/raid1/www/Hosts/bankrupt/TCRAP_Public/180419.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, April 19, 2018, Vol. 21, No. 077
Headlines
A U S T R A L I A
ALUMINA LTD: S&P Alters Outlook to Positive & Affirms 'BB+' ICR
ARAB BANK AUSTRALIA: S&P Withdraws 'BB+/B' Issuer Credit Ratings
BUTTERFLY SILVER: Second Creditors' Meeting Set for April 26
ELECTRICAL DATA: First Creditors' Meeting Set for April 30
HALF PRICE: Second Creditors' Meeting Set for April 27
NANGUS GROUP: Deloitte Appointed as Provisional Liquidator
PROSPA TRUST 2018-1: Moody's Rates AUD3.78MM Class C Notes 'B3'
RETTOP FARMING: Second Creditors' Meeting Set for April 27
C H I N A
EHI CAR: S&P Places 'BB' ICR on Watch Neg. on Privatization Risks
GOLDEN WHEEL: S&P Alters Outlook to Stable & Affirms 'B' ICR
TONGYI INDUSTRIAL: S&P Assigns Preliminary B ICR, Outlook Stable
* Moody's: Securitization is Meaningful Funding Source in China
I N D I A
ACN TEX: CRISIL Assigns B+ Rating to INR4.5MM Bill Discounting
ADMIN VITRIFIED: ICRA Assigns B+ Rating to INR20cr Term Loan
CYBERWALK TECH: ICRA Reaffirms D Rating on INR68.84cr Loan
HOIN MAL: ICRA Reaffirms B+ Rating on INR9.50cr Term Loan
IMMACULE LIFESCIENCES: CRISIL Reaffirms B- Term Loan Ratings
KANURU BAPAIAH: CRISIL Assigns B Rating to INR10MM LT Loan
LAKSHMINARASIMHA: ICRA Moves B Rating to Not Cooperating
LATHA EDUCATIONAL: CRISIL Moves B Rating to Not Cooperating
MARS ENVIROTECH: CRISIL Assigns B Rating to INR5MM Term Loan
NAREDI TEXFAB: CRISIL Moves B+ Rating to Not Cooperating Cat.
NASSCO TRADING: CRISIL Moves B+ Rating to Not Cooperating
NATIONAL (INDIA): ICRA Cuts INR18.50cr Loan Rating to D
NIHA INTERNATIONAL: CRISIL Assigns B+ Rating to INR7.5MM Loan
SAHU KHAN: ICRA Reaffirms B+ Rating on INR12cr Fund Based Loan
SHIV SHAKTI: ICRA Keeps B+ Rating in Not Cooperating Category
SHREE OM: CRISIL Assigns B Rating to INR6MM Overdraft
SOFFIA CERAMIC: CRISIL Assigns B+ Rating to INR4.6MM LT Loan
SOHAM RENEWABLE: ICRA Lowers Rating on INR38.70cr Loan to B-
SRI VENKATESWARA: ICRA Moves B Rating to Not Cooperating Cat.
ST. JOHNS: CRISIL Withdraws B+ Rating on INR7MM Cash Loan
VARSHA CABLES: ICRA Reaffirms B+ Rating on INR8.50cr Cash Loan
VENKATA NAGA: ICRA Reaffirms B+ Rating on INR9cr Loan
VIDYA SANSKAAR: ICRA Keeps B+ Rating in Not Cooperating Cat.
I N D O N E S I A
MNC INVESTAMA: S&P Lowers ICR to 'CC' on Debt Exchange Offer
WIJAYA KARYA: Moody's Affirms Ba2 Corp. Family Rating
N E W Z E A L A N D
PALMERSTON EXTENSION: Placed Into Receivership; 15 Jobs Axed
S I N G A P O R E
FALCON ENERGY: HC Grants Ambank Summary Judgment in Civil Suit
S O U T H K O R E A
GM KOREA: Parent GM Offers Relocation Plan to Gunsan Workers
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A U S T R A L I A
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ALUMINA LTD: S&P Alters Outlook to Positive & Affirms 'BB+' ICR
---------------------------------------------------------------
S&P Global Ratings said that it had affirmed the issuer credit
rating and associated issue rating on Alumina Ltd. at 'BB+'. The
outlook on the long-term rating is positive. The recovery rating
on Alumina's debt remains unchanged at '3'.
S&P said, "We revised the outlook to positive to reflect the
increasing earnings and cash flows of Alumina's joint-venture
(JV) Alcoa World Alumina and Chemicals (AWAC), as well as the
improving credit quality of AWAC's operating company, Alcoa Corp.
In addition, we expect both Alumina and AWAC to maintain a low
level of debt, which is key to their resilience amid volatile
commodity prices.
"In our view, AWAC's operating performance and dividend payment
are key to Alumina's credit quality. Being a 40% stakeholder in
AWAC, Alumina relies solely on the dividend distribution from
AWAC to service its debt and corporate expense. To reduce the
potential risk of structural subordination, AWAC's amended
charter agreement limits any substantial debt funding at the
asset level.
"We consider material debt funding at the AWAC asset level as
less likely. This is because the target enterprise debt level at
AWAC is limited to US$75 million over the foreseeable future (or
US$200 million if Alcoa achieves an investment-grade rating),
when permissible under Alcoa's amended revolving facility. AWAC
also has a track record of keeping its debt low at the asset
level. Its funding comes mainly from internally generated cash
flows or capital injection by its JV partners. AWAC has to use
any debt it undertakes to fund growth projects.
"We expect the favorable trading conditions in the alumina
industry to continue in 2018. China's structural reforms and
limited refinery growth in the rest of the world should support
balanced supply and demand dynamics in the alumina industry. In
addition, demand for alumina remains healthy due to steady
economic growth globally.
"We expect alumina prices to average around US$350 per ton in
2018. In 2017, AWAC recorded a multi-year high EBITDA of US$1,633
million, compared with US$394 million in 2016, mainly due to
higher alumina prices. Average realized alumina prices at AWAC
increased to US$335 per ton in 2017 from US$242 per ton in 2016.
At our alumina price assumption for 2018, Alumina should continue
to receive strong dividends from AWAC, supporting strong credit
metrics. Furthermore, assuming Alumina maintains its currently
low leverage, it can still generate credit metrics consistent
with the 'BB+' rating even if alumina prices fall moderately from
our assumption.
"Alumina's business risk profile reflects our view that AWAC's
good business position as one of the world's largest alumina
producers provides AWAC with the size and scope to adjust its
operations to respond to market conditions. Tempering these
strengths is Alumina's minority shareholding in AWAC rather than
direct control over AWAC's cash flows. Alumina's JV partner,
Alcoa Corp., is the majority owner and operator of the assets,
and as such, poses a counterparty risk for Alumina, in our view.
The positive outlook reflects a one-in-three chance that we could
upgrade Alumina over the coming quarters if AWAC maintains strong
dividends and Alumina keeps its leverage low. For the 'BBB-'
rating, we expect Alumina's pro rata free operating cash flows
(its 40% share of AWAC's free operating cash flows minus
Alumina's corporate and interest expenses) to debt to be
maintained at or above 40%."
Further improvement in Alcoa's credit quality would add immediate
upside rating pressure to Alumina.
S&P said, "We could revise the outlook on Alumina back to stable
if: AWAC were to raise a material amount of debt, resulting in
significant structural subordination of Alumina's financial
obligations. We forecast Alumina's financial profile would weaken
significantly because of persistently depressed alumina prices,
or significantly higher operational and/or caustic costs. These
scenarios would likely include Alumina's free operating cash flow
to debt sustaining below 40%."
Any negative rating actions on Alcoa Corp. could place downward
pressure on the rating on Alumina because of counterparty risk.
ARAB BANK AUSTRALIA: S&P Withdraws 'BB+/B' Issuer Credit Ratings
----------------------------------------------------------------
S&P Global Ratings withdrew its 'BB+/B' long- and short-term
global scale issuer credit ratings on Arab Bank Australia Ltd. at
the bank's request. At the time of withdrawal, the long-term
rating was on CreditWatch developing while the short-term rating
was on CreditWatch positive.
BUTTERFLY SILVER: Second Creditors' Meeting Set for April 26
------------------------------------------------------------
A second meeting of creditors in the proceedings of Butterfly
Silver Leasing Pty Ltd has been set for April 26, 2018, at
9:30 a.m. at the offices of P A Lucas & CO Pty Ltd, Level 4, 232
Adelaide Street, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 24, 2018, at 4:30 p.m.
Peter Anthony Lucas of P A Lucas & Co was appointed as
administrator of Butterfly Silver on March 12, 2018.
ELECTRICAL DATA: First Creditors' Meeting Set for April 30
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Electrical
Data Contractors Australia Pty Limited will be held at the
offices of McLeod & Partners, Hermes Building, Level 1, 215
Elizabeth Street, in Brisbane, Queensland, on April 30, 2018, at
10:00 a.m.
Jonathan Paul McLeod and Bill Karageozis of McLeod & Partners
were appointed as administrators of Electrical Data on April 17,
2018.
HALF PRICE: Second Creditors' Meeting Set for April 27
------------------------------------------------------
A second meeting of creditors in the proceedings of Half Price
Enterprises Pty Ltd has been set for April 27, 2018, at 11:00
a.m. at the offices of BRI Ferrier (NSW), Level 30, Australia
Square, 264 George Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 26, 2018, at 2:00 p.m.
Peter Paul Krejci of BRI Ferrier was appointed as administrator
of Half Price on April 16, 2018.
NANGUS GROUP: Deloitte Appointed as Provisional Liquidator
----------------------------------------------------------
The Australian Securities and Investments Commission (ASIC) has
obtained orders from the Supreme Court of Queensland appointing
Richard Hughes and David Orr of Deloitte as provisional
liquidators to three companies:
-- Nangus Holdings Group Pty Ltd;
-- Nangus Holdings Pty Ltd; and
-- Nangus Grazing Company Pty Ltd.
ASIC applied for and obtained these orders as part of an ongoing
investigation into the Nangus Group of companies. The orders were
sought by ASIC due to concerns about the solvency and lack of
management of the companies. In particular, ASIC has concerns
about a herd of approximately 261 head of cattle abandoned by
company management.
Keith Batt and Margaret Letizia, the individuals responsible for
the creation and management of the companies, are now both
personally bankrupt, disqualifying them from managing a
corporation.
The orders require the provisional liquidators to provide a
detailed report to the Court regarding the financial position and
management of each company so the Court can consider whether to
make final orders to wind the companies up.
The provisional liquidators can be contacted at:
Deloitte
123 Eagle Street
Brisbane, Qld 4000
Tel: +61 7 3308 7000
Email: webenquiry@deloitte.com.au
Nangus Holdings Pty Ltd (previously Nant Angus Holdings Pty Ltd)
(Nant Angus) offered an investment in cattle to retail investors.
As part of the investment arrangement, Nant Angus was to lease
the herds back from the investor for a period of five years from
the date of purchase and then buy them back from the investor at
an agreed price. Investors were told that during the lease period
they would be paid an annual interest rate of 9.95 per cent on
their investment capital. Investors were introduced to this
investment through full page advertisements taken out in the
Australian Financial Review newspaper by Nant Angus.
PROSPA TRUST 2018-1: Moody's Rates AUD3.78MM Class C Notes 'B3'
---------------------------------------------------------------
Moody's Investors Service has assigned definitive ratings to
notes issued by Perpetual Corporate Trust Limited, as trustee of
Prospa Trust Series 2018-1.
Issuer: Prospa Trust Series 2018-1
AUD64.80 million Class A Notes, Assigned A3 (sf)
AUD14.67 million Class B Notes, Assigned Ba2 (sf)
AUD3.78 million Class C Notes, Assigned B3 (sf)
The AUD6.75 million Seller Notes are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity.
The transaction is a revolving securitisation of a portfolio of
Australian commercial loans originated and serviced by Prospa
Advance Pty Limited (Prospa). This is Prospa's first transaction
rated by Moody's.
The initial portfolio amount is AUD87 million, with loans to
2,924 obligors The initial portfolio is around 3 months seasoned
on a weighted average basis, however in view of the ability to
substitute new loans into the portfolio, the seasoning may
reduce, with no minimum seasoning required for newly added
receivables.
The initial underlying receivables are short-term, high yielding,
unsecured, amortising loans made to Australian small businesses.
The initial average term of the loans is approximately 12 months,
with the maximum loan term of 24 months. The initial average loan
size is around AUD26,000.
All business loans benefit from a personal guarantee generally
from the small business owner or a director.
Secured loans are also eligible to be included in the collateral
pool. Historically, only a very small portion of Prospa's loans
are secured. Secured loans have a maximum term of 36 months.
Prospa is a non-bank lender in the Australian market, that
started originating loans in 2012. Its primary business activity
is providing Australian small businesses with finance solutions.
As of March 2018, Prospa had funded over AUD500 million of
business loans with the bulk originated in the last two years. It
is a major originator within the Australian "on-line" unsecured
small business loan market.
RATINGS RATIONALE
The definitive ratings take into account, among other factors:
- The evaluation of the initial and future underlying
receivables and their expected performance;
- The structural features of the transaction with the relatively
high credit enhancement available from subordination, compared to
other ABS transactions;
- High level of excess spread expected during amortisation of
the transaction;
- The liquidity reserve in the amount of 2.00% of the note
balance, funded from note issuance;
- The interest rate hedge provided by UBS AG, London branch
(A1/Aa3(cr), on review for possible upgrade, P-1/P-1(cr));
- The limited experience of Prospa as originator and servicer;
and
- The backup servicing arrangement with Perpetual Corporate
Trust Limited (Perpetual).
The transaction has a substitution period of 12 months from the
first payment date, during which, available principal collections
will be used to purchase additional receivables subject to
certain performance triggers, portfolio parameters and
eligibility criteria.
During the substitution period, the Class A, Class B and Class C
Notes will continue to benefit from 28.0%, 11.7%, and 7.5% of
note subordination, respectively. Following the end of the
substitution period, the notes will be repaid on a sequential
basis.
MAIN MODELLING ASSUMPTIONS
Moody's base case assumptions are an average default rate for the
underlying small business loans of 5.95% (equivalent to a B2/B3
rating proxy, over a portfolio weighted average life of 0.7
years), and coefficient of variation of 75.4%. We assume a
recovery rate with a mean of 5.0% and standard deviation of 20%.
Moody's has derived the base case assumption by analysing:
- the characteristics of the loan-by-loan portfolio information;
- eligibility criteria and portfolio parameters provided in the
transaction documents;
- the available historical performance data;
- the potential fluctuations in the macroeconomic environment
during the lifetime of this transaction; and
- the potential portfolio concentrations in terms of industry
sectors and single obligors as defined in the transaction
portfolio parameters. Specifically, in our modelling we have
assumed exposure to top two industries of 35% and 30%. This is
higher than initial portfolio's top two industry exposures of
around 21% and 17%.
In considering how meaningful Prospa's historical loan
performance is as an indicator of future performance, Moody's
took into account a number of factors:
- The limited history of performance relative to other issuers.
The bulk of Prospa's origination has only occurred in the last
two-three years.
- Australia's economic environment since 2013 has been largely
supportive of small businesses. As a result, loan performance and
its volatility during this period may not be a good indicator of
the potential performance of the portfolio through an economic
downturn.
- Because the short-term unsecured small business loans is a
relatively new Australian lending segment, there are limited
opportunities for a comparison of this portfolio and its
performance history to other portfolios.
As a result of these factors, Moody's has applied a greater
stress to the base case assumptions -- relative to historical
performance
-- than on most other Moody's-rated Australian ABS transactions.
To determine potential noteholder losses, Moody's has modelled
portfolio losses occurring during the amortisation period only,
and not during the substitution period. This is because Prospa is
required to fund any loans that have reached a specified level of
delinquency by subscribing for additional Seller Notes. Failure
to do so will result in an early amortisation event. As such,
portfolio losses occurring during the substitution period will
not result in a reduction of available credit enhancement.
Moody's has given credit to expected excess spread available
during the amorisation period. Specifically, we modelled a
portfolio yield resulting in 10% excess spread above required
payments at the start of the amortisation period, overtime
reducing it to the minimum receivable yield specified in the
eligibility criteria. Current portfolio yield is well in excess
of the minimum required.
The level of excess spread modelled takes into account the
transaction threshold rate mechanism and the minimum receivable
yield specified in the eligibility criteria. During the
substitution period, Prospa is required to maintain a portfolio
that generates a yield of 10% per annum in excess of the
transactions required payments. Should such excess spread drop
below 10%, the shortfall must be trapped in an excess spread
reserve which is available to cover portfolio losses. In
addition, should such excess spread drop below 6%, substitutions
will stop and the transaction will start amortising.
BACK-UP SERVICING
Perpetual is a standby servicer for this transaction. If Prospa
is removed or retires as servicer, Perpetual will step in as
servicer in accordance with the transaction documents.
INTEREST RATE RISK
The interest rate hedge is available to cover the interest rate
mismatch between fixed rate receivables and floating rate
liabilities. The hedge, provided by UBS AG, London branch,
consists of a fixed-to-floating rate swap and fixed rate caps.
The total hedge notional amount must be sufficient to cover the
principal balance of receivables outstanding, excluding notes,
otherwise the transaction will start amortising.
Methodology Underlying the Rating Action
The principal methodology used in these ratings was "Moody's
Global Approach to Rating SME Balance Sheet Securitizations"
published in August 2017.
Factors That Would Lead to an Upgrade or Downgrade of the Ratings
Factors that could lead to an upgrade of the notes include
better-than-expected collateral performance or portfolio yield.
A factor that could lead to a downgrade of the notes is worse-
than-expected collateral performance. Other reasons that could
lead to a downgrade include poor servicing, error on the part of
transaction parties, a deterioration in the credit quality of
transaction counterparties, and/or fraud.
A strong Australian economy with higher-than-expected GDP growth
would be supportive of Australian small businesses and could
drive better-than-expected portfolio performance. Likewise, an
economic downturn or sudden economic shock would create headwinds
for Australian small businesses and would likely result in
greater portfolio losses.
RETTOP FARMING: Second Creditors' Meeting Set for April 27
----------------------------------------------------------
A second meeting of creditors in the proceedings of Rettop
Farming Pty Ltd, trading as Potter Farms, has been set for April
27, 2018, at 11:00 am. at the Business Centre, Collins Square
727 Collins Street, in Docklands, Victoria.
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 April 26, 2018, at 4:00 p.m.
Stephen Robert Dixon and Ahmed Bise of Grant Thornton were
appointed as administrators of Rettop Farming on March 13, 2018.
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C H I N A
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EHI CAR: S&P Places 'BB' ICR on Watch Neg. on Privatization Risks
-----------------------------------------------------------------
S&P Global Ratings placed its 'BB' long-term issuer credit rating
on eHi Car Services Ltd. on CreditWatch with negative
implications. S&P also placed its 'BB' long-term issue rating on
the company's outstanding U.S. dollar-denominated senior
unsecured notes on CreditWatch with negative implications. China-
based eHi is a car rental and car services provider.
S&P's CreditWatch placement reflects the possibility that eHi's
debt leverage and financial policy could become more aggressive
following its privatization. The company may also face some
refinancing risk if the proposed transaction structure is altered
in a meaningful way.
On April 6, 2018, eHi announced that it had entered into a merger
agreement with a holding company fully owned by a consortium of
(potential) new shareholders and certain existing shareholders.
The consortium has offered to acquire the remaining stake in eHi
at US$6.75 per common share (or US$13.5 per American Depository
Share). The existing shareholders in the consortium control 29.6%
of eHi's common shares and have 37.5% of the voting power. The
consortium will fund the transaction through a debt and equity
commitment. The transaction is scheduled to be closed by the
third quarter of 2018, but is still subject to approvals by the
U.S. Securities and Exchange Commission, eHi's shareholders, and
the company's offshore noteholders.
S&P said, "We expect eHi's privatization plan to result in a
substantial change in the company's shareholder structure. Some
of eHi's existing shareholders will roll over into the new
structure. We estimate these shareholders currently hold
approximately 22% of the company's common shares. Also, we
believe it is possible that some existing shareholders could
increase their holdings as part of the transaction. The details
of the transaction are still not available. The (potential) new
shareholders include several private equity funds. In our
opinion, ownership by private equity funds could cause eHi's
financial policy to turn more aggressive."
The consortium currently plans to fund part of the transaction
from an incremental US$200 million loan. If the financing
structure or the consortium's relative equity contribution
changes, it could increase debt leverage at eHi, possibly
triggering a change of control clause in the company's offshore
notes.
S&P said, "Based on eHi's reported unaudited financial statements
for 2017, we estimate the company's EBIT interest coverage at
1.5x-1.7x, ratio of debt to capital at 55%-60%, and ratio of
funds from operations (FFO) to debt at 15%-20%.
"We aim to resolve our CreditWatch placement over the next three
to six months, once greater clarity on eHi's privatization plan
emerges, mainly details of the new shareholder structure and
funding alternatives to complete the transaction.
"We may lower the rating if: (1) the transaction substantially
increases eHi's debt, causing its EBIT interest coverage to
decline to less than 1.3x or FFO-to-debt ratio to drop below 20%;
(2) the company adopts a more aggressive financial policy; or (3)
the exit or dilution of eHi's existing controlling shareholders
triggers an early redemption of the company's offshore notes,
exposing it to liquidity risks.
"We may affirm the rating if the transaction does not materially
increase eHi's debt or leverage, and the existing controlling
shareholders retain their material control over the company to
ensure the consistency of its strategy and financial policies."
GOLDEN WHEEL: S&P Alters Outlook to Stable & Affirms 'B' ICR
------------------------------------------------------------
S&P Global Ratings revised the outlook to stable from negative on
China-based developer Golden Wheel Tiandi Holdings Co. Ltd. (GW
Tiandi). At the same time, S&P affirmed its 'B' long-term issuer
credit rating.
S&P said, "We revised the outlook to reflect GW Tiandi's improved
financial position, which exceeded our expectations. In addition,
the company's project execution has markedly improved in the past
two years, with increasingly stable sales.
"We expect GW Tiandi's total contracted sales to continue to
improve over the next one to two years. By our forecasts, annual
sales will hover around Chinese renminbi (RMB) 2.2 billion-
RMB2.7 billion in 2018-2019 from RMB2.5 billion in 2017, RMB2
billion in 2016, and RMB 900 million in 2015. At the same time,
the company's booked revenue is likely to stay around RMB2
billion in 2018 and 2019, stemming from increased sales and
better project delivery.
"The rating is also supported by GW Tiandi's recurring income
base, which we expect to grow steadily to about RMB200 million by
2019, from RMB166 million in 2017, driven by the opening of new
metro malls. In addition, we estimate the company's hotel income
will increase to RMB45 million-RMB60 million over the next two
years based on its current pipeline. In our view, GW's investment
properties have good locations in key transportation hubs in the
city of Nanjing, and fair asset quality. We estimate that GW
Tiandi's rental income continue will cover more than 50% of its
gross interest expenses in the coming 12 months."
GW Tiandi has some funding advantages compared with other small
developers in China, given it has a sizable completed investment
property portfolio, with a book value of RMB4.6 billion, which
makes up 40% of its asset base. The portfolio also allows GW
Tiandi to obtain bank loans at lower cost by securing its assets
and lowers its refinancing risks.
S&P said, "However, we believe the company's competitive
advantage is limited given its very small operating scale and
small market share in its key markets. Considering the scale and
high project concentration risk, any slippage of project launches
will significantly affect the company's financial metrics. GW
Tiandi currently has about 10-12 projects focused on Nanjing,
Changsha, and Zhuzhou. We have revised the business risk profile
to vulnerable from weak, because we expect average profitability
from property development on the back of rising land cost.
"In our view, the company's reinvestment risk is high. Given
rising land costs in Nanjing, GW Tiandi may find it increasingly
difficult to acquire land at a reasonable cost and in favorable
locations. As such, the company might need to use more resources
to secure fewer new projects. Moreover, the company acquired a
commercial project in Tin Hau, Hong Kong in February 2018. The
total consideration is Hong Kong dollar 844 million, which is
about 25%-30% of GW Tiandi's forecast contracted sales in 2018.
"We expect the company's leverage to weaken to about 6x-8x in
2018- 2019, from slightly less than 5x in 2017. The 2017 ratio
improved on better sales and revenue booking during the year. We
expect the ratio to deteriorate over the next two years, mainly
due to capital needs to replenish its small land reserves. In
2017, GW Tiandi increased its land bank to slightly above 1
million square meters (sqm), from less than 1 million sqm in
2016. We believe the company will continue to grow its land bank
in a controlled manner. To temper capital needs and execution
risks, the company has increased its joint-venture projects with
other larger peers."
Owing to GW Tiandi's strong revenue growth in 2017, the ratios
showed a volatile jump in the same year, with EBITDA to interest
coverage ratio improving to 3.2x in 2017 from 1.3x in 2016 and
debt-to-EBITDA ratio to 4.6x from 9.7x in 2016.
S&P said, "The stable outlook GW Tiandi reflects our expectation
that the company will maintain prudent financial discipline and
display a conservative growth appetite in the next two years. We
also expect the company's stable and recurring income from the
investment properties to increase gradually."
S&P may lower the rating under the following situations:
-- GW Tiandi's revenue from property development does not
significantly improve or that its pace of land acquisitions
causes its debt to increase beyond our expectations, such
that its EBITDA interest coverage ratio falls below 1.5x;
-- GW Tiandi's income stability deteriorates such that the ratio
of its recurring rental income to interest expenses falls
below 50%.
An upside is remote in the coming 12 months, given GW Tiandi's
small operating scale and high geographic and project
concentration. S&P may raise the rating if the company has longer
record of operating on a large scale and increases its financial
stability by growing its investment property portfolio.
TONGYI INDUSTRIAL: S&P Assigns Preliminary B ICR, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B' long-term issuer
credit rating to China-based chemical producer and distributor,
Tongyi Industrial Group Co. Ltd. The outlook is stable.
S&P said, "At the same time, we assigned our preliminary 'B'
long-term issue rating to the senior unsecured notes that
Tongyi's wholly owned subsidiary Tongyi (BVI) Ltd. will issue.
Tongyi will unconditionally and irrevocably guarantee the notes.
The preliminary ratings are based on our assumption of an
issuance amount of US$300 million and are subject to our review
of the final and executed documentation."
The preliminary rating on Tongyi reflects the company's small
scale, limited geographic and product diversity, below-average
profitability, customer and supplier concentration, and high
financial leverage. Tongyi is also exposed to high liquidity
pressure and faces key-man risk. S&P expects the proposed notes
issuance to moderately lower liquidity pressures for the company.
S&P said, "We expect Tongyi's chemical manufacturing to remain
limited to a few basic chemicals, namely liquefied petroleum gas,
methyl tert-butyl ether (MTBE), and propene. The company will
also continue to have high geographic concentration, in our view.
Its major production plants are in Liaoning province in China and
its products are mainly sold in northeast China. Although
Tongyi's products have above-average quality, the company's
concentration on highly standardized products constrains its
competitiveness. We do not expect management's plan to expand
into fine chemical products such as maleic anhydride to
significantly alter its revenue mix over the next two-to-three
years."
Tongyi's limited trading product portfolio and scale, and
customer and supplier concentration should continue to constrain
its chemical distribution business. However, S&P believes the
company's stable relationships with good-quality suppliers and
its flexibility in transportation and storage could temper the
risks. Tongyi can also leverage on the storage facilities and
vessels of affiliates owned by the company's major shareholders.
S&P said, "We expect Tongyi's profitability to remain limited
over the next one to two years owing to very thin margins in its
chemical distribution business. However, margins in this business
are fairly stable because of the business' "back-to-back" nature.
The profitability of Tongyi's chemical production segment is
comparable to its peers', with gross profit margin in the high
single digits. Based on those factors, we assess Tongyi's
business risk profile as weak.
"We estimate Tongyi's EBITDA will be Chinese renminbi (RMB) 1.1
billion-RMB1.2 billion each year in 2018 and 2019, compared with
RMB 1.1 billion in 2017. This is because the average selling
price of the company's products is likely to be aligned with
relatively flat oil prices. We expect Tongyi's capital
expenditure to be RMB240 million-RMB430 million each year in
2018-2019, down from the peak of RMB1.66 billion in 2016, because
the company has no major plan for capacity expansion or upgrade
in the period. However, we anticipate Tongyi's debt will remain
elevated, with its ratio of funds from operations (FFO) to debt
at close to 20% over the next one to two years.
"We do not expect any material deleveraging over the period
because the company's steadily growing trading business requires
significant debt financing. Based on those factors, we assess the
company's financial risk profile as aggressive.
"We believe the proposed notes issuance will moderately alleviate
Tongyi's liquidity pressure. We assume the company will use most
of the proceeds to refinance onshore debt. We would view the
company's liquidity as weak if the company is unable to refinance
its substantial short-term debt through the proposed notes. As of
Dec. 31, 2017, Tongyi's short-term debt was more than 40% of its
total debt. In our base case, the company's free cash on hand
plus cash FFO generated in the 12 months ending Dec. 31, 2018,
will be unable to cover its debt maturing over the same period.
Liquidity pressure could increase if prices or demand of
chemicals weakens, or the company's access to China's domestic
capital market is restricted such that it has difficulty in
refinancing its short-term debt.
"In our view, Tongyi has a much smaller revenue base, narrower
product portfolio, and smaller production capacity than its
domestic rated peers. Tongyi also has higher supplier
concentration, with the top five suppliers accounting for over
55% of total purchases in 2017. In addition, we believe key-man
risk is high because the company's strategies and relationships
with key suppliers and banks are highly dependent on the
chairman. Therefore, we assess the company's comparative rating
analysis as negative.
"The stable outlook on Tongyi reflects our expectation that the
company will maintain stable profitability and leverage in the
next 12 months because of favorable market conditions. We expect
Tongyi's ratio of FFO to debt to be comfortably above 12% in the
period. We also anticipate that the company's liquidity sources
will cover its liquidity uses in the next 12 months, assuming the
proposed notes issuance materializes.
"We may lower the rating on Tongyi if its liquidity deteriorates
to what we would consider to be weak. This could happen if the
company's operating cash flow weakens, its short-term debt
increases, its banking relationships deteriorate, or its access
to the domestic bond market is restricted.
"We may also lower the rating if the company's ratio of FFO to
debt deteriorates to below 12% on a sustained basis." This could
happen if:
-- The company's profitability is lower than S&P expects,
possibly due to poor industry conditions or unplanned
outages.
-- The company engages in aggressive business expansion through
debt financing.
S&P believes the rating upside is limited in the next 12 months.
S&P could raise its rating on Tongyi if the company's FFO-to-debt
ratio rises above 30%. This could happen if:
-- Tongyi's profitability is better than S&P expects, driven by
business scale expansion, improvement in product diversity,
or better industry conditions.
-- The company substantially reduces its debt.
* Moody's: Securitization is Meaningful Funding Source in China
---------------------------------------------------------------
Moody's Investors Service says China's fast-growing
securitization market will play an increasingly large role in
funding the economy over time, and will benefit from more
standardized and transparent product offerings, allowing the
market to grow and evolve in a sustainable way.
"Securitization can be an effective financial instrument that
enhances funding diversification and asset liquidity, which is
meaningful in China in particular against the backdrop of the
government's campaign of deleveraging and supporting the real
economy," says Gracie Zhou, a Moody's Vice President and Senior
Analyst.
"For example, the securitization of consumer finance related
assets has expanded rapidly, reflecting China's increasingly
consumption-driven economy, while the securitization of corporate
loans has declined as a share of the total market," adds Zhou.
Moody's conclusions are included in its just-released report
"Structured finance -- China: Securitization is growing as a
funding source for the economy".
Moody's report points out that China's securitization market is
growing fast, with new issuance increasing at a compound annual
growth rate (CAGR) of 121% between 2012 and 2017.
However, the contribution that securitization makes to funding
the Chinese economy remains small compared to other more
established and developed markets, such as the US and Europe. The
value of total outstanding asset-backed securities (ABS)
accounted for 2.48% of total bonds outstanding in China at the
end of 2017, while in the US, ABS issuance accounted for 31% of
total bond issuance as of September 2017.
The range of assets securitized in China has also increased over
time, with securitization now funding a broad spectrum of the
real economy and responding to shifts in the real economy and
policy direction.
The share of funding provided by securitization, however, varies
between asset classes. Securitization provided funding amounting
to around 1.2% of China's total household debt, 1.3% of the
residential mortgage debt, 7.1% of total auto debt (as of the end
of 2016), 2.1% of total credit card debt, 29.4% of micro-loan
debt and 0.2% of debt extended to non-financial enterprises as of
the end of 2017.
Looking ahead, for China's securitization market to continue to
grow and evolve in a sustainable way, Moody's says it will need
to develop more standardized and transparent product offerings
for a wider investor base and better market liquidity.
For PRC only: Neither MCO nor any of its majority-owned
affiliates is a qualified credit rating agency within the PRC.
Any rating assigned by MCO or any of its majority-owned
affiliates: (1) does not constitute a rating as required under
any relevant PRC laws or regulations; (2) cannot be included in
any registration statement, offering circular, prospectus or any
other documents submitted to the PRC regulatory authorities; and
(3) cannot be used within the PRC for any regulatory purpose or
for any other purpose which is not permitted under relevant PRC
laws or regulations. For the purposes of this paragraph, "PRC"
refers to the mainland of the People's Republic of China,
excluding Hong Kong, Macau and Taiwan.
=========
I N D I A
=========
ACN TEX: CRISIL Assigns B+ Rating to INR4.5MM Bill Discounting
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' rating on
the bank facilities of ACN Tex Private Limited (ACNTPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 1.3 CRISIL B+/Stable
Packing Credit .85 CRISIL A4
Inland/Import
Letter of Credit .50 CRISIL A4
Bank Guarantee .35 CRISIL A4
Bill Discounting 4.50 CRISIL B+/Stable
The rating reflects on the extensive industry experience of its
promoters in the industry and its average financial risk profile.
These strengths are partially offset by the high working capital
intensive operations.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations and exposure to intense competition
in textile industry: ACNTPL's business risk profile remains
constrained by its small scale of operations in the intensely
competitive textile industry. The company's small scale is
indicated by its revenues of INR29 cr during 2016 - 17. Small
scale of operations prevent the company from deriving benefits of
economies of scale. The textile industry is largely unorganized,
marked by the presence of several players with small capacities.
Furthermore, because of fragmentation and intense industry
competition, players have limited pricing and bargaining power,
and consequently, low operating margins. CRISIL believes that the
intense industry competition will continue to constrain ACNTPL's
business risk profile over the medium term.
Strengths:
* Extensive industry experience of the promoters: ACNTPL's
promoters have extensive experiences of around 3 decades in the
textile industry. ACNTPL benefits from its promoters' extensive
experience, their understanding of the dynamics of the local
market, and their established relationships with suppliers and
customers. CRISIL believes that ACNTPL will continue to benefit
from its promoters' extensive industry experience over the medium
term.
* Average financial risk profile: The company's financial risk
profile is average reflected by a gearing of 0.5 times and a
moderate net worth of INR1.67 cr as on March 31, 2017. The debt
protection metrics are average with interest coverage and net
cash accruals to total debt at 2.99 times and 59 percent as on
March 31 2017 respectively. Due to moderate accretion to reserves
and high reliance one external bank debt, CRISIL believes that
the financial risk profile of the company is expected to remain
average.
Outlook: Stable
CRISIL believes that ACNTPL will maintain a stable business risk
profile over the medium term owing to the promoter's extensive
industry experience. The outlook may be revised to 'Positive' if
the firm generates more-than-expected revenues and profitability
resulting in higher cash accruals improving its financial risk
profile. Conversely the outlook may be revised to 'Negative' in
case of decline in revenues and profitability resulting in
insufficient cash accruals to timely service the term debt
prepayment obligations or more than expected debt funded capex
plan leading to deterioration in the financial and liquidity risk
profiles.
Set up in 1997, the entity was promoted by Mr. Ramasamy
Venkatachalam, Ramaswamy Gounder Krishna Kumar, Kuupusamy
Periyasamy Ramasamy and Krishnakumar Loganayaki. ACNTPL's is
involved in knitting and finishing of textile for export market.
It operates from its manufacturing facility at Tirupur in Tamil
Nadu.
ADMIN VITRIFIED: ICRA Assigns B+ Rating to INR20cr Term Loan
------------------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]B+ for
the INR20.00-crore term loan and the INR8.00-crore cash credit
facility of Admin Vitrified Pvt. Ltd. ICRA has also assigned the
short-term rating of [ICRA]A4 for the INR2.00-crore non-fund
based bank guarantee of AVPL. The outlook on the long-term rating
is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term
Loan 20.00 [ICRA]B+ (Stable); Assigned
Fund-based-Cash
Credit 8.00 [ICRA]B+ (Stable); Assigned
Non-fund Based-
Bank Guarantee 2.00 [ICRA]A4; Assigned
Rationale
The assigned ratings favourably factor in the experience of
AVPL's promoters in the ceramic industry, the benefits derived
from its associate concern's marketing and distribution network
and the location-specific advantage, which ensures an easy
availability of raw materials. However, the assigned ratings are
constrained by the primary stage of the company's operations, as
it commenced from January 2018 and the risk associated with the
successful scale-up of operations, as per the expected
parameters. The ratings also take into account the below average
financial profile marked by lower expected accruals in the
initial phase of operations, leverage capital structure, and
below average debt coverage indicators due to pre-dominantly
debtfunded capex. The ratings also remain constrained by the
highly fragmented nature of the ceramic tiles industry, resulting
in intense competition. Furthermore, the ratings also note the
cyclical nature of the real estate industry, which is the main
consuming sector and the exposure of the company's profitability
to volatility in raw material and gas prices.
Outlook: Stable
ICRA believes that AVPL will continue to benefit from the past
experience of its promoters and distribution network of its
associate concerns. The outlook may revised to Positive if the
company reports healthy revenue and profitability, along with
efficient working capital management while ensuring regular debt
repayments, which is likely to strengthen the financial risk
profile. The outlook may be revised to Negative if cash accruals
are lower than expected, or delay in debt repayments or stretch
in working capital cycle, weakens the liquidity position of the
company.
Key rating drivers
Credit strengths
Experience of promoters in the ceramic industry: The key
promoters of the company have more than a decade's experience in
the ceramic industry vide their association with other ceramic
entities that operate in the same business sector. AVPL also
derives support from the marketing and distribution network of
its associate concerns.
Favourable location for raw material: The manufacturing facility
of the company is located in the ceramic tiles manufacturing hub
of Morbi (Gujarat), which provides easy access to quality raw
materials and allows savings on the transportation cost.
Credit challenges
Limited track record of operations: Being at a nascent stage,
with its operations having commenced from January 2018 (i.e.,
January 12, 2018), the company remains exposed to the risks
associated with successful scale up of operations of AVPL's
plant, as per the expected parameters.
Below average financial risk profile: The capital structure is
likely to remain adverse with high gearing levels in the medium
term, given the debt-funded nature of the capex and dependence on
working capital borrowings. The debt coverage indicators are also
estimated to remain below average, because of low expected
accruals in the initial phase of operations and relatively high
debt obligations.
Intense competition in the ceramic industry: The company faces
stiff competition from established tile manufacturers
as well as unorganised players, which limits its pricing
flexibility.
Vulnerability of profitability and cash flows to cyclicality
inherent in the real estate industry: The real estate industry
is the key end-user for vitrified tiles. Hence, the profitability
and cash flows are likely to remain vulnerable to the inherent
cyclicality of the real estate industry.
Vulnerability of profitability to any adverse fluctuations in raw
material and fuel prices: The margins of the company are
primarily affected by the raw material price and piped natural
gas price fluctuation. Any adverse movement in the prices of raw
materials and fuel could have an adverse impact on AVPL's
margins, considering the limited ability to pass on the price
hike owing to intense competition in the ceramic industry. The
price fluctuations also impact the realisations of the company.
Admin Vitrified Pvt. Ltd. was incorporated in April 2017 as a
private limited company promoted by Mr. Prayag Vansjaliya and
family. The company has set up a Greenfield project at Morbi in
Gujarat to manufacture glazed vitrified tiles and soluble salt
vitrified tiles with nano polishing, with an annual production
capacity of ~63,000 metric tonnes of vitrified tiles of
600mmX600mm dimensions. The company's operation commenced from
January 2018 (i.e., January 12, 2018).
AVPL's promoters, Mr. Jayantilal Vansjaliya, Mr. Arvind
Kankasania, Mr. Rajnikant Panchotiya and Mr. Durlabhji Panchotiya
have experience of more than a decade in the ceramic industry by
being associated with other ceramic entities.
CYBERWALK TECH: ICRA Reaffirms D Rating on INR68.84cr Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]D for
INR68.84-crore term loans of Cyberwalk Tech Park Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 68.84 [ICRA]D; reaffirmed
Rationale
The rating continues to factor in the delays in servicing of debt
by CTPPL given the inadequate cash-flow generation in its single
ongoing commercial project. Given the oversupply situation in the
vicinity of the project, CTPPL has been exposed to considerable
market risk, which has resulted in slower-than-expected sales and
leasing. Going forward, the timely servicing of debt-repayment
commitments and CTPPL's ability to lease/sell the remaining area
at desired prices and maintain its collection efficiency will
remain the key rating sensitivities. ICRA also notes the
experience of the company's promoters in the real-estate sector.
Key rating drivers:
Credit strength
Extensive experience of promoters in the real estate and other
businesses: The promoters of the company have a welldiversified
background. Aarone Group (Aarone Promoters Pvt. Ltd), managed by
Mr. Yog Raj Arora and his family members, is a Delhi-based real-
estate development Group with over 20 years of experience in
developing residential and commercial projects. Mr. Amit Kumar
Modi is the Managing Director (MD) of Chandigarh Distillers &
Bottlers Ltd. The promoters of Parabolic Real Estate Pvt. Ltd.
are a part of the top management of Parabolic Drugs Ltd., an
active pharmaceutical ingredient (API) and API intermediate
manufacturing and marketing company.
Credit challenges
Delays in debt servicing because of inadequate cash-flow
generation in the project due to oversupply and slowdown in
real estate: CTPPL developed the first phase of its real-estate
project named Cyber Walk in FY2013 for which it availed a total
debt of INR113.0 crore. Due to subdued sales, the cash flows
generated by the company were inadequate, leading to delay in
debt servicing. Despite the restructuring of debt in August 2016
and ballooning nature of repayments, the company has been making
repayments with a delay. The promoters have been funding the
cash-flow gaps.
Muted sales velocity with no sales in the last one year: The
company has sold around 55% of its saleable area till February
2017. However, there have been no sales in the last one year.
This can be attributed to the weakness in this micro market.
CTPPL (erstwhile Sofed Retailer Private Limited) was promoted as
a special purpose vehicle to set up an IT Park at Manesar,
Gurgaon. At present, Aarone Promoters Private Limited (owned by
Aarone Group) is the largest shareholder with 44.20% stake,
followed by Mr. Amit Kumar Modi (Chandigarh Distillers & Bottlers
Limited Group) and Parabolic Real Estate Pvt. Ltd. with 27.9%
stake each. The IT Park is titled CyberWalk and is being
developed in two phases, with a total leasable/saleable area of
11.28 lakh sq ft. While 8.8 lakh sq ft has been developed in
phase one, and phase two is yet to commence.
In FY2017, the firm reported a net loss of INR1.42 crore on an
operating income (OI) of INR4.85 crore compared to a net loss of
INR2.10 crore on an OI of INR5.63 crore in the previous year.
HOIN MAL: ICRA Reaffirms B+ Rating on INR9.50cr Term Loan
---------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating of [ICRA]B+ for
the INR19.40-crore fund-based bank facilities of Hoin Mal Sons
Enterprises Private Limited. The outlook on the long-term rating
is Stable.
Rationale
The rating reaffirmation continues to favorably factor in the
extensive experience of the promoters in the steel industry, and
its partly backward-integrated nature of operations, which
renders support to the company's sourcing ability. ICRA also
notes the improved sales volumes in the current year driven by
healthy order inflow for its main product, i.e. thermo-
mechanically treated (TMT), from major customers.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 9.50 [ICRA]B+ (Stable); reaffirmed
Fund based-Cash
Credit 9.90 [ICRA]B+ (Stable); reaffirmed
The rating, however, remains constrained by the company's average
financial risk profile characterised by low and declining
profitability due to its exposure to volatile raw material
prices, the cyclicality inherent in the steel and construction
industry and its modest scale of operations, which limits the
benefits from economies of scale. Further, the ratings are
constrained by HMS' leveraged capital structure as indicated by
high gearing of 1.87 times and TOL/TNW3 of 3.03 times as on March
31, 2017. ICRA also considers the stiff competition from other
organised and unorganised players in the industry characterised
by low entry barriers, which limits pricing flexibility. Further,
ICRA notes the company's high repayment obligations going forward
as compared to the projected cash accruals which requires
promoters continued support.
Outlook: Stable
The Stable outlook factors in ICRA's expectation that HMS will
continue to benefit from the extensive experience of its
directors. The company is also likely to benefit from the healthy
order inflow from its established customer base. 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
Experienced promoters: Extensive experience of the promoters in
the steel industry ensures repeat orders from the established
customers.
Improvement in sales volume in FY2017 and CY2018 because of
improved demand: Following a healthy demand recovery from the
end-user sectors, the company's production volumes increased by
~30% each in FY2017 and 9M FY2018 from the corresponding period
in the previous year. Recent buoyancy in steel prices and
incremental volumes post recovery in demand are likely to keep
revenue growth healthy in the near term at least.
Partially backward-integrated nature of operations: The company
has a partially backward-integrated facility with an induction
furnace to produce billets using sponge iron and scrap, which in
turn is consumed in-house for production of TMT bars. Besides
supporting the operating profitability, the backward integration
ensures uninterrupted raw-material availability.
Credit challenges
Small scale of operations with nominal accruals: The company has
a limited operational track record and its scale of operations
remains small at present. The operating income (OI) stood at
INR51.74 crore in FY2017 against INR43.02 crore in FY2016,
translating into a year-on-year (YoY) growth of 20%.
Average financial risk profile characterised by depressed debt-
protection metrics on account of low profitability: The company
continues to incur losses at the net level in FY2017 because of
high depreciation and interest cost. Weak profitability, coupled
with high-interest expense, kept HMS' debt-protection metrics low
as reflected by an interest coverage ratio of 1.43 times in
FY2017, DSCR of 0.76 times and total debt-to-operating profit
ratio of 12.23 times in FY2017.
Sizeable debt repayments compared to projected accruals over next
two years: The company has sizeable scheduled debt repayments in
FY2019 and FY2020, which are larger than its projected cash
accruals, which may require continued support from promoters.
Intense competition and cyclicality inherent in steel industry
limit pricing: The TMT bar-manufacturing segment is highly
fragmented, given the commoditised nature of the product, and is
characterised by intense competition from numerous small
organised and unorganised players. Factors like these, limit the
pricing flexibility of manufacturers. The realisation depends on
the price of raw material - mild steel (MS) ingots and steel
scrap. Although the prices generally move in tandem, there may be
short-term mismatches in the raw material and the end-product
prices, which in turn may lead to volatility in margins.
Any slowdown in end-user industries like construction and real-
estate segment is likely to result in muted growth: The company's
operations are vulnerable to adverse changes in demand-supply
dynamics in real estate and construction sectors. The cyclicality
inherent in both these sectors is likely to keep the company's
cash flows volatile.
HMS was incorporated in 2008 by Mr. Anshul Chandwani and Mr.
Chandan Chandwani, along with other members of their family. The
company commenced commercial operations in April 2014 to
manufacture MS billets and TMT bars. The company is a part of the
Chandwani Group, which has other companies in a similar line of
business. It has a manufacturing capacity of 42,000 MTPA of MS
billets and 30,000 MTPA of TMT bars at its manufacturing unit in
the Uttar Pradesh State Industrial Development Corporation
(UPSIDC) Industrial Area in Rae Bareli.
In FY2017, the company reported a net loss of INR0.09 crore on an
OI of INR51.74 crore, as compared to a net loss of INR0.17 crore
on an OI of INR43.02 crore in the previous year.
IMMACULE LIFESCIENCES: CRISIL Reaffirms B- Term Loan Ratings
------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B-/Stable' rating on the long-
term bank facilities of Immacule Lifesciences Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B-/Stable (Reaffirmed)
Foreign Currency
Term Loan 34.7 CRISIL B-/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5.5 CRISIL B-/Stable (Reaffirmed)
Term Loan 7.5 CRISIL B-/Stable (Reaffirmed)
ILPL's business risk profile remains weak due to the start-up
phase of operations, and has led to continuous losses since
inception on account of sizeable fixed overhead expense. Intense
competition is expected to keep scale of operation modest over
the medium term - operating revenue was INR11.37 crore in fiscal
2017. Further, the company is also exposed to risks related to
licensing requirement and there is also a high degree of
regulation required for continual investments and adherence to
quality by manufacturers. Also, customer concentration in revenue
is high as 100% sales are to one customer. Despite geographical
diversification, scale of operations is likely to remain modest
because of customer concentration, and exposure to license
requirements will continue to constrain business risk profile
over the medium term.
Financial risk profile is weak because of negative networth, low
debt protection metrics, and high total outside liabilities to
tangible networth ratio (TOLTNW). However, profitability is
expected to improve over the medium term supported by absorption
of fixed overheads as operations break-even.
Liquidity is weak on account of large working capital
requirement. Moreover, due to continuous losses, cash accrual is
insufficient to meet repayment obligations. However, group
companies (SRS Pharmaceuticals Pvt Ltd - SRS - and ACME
Formulations Pvt Ltd - Acme) infuse funds through preference
share capital to meet repayment obligations.
Analytical Approach
For the purpose of ratings, CRISL has considered the entire
preference share capital as 75% equity and 25% debt because:
* Preference shares are exclusively issued to group companies -
SRS (39.85% share) and Acme (60.15% share).
* These shares are non- convertible.
* They carry an interest rate of 5%, which is lower than the
market rate.
* Undertaking regarding deferability in times of stress is
presented by the company.
* The preference shares carry a maturity period of 10 years.
* More than 35% of the total preference shares are cumulative.
For arriving at the ratings, CRISIL has not consolidated the
business and financial risk profiles of group companies because
all transactions are independent, the product profile is
different and there is no financial fungibility between the
companies.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operation: With a turnover of INR11.37 crore in
fiscal 2017 and INR9.3 crore as on December 31, 2017, scale
remains modest. Besides, the initial stage of operation and high
fixed overhead cost is resulting in operating losses. Operations
are expected to remain small over the medium term due to orders
in-hand of only INR7.80 crore for fiscal 2019. Operating margin
will remain susceptible to fluctuations in raw material prices.
Thus, the modest scale, limits the company's pricing power and
renders it susceptible to changes in raw material prices because
of low bargaining power with key customers.
* Weak financial risk profile: Large debt led to high TOLTNW
ratio of -2.56 times as on March 31, 2017, and poor debt
protection metrics in fiscal 2017 due to significant losses at
the operating level. Interest coverage and net cash accrual to
adjusted debt ratios were -3.4 time and -0.31 time, respectively,
for fiscal 2017. Financial risk profile is expected to remain
weak on account of losses being incurred.
* Highly stretched liquidity: Liquidity is weak on account of
continued cash losses against debt repayment obligations of INR6-
7.0 crore in fiscals 2019 and 2020. Further, due to large working
capital requirement with gross current assets of 340 days as on
March 31, 2017, pressure on external bank borrowings is
significant. However, liquidity is supported by need-based fund
support from group companies. Therefore, with the expected modest
scale of operations, dependence on promoters' funding will
continue.
Strength:
* Extensive experience of the promoters: Benefits from the
promoters' extensive experience in the industry through group
companies SRS and Acme, their understanding of the dynamics of
the industry and local market, and expansion in scale of
operations through geographic diversification on account of
healthy relations with corporates should support the business.
Acme is into manufacturing, while SRS is into marketing of drugs
in the overseas market.
Outlook: Stable
CRISIL believes ILPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if stabilisation of operations and substantial sales,
lead to revenue growth and large cash accrual. The outlook may be
revised to 'Negative' if stretch in working capital cycle or
continued suboptimal operating performance exerts pressure on
liquidity.
Incorporated on 20 September 2010, ILPL is basically an exporter,
manufacturer and supplier of allopathic medicine, tablet,
capsule, injection, drop trader of antibiotic, antifungal,
diuretics and cardiovascular. It's a Nalagarh, Himachal Pradesh-
based pharmaceutical formulator. It is promoted by Viral Shah,
Suchet.
KANURU BAPAIAH: CRISIL Assigns B Rating to INR10MM LT Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Kanuru Bapaiah Constructions And Leasing (KBCL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 10 CRISIL B/Stable
The rating reflects exposure to risks associated with its ongoing
project and cyclicality in real estate industry. These weaknesses
are partially offset by extensive experience of proprietor in the
real estate industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Project implementation and funding related risks: The project
is at an early stage of construction leading to high
implementation risk. Moreover, the firm is yet to enter into
lease agreements with tenants, leading to high offtake risks.
Hence, any delay in completion or slower bookings may impact cash
flows and liquidity.
* Exposure to inherent risks and cyclicality in real estate
industry: The real estate sector in India is cyclical and marked
by sharp movements in prices and a highly fragmented market
structure. The overall uncertain economic climate and changing
regulatory environment exposes the firm to cyclicality in the
sector.
Strength
* Proprietor's extensive experience: The proprietor has over 20
years of experience in real estate development and have 6
commercial properties in Vijaywada, leading to established
presence and brand value.
Outlook: Stable
CRISIL believes KBCL will benefit over the medium term from its
proprietor's extensive industry experience. The outlook may be
revised to 'Positive' if timely completion of project, and
healthy customer response to the project leads to higher cash
flow generation. The outlook may be revised to 'Negative' if time
or cost overruns in implementation of project or lower-than-
expected occupancy, impacting the debt servicing ability.
Established in the 2016, KBCL is partnership firm promoted by Mr.
Rao. The firm is currently constructing a commercial building in
Vijayawada. The firm is expecting to generate revenues in 2020-
21.
LAKSHMINARASIMHA: ICRA Moves B Rating to Not Cooperating
--------------------------------------------------------
ICRA Ratings has moved the long-term ratings for the bank
facilities of Lakshminarasimha Warehousing to the 'Issuer Not
Cooperating' category. The rating is now denoted as
"[ICRA]B(Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 5.15 [ICRA]B(Stable); ISSUER NOT
Loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Unallocated 0.85 [ICRA]B(Stable); ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/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.
Lakshminarasimha warehousing a partnership concern was
established on October 10, 2015 and is mainly engaged in the
activity of construction of go-downs and leasing out to FCI/CCI.
The firm has availed a term loan from Corporation Bank to build
and lease grain storage godowns which is being built at
Gajalpuram village, Thripuraram Mandal of Nalgonda district. The
present capacity of the godowns is 8,000 MT.
LATHA EDUCATIONAL: CRISIL Moves B Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has been consistently following up with Latha Educational
Society (LES) for obtaining information through letters and
emails dated February 15, 2018, March 8, 2018 and March 12, 2018
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 5 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Latha Educational Society.
Which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Latha Educational Society is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Latha Educational Society to 'CRISIL B/Stable
Issuer not cooperating'.
LES, based in Tamil Nadu, manages Sakthi Matric Higher Secondary
School and ECR International School at Chinnasalem in Tamil Nadu.
Established in 1993, the society is managed by Mr. E C Ravikumar.
MARS ENVIROTECH: CRISIL Assigns B Rating to INR5MM Term Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
facilities of Mars Envirotech Limited (MEL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.5 CRISIL B/Stable
Term Loan 5 CRISIL B/Stable
The rating reflects MEL's exposure to project stabilisation risk
and government regulation and below-average financial risk
profile. These weaknesses are partially offset by the extensive
experience of the promoters and their funding support.
Key Rating Drivers & Detailed Description
Weakness
* Project stabilisation risk: The company has completed the
municipal waste management and power generation plant project and
has entered into a power purchase agreement with the Punjab State
Electricity Board for supply of electricity. The plant is
expected to be fully operational by H1FY19, post which power
generation and supply will commence.
* Below-average financial risk profile: Expected networth and
gearing of INR1.7 crore and 7.04 times, respectively will
constrain financial risk profile.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' experience of two decades and their funding support
should support the business.
Outlook: Stable
CRISIL believes MEL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if stabilisation of operations results in significant
increase in scale and profitability, and strengthens financial
risk profile. The outlook may be revised to 'Negative' if low
scale of operation and profitability, stretch in working capital
cycle, or any large, debt-funded capital expenditure weakens
financial risk profile, especially liquidity.
Incorporated in 2011, MEL has set up a municipal waste management
and power generation facility in Lalru, Punjab, which is
partially operational from January 2018. It has its registered
office in Lucknow, Uttar Pradesh. The company is into power
generation using municipal solid waste and is a part of Mars
group.
NAREDI TEXFAB: CRISIL Moves B+ Rating to Not Cooperating Cat.
-------------------------------------------------------------
CRISIL has been consistently following up with Naredi Texfab
Private Limited (NTPL) for obtaining information through letters
and emails dated December 18, 2017 and January 17, 2018 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Letter of Credit 1 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Term Loan 7.73 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Naredi Texfab Private Limited.
Which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Naredi Texfab Private Limited is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Naredi Texfab Private Limited to CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
NTPL was incorporated in December 2012, promoted by the Naredi
family of Rajasthan; it commenced commercial operations from
April 2014. The company manufactures, prints, and stitches
polypropylene woven sack bags and high-density polyethylene bags
used in various industries for packaging. The manufacturing
facility at Nimbahera, Rajasthan, has an installed capacity of 5
million meter per month.
NASSCO TRADING: CRISIL Moves B+ Rating to Not Cooperating
---------------------------------------------------------
CRISIL has been consistently following up with Nassco Trading
India Private Limited (NTIPL) for obtaining information through
letters and emails dated December 18, 2017 and January 17, 2018
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.5 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Nassco Trading India Private
Limited. Which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Nassco Trading India Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Nassco Trading India Private Limited to CRISIL
B+/Stable Issuer not cooperating'.
Incorporated in April 2010, NTIPL trades in tiles, marbles, and
granites. It is based in Attingal (Kerala), and is promoted by Mr
Nazar Mohamed Ellias and his wife Ms Raheena Jalaudeen.
NATIONAL (INDIA): ICRA Cuts INR18.50cr Loan Rating to D
-------------------------------------------------------
ICRA Ratings has downgraded the long-term rating from [ICRA]B+ to
[ICRA]D assigned to the INR6.00-crore fund based facility of
National (India) Contractors & Engineers. ICRA has also
downgraded the long-term rating from [ICRA]B+ to [ICRA]D and the
short-term rating from [ICRA]A4 to [ICRA]D to the INR18.50-crore
non-fund based bank facilities of NICE.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 6.00 [ICRA]D; Downgraded from
[ICRA]B+
Non-fund Based
Limit 18.50 [ICRA]D; Downgraded from
[ICRA]B+/ [ICRA] A4
Rating Rationale
The rating revision takes into account the recent delays in
servicing of debt obligations, owing to the stretched liquidity
position of the company. The ratings continue to remain
constrained by the company's weak financial profile
characterised by leveraged capital structure, weak debt coverage
indicators and stretched liquidity position arising out of
high receivables and inventory levels. The ratings also factor in
the high client and geographical concentration risk faced
by NICE; and the risk of capital withdrawal associated with a
partnership firm.
Outlook: Not applicable
Key rating drivers
Credit strengths
Long standing experience of promoters and track record of NICE in
the construction industry: NICE was incorporated in 1962 and
engaged in the business of construction of buildings (residential
and commercial), townships and universities. Over the past three
decades, the firm has completed more than 100 projects involving
civil construction for residential, industrial and institutional
projects for government as well as private sector. The firm is
registered as a class 1A contractor with PWD.
Credit challenges
Delays in debt servicing in the recent past: The company has
faced liquidity constrained on account of its stretched
receivable position which has resulted in delays in debt
servicing in the fund based facilities in the recent past.
Weak financial profile characterised by small scale of
operations, leveraged capital structure, modest debt coverage
indicators and tight liquidity position: NICE is modest sized
player in the fragmented and competitive civil construction
industry. The firm reported a modest growth of 3% in operating
income in FY2017 to INR45.0 crore from INR43.6 crore due to
slower execution of projects in hand. The company's total debt
increased sharply to INR38.15 crore as on March 31, 2017 from
INR30.57 crore as on March 1, 2016 due to increased long term
borrowings. The long-term borrowings includes loan against
property availed for working capital funding purpose from various
non-banking financial institutions. The capital structure
continued to remain leveraged with gearing of 3.12 times as on
March 31, 2017 while the debt coverage indicators also remained
weak with TD/OPBDITA of 6.6%, NCA/Total Debt at 5% and interest
coverage ratio of 1.23 times as on March 31, 2017. The liquidity
position of the company continued to remain stretched due to high
debtor and high inventory days. The average monthly utilisation
of cash credit limits remained high at 100% during the period
from January, 2017 to January, 2018.
High client and geographic concentration risks: Most of the
projects executed by NICE and those in hand are based in
Maharashtra and Rajasthan which exposes the firm to geopolitical
risks associated with the states. As on January 12, 2018, NICE
had an unexecuted order book of INR152.33 crore to be executed
over a period of 12-24 months. The order book is mainly
concentrated between three projects being executed for Maharshtra
State Road Development Corporation (MSRDC) (Rs 44.4 crore) and a
few projects for Public Works Department (PWD) worth ~Rs. 25
crore, mainly concentrated in Pune, Maharashtra. The company has
also faced delays in a few major projects which has resulted in
lower growth in operating income in FY2017. The top 5 projects
account for 72% of the unexecuted ding order book position as on
January 12, 2018.
Intense competition from established peers: The construction
industry is highly competitive and fragmented with numerous small
as well as large players, impacting the pricing flexibility and
profitability of players like NICE. Many construction majors are
present in the segments where NICE operates, which can impact the
order book build up. Given NICE's modest size and the intense
competition in the industry, increasing the order inflow would
continue to be challenging.
National (India) Contractors & Engineers was set up in the year
1962 by Mr. Usmangani Khatri and is engaged in the business of
construction of buildings (residential and commercial), factories
(sugar and spinning mills), townships and universities etc. The
firm is based out of Mumbai and executes construction projects in
the states of Maharashtra and Rajasthan.
NIHA INTERNATIONAL: CRISIL Assigns B+ Rating to INR7.5MM Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Niha International Private Limited (NIPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.5 CRISIL B+/Stable (Assigned)
The rating reflects the company's weak financial risk profile
because of weak capital structure and modest debt protection
metrics, and its modest scale of operations. The weaknesses are
partially offset by the promoters' extensive industry experience.
The management is undertaking capital expenditure (capex) for
adding a revenue segment. Timely completion of capex and
successful ramp-up of operations will remain key rating
sensitivity factors.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: The financial risk
profile is constrained by high gearing of 6.9 times and modest
networth of INR1.2 crore as on March 31, 2017, and average debt
protection metrics, reflected in interest coverage and net cash
accrual to total debt ratio of 1.5 times and 0.07 time,
respectively, in fiscal 2017.
* Modest scale of operations: The modest scale is indicated by
estimated revenue of INR40 crore in fiscal 2018. The revenue is
expected to increase because of forward integration. However, the
extent of revenue growth will remain a key rating sensitivity
factor.
* High project risk: The company is exposed to risks related to
implementation of its capex of INR19-20 crore for forward
integration. Timely completion of the project and successful
ramp-up in operations, will remain a key monitorable over the
medium term.
Strength
* Extensive experience of the promoters: The promoters'
experience of two decades and longstanding relationships with
suppliers and customers will continue to support NIPL's business
risk profile.
Outlook: Stable
CRISIL believes NIPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if significant growth in revenue and operating margin
leads to improvement in financial risk profile, and the company
demonstrates better working capital management. The outlook may
be revised to 'Negative' if time and cost overrun in project
implementation, significant decline in revenue, or stretch in
working capital cycle weakens the financial risk profile.
Incorporated in 1998, NIPL is engaged in washing and cleaning of
glass bottles. The company is promoted by Mr Rajesh Rajendran and
is based in Tamil Nadu.
SAHU KHAN: ICRA Reaffirms B+ Rating on INR12cr Fund Based Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+
assigned to the INR12.00-crore fundbased bank limits of Sahu Khan
Chand Foods. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-
Working Capital
Facilities 12.00 [ICRA]B+ (Stable); reaffirmed
Rationale
The rating reaffirmation continues to take into account the
extensive experience of partners in the green pea-processing
business, and the steadily growing consumption of frozen foods in
India.
The rating, however, remains constrained by SKCF's average
financial profile characterised by subdued net profit margin,
weak capital structure as evident from TOL/TNW3 of 4.85 times and
gearing of 2.32 times, coupled with stretched debt protection
metrics as depicted by TD/OPBDITA4 of 8.36 times and NCA/TD5 of
9% as on March 31, 2017. It also considers the significant
increase in its inventory-holding period due to the seasonal
stocking of raw materials, leading to high working-capital
intensity as on March 31, 2017. Also, the company's profitability
remains vulnerable to adverse movements in agro commodity prices
with the price risk accentuated due to its high inventory holding
in the business and which is expected to remain under pressure
due to intense competition. The rating continues to take into
account the susceptibility of the business operations to the
demand-supply scenario in the domestic markets, and performance
of the domestic agricultural sector, which is highly influenced
by climatic conditions. ICRA also notes that SKCF is a
partnership concern and any significant withdrawals from the
capital account would impact the net worth and thereby, the
capital structure.
Outlook: Stable
The Stable outlook factors in ICRA's expectation that SKCF will
continue to benefit from the extensive experience of its partners
and their continued support to the business. The outlook may be
revised to Positive if substantial growth in revenue and
profitability, and better working-capital management, strengthens
the financial risk profile. The outlook may be revised to
Negative if cash accrual is lower than expected, or stretch in
the working-capital cycle weakens liquidity.
Key rating drivers
Credit strengths
Established track record of promoters in similar line of
business: The promoters have extensive experience in the
processed food industry. The partners also operate other firms in
similar lines of businesses. The firm will continue to benefit
from its promoters' extensive experience and their understanding
of the market dynamics.
Steady demand of frozen green peas: Positive domestic demand
outlook for the frozen foods segment given the growing domestic
consumption on the account of their longer shelf lives and
growing middle-class working population.
Credit challenges
Average financial risk profile: The firm's operations remained
small with an operating income (OI) of INR17.52 crore in FY2017
down from INR22.44 crore in the previous year. Further, the price
of green peas has remained relatively low in FY2018 which is
expected to limit revenue growth in the current year as well. The
capital structure remained leveraged with a gearing of 2.32 times
and TOL/TNW of 4.85 times as on March 31, 2017. Also, the net
margins remained subdued at 0.97% in FY2017 due to the high
depreciation and interest expenses.
High working-capital intensity: The firm's operations are
working-capital intensive in nature because of the seasonal
nature of business which necessitates high inventory-holding
requirements during the procurement season with NWC/OI at 43% in
FY2017.
Fluctuating EBITDA margins: The company's operating EBITDA margin
has been fluctuating due to the market-driven pricing of its
products. Operating profit margin stood at 10.03% in FY2015,
7.81% in FY2016 which improved to 9% in FY2017.
Highly competitive and fragmented industry structure resulting in
low profitability margins: The industry is highly fragmented with
a large number of organised and unorganised players that limit
its pricing flexibility and bargaining power. In addition, the
firm's profitability is vulnerable to agro-climatic risks as well
as to changes in Government policies, which impact availability
and prices.
Net worth is exposed to withdrawal of capital by partners: SKCF
being a partnership firm is exposed to reduction in networth
due to of any substantial withdrawal by the partners that may
affect its capital structure.
SHIV SHAKTI: ICRA Keeps B+ Rating in Not Cooperating Category
-------------------------------------------------------------
ICRA Ratings said the rating for the INR23.75 crore bank
facilities of Shiv Shakti Industries (SSI) continues to remain in
the 'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]B+(Stable) ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 3.75 [ICRA]B+ (Stable) ISSUER NOT
Loan COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Fund based-Cash 20.00 [ICRA]B+ (Stable) ISSUER NOT
Credit COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/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.
Established in 2013, Shiv Shakti Industries is a partnership firm
with Mr Soham Purohit and Manisha Purohit as partners. The firm
is engaged in the business of ginning and pressing of raw cotton
as well as crushing of cottonseeds with processing capacity of
around 150 TPD of raw cotton. The firm is equipped with 24
ginning machines and 1 Pressing machine having capacity to
produce 250 bales per day. The firm is also equipped with 10
expellers having capacity to produce 10,500 kgs of oil per day.
The saleable products of the firm include cotton bales, cotton
seeds, cottonseed oil and cottonseed cakes.
SHREE OM: CRISIL Assigns B Rating to INR6MM Overdraft
-----------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Shree Om Milk Foods Private Limited (SOMFPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 6 CRISIL B/Stable
The rating reflects experience of SOMFPL's modest scale of
operations and risks related to customer concentration in revenue
profile. These weaknesses are partially offset by the experience
of the promoters.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
of INR0.79 crore extended to the company by its promoters as
neither debt nor equity, as the loan is expected to remain in the
business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Small scale of operations, with
revenue of about INR77 crore in fiscal 2017, amid intense
competition limits pricing power with suppliers and customers,
thereby constraining profitability.
* Customer concentration in revenue profile: SOMFPL faces
significant customer concentration risk. Its top two customers
account for about 80% of sales. Revenue and profitability may
hence remain dependent on the growth plans of key customers.
Strength
* Experience of promoters: Benefits derived from the promoters'
experience and established relationships with customers.
SOMFPL is promoted by Mr. Hanuman Prasad Sharma and Mr. Om
Prakash Sharma, who have experience of over a decade and their
strong understanding of the local market dynamics helped
establish relationships with reputed customers such as Nestle
India Limited ('CRISIL AAA/Stable/CRISIL A1+') and Mother Dairy
Fruit and Vegetable Pvt. Ltd ('CRISIL A1+'). Thus, healthy
relations with customers and suppliers should continue to support
the business.
Outlook: Stable
CRISIL believes SOMFPL will continue to benefit over the medium
term from the experience of the promoters. The outlook may be
revised to if higher-than expected growth in revenue and cash
accrual, large capital infusion along with efficient working
capital management strengthen financial risk profile. Conversely,
the outlook may be revised to 'Negative' if lower-than-expected
cash accrual, incremental working capital requirement, or any
large, debt-funded capital expenditure weakens liquidity.
SOMFPL, incorporated in 2008 at Bikaner (Rajasthan) manufactures
and trades in milk and milk products such as ghee, curd, cheese,
and butter milk. Mr Hanuman Prasad Sharma and Mr Om Prakash
Sharma are the promoters.
SOFFIA CERAMIC: CRISIL Assigns B+ Rating to INR4.6MM LT Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Soffia Ceramic (SC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.5 CRISIL B+/Stable (Assigned)
Long Term Loan 4.6 CRISIL B+/Stable (Assigned)
The rating reflects SC's exposure to risks related to
implementation and stabilisation of the project. The rating also
factors in expectation of an average financial risk profile.
These weaknesses are partly offset by the extensive experience of
the promoters and their funding support, and strategic location
of the manufacturing plant.
Analytical Approach
Unsecured loans extended by the promoters and their relatives
have been treated as neither debt nor equity. This is because
these loans are expected to remain in the business over the
medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to timely implementation and stabilisation of the
project: Manufacturing of wall tiles is expected to commence from
April 2018. Timely implementation and stabilisation of the
project, and commensurate ramp-up in sales during early phase of
operations will remain critical, and hence, monitored closely.
* Average financial risk profile: Financial risk profile may
remain average on account of the capital expenditure. Gearing is
expected at about 1.60 times.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' experience of around a decade should continue to
support business risk profile. Equity and unsecured loans from
the promoters will support liquidity in the initial phase of
operations.
* Strategic location of the plant: Manufacturing facility is in
the Morbi district of Gujarat, which is a tile manufacturing
cluster. Hence, raw materials and labour will be easily
available.
Outlook: Stable
CRISIL believes SC will benefit from the extensive experience and
funding support of the promoters, and the strategic location of
its plant. The outlook may be revised to 'Positive' if timely
implementation and stabilisation of the project leads to expected
revenue, profitability, and cash accrual. The outlook may be
revised to 'Negative' if a delay in implementation or
stabilisation of the project-leading to lower revenue or cash
accrual, or a stretch in working capital cycle - weakens
financial risk profile, especially liquidity.
Incorporated in May 2017, SC is establishing a green field
project for manufacturing wall tiles biscuit/body. It is promoted
by Mr Anuj Narbherambhai Ughreja, Mr Dhananjaybhai Dilipbhai
Ughreja, Mrs Madhuben Dilipbhai Ughreja, and Mrs Pragnaben
Balvantbhai Zalariya. Operations are expected to commence in
April 2018.
SOHAM RENEWABLE: ICRA Lowers Rating on INR38.70cr Loan to B-
------------------------------------------------------------
ICRA Ratings has upgraded the long-term rating assigned to the
INR38.70-crore term loan of Soham Renewable Energy India Private
Limited (SMPPL) from [ICRA]D to [ICRA]B-. The outlook on the
long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 38.70 [ICRA]B-(Stable) revised
from [ICRA]D
Rationale
The rating revision factors in the timely debt servicing by
SREIPL during the last three-month period (December 2017-February
2018). The funding requirements were met by proceeds from sale of
power generated and cash in-flow due to return of loans (funding
support) from subsidiary Soham Phalguni Renewable Energy Private
Limited(SPREPL) owing to improvement of SPREPL's operational
performance.
The rating, however, continues to remain constrained by the sub-
optimal performance of the 6 MW hydro power project in 11M FY2018
due to low water availability. Subdued generations resulted in
suppressed cashflows for the company and necessitated external
support to meet its funding requirements. Further, given that the
project is not covered under any deemed generation clause in case
of loss of generations due to shortage of water, timely receipt
of support from associate entities in case of lower-than-optimal
(breakeven) generations would be critical to ensure timely debt
servicing by the company. While SREIPL currently sells power to
third party customers, the rating remains affected by the absence
of a long-term power purchase agreement(PPA) for offtake of power
generated by SREIPL. The rating also remains constrained by the
relatively high capital cost of the project (Rs. 11.28 crore/MW)
which has impacted its overall return indicators. ICRA further
notes that while a cash debt service reserve account was created
under SREIPL in February 2017 to provide a cushion to the
company's repayments, the same was utilized subsequently to meet
repayment obligations and was not replenished thereafter.
ICRA, however, continues to take note of the established presence
of the Soham group (which operates 53.5 MW of hydro power
projects) in the renewable power segment and the demonstrated
ability of the Group to raise funds from strategic investors to
meet its funding requirements. Further, ICRA also notes that the
eligibility of the 6 MW hydro power project under SREIPL for
receipt of capital subsidy of INR2.2 crore is likely to improve
its viability to a certain extent.
Outlook: Stable
The Stable outlook reflects ICRA's expectation that the
generation levels of SREIPL will continue to remain stable while
remaining contingent on the availability of water resources. The
outlook may be revised to 'Positive' in case of further
improvement in generation levels which would result in an
additional cashflow cushion. The outlook may be revised to
'Negative' in case of lower than expected generations which would
exert pressure on the company's cashflows.
Key rating drivers
Credit strengths
Holding company of the Soham Group: SREIPL is the holding company
of the Soham group which operates 53.5 MW of hydro power projects
in Karnataka. Under SREIPL, the group has been able to raise
INR150 crore equity from strategic investors since FY2012.
Eligibility for capital subsidy: The 6 MW hydro power project
under SREIPL is eligible for a capital subsidy of INR2.2 crore
which is likely to improve its viability to a certain extent.
Credit challenges
Operations remain exposed to hydrological risks: The company's
operations remain exposed to hydrological risks given that it is
not covered under any deemed generation clause in case of loss of
generation due to shortage of water.
Subdued generations since commencement of operations have
resulted in inadequate cashflows which necessitated external
support to meet funding requirements Offtake risk on account of
absence of a long-term PPA - SREIPL has signed a power purchase
agreement via third party route for supply of 2MU power every
calendar month. However, given that the PPA is not long-term in
nature, the company remains exposed to offtake risks.
Nevertheless, the company has been supplying power to the same
customer since commencement of commercial operations.
High capital cost: The 6MW power project under SREIPL underwent
time and cost overruns and hence the capital cost/MW remains high
at INR11.28.MW and constrains the overall return indicators of
the project.
Incorporated in November 1991, Soham Renewable Energy India
Private Limited (SREIPL) is the holding company of Soham group
which operates hydro power projects with a cumulative capacity of
53.5 MW in Karnataka. SREIPL operates a mini hydro power project
with a capacity of 6 MW in Mandya District, Karnataka. The
project is a gated diversion weir being built across the river
Cauvery and commenced full scale commercial operations during
September 2015.
In FY2017, the company reported a net loss of INR4.56 crore on an
operating income (OI) of INR4.84 crore compared with a net loss
of INR7.70 crore on an OI of INR5.13 crore in the previous year.
SRI VENKATESWARA: ICRA Moves B Rating to Not Cooperating Cat.
-------------------------------------------------------------
ICRA Ratings has moved the long-term ratings for the bank
facilities of Sri Venkateswara Warehousing to the 'Issuer Not
Cooperating' category. The rating is now denoted as
"[ICRA]B(Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 7.73 [ICRA]B(Stable); ISSUER NOT
Loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Unallocated 0.27 [ICRA]B(Stable); ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/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.
Sri Venkateswara Warehousing a partnership concern was
established on October 10, 2015 and is mainly engaged in the
activity of construction of go-downs and leasing out to FCI/CCI.
The firm has availed a term loan from Corporation Bank to build
and lease grain storage godowns which is being built at
Gajalpuram village, Thripuraram Mandal of Nalgonda district. The
present capacity of the godowns being constructed by the firm is
24,000 MT.
ST. JOHNS: CRISIL Withdraws B+ Rating on INR7MM Cash Loan
---------------------------------------------------------
CRISIL Ratings has been consistently following up with St. Johns
Cashew Company (SJCC) for obtaining information through letters
and emails dated September 14, 2017 and October 26, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable (Issuer Not
Cooperating; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawal)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SJCC. This restricts CRISIL's
ability to take a forward looking view on the credit quality of
the entity. CRISIL believes that the information available for
SJCC is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL BB' rating
category or lower'. Based on the last available information,
CRISIL has migrated the ratings on the bank facilities of SJCC to
'CRISIL B+/Stable' Issuer not cooperating' from 'CRISIL
B+/Stable'.
CRISIL has withdrawn its rating on the bank facilities of SJCC on
the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
Set up as a proprietorship firm in 2001, SJCC processes raw
cashew nuts and sells cashew kernels. The firm, based in Kollam,
Kerala, is promoted by Mr Sajan P Y.
VARSHA CABLES: ICRA Reaffirms B+ Rating on INR8.50cr Cash Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ for
the INR8.50-crore cash-credit facilities of Varsha Cables Pvt
Ltd. ICRA has also re-affirmed the short-term rating of [ICRA]A4
for the INR4.00-crore non-fund based facilities of the company.
The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash
Credit 8.50 [ICRA]B+ (Stable); Reaffirmed
Non-fund based-
Letter of Credit/
Bank Guarantee 4.00 [ICRA]A4; Reaffirmed
Rationale
The rating reaffirmation continues to be constrained by company's
modest scale of operations limiting its ability to benefit from
economies of scale, impacting its competitive position and
pricing flexibility vis-Ö-vis the larger entities. The ratings
also consider below average financial risk profile of the company
characterised by high gearing, weak coverage indicators and high
working capital intensity. The ratings also limited by
significant customer concentration with top five customers
accounting for 81% of the revenues during FY2017. The ratings
further consider the vulnerability of the margins to adverse
movements in raw material prices.
The ratings; however, continues to positively factors in the
established track record and long experience of the promoters in
the wires and cable manufacturing industry. The reaffirmation
also derives comfort from the established and reputed customer
base resulting in repeat orders. Going forward, the ability of
the company to scale up operations while improving margins,
improve its capital structure while managing its working capital
requirements would remain the key rating sensitivities.
Outlook: Stable
ICRA believes that the Varsha Cables Pvt Ltd (VCPL) will continue
to benefit from extensive experience of the promoters in
manufacturing of wires and cables. The financial profile of the
company is likely to remain stable given its established
customer base. The outlook may be revised to 'Positive' if
substantial and sustainable growth in revenue and profitability,
and better working capital management, strengthen the financial
risk profile. Conversely, the outlook may be revised to
'Negative' if cash accruals are lower than expected, or if any
higher than anticipated capital expenditure, or stretch in
working capital requirements weakens liquidity.
Key rating drivers
Credit strengths
Long experience of the company in wires and cables industry: The
promoters of VCPL have several years of experience in the wires
and cables industry. Mr. Puttaraju P Gowda, the Chairman and MD,
is an electrical engineer with extensive work experience spanning
several decades in the cable industry with Tata Power Company
Ltd., and as a contractor for laying and maintenance of cables in
Mumbai. Mr. Unnikrishnan Mundur, director, is an electrical
engineer and an exemployee of Tata Power Company Limited and the
promoter of Allied Techno Service Private Limited, Mumbai.
Reputed customer base across diversified product profile: The
company has a reputed customer base with clients like LAPP India
Private Limited, Schneider Electric India Private Limited,
Johnson Controls India Private Limited, Bharat Heavy Electricals
Limited, and Bharat Electronics Limited etc.
Credit challenges
Modest scale of operations with weak capitalisation and coverage
indicators: The company's existing scale of operations is akin to
a modest-sized company operating in wires and cables
manufacturing industry. This constrains company's ability to
benefit from economies of scale and limits its competitive
position and pricing flexibility vis-Ö-vis the larger entities.
The capital structure and coverage indicators of the company
stood weak with gearing of 3.1 times, total debt/OPBDITA of 5.62
times, TOL/TNW of 4.31 times, interest coverage of 1.52 times and
NCA/Total debt of 6.1%
as on March 31, 2017.
Significant customer concentration: The customer concentration
for the company remained high with top-five customers accounting
for 73.5% of revenues during 6M FY2018, albeit moderated from
81.1% and 80.9% in FY2016 and FY2017 respectively. Nevertheless,
the established relations of the company with its clients,
results in repeat orders.
Exposed to raw material price fluctuations: The major raw
materials are copper, aluminium, GI Sheets, XLPE and PVC
granules, the prices of which are highly volatile in nature.
Usually, the company quotes prices to its customers based on the
latest raw material prices which is valid for 15 to 20 days. In
case the customer responds after the given timeline, a revised
quote is provided. From the time of receipt of purchase order to
delivery, the company remains exposed to fluctuations in raw
material prices. However, the small order to delivery timeline,
which is less than a month in most of the cases, mitigates this
risk to an extent.
High competitive intensity: The company faces stiff competition
from other established players, which limits its pricing
flexibility and bargaining power with its customers, thereby
putting pressure on its revenues and profitability.
Varsha Cables Pvt Ltd manufactures low tension copper and
aluminium electrical cables. The company was established in 1995
by Mr. Puttaraju, its Chairman and Managing Director and Mr. B.
Kumar, its Director. In 2009, the company divested part of its
operations and the equity share of Mr. B. Kumar. The company has
a
manufacturing facility at Hebbal Industrial Area, Mysore with a
manufacturing capacity of 12.50 million meters per annum, with an
average capacity utilisation of 36.3% in FY2017. The company
manufactures several kinds of wires and cables, varying from
simple insulated copper wires to armoured, shielded and braided
cables. The company has the capability to manufacture variety of
wires and cables varying from 0.02 mm to 630 mm thickness and
capable of handling up to 1100 kV of electricity.
In FY2017, the company reported a net profit of INR0.2 crore on
an operating income of INR26.3 crore, as compared to a net profit
of INR0.2 crore on an operating income of INR25.9 crore in the
previous year.
VENKATA NAGA: ICRA Reaffirms B+ Rating on INR9cr Loan
-----------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ and
short-term rating of [ICRA]A4 to the INR25.00 crore1 bank
facilities of Venkata Naga Lakshmi Paper Mills Private Limited.
The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 0.74 [ICRA]B+ (Stable); Reaffirmed
Fund based- 9.00 [ICRA]B+ (Stable); Reaffirmed
Working Capital
Facilities
Unallocated 15.26 [ICRA]B+ (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The rating reaffirmation takes into account the modest scale of
operations with revenues of INR31.1 crore in FY2017 in an
intensely competitive paper manufacturing industry. High
competition, coupled with fluctuations in the availability
and prices of raw material, results in modest and fluctuating
profitability indicators. The ratings are further constrained
by tight liquidity position of the company as reflected in the
high working capital utilisation of 96.4% for the period
December-16 to January-18. The ratings also consider the
stretched financial profile characterised by high gearing and
modest debt coverage indictors.
However, the rating favourable factors in the extensive
experience of the promoters spanning over years in the paper and
packaging business, and the established customer and supplier
base of the company. ICRA also takes into account the location
advantage with proximity to the various packaging units in West
Godavari region of Andhra Pradesh.
Outlook: Stable
ICRA believes Venkata Naga Lakshmi Paper Mills Private Limited
will continue to benefit from the extensive experience of its
partners in the paper and packaging business. 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
Long experience of the promoters: The promoters have extensive
experience in the paper and packaging business which has resulted
in strong customer and supplier base.
Favorable location of the manufacturing unit: The manufacturing
unit is located in West Godavari district, Andhra Pradesh which
has several corrugators, providing easy access to the customers
and sells kraft paper at lower transportation costs.
Credit weaknesses
Modest scale of operations: VNLPMPL has modest scale of
operations limiting its financial flexibility. Moreover, the
company's revenues declined from INR38.2 crore in FY2016 to
INR31.1 crore in FY2017 on account of lower sales volumes owing
to subdued demand with higher supply at lower rates. However, the
company is expecting 32.2% revenue growth in FY2018 with revival
of demand.
Stretched financial profile: The financial profile of the company
remains stretched with high gearing of 2.1 times in as on
March 31, 2017 and modest debt coverage protection metrics in
FY2017 with interest coverage of 1.7 times, NCA/Total Debt of
6.5%, Total Debt/OPBDITA of 6.6 times and DSCR of 1.3 times.
Tight liquidity position: The liquidity position of the company
is constrained as reflected in the high average utilization of
96.4% of the working capital limits for the period December 16 to
January-18. The company's working capital intensity is high owing
to high debtor and inventory days.
Exposure of the company's profitability to changes in key raw
material prices: The company is exposed to the fluctuations in
the availability and prices of the raw-materials. The company
does not enter into any forward contracts for waste paper
purchase from its suppliers.
Highly fragmented industry, given the low entry barriers: The
company faces stiff competition from other unorganized players as
this industry as there are virtually no entry barriers, which
limits its pricing flexibility and bargaining power with
customers, thereby putting pressure on its revenues and margins.
Venkata Naga Lakshmi Paper Mills Private Limited (VNLPMPL) was
incorporated by Mr. V. Mangapathi Raju in 2003 and is into
manufacturing of Kraft Paper. The company supplies Kraft paper,
which is used in manufacturing of cartons, and packaging of FMCG
products, eggs, aqua food etc. The company currently has a
manufacturing unit with installed capacity of 21,000 MTPA in
Unguturu, West Godavari District.
In FY2017, the company reported a net profit of INR0.2 crore on
an operating income of INR31.1 crore, as compared to a net profit
of INR0.3 crore on an operating income of INR38.2 crore in
FY2016.
VIDYA SANSKAAR: ICRA Keeps B+ Rating in Not Cooperating Cat.
------------------------------------------------------------
ICRA Ratings said the rating for the INR5.80 crore bank
facilities of Vidya Sanskaar Educational and Charitable Trust
(VSECT) continues to remain in the 'Issuer Not Cooperating'
category. The rating is denoted as "[ICRA]B+ (Stable); ISSUER NOT
COOPERATING". ICRA had earlier moved the rating of VSECT to the
'ISSUER NOT COOPERATING' category due to nonsubmission of monthly
'No Default Statement' ("NDS") by the entity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 5.69 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Unallocated 0.11 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity.
Vidya Sanskaar Educational and Charitable Trust was established
in the year 2009 as a public charitable trust with Mr. S.P.
Muddahanume Gowda, Mr. H.B. Shyama Sundar and Mr. Purushotham
Patel as the trustees. The trust currently manages three
institutions namely -- Vidya Sanskaar International Public
School, Vidya Sanskaar Pre-University College and Vidya Sanskaar
Institute of Science, Commerce and Management.
=================
I N D O N E S I A
=================
MNC INVESTAMA: S&P Lowers ICR to 'CC' on Debt Exchange Offer
------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
PT MNC Investama Tbk. and the long-term issue rating on the
US$365 million senior secured notes that Ottawa Holdings Pte.
Ltd. issued to 'CC' from 'CCC-'. MNC Investama guarantees the
notes. The outlook on the long-term issuer credit rating is
negative.
S&P said, "At the same time, we assigned our preliminary 'B-'
issue rating to the Indonesia-based company's proposed US$220
million senior secured notes. The preliminary rating is subject
to our review of the final documentation and completion of the
exchange offer.
The downgrade follows MNC Investama's proposed exchange offer for
its US$365 million senior secured notes, which mature in May
2018. S&P said, "We view the transaction as a distressed
exchange, tantamount to a default, upon completion because we
believe the participating US$115 million noteholders will receive
less value than originally promised. We also believe that,
without the exchange, the probability of a payment default would
be extremely high."
MNC Investama proposes to swap US$115 million of the existing
notes into subordinated debt and exchange the balance with new
three-year US$220 million senior secured notes and cash. The
completion of the debt swap is subject to the successful
refinancing of the secured notes. Additionally, upon the
completion of the exchange, the subordinated debt will be
converted to equity by the end of September 2018.
S&P said, "Our 'B-' preliminary rating on the proposed notes
reflects the expectation that, following the exchange offer and
completion of associated refinancing transactions, we would rate
MNC Investama at 'B-'. We expect to assign a rating to the new
senior secured notes at the same time that we raise the issuer
credit rating to reflect the risk of a conventional default. This
issuer credit rating will reflect our view of the company's
aggressive management strategy, weak liquidity at the holding
company level absent asset and stake sales, and ongoing long-term
risks associated with servicing the anticipated capital
structure.
"We expect that MNC Investama's liquidity at the holding company
level, in the absence of asset sales, to be weak with dividend
interest cover less than 1.3x over the next three years. With a
shorter three-year bond tenor, the future viability of this
capital structure will also depend on management's ability to
refinance again in the next 12-18 months or execute its planned
asset monetizations in the next three years. We believe these
initiatives are crucial to support the holding company's
liquidity and provide a path to ultimately repay the proposed
US$220 million senior secured notes due in 2021."
In S&P's view, MNC Investama's management and governance is weak,
given the lack of prudent financial management and management's
priority on growth and shareholder returns. MNC Investama has
indicated its aspirations to grow its banking operations, a
segment in which the group is a marginal participant without a
material track record of operations. MNC Investama also delves in
other businesses outside its core media and entertainment
business, such as energy and land.
The rating captures the significant currency mismatch risk as MNC
Investama does not currently hedge its U.S. dollar-denominated
debt and interest payments. S&P said, "We expect more than 50% of
the company's debt will be denominated in U.S. dollar over the
next two years while we project over 80% of EBITDA and cash flows
to be in Indonesian rupiah, given the company's domestic
operations."
These weaknesses overshadow the otherwise good operational
performance and achievements of its TV stations. S&P said,
"Overall, we expect subsidiary PT Media Nusantara Citra Tbk.
(MNCN) to maintain its leading position with about 40% revenue
market share and about 6% revenue growth over the next two years,
largely driven by higher advertising rates from its premium
positioning and continued success of its broadcast content. We
expect MNCN to contribute around 90% dividends to MNC Investama
because we expect flat to weaker revenue growth at MNC Sky
Vision."
S&P said, "The negative outlook reflects our expectation that,
once the debt exchange is completed, we will lower rating on MNC
Investama and the senior secured notes to 'D'. Shortly
thereafter, we expect to raise the issuer credit rating to 'B-'."
WIJAYA KARYA: Moody's Affirms Ba2 Corp. Family Rating
-----------------------------------------------------
Moody's Investors Service has taken a number of rating actions on
non-financial corporates in Indonesia that are also government-
related issuers. The rating actions follow its earlier
announcement that it has upgraded Indonesia's sovereign rating to
Baa2 from Baa3.
As a result of the sovereign rating action, Moody's has upgraded
the issuer and senior unsecured ratings of Pertamina (Persero)
(P.T.) to Baa2 from Baa3. The outlook on these ratings have been
revised to stable from positive.
At the same time, Moody's has affirmed the Baa1 issuer rating of
Telekomunikasi Indonesia (P.T.) (Telkom) and the Ba2 corporate
family rating of Wijaya Karya (Persero) Tbk. (P.T.) (WIKA). The
outlook on these ratings is stable.
RATINGS RATIONALE
"Pertamina's ratings upgrade follows the upgrade of the sovereign
rating and reflects the company's strategically important
position as Indonesia's only national integrated oil and gas
company. Its baseline credit assessment (BCA) is affirmed at
baa3," says Rachel Chua, a Moody's Assistant Vice President and
Analyst.
"Telkom's rating is one notch above the rating of the sovereign
and reflects its standalone credit strength without any tangible
uplift due to government ownership. The rating reflects the
company's established position as Indonesia's largest integrated
telecommunications operator and an operating and financial
profile reflective of a strong investment-grade company," says
Nidhi Dhruv, a Moody's Vice President and Senior Analyst.
However, Telkom's rating is also constrained by an evolving
acquisition strategy, its exposure to Indonesia's competitive
operating environment, and the risk of intervention from the
Government of Indonesia (Baa2 stable), given Telkom is a majority
state-owned company.
"WIKA's ratings are affirmed at Ba2 with stable outlook because
WIKA's rating already incorporates a two-notch uplift from its b1
BCA, given our expectation that it will receive a moderate level
of extraordinary support from the Indonesian government in times
of need. Accordingly, an upgrade to the sovereign rating does not
automatically result in an upgrade of WIKA's rating," says Maisam
Hasnain, a Moody's Analyst.
"WIKA's b1 BCA continues to reflects its leading market position
as one of the largest construction companies in Indonesia, with
an established track record of completing large projects, with a
sizeable order book that provides good revenue and cash flow
visibility," adds Hasnain, also Moody's Lead Analyst for WIKA.
The principal methodologies used in rating Pertamina (Persero)
(P.T.) were Global Integrated Oil & Gas Industry published in
October 2016, and Government-Related Issuers published in August
2017. The principal methodologies used in rating Telekomunikasi
Indonesia (P.T.) were Telecommunications Service Providers
published in January 2017, and Government-Related Issuers
published in August 2017. The principal methodologies used in
rating Wijaya Karya (Persero) Tbk. (P.T.) were Construction
Industry published in March 2017, and Government-Related Issuers
published in August 2017.
Pertamina (Persero) (P.T.) is a 100% Indonesian government-owned,
fully-integrated oil and gas corporation, with operations in
upstream oil, gas and geothermal exploration and production,
downstream oil refining, marketing, distribution, transportation
and trading of petroleum products.
Telekomunikasi Indonesia (P.T.) (Telkom) is the largest
integrated telecommunications company in Indonesia. The company,
along with majority owned subsidiary, Telekomunikasi Selular
(P.T.) (Baa1 stable), generated gross revenue of IDR128.3
trillion (approximately USD9.6 billion) for the 12 months ended
31 December 2017. Telkom is 52.1% owned by the Government of
Indonesia.
Established in 1960, Wijaya Karya (Persero) Tbk. (P.T.) (WIKA) is
one of the largest EPC companies in Indonesia with annual revenue
of around IDR26.2 trillion and an order book of IDR106.6 trillion
as of December 2017. WIKA is 65% owned by the Government of
Indonesia, with the remaining 35% shares held by the public.
List of rating actions
Issuer: Pertamina (Persero) (P.T.)
Issuer Rating, upgraded to Baa2 from Baa3
Senior Unsecured MTN Programme, upgraded to (P)Baa2 from (P)Baa3
Senior Unsecured Regular Bond/ Debenture, upgraded to Baa2 from
Baa3
Baseline Credit Assessment, affirmed at baa3
Outlook is revised to stable from positive
Issuer: Telekomunikasi Indonesia (P.T.)
Issuer rating -- Domestic Currency, affirmed at Baa1
Baseline Credit Assessment, affirmed at baa1
Outlook is maintained at stable
Issuer: Wijaya Karya (Persero) Tbk. (P.T.)
Corporate Family Rating, affirmed at Ba2
Senior Unsecured (Domestic) Rating, affirmed at Ba2
Baseline Credit Assessment, affirmed at b1
Outlook is maintained at stable
====================
N E W Z E A L A N D
====================
PALMERSTON EXTENSION: Placed Into Receivership; 15 Jobs Axed
------------------------------------------------------------
Richard Mays at Stuff.co.nz reports that a Palmerston North
export business founded in 1937 has been placed into
receivership, with the loss of 15 jobs.
According to Stuff, Tremaine Ave ladder and joinery company
Pelco, registered as the Palmerston Extension Ladder Company,
ceased trading on April 4 after a creditor took action against it
over a 2011 general security agreement.
Stuff relates that the agreement guarantees secured creditor
status and the registered creditor, Dobbin Investments, is part
of Palmerston North's AB Robertson Holdings.
Director Bruce Robertson said there was no choice but to call
time on Pelco, the report relays.
"One of my companies owns the property, and there were
outstanding rent arrears and other debts owing," Stuff quotes
Mr. Robertson as saying. "It's an iconic business that makes
world-class ladders for those working in the electricity industry
and exports [them] all over the world. They also make paddles and
oars. It's a real shame the company has not been able to meet its
obligations."
Pelco company director since 1991, Bruce Harvey Woodfield, could
not be reached for comment.
Receiver Hamish Pryde -- hamishpryde@coombesmith.co.nz -- from
Palmerston North chartered accountancy firm Coombe Smith, said
Pelco's creditor was looking to recover its money. Pryde was in
the process of gathering information for the first report on the
receivership, due on June 11.
The family-owned timber manufacturing business was started by
Woodfield's grandfather Cecil Victor Woodfield in 1937.
=================
S I N G A P O R E
=================
FALCON ENERGY: HC Grants Ambank Summary Judgment in Civil Suit
--------------------------------------------------------------
The Business Times reports that Falcon Energy said on April 18
that the Kuala Lumpur High Court has ruled in favor of Malaysian
lender AmBank in its application for summary judgement in the
civil suits commenced against three wholly owned Falcon Energy
subsidiaries, the company and PT Bayu Maritim Berkah.
Falcon Energy is filing a notice of appeal to the Court of
Appeal, the report says.
The Business Times relates that the company said it will continue
to engage lenders and stakeholders in its restructuring exercise.
Singapore-based Falcon Energy Group Limited, an investment
holding company, provides services from the initial exploration
stage to production and postproduction stage to oil companies and
contractors worldwide.
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S O U T H K O R E A
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GM KOREA: Parent GM Offers Relocation Plan to Gunsan Workers
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Yonhap News Agency reports that General Motors Co. on April 18
offered to relocate workers from the South Korean plant it plans
to close next month to other local production lines in an effort
to get the union to accept the restructuring plan laid out by
management.
According to Yonhap, the suggestion came against a background of
strong resistance from GM Korea Co.'s union to the U.S.-based
carmaker's decision to shut its plant in Gunsan, 270 kilometers
south of Seoul. In February, GM called on the union to agree to a
wage freeze, no bonuses and a suspension of some work benefits so
the carmaker can stay afloat in the country.
In response to the union's refusal to accept the entirety of the
self-help package, GM warned that there is no option but to put
GM Korea under court protection if no breakthrough is reached by
April 20, Yonhap says.
In the ninth wage negotiations held at the carmaker's main
Bupyeong plant, just west of Seoul, GM Korea proposed the gradual
relocation of a certain number of the remaining 680 workers at
the Gunsan plant to three plants in Bupyeong and Changwon, a
company spokesman said over the phone, Yonhap relays.
But the company didn't give the number of workers who may be
transferred or provide any timeframe for the relocation.
Yonhap notes that GM Korea has offered a voluntary retirement
package for Gunsan workers, as most of them cannot be relocated.
Some 1,920 out of the 2,600 Gunsan plant workers filed for the
previous retirement program and quit the company with a severance
package.
Yonhap says the company has also asked for financial support from
all stakeholders, including the state-run Korea Development Bank,
its second-biggest shareholder.
Over 2,600 GM Korea workers out of a workforce of 26,000 have
filed for voluntary retirement, as the carmaker has stepped up
the restructuring of its loss-making Korean operations, Yonhap
discloses.
If the remaining Gunsan plant workers are not included in the
relocation program, they will be put on unpaid leave, the
spokesman, as cited by Yonhap, said.
The union, meanwhile, said it cannot accept the company's
position on the restructuring issue, the report adds.
"As we see a maximum of 100 workers could be transferred to other
plants, the company means 580 workers must leave the company
under a severance package that includes advance payment of
salaries," Yonhap quotes a union spokesman as saying.
The company and the union will hold talks today, April 19, one
day before the deadline, Yonhap adds.
GM Korea Co. is the South Korean unit of General Motors Co.
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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
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about which we report.
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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
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