power Distribution Company Limited, accounts
for almost 100% of the company's orders, which are all executed
in and around Chhattisgarh.
In FY17, revenue was INR429 million, EBITDA margin was 3.5%,
interest coverage (operating EBITDA/gross interest expense) was
1.78x and leverage (total adjusted net debt/operating EBITDAR)
was 2.19x.
The ratings also reflect KCPL's tight liquidity, indicated by
nearly full utilization of the working capital limits during the
12 months ended December 2017.
The ratings, however, are supported by strong revenue visibility,
given KCPL had an order book of INR1,599.6 million (3.7x of FY17
revenue) as of December 2017, and the founder's experience of
almost a decade in the construction sector.
RATING SENSITIVITIES
Negative: Further deterioration in the liquidity profile could be
negative for the ratings.
Positive: Any revenue growth, along with any improvement in
credit metrics and liquidity profile, will be positive for the
ratings.
COMPANY PROFILE
Incorporated in August 2016, KCPL acquired a partnership firm, KR
Constructions, during the month and commenced commercial
operations thereafter. KCPL is engaged in the installation and
construction of new lines and substations in Chhattisgarh.
In FY16, KR Constructions' revenue was INR262 million, EBITDA
margin was 5.7%, interest coverage (operating EBITDA/gross
interest expense) was 2.26x and net leverage (total adjusted net
debt/operating EBITDAR) was 2.15x. In 4MFY17, KR Constructions'
revenue was INR139.35 million.
LATA EXPORTS: CARE Moves D Rating to Not Cooperating Category
-------------------------------------------------------------
CARE Ratings has been seeking information from Lata Exports
Apparels Private Limited to monitor the rating(s) vide e-mail
communications/letters dated October 17, 2017, November 2, 2017,
December 12, 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. CARE's rating on
LEAPL's bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7.50 CARE D; Issuer not
Facilities cooperating; Based on best
available Information
Short term Bank 6.75 CARE D; Issuer not
Facilities cooperating; 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(s).
Detailed description of the key rating drivers
At the time of last rating on September 25, 2017 the following
were the rating strengths and weaknesses (updated for the
information available from Registrar of Companies): LEAPL's
ability to establish clear track of servicing of its debt
obligations with generation of sufficient cash accruals is the
key rating sensitivity.
Key updates
Delay in debt servicing: As per the interaction with the banker,
the account has been classified as NPA.
Incorporated in 1996 by the Karthikeyan family, Lata Exports
Apparels Private Limited (LEAPL) is engaged into manufacturing of
ready-made garments and uniforms for men, women and children. It
exports its products to USA, UK, Germany, Mexico and Australia
(contributing ~56.30% to total income) and domestically to
retailers and wholesalers (contributing ~13.72% to total income).
Furthermore, LEAPL undertakes job work of garment manufacturing
for other entities and brands such as Ashima Limited and India
Fashions Limited (contributing ~29.98% to total income during
FY16). LEAPL has its manufacturing facility at Bhiwandi with an
installed capacity of 75,000 pieces per month having capacity
utilisation of 65% during FY16.
MADHAV TEXTILES: CARE Lowers Rating on INR7cr Bank Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Madhav Textiles (MDT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 7.00 CARE D; Issuer not cooperating;
Term Bank Revised from CARE BB-; Stable/
Facilities CARE A4; on the basis of best
available information
Detailed description of the key rating drivers
CARE has been seeking information from MDT to monitor the
rating(s) vide e-mail communications/letters dated October 26,
2017, November 1, 2017, November 17, 2017, December 1, 2017,
December 23, 2017, January 16, 2018 and February 3, 2018 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 rating on Madhav Textile's bank
facilities and instruments will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Ongoing delays in debt servicing: The revision in the ratings
assigned to the bank facilities of Madhav Textiles is primarily
due to irregularity in servicing its debt obligations.
Surat (Gujarat) based MDT was established in 2010 as a
proprietorship firm by Mr. Akhilesh Maheswari. MDT is into the
business of trading of yarn (Viscose and Mono Filament) and
finished fabrics. MDT is also doing job work of finished fabric
however proportion of the same is very small. MDT imports its
material i.e. viscose yarn and mono filament yarn from China and
Korea and purchases finished fabric from the local market. These
materials are then being supplied to local weavers (in case of
yarn) and manufacturer of sarees and readymade garments (in case
of finished fabric).
MARINELINES SHIP: ICRA Keeps B+ Rating Under Not Cooperating Cat.
-----------------------------------------------------------------
ICRA Ratings said the ratings for INR35.00 crore bank facilities
of Marinelines Ship Breakers Private Limited continue to remain
under 'Issuer Not Cooperating' category. The rating is now
denoted as "[ICRA]B+ (Stable) and [ICRA]A4; ISSUER NOT
COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 5.00 [ICRA]B+ (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Letter of Credit 30.00 [ICRA]A4; ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly the lenders, investors and other market participants
are advised to exercise appropriate caution while using this
rating as the rating may not adequately reflect the credit risk
profile of the entity.
Incorporated in 1997, Marinelines Ship Breakers Private Limited
is engaged in the business of dismantling of ships to produce re-
rollable scrap. It procures ships from the international market
for ship-breaking and sells the scrap in the domestic market.
MSBPL operates from Plot No. 47 leased from Gujarat Maritime
Board at the Alang-Sosiya Ship-breaking Yard, Bhavnagar. The area
of the plot is 2,295 square meters.
MCNALLY SAYAJI: CARE Reaffirms D Rating on INR173.75cr LT Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Mcnally Sayaji Engineering Limited (MSEL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 173.75 CARE D Reaffirmed
Long/Short-term
Bank Facilities 89.00 CARE D/CARE D Reaffirmed
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of MSEL factor in the
on-going delays in debt servicing due to continued losses in FY17
(refers to the period April 1 to March 31) and stretched
operating cycle.
Detailed description of key rating drivers
Key Rating Weaknesses
On-going delays in debt servicing: MSEL's liquidity position has
been impacted due to continuing losses arising from slow movement
in orders and delays in recovery of debtors. There are ongoing
delays in debt servicing.
Stretched operating cycle: MSEL has high working capital
requirement due to elongated operating cycle. The average
collection period was high at 164 days in FY17. Further, the
inventory period was high at 227 days due to slow movement in
orders. Accordingly, the operating cycle is elongated.
MSEL, incorporated in December, 1943, is a 74.86% subsidiary of
McNally Bharat Engineering Co. Ltd belonging to the B. M. Khaitan
group. MSEL is engaged in manufacturing of construction, material
handling and other equipment & spares. The company has
manufacturing units located at Vadodara (Gujarat), Kumardhubi
(Jharkhand) and Asansol (West Bengal) engaged in the
manufacturing of various construction and material handling
equipment & spares and has slurry pump thickeners and floatation
unit at Bengaluru (Karnataka). Besides, the company also has two
windmills (aggregate capacity - 1.6 MW) at Jamnagar, Gujarat.
NICE SESAME: ICRA Keeps B+ Rating Under Issuer Not Cooperating
--------------------------------------------------------------
ICRA Ratings said the ratings for INR10.00 crore bank facilities
of Nice Sesame Agro Industries continue to remain under 'Issuer
Not Cooperating' category. The rating is now denoted as "[ICRA]B+
(Stable) and [ICRA]A4; ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 8.96 [ICRA]B+ (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Term loan 0.84 [ICRA]B+ (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Bank Guarantee 0.20 [ICRA]A4; ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly the lenders, investors and other market participants
are advised to exercise appropriate caution while using this
rating as the rating may not adequately reflect the credit risk
profile of the entity.
Nice Sesame Agro Industries was established in 2005 by Shaikh
brothers and is engaged in processing (hulling) and export of
sesame seeds and other agro products. The firm has processing
capacity of 35 MT per day (considering 24 hours of operation) and
is located at Kapadwanj-Nadiad Road, Gujarat. The firm is also
engaged in trading of sesame seeds, pigeon peas (Toor dal), and
other agro commodities.
PANSARI STEELS: ICRA Assigns B+ Rating to INR8cr Cash Loan
----------------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]B+ to the
INR8.00-crore fund-based limits of Pansari Steels Private
Limited. ICRA has also assigned short term rating of [ICRA]A4 to
the INR2.00 crore proposed limits of PSPL. The outlook on the
long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 8.00 [ICRA]B+(Stable); assigned
Unallocated
(Proposed Limits) 2.00 [ICRA]A4; assigned
Letter of Credit (6.00) [ICRA]A4; assigned
Rationale:
The assigned ratings take into account the intensely competitive
and low value additive nature of the metal trading and plastics
industry which results in PSPL's weak profitability. Further,
PSPL's modest scale of operations results in limited economies of
scale and the company's profitability is susceptible to foreign
exchange fluctuations (due to large volumes of imported raw
materials) as well as movement in traded goods. The ratings also
consider the weak financial profile of the company marked by low
net worth and weak coverage indicators. ICRA notes that the
liquidity position of the company remains tight owing to
stretched receivables as reflected in the continuous high working
capital limit utilisation of PSPL However, the ratings derive
comfort from the company's experienced management and diversified
product portfolio.
Going forward, the PSPL's ability to increase its scale of
operations in a profitable manner while improving the gearing
level as well as maintaining optimal working-capital intensity
will be the key rating sensitivities.
Outlook: Stable
ICRA believes that PSPL will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to Positive if there is a significant
increase in the company's revenues and profitability margins,
along with sustained improvement in its capital structure.
Conversely, the outlook may be revised to Negative in case of a
steep decline in the company's revenues or profitability margins
or weakening of its financial risk profile.
Key rating drivers:
Credit strengths
Experienced management lends competitive edge: The management has
an experience of more than two decades in trading of the
iron/steel sheets and PVC Resin (polyvinyl chloride). Over the
years, the promoters have gained a thorough knowledge of the
markets. Such a long presence in the industry has helped the
company establish relationships with several suppliers and
customers.
Established relationship with key customers ensures repeat
orders: The customers of PSPL include traders and manufacturers
of different types of PVC pipes. The company has well-established
relationships with several customers as is demonstrated by repeat
orders from the same.
Credit challenges
Exposure to price risk as inventory procurement is not backed by
orders from customers: PSPL usually maintains an inventory of
around 20-25 days and its product procurement is usually not
order backed. Furthermore, the inventory levels occasionally
increase if the management expects raw material prices to rise in
the near future. This exposes PSPL's profitability to adverse
movements in raw material prices. As is the industry practice,
however, the company is generally able to pass on some increase
in raw material prices to its customers.
Low profitability due to trading nature of operations and low
entry barriers: The trading business is marked by a large number
of organised and unorganised participants. PSPL is a small -sized
player in the industry. Furthermore, the company is involved in
trading activity which has relatively low margins. The trading
business is highly fragmented, owing to the the low entry
barriers, which limits the pricing flexibility of the
participants, including PSPL.
PSPL, a closely held company, was incorporated in 1991 and is at
present managed by Mr. Vishwanath Pansari. The company is
involved in trading of iron sheets and polymers, mainly
comprising ethylene Vinyl Acetate (EVA) and poly Vinyl chloride
(PVC). In FY2018 the company also started trading of new product
i.e. calcium carbonate although the same has contributed
marginally to the topline of PSPL.
PSPL reported a net profit of INR0.06 crore on an OI of INR19.06
crore in FY2017 compared with a net profit of INR0.06 crore on an
OI of INR19.29 crore in the previous year.
PERFECTO ELECTRICALS: ICRA Removes B Rating from Not Cooperating
----------------------------------------------------------------
ICRA Ratings has removed its earlier rating of [ICRA]B (Stable)
and [ICRA]A4 from the 'ISSUER NOT COOPERATING' category as
Perfecto Electricals has now submitted its 'No Default Statement'
("NDS") which validates that the company is regular in meeting
its debt servicing obligations. The company's rating was moved to
the 'ISSUER NOT COOPERATING' category in January, 2018.
The ratings take into account PE's relatively small scale of
current operations and weak financial risk profile as reflected
by a leveraged capital structure and subdued coverage indicators.
The ratings also take note of high working capital intensity of
the business on account of high receivables that exerts pressure
on the liquidity position of the firm. The ratings are also
impacted by high customer and geographical concentration risks
with the Indian Railways accounting for the entire sales and the
current order book outstanding primarily in Eastern India, and
execution risk arising from delays in availability of land. The
ratings further incorporate the risk associated with the entity's
status as a partnership firm, including the risk of capital
withdrawal by the partners.
The ratings, however, derive comfort from the promoters' long
experience in the supply and installation of signalling and
telecommunication systems, PE's healthy order book position of
~INR 124 crore as on December 31, 2016 that provides revenue
visibility in the near term at least, and reputed clientele,
which mitigates counterparty credit risk to a large extent.
PETRON ENGINEERING: Ind-Ra Lowers Long Term Issuer Rating to 'D'
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Petron
Engineering Construction Limited's (PECL) Long-Term Issuer Rating
to 'IND D(ISSUER NOT COOPERATING)' from 'IND BB-(ISSUER NOT
COOPERATING)'.The Outlook was Negative. The instrument-wise
rating actions are as follows:
-- INR121.6 mil. Term loan (long-term) downgraded with IND D
(ISSUER NOT COOPERATING) rating;
-- INR845 mil. Fund-based limits (long-term) downgraded with
IND D(ISSUER NOT COOPERATING) rating;
-- INR4,120 mil. Non-fund-based limits (short-term) downgraded
with IND D(ISSUER NOT COOPERATING) rating;
-- INR200 mil. Proposed term loan (long-term) downgraded with
Provisional IND D (ISSUER NOT COOPERATING) rating;
-- INR350 mil. Proposed fund-based limits (long-term) downgraded
with Provisional IND D(ISSUER NOT COOPERATING) rating; and
-- INR650 mil. Proposed non-fund-based limits (short-term)
downgraded with Provisional IND D(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
the best available information
KEY RATING DRIVERS
The rating action reflects delays in debt servicing by PECL in
the last three months ended January 2018, the details of which
are not available.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months
could result in an upgrade.
COMPANY PROFILE
Incorporated in 1976, PECL provides turnkey engineering,
procurement, construction and composite construction solutions to
power, oil and gas, petrochemical, cement and other sectors.
PONGALUR PIONEER: Ind-Ra Migrates BB+ Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Pongalur Pioneer
Textiles Private Limited's (PPTPL) 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 the rating. The rating will now
appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are as follows:
-- INR57.50 mil. Fund-based limits migrated to Non-Cooperating
Category with IND BB+(ISSUER NOT COOPERATING) rating;
-- INR215 mil. Non-fund-based limits migrated to Non-Cooperating
Category with IND A4+(ISSUER NOT COOPERATING) rating; and
-- INR184.82 mil. Term loan due on July 28, 2022 migrated to
Non-Cooperating Category with IND BB+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
February 2, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
PPTPL was established in 1990 by Mr. V Selvapathy in Tirupur. The
company is primarily engaged in the manufacturing of warp cotton
yarn. It has an installed capacity of 66,856 spindles and
manufactures combed warp cotton yarn in the higher count ranges
from 66s, 72s and 91s. It sells yarns in Somanur (Coimbatore) and
Mumbai through dealers, brokers and directly.
PPTPL sources raw materials from brokers. It does not have any
long-term contracts for sourcing and pricing raw materials from
suppliers. Pricing is dependent on demand and market conditions.
The company has five wind mills across Edayarpalayam (Coimbatore)
and Karungulam that meet 35% of the company's power requirements.
The overall generating capacity of the wind mills is 1.675MW.
PRAGATEJ BUILDERS: ICRA Moves D Rating to Not Cooperating Cat.
--------------------------------------------------------------
ICRA Ratings has moved the long-term rating for the bank
facilities of Pragatej Builders and Developers Private Limited
(PBDPL) to the 'Issuer Not Cooperating' category. The rating is
now denoted as "[ICRA]D ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 20.00 [ICRA]D ISSUER NOT
Loan COOPERATING; Rating moved
to the 'Issuer Not
Cooperating'
category
The rating is based on limited information on the entity's
performance since the time it was last rated August 2016. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating
agreement with PBDPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information, and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Established in 1996, PBDPL is a wholly promoter group owned
organization engaged in the execution of slum rehabilitation
projects. The company is managed by Mr. Rajeshwar Vishnu Kharat
and Mr. Ramesh Vishnu Kharat who have previously undertaken a
slum rehabilitation project at Dharavi under PBDPL's group
concern - Prathamesh Construction Co. The other group concerns of
the company - Apex Developers and Prerna Housing Developers are
engaged in the execution of redevelopment and rehabilitation
projects respectively. The company is currently engaged in the
construction of its first project 'Vishnuchandra Sky' at Wadala,
Mumbai.
PUNEET IRON: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Puneet Iron and
Steel Private Limited's (PISPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR150 mil. Fund-based limits migrated to Non-Cooperating
Category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating; and
-- INR70 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
January 31, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
PISPL was formed in 1991 as Puneet Steels, a partnership firm
engaged in the trading of steel rounds and squares in Faridabad,
Haryana. The company was reconstituted as a private limited
company and renamed as PISPL in 2000. It is an authorized
distributor of Steel Authority of India Limited ('IND
AA'/Negative) and Rashtriya Ispat Nigam Limited ('IND A-
'/Negative) and sells steel in the domestic market, majorly to
the auto sector.
RAICHUR POWER: Ind-Ra Gives Prov. BB+ Rating to INR17,120BB Loans
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has taken the following
rating actions on Raichur Power Corporation Limited's (RPCL) bank
facilities:
-- INR17,120 bil. Proposed working capital loans* assigned with
Provisional IND BB+/Stable rating;
-- INR17,120 bil. Senior project bank loans# withdrawn and the
rating is withdrawn.
*The final rating for the proposed working capital loans will be
assigned following the closure of the loan issue upon the receipt
of final documentation, conforming to the information already
received by Ind-Ra.
#Ind-Ra is no longer required to maintain the rating for senior
bank loans, as the agency has received a no-objection certificate
from all consortium banks. This is consistent with the Securities
and Exchange Board of India's circular dated 31 March 2017 for
credit rating agencies.
KEY RATING DRIVERS
The rating reflects RPCL's delay in filing of tariff petition
seeking inclusion of revised project costs and tariffs before
Karnataka Electricity Regulatory Commission (KERC). The tariff
petition and approval process takes two to three months according
to the management. Despite tariff being a cost-plus in nature,
the regulatory framework allowing recovery of only approved
capital costs could stress the coverage ratios. Hence, the
adoption of tariff by KERC would be a key monitorable.
The rating also reflects the increased cost and time overruns for
the project, which will hurt RPCL's finances. The total cost
overruns were INR37.6 billion in March 2017, up 41% from the
initial project cost of INR90.1 billion. These have been funded
by raising additional loans of INR31.84 billion from Power
Finance Corporation and equity. The cost overruns stemmed from
the non-availability of mega power status, an increase in the
cost of balance of plant, changes in foreign exchange rate and
interest during construction.
The rating also factors in RPCL's thin coverage ratios, leaving
little room for any deviation from base case assumptions. Given
the limited operational track record of the plant at a plant load
factor in the range of 15%-20% (stabilization phase), the project
is exposed to strict technical standards. RPCL will be able to
claim for energy charges per unit of electricity based on the
station heat rate value of 2,141kcal/kWh, according to normative
norms.
The rating also reflects the absence of a debt service reserve
account, which reduces the cushion available in cash flows for
debt servicing in the event of some unforeseen stress. However,
RPCL has regularly made debt servicing payments with the support
of KPCL.
Ind-Ra derives temporary comfort from the availability of a
bridge linkage from South Eastern Coalfields Limited, since the
initially allocated Deocha-Pachami coal block would take
considerable time for development. Given the uncertainty on the
coal mine development, Ind-Ra has considered the bridge linkage
for the analysis till September 2020, similar to management case
estimation. However, in lieu of Deocha pachami coal block,
Karnataka Power Corporation Limited (KPCL, the major sponsor) has
applied for Ghogarpalli and dip side of Ghogarpalli coal block
situated in Odisha state under Mines and Minerals (Development
Regulation) Act. Inter-Ministerial Committee has already
submitted its recommendations to the government of India and the
Ministry of Coal is in the process of allocating the same to
KPCL.
The rating benefits from KPCL's four-decade-long track record in
the construction and operation of thermal power plants. KPCL is
fully owned by the government of Karnataka and owns 52.58% of
RPCL. Of the remaining share capital, Bharat Heavy Electricals
Limited ('IND AA+'/Stable) holds 27.34% and Industrial Finance
Corporation of India Limited 20.08%, according to FY17 audited
annual accounts. The presence of strong sponsors such as BHEL and
the state government supports the rating.
The rating is also supported by the presence of a 25-year power
purchase agreement with Karnataka-owned distribution utilities,
whose tariff is based on Central Electricity Regulatory
Commission's workings of cost plus return model. Fixed and
variable costs are pass-through (except station heat rate and
operation & maintenance costs), which also assures a 15.5% (post
tax) return on equity. However, delays in payables could be a
potential risk for the project, as Ind-Ra rated renewable energy
companies receive payments with a delay of about 90 days from
Karnataka discoms. Interest on working capital is a pass-through;
therefore, although RPCL would have to fund the temporary
mismatches, the project would receive it in the subsequent years.
RATING SENSITIVITIES
Positive: Adoption of tariff by the regulatory commission,
station heat rate in the vicinity of KERC prescribed value, and
coverage ratios exceeding the Ind-Ra's base case estimates would
result in a rating upgrade.
Negative: A sustained station heat rate of over 2,300kcal/kWh,
reduced tariff rate adoption by KERC owing to increased project
cost, absence of permanent coal linkage by April 2018, increased
receivable days and lower-than-projected coverage ratios could
result in a rating downgrade.
COMPANY PROFILE
RPCL, a JV company, has implemented a 1,600MW (2X800MW) coal-
based thermal power project in Yeramarus near Raichur, Karnataka
and commenced operations in April 2017 (one unit of 800MW in
March 2017 and another unit of 800MW in April 2017). KPCL is
already operating a 1,000MW power plant in Bellary and a 1,720MW
power plant in Raichur.
RPCL is a state government undertaking, engaged in power
generation since 1970. KPCL has 34 dams (including the main,
pickup and saddle dams) and 24 power stations across the state
with power production capabilities ranging from 0.35-1,720MW. The
total installed capacity of KPCL is more than 6,000MW.
RATHI GRAPHIC: ICRA Lowers Rating INR6.5cr Loan to D
----------------------------------------------------
ICRA Ratings has revised the ratings for the INR7.811-crore bank
facilities of Rathi Graphic Technologies Limited to [ICRA]D
ISSUER NOT COOPERATING from [ICRA]BB ISSUER NOT COOPERATING. The
Negative outlook on the long-term rating has been removed. ICRA
has also revised the ratings for the INR5.0-crore bank facilities
of RGTL to [ICRA]D ISSUER NOT COOPERATING from [ICRA]A4 ISSUER
NOT COOPERATING. The ratings continue to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 6.50 [ICRA]D ISSUER NOT COOPERATING;
Working Capital Rating downgraded from
Limits [ICRA]BB(Negative) and continues
to remain in the 'Issuer Not
Cooperating' category
Term Loans 0.49 [ICRA]D ISSUER NOT COOPERATING;
Rating downgraded from
[ICRA]BB(Negative) and continues
to remain in the 'Issuer Not
Cooperating' category
Unallocated 0.82 [ICRA]D ISSUER NOT COOPERATING;
Rating downgraded from
[ICRA]BB(Negative) and continues
to remain in the 'Issuer Not
Cooperating' category
Non Fund based 4.00 [ICRA]D ISSUER NOT COOPERATING;
Limits-LC/BG Rating downgraded from [ICRA]A4
and continues to remain in the
'Issuer Not Cooperating'
Category
SLC 1.00 [ICRA]D ISSUER NOT COOPERATING;
Rating downgraded from [ICRA]A4
and continues to remain in the
'Issuer Not Cooperating'
Category
Rationale
RGTL announced its quarterly results for Q3 FY2018 on
February 14, 2018. During Q3FY2018, the company reported an
operating income (OI) of INR2.1 crore and a net loss of INR1.6
crore compared to an OI of INR8.2 crore and a net profit of
INR0.2 crore in the corresponding previous quarter.
The rating action factors in the delays in debt servicing by the
company due to its stretched liquidity position. The financial
profile of the company has deteriorated materially in the current
fiscal as marked by significant decline in revenues and operating
and net losses in Q3 FY2018 as well as 9M FY2018. Moreover the
ratings continue to take into account the high competitive
intensity of the industry, RGTL's exposure to adverse movement in
key raw material prices and foreign exchange rate; and high
working capital intensity of the business.
However, RGTL has established track record of operations,
experienced promoters in the ink toner industry, established
brand and a wide distribution network.
Key rating drivers
Credit strengths
Established operational track record; long experience of
promoters in the ink toner industry: RGTL has an operational
track record of over three decades. Moreover, the company's
promoters have experience of several decades in the ink toner
industry.
Wide distribution network: over the years, RGTL has developed a
wide distribution network of around 150 distributors across
India, along with branch offices in cities like Mumbai, Chennai,
Kolkata, Hyderabad and Patna.
Credit weaknesses
Stretched liquidity position: resulting in delays in debt
servicing
Deterioration of financial profile: marked by significant decline
in revenue and operational and net losses in Q3 FY2018 as well as
9M FY2018.
High working capital intensity: The company's working capital
intensity remains high, primarily due to the need to stock high
imported raw material inventory and the high receivable levels,
leading to almost full utilisation of working capital limits.
Competition from original equipment manufacturers and imports:
The ink toner industry is fragmented and is marked by the
presence of numerous players. High competition limits the pricing
flexibility of the industry participants.
Exposure to price volatility and foreign exchange risk: Part of
the raw material requirement is being met through imports, which
exposes the company to foreign exchange risk. Also given the high
inventory levels, RGTL is exposed to adverse movement in raw
material and finished product prices.
Rathi Graphic Technologies Limited (RGTL) is a public limited
company engaged in the manufacturing of toners for photocopiers,
laser printers, and multi function printers. The company was
incorporated in December 1991 by Mr. Raj Kumar Rathi. The
manufacturing facility is located at Bhiwadi, Rajasthan and the
company sells its product under the brand name 'Rathi Toner'. The
promoter Mr. Raj Kumar Rathi belongs to the Rathi family which
has long track record and established name in manufacturing of
thermo mechanically treated (TMT) bars. The promoters are also
engaged in the MT bars manufacturing business through group
company - RGTL Industries Ltd (RIL), in which RGTL currently
holds 49.18% stake.
During FY2017, RGTL reported a profit after tax (PAT) of INR3.7
crore on an operating income of INR31.7 crore as against a PAT of
INR1.2 crore on an operating income of INR31.4 crore in FY2016.
During 9M FY2018, the company reported a net loss of INR1.9 crore
on an operating income of INR17.1 crore as against a PAT of
INR3.6 crore on an operating income of INR24.1 crore in 9M
FY2017.
RITA INT'L: Ind-Ra Raises LT Rating on INR90MM Loan to 'B+'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Rita
International's Long-Term Issuer Rating to 'IND B+' from 'IND B
(ISSUER NOT COOPERATING)'. The Outlook is Stable. The instrument-
wise rating action is:
-- INR90 mil. (increased from INR80 mil.) fund-based limits
upgraded with IND B+/Stable rating.
KEY RATING DRIVERS
The upgrade reflects an improvement in Rita's liquidity profile
during FY17, as cash flow from operation turned positive at INR21
million (FY16: negative INR7 million). Moreover, the company's
average utilization of the fund-based limits during the 12 months
ended January 2018 was comfortable at 87% as against the 100% use
earlier.
The upgrade also reflects Ind-Ra's expectation that Rita's credit
metrics could improve further during FY18, on account of loan
maturity. The metrics remained weak in FY17, despite net
financial leverage (net debt/EBITDA) improving to 6.4x in FY17
(FY16: 8.0x) due to a decline in debt level while interest
coverage (operating EBITDA/gross interest) was stable at 1.3x
(1.3x).
The ratings are constrained by Rita's small scale of operations,
marked by revenue of INR304 million in FY17 (FY16: INR302
million), and weak EBITDA margin 4.0% (4.6%) due to a low demand
in the domestic market.
RATING SENSITIVITIES
Positive: A substantial improvement in the scale of operations
along with improvement in the credit metrics will be positive for
the ratings.
Negative: Deterioration in the credit metrics will be negative
for the ratings.
COMPANY PROFILE
Rita was established by Pankaj Shukla in 2010 as a proprietorship
concern in Varanasi. The entity manufactures handmade carpets.
RK POULTRIES: Ind-Ra Assigns BB Rating to INR60MM Facilities
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned RK Poultries
Private Limited (RKPPL) a Long-Term Issuer Rating of 'IND BB'.
The Outlook is Stable. The instrument-wise rating action is given
below:
-- INR60 mil. Fund-based facilities assigned with
IND BB/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect RKPPL's small scale of operations and
moderate credit metrics. Revenue increased to INR241 million in
FY17 from INR22 million in FY16, driven by a rise in farmer
contracts. EBITDA margin was 6.4% in FY17 (FY16: 12.4%). The
decline in EBITDA margin was due to a fall in indirect expenses.
RKPPL booked INR300 million in revenue for 8MFY18.
Moreover, interest coverage (operating EBITDA/gross interest
expense) was 7.6x in FY17 (FY16: 22.0x) and net financial
leverage (total adjusted net debt/operating EBITDA) was 3.8x
(2.9x). The deterioration in interest coverage and net financial
leverage was due to a decline in EBITDA margin and an increase in
total debt, respectively.
The ratings, however, are supported by a moderate liquidity
position, indicated by a 94.5% average utilization of its fund-
based limits for the 12 months ended January 2018.
RATING SENSITIVITIES
Negative: Any further decline in operating profitability leading
to any further deterioration in the overall credit metrics could
be negative for the ratings.
Positive: Any further improvement in the scale of operations and
any improvement in the overall credit metrics could be positive
for the ratings.
COMPANY PROFILE
RKPPL was incorporated on December 21, 2015 in Kharadi, Pune, by
Mrs. Ratnamala Kunjir and Mrs. Usha Mahadev Gandhale. The company
engaged in broiler farming and layer farming.
RUCHI WORLDWIDE: CARE Moves D Rating to Not Cooperating Category
----------------------------------------------------------------
CARE Ratings has been seeking information from Ruchi Worldwide
Limited (RWL) to monitor the rating(s) vide e-mail
communications dated September 6, 2017, September 12, 2017,
September 15, 2017, September 20, 2017 and February 6, 2018 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. Further, RWL has not paid the surveillance fees for
the rating exercise as agreed to in its Rating Agreement. The
rating on RWL's bank facilities will now be denoted as CARE
D/CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 835.00 CARE D/CARE D; ISSUER NOT
term Bank COOPERATING; Based on best
Facilities 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(s).
The ratings of RWL take into account ongoing delays in servicing
of debt obligations on account of its stressed liquidity.
Detailed description of the key rating drivers
At the time of last rating on January 10, 2017 the following were
the rating strengths and weaknesses (updated for the information
as conveyed by the company):
Key Rating Weaknesses
Delays in debt servicing: RWL witnessed recent delays in
servicing of debt obligations on account of stress on its
liquidity mainly due to delays in receipt of payments from
customers.
RWL is a subsidiary of Ruchi Soya Industries Ltd. (RSIL; rated
CARE D) and a part of the Indore, Madhya Pradesh based Ruchi
Group. RWL is an international trading arm of the group and is
involved in trading of various agri-commodities including edible
oil, raw cotton, castor seeds and oil, coffee, grain and pulses.
As on March 31, 2016, RSIL held 52.48% equity in RWL and the
balance was with the Shahra family, the promoters of RSIL.
RUNGTA IRRIGATION: ICRA Cuts Rating on INR14cr Cash Loan to B
-------------------------------------------------------------
ICRA Ratings revised the ratings on certain bank facilities of
Rungta Irrigation Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 14.00 [ICRA]B(Stable) ISSUER NOT
Cash Credit COOPERATING; Rating downgrade
from [ICRA]BB-(Stable) ISSUER
NOT COOPERATING; Rating
continues to remain under
'Issuer Not Cooperating'
Category
Non-fund based- 8.00 [ICRA]A4 ISSUER NOT COOPERATING
Bank Guarantee Rating reaffirmed, Rating
continues to remain under
'Issuer Not Cooperating'
Category
Material Event
Rungta Irrigation Limited has announced its quarterly and nine-
month, ended December 31, 2017, results on February 9, 2018. The
company has reported an operating loss of INR1.48 crore on an
operating income of INR34.07 crore for 9M FY2018 over an
operating profit of INR1.18 crore on an operating income of
INR42.74 crore for 9M FY2018.
As per the company's notes to accounts disclosed in the quarterly
and nine-month results, ended December 31, 2017, a fire had
occurred at its manufacturing unit in Ghaziabad causing a stock
loss amounting to INR1.70 crore. The Insurance claim for stock
loss has been filed with the insurer. However, the settlement is
still under process.
Impact of Material Event
ICRA has downgraded the long-term rating to [ICRA]B (Stable)
ISSUER NOT COOPERATING from [ICRA]BB- (Stable) ISSUER NOT
COOPERATING and has reaffirmed the short-term rating of [ICRA]A4
ISSUER NOT COOPERATING for the aggregate amount of INR22.00 crore
bank facilities of Rungta. The rating continues to remain in the
'Issuer Not Cooperating' category.
As part of its process and in accordance with its rating
agreement with Rungta, ICRA has been trying to seek information
from the entity to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 01, 2016,
ICRA's Rating Committee has taken a rating view based on the best
available information.
The rating downgrade takes into account the overall downturn in
the company's operation from the cascading impact of the fire in
its factory premises, leading to decline in operating income and
loss at operating level during 9M FY2018 as compared to the same
period of the previous year. The ratings continue to remain
constrained by the small scale of operations, which coupled with
high competitive intensity of operations, have exerted pressure
on the margins. The ratings also factor in Rungta's exposure to
volatility arising from its dependence on tender-based business
and high working capital intensity of operations owing to delayed
receivables from Government agencies. The ratings, however,
continue to factor in the extensive experience of the promoters
in the micro-irrigation systems industry.
Outlook: Stable
ICRA believes Rungta will continue to benefit from the extensive
experience of its promoters and strong track record of working
with state government agencies. The outlook may be revised to
Positive if substantial growth in revenue and profitability
coupled with an improvement in working-capital management
strengthens the financial-risk profile. The outlook may be
revised to Negative if further decline in profitably and cash
accrual position, or if any major capital expenditure, or stretch
in the working-capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Well experience directors across diverse business verticals and
established track record of working with Government agencies: The
company is operational since 1986 and been listed as a public
limited company in 1994. Key management personnel of the company,
namely Mr. M. P. Rungta, Ms. Sruti Rungta and Mr. Tarun Kumar
Magotia, have an established experience in diverse business
verticals of irrigation, cement, leasing, financing and mining of
limestone and bauxite. With more than three decades in the
irrigation industry, the company has an established track record
in manufacturing, designing, assembling and marketing sprinklers
and drip irrigation systems. Since more than 50% of the total
business for the company comes through Government contracts via
tenders, the company has an established track record of working
with state government agencies.
Credit challenges
Cascading impact of fire in factory premises resulted in overall
downturn in operations in 9M FY2018: Operating income of the
company remained almost stagnant during the last few years, with
a cumulative average growth rate (CAGR) for the FY2013-FY2017
period standing at -0.40%. Furthermore, the OI of the company
declined by almost 20% Y-o-Y and stood at ~INR 34.07 crore during
9M FY2018, as against an OI of ~INR 42.74 crore for 9M FY2017.
The same also remained significantly low as compared to an OI of
~INR 62.60 crore on an annual basis for FY2017. As per a recent
press release, a fire broke out at its Ghaziabad unit causing a
stock loss of INR1.70 crore for the current year. The cascading
impact of the fire seems to have resulted in an overall downturn
in operations in the current year. Insurance claim for the stock
loss has been filled and settlement is under process. The final
settlement and quantum of loss, however, could not be
ascertained. Decline in the top-line, coupled with the stock loss
due to fire, have led to an operating loss (OPM) of ~10.78%
during Q3 FY2018, as against an operating profit (OPM) of 3.29%
during Q3 FY2017, and an aggregate operating loss of ~4.34% for
9M FY2018 as against an operating profit of ~2.75% during 9M
FY2017.
Volatility arising from dependence on tender-based business:
Almost 50% of the overall revenues accrues from Government and
private bid tenders. The tenders remain dependent upon the
election and agenda of ruling state government agencies, which
affects the firm's scale of operations.
High competitive intensity in the irrigation system industry: The
competitive intensity in the business remains high owing to
aggressive bidding, which exerts pressure on the profitability
margins of firms in the industry.
High working capital intensity of operations because of delayed
receivables from Government agencies: The working capital cycle
remains prolonged as realisations on tender-based sales - which
constitute a major portion of Rungta's sales - are delayed, while
the credit period from suppliers remain minimal.
Rungta Irrigation Limited was incorporated on April 17, 1986 by
Mr. Sita Ram Jindal and Mr. Dindayal Agrawal as 'Jindal
Irrigation Private Limited'. The company was acquired from the
erstwhile promoters by Mr. M. P. Rungta in 1993. Subsequently,
the company was listed as a public limited company in 1994
through a shareholder resolution. The company is currently
engaged in manufacturing and assembling micro-irrigation systems
for sale primarily in domestic markets. The key products of the
company include sprinkler and drip irrigation systems, aluminium,
polyvinyl chloride (PVC) and high-density polyethylene (HDPE)
pipes and fountains. The company's manufacturing facilities are
at Ghaziabad (Uttar Pradesh) and Yanam (Pondicherry). It has a
manufacturing capacity of 4,500 MTPA HDPE pipes, 200,000 HDPE
pipes with couplers, 5,000 MTPA rigid PVC pipes and profiles, 750
MTPA linear low-density polyethylene tubes, and 350,000 aluminium
pipes with couplers.
In 9M FY2018, the company reported a net profit of INR0.21 crore
on an operating income (OI) of INR34.07 crore, as compared to a
net profit of INR2.31 crore on an OI of INR62.60 crore in the
previous year.
S.S. CONSTRUCTION: ICRA Reaffirms B- Rating on INR5.95cr Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long -term rating of [ICRA]B-
assigned to the INR5.95-crore fund-based facilities and INR2.05-
crore non-fund based facilities of S.S. Construction. The outlook
on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 5.95 [ICRA]B-(Stable); reaffirmed
Non-fund based 2.05 [ICRA]B-(Stable); reaffirmed
Rationale
The rating reaffirmation factors in SCC's steady revenue and
profits in FY2017 and growth in current year revenue expected to
be supported by its recently completed real estate project. The
rating, however, remains constrained due to the firm's weak and
geographically concentrated order book, small scale of
operations, and price risks. The rating is further constrained by
the highly leveraged capital structure with high limit
utilisation, and proprietorship nature of the concern.
Outlook: Stable
ICRA believes the firm will continue to benefit from the
experience of its promoter in the construction industry. The
outlook may be revised to Positive if substantial growth in
revenue and profitability strengthens the financial risk profile.
The outlook may be revised to 'Negative' if scale or cash accrual
is lower than expected, or a stretch in the working capital cycle
weakens liquidity further.
Key rating drivers:
Credit strengths
Moderate experience in the construction business: SSC is managed
by Mr. Ravi Chaudhary who has gained an experience of more than
ten years in the construction business. The firm is registered as
an "A" class Contractor with various state departments in Uttar
Pradesh. Over the last five years, SSC has completed work worth
INR45 crore.
FY2018 performance expected to be supported by own real estate
projects: The firm has completed two small real estate projects
with a saleable area of 13,600 sq. ft. each, costing INR5.28
crore and INR5.29 crore respectively in February 2017. The firm's
market risk remains moderate as more than 60% of the units have
been already sold within three quarters (April 2017 to Dec 2017)
and the possession has been offered to the customers. A majority
of the revenue and profits in FY2018 are expected to come from
these projects. Although the real estate market remains weak in
the Ghaziabad area, the firm has been able to sell at a healthy
pace and at better rates, given the completed status which has
also resulted in good collections.
Credit challenges
Small scale of operations with fluctuating profitability in
absence of price escalations: The firm's scale of operations
remains small with revenue of around INR13.95 crore in FY2017.
While the operating profitability improved in the year backed by
the sale of flats, in the absence of price escalation clauses in
construction segment, SSC's margins remain exposed to raw
material price risk.
Weak and geographically concentrated order book position in
construction segment: The firm had a pending order book of
INR7.87 crore as of December 31, 2017, which gives limited
revenue visibility in the next financial year with order book/OI
of 0.59x as of December 2017. With some projects facing delays
owing to lack of funds in departments, SSC's ability to maintain
its topline remains to be seen. SSC is a regional player that
undertakes only Government projects in Uttar Pradesh and
Uttarakhand, thus dependence on Government agencies in these
states makes the firm vulnerable to changes in Government
policies and investment in infrastructure in these states.
Weak and leveraged capital structure; however, moderate coverage
indicators: The firm has low net worth due to low accruals and
continued capital withdrawals. With high dependence on debt and
low capital base, SSC's leverage is very high. However, due to
moderate OPBITDA levels in FY2017, SSC's interest coverage
improved to 1.56 times in FY2017.
High working capital intensity due to high inventory: The firm's
working capital intensity increased from 47.25% in FY2016 to
75.84% in FY2017 due to increased inventory as the firm has
constructed two real estate projects of INR10.24 crore, which are
yet to be sold. However, despite the moderate working capital
requirements in civil construction, the utilisation of the
associated cash credit limits remains high indicating stretched
liquidity. Collections in real estate projects are likely to help
the firm in easing out its liquidity in the short-term as is also
visible from the pre-payments of term loans.
Susceptibility of margins to fluctuations in raw material prices
and labour costs: In all the contracts the firm has to procure
the entire material, in the absence of a price escalation clause.
The margins are thus susceptible to fluctuations in raw material
prices and labour costs.
Risks associated with constitution as a proprietorship firm:
Given SSC's constitution as a proprietorship firm, it is exposed
to discrete risks including the possibility of withdrawal of
capital by the partners and the risk of dissolution of the firm
upon the death, retirement or insolvency of the proprietor.
Moreover, the proprietorship nature limits SSC's flexibility to
tap external channels of financing.
S.S. Construction (SSC) is a proprietorship firm based in
Ghaziabad, Uttar Pradesh and was set up in 2007. The firm is
promoted by Mr. Ravi Chaudhary. SSC undertakes civil construction
work for state and Central Government agencies. It is registered
as an 'A' class contractor with UP State Power Utilities, UPSIDC
Ltd, Kanpur, Ghaziabad Development Authority, Hapur Pilkhuwa
Development Authority, Kanpur Development Authority, Bulandshahr
Development Authority etc. The company has worked in various
towns of UP, including Ghaziabad, Kanpur, Moradabad, Noida, Agra,
Meerut, Bulandshahr, Hapur, Bareilly etc. The firm has completed
two small real estate projects with a saleable area of 13,600 sq.
ft. each, costing INR5.28 crore and INR5.29 crore respectively in
February 2017. Project I, consists of 16 3BHK flats with sales
value of INR8.0 crore and project II, consists of 24 2BHK flats
with the sales value of INR7.5 crore.
In FY2017, the firm reported a net profit of INR1.23 crore on an
OI of INR13.95 crore compared with a net profit of INR1.04 crore
on an OI of INR13.41 crore in the previous year.
SAGAR METALLICS: Ind-Ra Migrates BB- Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sagar Metallics
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR110 mil. Fund-based working capital limits migrated to
Non-Cooperating Category with IND BB-(ISSUER NOT
COOPERATING)/IND A4+(ISSUER NOT COOPERATING) rating; and
-- INR23.9 mil. Term loan due on July 2021 migrated to Non-
Cooperating Category with IND BB-(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed
onFebruary 7, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2009, Sagar Metallics Private Limited manufactures
and sells metallic yarn and films to local wholesalers for saree
designing, yarn manufacturing and embroidery works.
SAN MARINE: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded San Marine
Exports' (SME) Long-Term Issuer Rating to 'IND D' from 'IND B+'.
Simultaneously, Ind-Ra has reassigned SME a Long-Term Issuer
Rating of 'IND B-'. The Outlook is Stable. The instrument-wise
rating actions are as follows:
-- INR1 mil. Term loan due on April 2023 assigned with
IND B-/Stable rating;
-- INR135 (reduced from INR150) mil. Fund-based working capital
facilities downgraded and reassigned with IND B-/Stable/
IND A4* rating; and
-- INR12 mil. Non-fund-based facilities assigned with IND A4
rating.
* Reassigned 'IND B-'/Stable/'IND A4' after downgrade to 'IND D'
KEY RATING DRIVERS
The downgrade reflects multiple instances of over-utilization by
SME of its fund-based limits for more than 30 days during June
2017-January 2018 due to a stressed liquidity position.
The reassignment of the 'IND B-' Long-Term Issuer Rating reflects
SME's utilization of its fund-based working capital facilities
within the sanctioned limits during October 2017-January 2018 due
to an improvement in the collection process that led to a
reduction in creditor days. The liquidity remains tight,
indicated by an average working capital facility utilization of
95.0% for the three months ended January 2018.
The ratings reflect continued weak credit metrics because of a
rise in debt and a volatile EBITDA margin. In FY17, EBITDA
interest coverage (operating EBITDA/gross interest expense) was
1.4x (FY16: 1.6x) and net financial leverage (total adjusted net
debt/operating EBITDA) was 7.2x (6.0x). EBITDA margin was
volatile at 4.4%-5.4% during FY14-FY17 due to raw material price
fluctuations.
The ratings, however, are supported by revenue growth to INR599
million in FY17 from INR400 million in FY16, driven by an
increase in orders from long-standing customers, though the scale
of operations continued to be moderate. SME booked INR700 million
in revenue for 10MFY18 and had an outstanding order book of INR60
million (as of February 2018) that will be completed by end-April
2018.
The ratings continue to be supported by SME's operational track
record and promoters' experience of over three decades in fish
processing and seafood export.
RATING SENSITIVITIES
Negative: Further stretch in the liquidity, along with a decline
in profitability resulting in deterioration in the credit metrics
on a sustained basis, could lead to a negative rating action.
Positive: An improvement in the liquidity, along with substantial
revenue growth and an improvement in the credit metrics, could
lead to a positive rating action.
COMPANY PROFILE
Incorporated in 2010, Kerala-based SME is a partnership firm
engaged in the processing and export of sea food. Its production
site is in Kollam, Kerala.
SANKHESWARAA GOLD: CARE Cuts Rating on INR12.5cr Loan to B-
----------------------------------------------------------- CARE
Ratings revised the ratings on certain bank facilities of
Sankheswaraa Gold Exports Private Limited (SGEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 12.50 CARE B-; Issuer not cooperating;
Facilities Revised from CARE B
CARE has been seeking information from(SGEPL to monitor the
rating(s) vide e-mail communications/letters dated December 18,
2017, December 22, 2017 and December 28, 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, 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 SGEPL's bank facilities
will now be denoted as CARE B-; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on February 24, 2017 the following
were the rating strengths and weaknesses (updated for the
information available from Registrar of Companies):
Key Rating Weaknesses
Nascent stage of operations: SGEPL is in the initial stage of
operations with 2016 as its year of commencement thereby limiting
its operating flexibility with respect to product pricing and
negotiating favourable terms with suppliers, apart from ability
to weather challenging market conditions.
Counter party risk: SGEPL supplies Jewellery to the wholesalers
whereby it does not get any security or deposit against the
credit extended exposing the company to counter party risk.
Working capital intensive nature of business and exposure to
volatility in gold prices: The operations of the entity remained
working capital intensive in nature with high inventory period
and high utilization of working capital limits. Furthermore, the
selling price is dependent on the prevailing market prices
thereby exposing the company to price volatility risk.
Presence in competitive industry: Jewellery industry is highly
competitive and fragmented with number of players being
unorganized. With increasing demand for certified and branded
Jewellery, the competition among the players is intense,
squeezing the profitability margins .
Key rating strengths
Experienced promoters: The promoters of the entity have
experience of over two decades in the industry and over this
period have developed good relations with suppliers and
customers.
Sankheswaraa Gold Exports Private Limited (SGEPL) was
incorporated on June, 25, 2012 by Mr Ketan Nirmal Jain & family.
In March, 2016, the company was taken over by Mr Rakesh Champalal
Parekh and Mr Nikunj Pravin Parekh. SGEPL has recently commenced
its operations from May 19, 2016 by setting up a plant &
machinery for manufacturing of gold chains and bracelets with
high quality art and finishing. This machinery was imported from
Turkey and the total expenditure was INR1.10 crore which was
funded through funds from the promoters. The company sells its
products to various wholesalers spread across India.
SHARWIN COTTEX: CARE Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------------
CARE Ratings has been seeking information from Sharwin Cottex to
monitor the rating(s) vide e-mail communications/letters dated
January 19, 2018, January 2, 2018, December 6, 2017, November 16,
2017, November 1, 2017, October 17, 2017, October 3, 2017,
September 4, 2017 and numerous phone calls. However, despite our
repeated requests, the entity has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on Sharwin Cottex bank facilities will
now be denoted as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.50 CARE B+; Issuer Not Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise
caution while using the above rating.
Detailed description of the key rating drivers
At the time of last rating done on November 11, 2016, the
following were the rating strengths and weaknesses:
Key Rating Weaknesses
Susceptibility of profit margins to cotton price fluctuation and
presence in lowest segment of textile value chain and heavy
dependence on short term funds due to procurement of seasonal raw
material results The profitability of SRC is exposed to
fluctuations in raw cotton, which being an agricultural commodity
is subject to the vagaries of monsoon. Furthermore, it operates
in the lowest segment of textile value chain business having
limited value addition, while the operations are working capital
intensive in nature increasing its dependence of short term
funding requirements.
Partnership nature of constitution: Being a partnership firm, SRC
is exposed to inherent risk of partners' capital being withdrawn
at time of personal contingency, and firm being dissolved upon
the death/retirement/insolvency of partners.
Key Rating Strengths
Experienced promoters: Mr. Sukhdev Prajapati holds experience of
more than 2 decades in the field of financial services of
agriculture commodities while Mr. Soham Purohit holds experience
of 3 years in cotton ginning business.
Location advantage and eligibility to receive fiscal benefits
from the government: SRC's manufacturing facilities are located
in Mehsana district of Gujarat which is the largest producer of
raw
cotton in India. It enjoys benefits in terms of lower logistics
expenditure, easy availability of raw material, labour, water and
power connection. Also, cotton being an agro-commodity SRC is
eligible for government subsidies which is projected to increase
the cash flow in the short-term.
Ahmedabad-based (Gujarat), SRC was formed in February, 2016 by
Mr. Sukhdev Prajapati, Mrs. Manisha Purohit and Mr. Soham
Purohit. The firm is setting up a greenfield plant for cotton
ginning and pressing near Mehsana district in the area of 19425
square meters. The firm will operate with 36 double roller jumbo
gin machines of 54" size for ginning and 5 cotton stripper
machines for pressing. Total installed capacity for ginning will
be 45619.20 MTPA for raw cotton. For oil extraction process, 12
extruders of 33*6" will be
installed and its installed capacity will be of 24192 MTPA of
cotton seeds.
Total proposed project cost was INR14.93 crore which was proposed
to be funded through term loan of INR4.50 crore, unsecured loans
from relatives of INR4.43 crore and balance by partners' capital.
Total project cost incurred as on September 3, 2016 was INR 13.84
crore (92.70% of the project cost) which was financed through
term loan of INR4.50 crore, capital contribution of INR6 crore
and remaining amount through unsecured loans from promoters. Mrs.
Manisha Purohit and Mr. Soham Purohit are also associated with
another partnership firm namely Shiv Shakti Industries, engaged
in cotton ginning and oil extraction.
SHREE RAGHUVANSHI: ICRA Moves D Rating to Not Cooperating Cat.
--------------------------------------------------------------
ICRA Ratings has moved the ratings for the bank facilities of
Shree Raghuvanshi Fibers Private Limited (SRFPL) to the 'Issuer
Not Cooperating' category. The rating is now denoted as "[ICRA]D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Term 1.50 [ICRA]D ISSUER NOT COOPERATING;
Loan Rating moved to the 'Issuer Not
Cooperating' category
Fund Based-Cash 25.00 [ICRA]D ISSUER NOT COOPERATING;
Credit Rating moved to the 'Issuer Not
Cooperating' category
Fund Based-DAUE 0.35 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
ICRA has been seeking information from the entity to monitor its
performance and had also sent repeated reminders to the company
for payment of surveillance fee that became overdue. Despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. The current rating action has been taken by ICRA
on the basis of the 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 it may not adequately reflect the credit
risk profile of the entity.
Incorporated in 2007, Shree Raghuvanshi Fibers Private Limited
(SRFPL) is involved in the ginning and pressing of raw cotton to
process cottonseeds and produce cotton bales, as well as in the
crushing of cottonseeds for the production of cottonseed oil and
oil cake. The company is jointly managed by three directors,
Bhavesh Shelani, Gopal Shelani and Harshad Shelani. The
manufacturing unit of the company is located at Gondal (Gujarat)
and is equipped with 36 ginning machines and 11 expellers. The
manufacturing unit has a processing capacity of ~63,500 metric
tonnes per annum of raw cotton and 95 MT per day of cottonseed
oil.
SHRI RAM: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shri Ram Rubtech
Private Limited's (SRPL) 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:
-- INR30 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B+(ISSUER NOT COOPERATING) rating;
-- INR0.41 mil. Term loan due on May 2017 migrated to Non-
Cooperating Category with IND B+(ISSUER NOT COOPERATING)
rating; and
-- INR20 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
February 20, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1992, SRPL has a 35,000 sq. m rubber lining
facility in Gujarat.
SKYPOINT MULTITRADE: CARE Moves D Rating to Not Cooperating Cat.
----------------------------------------------------------------
CARE Ratings has been seeking information from Skypoint
Multitrade Private Limited (SMPL) to monitor the rating(s) vide
e-mail communications/ letters dated January 31, 2018, January
24, 2018, January 10, 2018 and October 23, 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 Skypoint Multitrade
Private Limited's bank facilities will now be denoted as CARE D;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 8.48 CARE D; Issuer not Cooperating;
Facilities Based on best available
Information
Short term Bank 10.05 CARE D; 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(s).
The ratings take into account the default in servicing its debt
obligations marked by overdues in the export packing credit
facility coupled with non-servicing of interest in the cash
credit facility. The ability of SMPL to timely service the debt
obligations is the key rating sensitivity.
Detailed description of the key rating drivers
At the time of last rating on February 22, 2017 the following
were the rating strengths and weaknesses.
Key Rating Weaknesses
Default in debt servicing: SMPL has been defaulting in its debt
servicing obligations. The CC facility is irregular with
nonservicing of interest since last 51 days as on February 21,
2017, whereas the EPC facility has remained overdue for more
than 180 days. As per banker interaction, the account is
classified as NPA since March 30, 2017.
Incorporated in 2011 by Mr. Masiar Rahaman and Mr. Mijanur
Rahaman, Skypoint Multitrade Private Limited (SMPL, erstwhile
Skypoint Mercantile Private Limited) is engaged in trading of
various agro-commodities like basmati rice, boiled rice,
parboiled rice, raw rice, chana dal, moong dal, soya beans, raw
cashew-nuts, yellow corn, etc. The varieties of rice are sold
under the brands "Jolly Rice" and "Trendy Rice" which comprise
60-65% of the net sales in a year. SMPL forayed into the exports
of rice to the wholesalers in African and Gulf countries in FY16
with exports constituting ~40% of the net sales in FY16. All the
supplies, on the other hand, are procured from the domestic agro-
producers.
SMPL also has an associate concern named Mijan Imex International
Private Limited (MIIPL) (CRISIL BB), which is also incorporated
by Mr. Masiar and Mr. Mijanur, and is engaged in the similar line
of business. The varieties of rice traded by MIIPL are sold under
the brand "Asian Taste".
UNIWORTH ENTERPRISES: Ind-Ra Assigns BB+ LT Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Uniworth
Enterprises LLP (Uniworth) a Long-Term Issuer Rating of 'IND
BB+'. The Outlook is Stable. The instrument-wise rating actions
are as follows:
-- INR440 mil. Term loan due on February 2024 assigned with
IND BB+/Stable rating;
-- INR150 mil. Fund-based working capital facility assigned with
IND BB+/Stable/IND A4+ rating;
-- INR70 mil. Non-fund-based working capital facility assigned
with IND A4+ rating; and
-- INR90 mil. Proposed fund-based working capital facility*
assigned with Provisional IND BB+/Stable/Provisional IND A4+
rating.
*The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility
by Uniworth to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect Uniworth's limited operating track record in
the packaging industry. The firm, which predominantly caters to
the pharmaceutical industry, commenced commercial operations in
July 2017. The ability of the firm to quickly scale up/stabilize
operations and prudently manage its working capital cycle will be
critical from the credit perspective. Uniworth achieved revenue
of about INR59 million until December 2017.
The ratings also factor in the susceptibility of industry players
to the fluctuation in prices of polyvinyl chloride (PVC) resin
(crude oil derivative), a key raw material used in the
manufacturing of PVC, polyvinylidene chloride and aluminum film.
Further, the ratings are constrained by partnership nature of the
firm, intense competition and regulated nature of the packaging
industry.
However, the ratings derive strength from the promoters'
experience of about four decades in the chemicals industry, and
operational and financial support from Meghmani group companies.
According to management, Uniworth will leverage on marketing and
distribution strength of the group companies, which will bring
about cost savings and enable it to penetrate in the packaging
industry. The firm received financial support in the form of
unsecured loans of INR42.5 million (till January 2018). According
to management, the firm will borrow another INR7.5 million by
FYE18 from the group companies to meet its working capital
requirements.
The ratings also draw support from the firm's proximity to major
pharmaceutical plants, availability of raw material and Ind-Ra
expectations of stable growth in the pharmaceutical industry.
RATING SENSITIVITIES
Negative: Any delay in ramp up of production/stabilization of
operations leading to a weak credit and/or liquidity profile will
be negative for the ratings.
Positive: Successful ramp up of production/stabilization of
operations leading to a stable credit and/or liquidity profile
will be positive for the ratings.
COMPANY PROFILE
Uniworth, promoted by Patel family, is a part of Meghmani group
which has business interests in agro-chemicals, specialty
chemicals, fertilizers, dyes and intermediates, digital printing
inks, among others.
Incorporated in 2013, the firm has set up a manufacturing unit in
Sanand, Ahmedabad with an overall packaging capacity of
13,320mtpa. The manufacturing unit has a capacity to produce
7,920mtpa of PVC rigid, 3,600mtpa of polyvinylidene chloride and
1,800mtpa of aluminum film.
=================
I N D O N E S I A
=================
SRI REJEKI: Fitch Affirms BB- Long-Term IDR; Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Indonesia-based integrated fabric and
garment manufacturer PT Sri Rejeki Isman Tbk's (Sritex) Long-Term
Issuer Default Rating (IDR) at 'BB-'. Fitch Ratings Indonesia has
also affirmed the National Long-Term Rating at 'A+(idn)'. The
Outlook is Stable.
The affirmation reflects robust operating performance stemming
from a normalising working capital cycle and growing operating
scale. Nevertheless, Fitch believes there are material risks from
possible M&A activity, which may keep Sritex's leverage elevated
for longer than Fitch expect. There is limited rating headroom
after the significant capacity improvements in the past few years
followed by two acquisitions in early 2018. Fitch forecasts that
leverage will be below 3.0x, the level at which Fitch would
consider rating action, by end 2019. However, Fitch forecasts do
not include any M&A due to uncertainty over such activity. It is
possible that further acquisitions will prevent leverage falling
to below 3.0x which, given the limited rating headroom, could see
Fitch take negative rating action.
'A' National Ratings denote expectations of low default risk
relative to other issuers or obligations in the same country.
However, changes in circumstances or economic conditions may
affect the capacity for timely repayment to a greater degree than
is the case for financial commitments denoted by a higher rated
category
KEY RATING DRIVERS
M&A Risks; Limited Rating Headroom: Fitch believes Sritex has
very limited rating headroom with leverage expected at 3.3x in
2018. Fitch think any plans for M&A, especially if they are
aggressively debt-funded, may lead to a weaker financial profile
and warrant negative rating action. Sritex acquired two
Indonesia-based yarn-spinning companies in February 2018, funded
by a combination of rights issue proceeds and internal cash.
Fitch expects leverage to rise temporarily by end-2018 due to the
acquisitions, and to fall below the negative rating threshold of
3x from 2019.
Working Capital Cycle Normalising: Fitch estimates Sritex's net
cash cycle fell in 2017 after a temporary increase in 1H17 that
was driven by a production bottleneck at the company's finished-
fabric division. New production capacity in the division took
longer to be commissioned, even though spinning and weaving
production, key raw materials for finished fabrics, had already
increased. Fitch believes Sritex's ability to manage its working
capital over the short-to-medium term is a key credit risk.
Improving Business Profile: Fitch expect the company's EBITDA to
rise to around USD185 million in 2018 and USD195 million in 2019
(2015: USD118 million) after the completion of a capacity
expansion plan and the acquisition of the two textile companies,
which would lead to a larger operating scale and better
bargaining power with suppliers. The acquisitions also provide
Sritex with greater product diversification as the acquired
companies' focus on home-textile products complement Sritex's
garment-textile products.
Vertical Integration, Growing Exports: Fitch expects over 50% of
Sritex's revenue (9M17: 52%) to stem from exports over the short-
to-medium term, up from an average of 47% in 2014-2016. Sritex
sources yarn and raw fabric from its own mills and produces
speciality garments, such as military uniforms, which have higher
profit margins. The company is a nominated supplier to several of
its main buyers, which is a key credit strength, and is supported
by its record of punctual delivery to customers' required quality
and cost.
Sufficient Production Capacity: Sritex is one of Indonesia's
largest vertically integrated fabric and garment manufacturers.
The company has an annual production capacity of 654,000 bales of
yarn, 180 million metres of greige cloth, 240 million yards of
finished fabric, and 30 million pieces of garments. The company
may expand its capacity further in the short-to-medium term
through organic means - subject to the level of external demand -
and also through inorganic means (opportunistic acquisitions).
Fitch may consider negative rating action if the expansion is
forecast to result in a sustained deterioration of Sritex's
financial profile, measured by its inability to reduce leverage
to around 3x on a sustained basis.
Currency Risk Mostly Hedged: Over half of Sritex's 9M17 revenue
stemmed from exports and a large part of its domestic sales is
also exported indirectly and therefore linked to the US dollar
exchange rate. Consequently, Sritex has a significant natural
hedge against foreign-currency costs, which was evident in 2015
and 2016 when its EBITDA margin remained largely intact in the
face of severe currency volatility
DERIVATION SUMMARY
Sritex's rating sits comfortably between its main peers - 361
Degrees International Limited (BB/Stable) and PT Pan Brothers Tbk
(B/Stable). 361 Degrees is an established sportswear brand-owner
and producer in China with the fourth-largest domestic brand. It
has a similar operating EBITDA scale and EBITDA margins to Sritex
but it has a significantly stronger financial profile with cash
reserves exceeding its debt, which justifies the one-notch
difference between the two companies.
Pan Brothers, the largest publicly listed garment manufacturer in
Indonesia, has high leverage due to the aggressive expansion of
its production capacity over the last two years. The two-notch
difference is mainly driven by Sritex's considerably larger
operating scale, wider profit margins, stronger financial profile
and better business risk profile compared with Pan Brothers. The
same factors also drive the one-notch difference with Pan
Brothers' National Rating of 'A(idn)'.
Sritex's National Rating can also be compared with PT Chandra
Asri Petrochemical Tbk (CAP/AA-(idn)/Stable), which is the
largest integrated petrochemical producer in Indonesia with
production ranging from upstream cracker to downstream polyolefin
products. CAP's operating scale is more than twice the size of
Sritex with EBITDA of over USD400 million. CAP's rating is one-
notch higher than Sritex's, which is justified by its slightly
wider profitability level compared with Sritex and its stronger
financial profile as indicated by higher interest coverage and
lower leverage.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch Rating Case for the Issuer
- Revenue growth of 13% in 2017 and 38% in 2018 post-acquisition
- EBITDA margin of 21% in 2017 and 17% in 2018 post-acquisition
- Capex to revenue ratio of 3.5% in 2017 and around 3% in 2018-
2020
- Net working capital cycle of around 210 days in 2017 and
around 180 days in 2018-2020
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Fitch do not expect positive rating action for the next two
years as Sritex's leverage, measured by net adjusted
debt/EBITDAR, is likely to remain high for its ratings.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Inability to lower leverage to around or below 3x on a
sustained basis (2018E: 3.3x)
- A sustained weakening in EBITDA margin
LIQUIDITY
Sufficient Liquidity: At end-September 2017, Sritex had a cash
balance of USD114 million and committed but undrawn credit lines
of around USD245 million, compared with around USD95 million of
debt maturing in the next 12 months, out of which USD30 million
was refinanced in December 2017 and the maturity extended to
2020. Aside from these, the earliest significant debt maturity is
2021, when USD350 million in unsecured notes fall due.
FULL LIST OF RATING ACTIONS
PT Sri Rejeki Isman Tbk
- Long-Term IDR affirmed at 'BB-'; Outlook Stable
- Senior unsecured debt rating affirmed at 'BB-'
- National Long-Term Rating affirmed at 'A+(idn)'; Outlook
Stable
- USD40 million senior unsecured medium-term notes due 2020
affirmed at 'A+(idn)' Golden Legacy Pte Ltd
- USD350 million senior unsecured 8.25% bond due 2021 affirmed
at 'BB-'
- USD150 million senior unsecured 6.875% bond due 2024 affirmed
at 'BB-'
STAR ENERGY: Fitch Assigns BB- Rating to US$650MM Secured Notes
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB-(EXP)' rating to Star Energy
Geothermal (Wayang Windu) Limited's (SEG) proposed fully
amortising up to US$650 million senior secured notes due 2033.
The Outlook is Stable.
The final ratings are contingent upon the receipt by Fitch of
final documents conforming to information already received as
well as the final pricing and financial close on the notes.
KEY RATING DRIVERS
The project benefits from long-term contracts to use geothermal
resources and sell electricity to the Indonesian state-owned
power company PT Perusahaan Listrik Negara (PLN; BBB/Stable). The
take-or-pay nature of the electricity sales contract with PLN
eliminates most volume and merchant price risks. Fitch expects
the supply of geothermal resource to be reliable, subject to
appropriate and timely well maintenance and drilling of new
wells.
SEG's financial profile under the Fitch rating case shows an
average DSCR of 1.29x and a minimum of 1.13x. The low level of
excess cash generation could limit SEG's ability to fund
necessary capital expenditures if they needed to be accelerated,
or other unexpected costs. The metrics are appropriate for a 'BB-
' rated facility of this type under Fitch's "Renewable Energy
Project Rating Criteria".
Robust Operating Track Record: Operation Risk - Weaker
SEG self-operates the geothermal power plant and is therefore
exposed to the risks of cost overruns and operational performance
below expectations. However, the risk is mitigated by SEG's
operating experience and strong track record with very high
average availability and capacity factors (greater than 97%,
excluding the 2015 outage) for both generation units since start
of operations.
The facility suffered an extended outage in 2015 due to a
landslide that damaged a steam pipeline, but SEG has made
considerable changes to reduce the probability of such an event
recurring.
Routine operating costs have generally been decreasing, although
this is partly due to the appreciation of the Indonesian rupiah
against the US dollar. SEG has a detailed capital investment plan
for drilling new wells and maintaining existing wells over the
next 15 years, and the external technical consultant, GeothermEx,
has reviewed and is satisfied with SEG's capex plan.
However, GeothermEx has also advised that given the nature of the
geothermal assets, there is considerable uncertainty around the
timing of this. For major drilling programmes (capex exceeding
USD100 million over two years) a reserve account will provide for
25% of the well drilling costs over the next two years. The
reserve account will also provision for the next six months of
planned maintenance costs.
Resource Inherently Uncertain: Revenue Risk - Volume: Midrange
The volatility and gradual decline inherent in the geothermal
resource introduces risk to electricity generation, but SEG has
successfully managed its steam supply through maintaining
existing wells and drilling new "make-up" wells. The existing
resources are sufficient to support 280MW electricity generation
for 30 years or 390MW electricity generation for 20 years,
according to GeothermEx's technical report in February 2018.
Curtailment risk is limited by the take-or-pay nature of the
electricity sales contract, which requires the off-taker to pay
for 95% of the rated capacity of each generator if it is not
dispatched.
Supportive Long-Term PPA: Revenue Risk - Price - Midrange
The electricity tariffs are largely fixed under the sales
contracts with PLN. Unit 1 is exposed to potential price
renegotiation after 2030, but the company would be required to
add an additional USD50 million to the debt reserve account from
2028, providing a cash cushion for the period between 2030 and
the scheduled maturity in 2033.
The tariffs are indexed using straightforward, broad-based
publicly available indexation formulas. The tariffs are
denominated in US dollars but partially indexed to the
rupiah/dollar exchange rate, so that SEG's revenues will decline
if the rupiah depreciates against the dollar. SEG does not enter
into foreign exchange hedges, leaving it exposed to exchange rate
risk.
Fully Amortising Debt: Debt Structure - Midrange
The senior rank, full amortisation, and fixed coupon of the
proposed debt are all stronger attributes. The issuance of
additional debt to fund the development of Unit 3 could expose
SEG to potentially higher rates at that time, although the new
debt would be subject to the requirement for at least 1.3x look-
forward DSCR. If this additional debt is structured as a new debt
tranche instead of additional notes, the existing notes may not
have security over the new assets and may not have access to the
cash flows from Unit 3 for debt service.
The six-month DSRA is a mid-range attribute, while the lock-up
regime (at 1.0x look-back DSCR) is not robust and is weaker than
many peers'. The full amortisation that begins in year 1 results
in steady deleveraging, but the annual cash flows and DSCRs are
volatile. Overall, Fitch assesses the debt structure is assessed
as Midrange.
Financial Profile
Underperformance of the geothermal resource, higher-than-expected
capex and reduced operational efficiency could impair SEG's
ability to service its debt payments. SEG has an average DSCR of
1.42x and a minimum DSCR of 1.35x under the Fitch base case.
The Fitch rating case, in which Fitch apply stresses on the
capacity factor, availability, opex and capex, results in an
average DSCR of 1.29x and a minimum DSCR of 1.13x. The achieved
coverage level is below the 1.40x (BBB-) concentrated solar power
(CSP) threshold in Fitch's "Renewable Energy Projects Rating
Criteria" but above the 'BB-' threshold of 1.20x.
PEER GROUP
Fitch has rated other geothermal projects below investment grade
mainly due to uncertainty about resource depletion and lack of
substitute fuel, and/or volatile pricing mechanisms. In
particular, the default of Coso Geothermal Power Holdings LLC
highlights the resource depletion risk inherent in geothermal
projects. OrCal Geothermal LLC's (BB/Stable) stand-alone DSCRs
average below 1.0x in the Fitch ratings cases but the rating is
based on the continuing capital contribution by the sponsor to
fund discretionary capital expenditures.
SEG has a better price risk attribute than peers as a result of
its long-term take-or-pay PPA with the state-owned utility PLN,
and its resources have been validated through studies by external
consultants. The DSCR projections in Fitch's rating case indicate
a robust coverage averaging 1.29x over the debt term.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action:
- Production declines or interruptions, operating difficulties,
or additional debt resulting in the projected average DSCR
dropping below 1.25x in Fitch's rating case.
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action:
- Repayment of debt faster than planned, resulting in projected
average DSCR above 1.35x in Fitch's rating case.
===============
M A L A Y S I A
===============
DAYA MATERIALS: Falls Into PN17 Status
--------------------------------------
theedgemarkets.com reports that Daya Materials Bhd fell into
Practice Note 17 (PN17) status after its shareholder equity
retreated to under 25% of its issued capital as at Dec. 31, 2017.
According to theedgemarkets.com, the integrated oil and gas
company said in a filing to Bursa Malaysia that its consolidated
shareholder equity has decreased to MYR19.1 million, which is
less than the 25% issued capital sum of MYR40 million.
Daya Materials joins 21 others in the list of PN17-status
companies, which represents 2.4% of the total of 902 companies
listed on Bursa Malaysia, said Bursa Malaysia Securities Bhd in a
separate statement, theedgemarkets.com relays.
"Bursa Securities would like to emphasise that it will continue
to monitor the progress of Daya Materials in respect of its
compliance with the listing requirements," it said.
Over the next 12 months, Daya Materials will need to submit a
regularisation plan to Bursa Securities for approval, the report
notes.
It also needs to declare whether the plan will result in
significant change in its business direction within the first
three months, and to submit the regularisation plan to Securities
Commission Malaysia if such is the case, according to the report.
theedgemarkets.com says failure of the above will result in
suspension of trading of its shares, and ultimately de-listing of
the company from Bursa.
"DMB (Daya Materials) is looking into formulating a
regularisation plan to address its PN17 status and will make the
necessary announcement on the regularisation plan in due course,"
said Daya Materials.
Daya Materials Berhad -- http://dayagroup.com.my/-- engages in
investment holding and providing management services to its
subsidiaries. The Company's segments include polymer, oil and
gas, technical services and others. The polymer segment
manufactures materials for the power cables and wires industry,
and trades other related polymer compounds and specialty chemical
products.
MULTI SPORTS: Seeks Another Extension to Issue Financial Reports
----------------------------------------------------------------
theedgemarkets.com reports that Multi Sports Holdings Ltd has
requested further time extension to April 11 to issue its
outstanding financial reports.
theedgemarkets.com relates that the company said it has submitted
the request to Bursa Malaysia Securities Bhd as it was unable to
meet the Feb. 28 deadline.
According to the report, the China-based group has yet to submit
its unaudited quarterly results from the second quarter of the
financial year ended Dec. 31, 2016 (FY16) until the fourth
quarter of FY17, as well as the annual report and audited
financial statement for FY16.
It had asked for numerous extensions in the past year, the report
notes.
On Dec. 8 last year, Bursa Securities' Appeals Committee allowed
the group's appeal against delisting and to defer it subject to
its compliance to issue all the outstanding financial statements
due (other than the FY15 Annual Report) by Feb. 28, according to
theedgemarkets.com.
Trading in Multi Sports shares has been suspended since May 10,
2016. It was last traded at 3.5 sen, for a market capitalisation
of MYR21.24 million, theedgemarkets.com discloses.
Malaysia-based Multi Sports Holdings Ltd is engaged in footwear
production. The Company has five segments; TPR shoe soles, RB
shoe soles, MD1 shoe soles, MD2 shoe soles and Apparels and
accessories. TPR shoe soles are a physical mix of polymers,
usually rubber and plastic. The RB shoe soles are waterproof and
weatherproof. Natural and synthetic rubbers are used in the
production of RB shoe soles. The MD1 shoe soles are lightweight,
soft, flexible, elastic, resistant to wear and tear. The main
components of MD2 shoe soles are similar to MD1 shoe soles.
Apparels and accessories segment comprise the main component is
men's fashion wear and accessories. The Company's subsidiaries
include Pak Sing Shoe Material (H.K.) Limited, Jinjiang Baixing
Shoe Material Co., Ltd, Fujian Evidoma Ltd., Fujian Qingte
Investment Ltd and Quanzhou Sente Trading Ltd.
===============
M O N G O L I A
===============
MONGOLYN ALT: Waiver Extension No Effect on Fitch CCC+ IDR
----------------------------------------------------------
Mongolyn Alt (MAK) LLC has received an extension on the expiry of
its consent and waivers for its loans from the European Bank for
Reconstruction and Development (EBRD) and Deutsche Investitions -
und Entwicklungsgesellschaft mbH (DEG) to March 31, 2018 from
February 28, 2018, as a proposed bond issuance has been delayed.
The extension will not affect the expected Long-Term Issuer
Default Rating (IDR) of 'CCC+(EXP)' on MAK and the expected
rating of 'CCC+(EXP)' on its proposed US dollar notes that Fitch
Ratings assigned on January 31, 2018. Fitch will continue to
monitor closely the company's refinancing and restructuring
efforts.
MAK's expected ratings reflects the Mongolia-based coal miner's
adequate liquidity and debt maturity profiles, assuming it
completes the proposed bond deal and debt restructuring. The
company plans to repay some of its existing loan facilities that
are in default with proceeds from the proposed bond. The
remaining loans will be restructured based on terms outlined in
the signed consents and waivers from each respective lender,
which have been reviewed by Fitch.
MAK intends to repay the loans from EBRD and DEG with the
proceeds from the proposed bond issuance. The consent and waivers
from the company's other lenders expire on 31 May 2018 (Eksport
Kredit Fonden, EKF), 30 June 2018 (Development Bank of Mongolia)
and Aug. 31, 2018 (BHF-BANK Aktiengesellschaft). In addition, the
EKF loan consents and waivers require MAK to complete its
proposed bond issuance by 31 March 2018.
MAK's expected IDR incorporates Fitch's expectation that the
company will be able to generate positive free cash flows over
the medium term, barring a significant deterioration in coal
prices. This is based on the assumption that MAK will be able to
reduce production costs and capex during moderate coal price
weakness. These expectations are counterbalanced by MAK's history
of aggressive debt-funded investments, and limited access to
external funding, which may heighten the company's liquidity risk
if there is a sharp, sustained coal price or demand downturn and
unfavourable capital market conditions.
The final ratings are contingent upon successful issuance of the
proposed bond and completion of the restructuring in line with
the terms already received, and upon receipt of final documents
conforming to information already received.
STATE BANK: Fitch Affirms and then Withdraws B- Long-Term IDR
-------------------------------------------------------------
Fitch Ratings has affirmed Mongolia-based State Bank LLC's Long-
Term Issuer Default Ratings (IDRs) at 'B-' with Positive Outlook
and its Viability Rating at 'b-'. Concurrently, Fitch is
withdrawing all ratings on State Bank for commercial reasons.
KEY RATING DRIVERS
There has been no material change in State Bank's credit profile
and Fitch's expectation of support from the Mongolian sovereign,
should it be needed, since the previous rating action on Nov. 20,
2017. For more information on the drivers of State Bank's
ratings, please see Fitch Affirms Three Mongolian Banks at 'B-';
Outlook Revised to Positive, dated Nov. 20, 2017.
RATING SENSITIVITIES
Rating sensitivities are not applicable as the ratings have been
withdrawn.
Fitch has affirmed and withdrawn the following ratings:
State Bank LLC
Long-Term Foreign-Currency IDR at 'B-'; Outlook Positive
Short-Term Foreign-Currency IDR at 'B'
Long-Term Local-Currency IDR at 'B-'; Outlook Positive
Viability Rating at 'b-'
Support Rating at '5'
Support Rating Floor at 'B-'
===============
P A K I S T A N
===============
PAKISTAN: Banking System Outlook is Stable, Moody's Says
--------------------------------------------------------
Moody's Investors Service says that its outlook for banks in
Pakistan (B3 stable) is stable over the next 12-18 months. The
outlook is driven by an accelerating economy and stable funding,
while also taking into account the banks' large holdings of low-
rated government bonds, modest capital levels and high asset
risks.
"Pakistan's economic growth - boosted by domestic demand and
China-funded infrastructure projects - will stimulate lending and
support a slight improvement in asset quality over the next 12-18
months," says Constantinos Kypreos, a Moody's Senior Vice
President.
"And, despite margin pressure, the banks' profitability should
remain flat," adds Kypreos. "Stable funding from customer
deposits and high liquidity levels represent further strengths."
"However, the biggest challenge facing the banks is their large
holdings of low-rated Pakistan government bonds," says Corina
Moustra, a Moody's Associate Analyst.
"Modest capital levels and high asset risks pose additional
risks," adds Moustra.
Moody's conclusions are contained in its just-released banking
system outlook for Pakistan and is authored by Kypreos and
Moustra.
The stable outlook is based on Moody's assessment of five
drivers: operating environment (stable), asset risk and capital
(stable), profitability and efficiency (stable), funding and
liquidity (stable), and government support (stable).
On the operating environment, Moody's says that real GDP growth
will accelerate to 5.5% and 5.6% in the fiscal years ending June
2018 and June 2019. Infrastructure investment and solid domestic
demand will prove the main drivers of economic growth and will
fuel lending growth of 12%-15% for 2018. The economy, however,
remains susceptible to political instability and a deterioration
in domestic security.
With regard to asset risk, Moody's expects asset quality to
improve in the current supportive macroeconomic environment,
helped by the banks' diversified loan portfolios and low
corporate debt. Moody's points out that nonperforming loans
measured 9.2% of gross loans as of 30 September 2017.
Asset risk remains high, however, due to weaknesses in the legal
framework, inefficient foreclosure processes and scant
information for assessing borrower creditworthiness. In addition,
the banks' high exposure to low-rated government securities (44%
of assets) continues to pose a key risk.
As for capital, the banks' capital ratios - with Tier 1 at 12.7%
as of Sept. 30, 2017 - have declined, but will recover gradually
once higher regulatory requirements kick in this year and the
next. Capital will be boosted by higher profit retention, capital
increases and capital optimisation measures. However, based on
Moody's adjusted Tier 1 ratio - which measured 6.5% at Sept. 30,
2017 - the banks' capital buffers are modest.
On the issue of profitability, Moody's says that the banks'
profitability will remain flat, despite margin pressure. Moody's
explains that profits will be supported by strong lending growth,
a focus on low-cost current accounts and moderate provisioning
needs, despite interest margin compression. Interest margins
should level off towards the end of 2018, once pressure from the
reinvesting of legacy high-yielding Pakistan investment bonds
reduces, as the remaining of these mature.
With regard to funding and liquidity, Moody's report says that
stable customer deposits and high liquidity levels will remain
the banks' key strengths. Customer deposits make up around 70% of
total assets, and Moody's expects that these deposits will
continue to grow by 12%-15% this year, providing plentiful, low-
cost funding.
Moody's rates the five largest banks in Pakistan, which together
account for around 50% of total system deposits.
Moody's has maintained a stable outlook on Pakistan's banking
system since November 2015.
=================
S I N G A P O R E
=================
KRISENERGY LTD: Narrows FY17 Net Loss to US$139.2 Million
---------------------------------------------------------
Ann Williams at The Business Times reports that KrisEnergy Ltd
shaved its net loss to US$139.2 million for financial year 2017
from a net loss of US$237.1 million a year ago.
A non-cash impairment of US$120.7 million from the cessation of
participation in the Block A Aceh gas project in Indonesia, made
to reduce risk exposure, was the main factor contributing to the
group's net loss, said KirsEnergy in a Singapore Exchange filing
before market open on March 1, the Business Times relays.
The Business Times notes that a near 60% increase in average
realised oil price enabled it to maintain year-on-year revenues
steady at US$140.7 million from US$142.8 million in the previous
year despite a 21% drop in working interest production to 12,745
barrels of oil equivalent per day, mainly due to the G10/48
Wassana oil field, offshore Thailand.
An uplift came from the more than halving of depreciation,
depletion and amortisation charges to US$48.3 million from
US$104.5 million a year ago as a result of reduced production and
lower asset carrying values following impairment charges
recognised in FY16, the Business Times says.
According to the report, chief executive Kelvin Tang said that
although the company welcomed the steady improvement in oil
prices throughout 2017, the markets' gyrations in the first two
months of 2018 continue to test confidence in the upstream sector
and management's ability to plan and commit to capital
expenditure.
"In this uncertain environment, our emphasis will remain on
safeguarding our balance sheet through cost control, focusing our
capital expenditure towards committed expenditures whilst at the
same time continuing to maximise oil and gas production,"
KrisEnergy, as cited by The Business Times, said.
As such, KrisEnergy said it would focus on its core Cambodian and
Thai assets in the Gulf of Thailand, where its oil development
projects are less capital intensive and have shorter cycle times,
and any mandatory commitment activities as required under our
licence agreements, The Business Times relays.
According to The Business Times, the group's cash and cash
equivalents as at Dec. 31, 2017, amounted to US$65.6 million,
while the total amount drawn on the revolving credit facility
with DBS Bank was US$148.3 million. Unused sources of liquidity
amounted to US$65.6 million.
Total debt amounted to US$424.6 million and the group's gearing
stood 73.5%, The Business Times adds.
KrisEnergy Limited (SGX:SK3) -- https://krisenergy.com/ -- is a
Singapore-based investment holding company. The Company is an
independent upstream oil and gas company with a portfolio of
exploration, appraisal, development and production assets focused
on the geological basins in Asia. The Company operates through
exploration and production of oil and gas in Asia segment. The
Company holds interests in approximately 20 licenses in
Bangladesh, Cambodia, Indonesia, Thailand and Vietnam covering a
gross acreage of approximately 60,750 square kilometers.
SWISSCO HOLDINGS: 4 Hong Kong Units in Voluntary Liquidation
------------------------------------------------------------
The Strait Times reports that the judicial managers of Swissco
Holdings said on March 2 that four of the chartering group's
Hong Kong units have been placed under creditors' voluntary
liquidation there.
The four units are owned by Swissco subsidiary Scott and English
Energy, which is also in creditors' voluntary liquidation, the
report discloses.
The Strait Times relates that as a result of resolutions passed
at the meetings on Feb. 26, the judicial managers have appointed
JLA Asia's John Robert Lees -- jrlees@jla-asia.com -- and Mat Ng
-- mng@jla-asia.com -- as the joint and several liquidators of
the four companies.
A motion for a committee of inspection to be constituted for the
four companies was also passed, the report says.
About Swissco Holdings
Swissco Holdings Limited (SGX:ADP), along with its subsidiaries
-- http://swissco.net/html/index.php-- is a Singapore-based
integrated oil and gas service provider. The Company provides
drilling rigs, accommodation jackups and vessel chartering
services for the oil and gas industry. The Company's segments are
Drilling, which includes drilling rig chartering; Offshore
support vessels (OSV), which includes vessel chartering (such as
sale of out-port-limit services), ship repair and maintenance
services, maritime related services (such as sale of vessels) and
OSV related investment activities; Service assets, which includes
accommodation and service rig chartering, and Others segment,
which includes corporate activities. Its OSV segment owns and
operates a fleet of over 40 offshore support vessels that provide
a range of offshore chartering services for the marine, offshore
oil and gas, and civil construction industries. Its subsidiaries
include Swissco Energy Services Pte Ltd, Swissco Offshore (Pte)
Ltd and Seawell Drilling Pte Ltd.
Swissco and SOPL entered into judicial management last in
November 2016 after the listed holding company slipped into a
US$296 million quarterly loss on booking massive impairments.
A Singapore court in April 2017 approved the application made by
Swissco to be placed under judicial management.
Last November, the High Court granted Swissco an extension of its
judicial management order to Sept. 18 this year, the Strait Times
says.
====================
S O U T H K O R E A
====================
KUMHO TIRE: Creditors to Sell Firm to Doublestar Via Rights Issue
-----------------------------------------------------------------
Yonhap News Agency reports that Kumho Tire Co.'s creditors said
on March 2 they aim to sell the financially troubled company to
Qingdao Doublestar Co. through a rights issue, as attracting
investment from the Chinese tiremaker may be the best option at
present.
According to Yonhap, the state-run Korea Development Bank (KDB),
the main creditor, held talks with Doublestar as it believes new
capital injection will help creditors suffer less losses from
investments in Kumho Tire as well as help the tiremaker develop
new technology and improve product quality, the policy lender
said in a statement. The move comes after a failed attempt to
sell the tiremaker to Qingdao Doublestar last year.
"Creditors will have to inject a massive amount of fresh capital
into Kumho Tire for a turnaround if they push forward a joint
restructuring program. But it won't guarantee a turnaround for
the company's businesses, including the loss-making Chinese
unit," Yonhap quotes KDB Vice Chairman & Chief Operating Officer
Lee Dai Hyun as saying at a press conference.
Given the conditions, creditors have decided that attracting
investment from Doublestar is the "most reasonable alternative"
for now, Mr. Lee, as cited by Yonhap, said.
In its proposal, Doublestar said it will invest KRW646.3 billion
(US$599 million) in Kumho Tire's new shares, which will allow the
Chinese tiremaker to become the biggest shareholder with a stake
of 45 percent, the statement said, Yonhap relays.
If the rights issue is successful, KDB-led creditors will
collectively own a 23.1 percent stake in Kumho Tire, it said.
On top of the capital injection into Kumho Tire's new shares,
Doublestar said it will invest KRW200 billion in the tiremaker's
production facilities, with a guarantee of job security for
existing union workers for three years after taking control of
management, the KDB said, according to Yonhap.
Yonhap relates that under the potential deal, which requires the
cooperation of the union and the government's approval,
Doublestar and creditors are prohibited from selling their stakes
in Kumho Tire for three and five years, respectively, after the
management transfer, a KDB spokesman said over the phone.
"Creditors called on the union to decide on whether to accept
Doublestar's investment proposals or not by the end of March. If
the union refuses to accept the offerings, the tiremaker will
have to be placed under a court receivership," the spokesman
said.
In a statement released on March 2, Kumho Tire's 3,000-strong
union said it will stage an unyielding fight against the company
and creditors seeking to sell the tiremaker to a foreign firm,
Yonhap relays.
The union will not end the protest until creditors withdraw all
plans to sell Kumho Tire to the foreign company, a union
spokesman said.
Yonhap notes that in March last year, Qingdao Doublestar signed a
KRW955 billion contract with the KDB-led creditors to buy a 42.01
percent stake in the Korean tiremaker.
The deal, however, was scrapped in September when creditors
rejected Doublestar's demand to cut the purchase price by 16
percent to KRW800 billion, citing deteriorating earnings, Yonhap
adds.
Kumho Tire Co. Ltd. manufactures tire. The company's offerings
include tires for sports utility vehicles, passenger cars,
various sizes of trucks and buses and racing cars. In addition,
the company provides batteries for automobiles. The company is
part of the Kumho Asiana Group.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***