/raid1/www/Hosts/bankrupt/TCRAP_Public/180607.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, June 7, 2018, Vol. 21, No. 112
Headlines
A U S T R A L I A
ADVENTURE FUND: Second Creditors' Meeting Set for June 13
CUDGEGONG LABOUR: First Creditors' Meeting Set for June 15
ECLIPSE RESOURCES: Second Creditors' Meeting Set for June 12
ENDEAVOUR INDUSTRIES: First Creditors' Meeting Set for June 15
KENNETH BLACKLEY: First Creditors' Meeting Set for June 18
REMOTE HORIZONS: Clifton Hall Appointed as Liquidator
TZUKURI PTY: Intellectual Property Up for Sale
C H I N A
HENGDELI HOLDINGS: Fitch Affirms Then Withdraws 'B-' IDR
HUAYUAN PROPERTY: S&P Assigns 'B+' Long-Term ICR, Outlook Stable
* CHINA: Debt Collectors Use New Technology to Recover Loans
I N D I A
AGRI TILL: CARE Assigns B+ Rating to INR9cr LT Loan
ANAND ELECTRICALS: CRISIL Migrates B Rating to Not Cooperating
ANJANA EXPLOSIVES: Ind-Ra Maintains 'B' Rating in Non-Cooperating
ARKITON TILES: ICRA Assigns B+ Rating to INR6.95cr Term Loan
ARYAN SILK: CRISIL Migrates B+ Rating to Not Cooperating
ASTRA ROCKS: CRISIL Reaffirms 'B' Rating on INR12MM Cash Loan
ATUL COMMODITIES: CRISIL Migrates B+ Rating to Not Cooperating
AZEN MEDICAL: CARE Downgrades Rating on INR16.85cr Loan to D
BIRESHWAR COLD: CRISIL Migrates B Rating to Not Cooperating
DABANG METAL: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
DELTA JEWELLERS: Ind-Ra Hikes Long Term Issuer Rating to 'BB+'
EAST INDIA: CRISIL Lowers Rating on INR11MM Cash Loan to B+
EVERGREEN VENEERS: ICRA Reaffirms B Rating on INR12cr Cash Loan
GAURISHANKER BIHANI: ICRA Reaffirms B+ Rating on INR15cr Loan
GOPINATH DAIRY: CRISIL Migrates D Rating to Not Cooperating
GUJARAT ECO: CRISIL Withdraws B- Rating on INR34.57MM Loan
JAY BHAWANI: CRISIL Withdraws B+ Rating on INR5MM Cash Loan
JHARKHAND MEGA: CRISIL Moves D Rating to Not Cooperating
JSW STEEL: Fitch Withdraws BB(EXP) Rating on Proposed Bonds
KHEDUT COTEX: CARE Lowers Rating on INR8.40cr LT Loan to D
KOLEY MULTIPURPOSE: CARE Reaffirms B+ Rating on INR12.19cr Loan
KOTAK URJA: ICRA Moves 'D' Rating to Not Cooperating Category
KUNDAN INDUSTRIES: Ind-Ra Migrates BB+ Rating to Non-Cooperating
MAINI CONSTRUCTION: Ind-Ra Retains BB- Rating in Non-Cooperating
MAKALU TRADING: CRISIL Migrates D Rating to Not Cooperating
MARBILANO TILES: ICRA Hikes Rating on INR14.08cr Loan to B+
MARUTHI SAW: CRISIL Assigns B+ Rating to INR1MM Overdraft
MOTOR FAB: CRISIL Assigns B+ Rating to INR30MM Loan
NANCY KRAFTS: CRISIL Reaffirms B Rating on INR1.9MM LT Loan
NARAYAN AGRO: Ind-Ra Maintains 'C' LT Rating in Non-Cooperating
NEOTECH FOUNDRIES: CARE Assigns B+ Rating to INR9.54cr LT Loan
NORTHERN ARC 2018: Ind-Ra Assigns BB+ Rating on INR12.18MM Loan
NV AUTOSPARES: CRISIL Migrates D Rating to Not Cooperating
PARAM TEX: CRISIL Migrates B+ Rating to Not Cooperating
PCM STRESCON: CRISIL Migrates B Rating to Not Cooperating
PONGALUR PIONEER: Ind-Ra Affirms 'BB+' Long Term Issuer Rating
RAMESH COMPANY: ICRA Reaffirms B+ Rating on INR14cr Cash Loan
RIDHI ENTERPRISES: ICRA Withdraws B Rating on INR0.50cr Loan
SAHIL POLYPLAST: Ind-Ra Maintains B+ LT Rating in Non-Cooperating
SHIVAM COTTON: CARE Assigns B+ Rating to INR12.99cr LT Loan
SHRI LAKSHMI: NCLT Admits Insolvency Process vs. Firm
SHUKRANA IMPEX: Ind-Ra Maintains 'B+' Rating in Non-Cooperating
SPACETECH EQUIPMENT: CARE Reaffirms B Rating on INR3.25cr Loan
STAR AQUA: CRISIL Lowers Rating on INR10MM Cash Loan to D
SVM CERA: ICRA D Rating Remains in Not Cooperating Category
SVS FOOD: ICRA B- Rating Remains in Not Cooperating Category
THEOS TILES: CRISIL Assigns B+ Rating to INR6.9MM Term Loan
TRANSMARINUS: Ind-Ra Assigns BB LT Issuer Rating, Outlook Stable
USHA FABS: Ind-Ra Migrates B+ LT Issuer Rating to Non-Cooperating
VAG BUILDTECH: CRISIL Cuts Rating on INR25MM Cash Loan to B+
VIRTUE MARKETING: CARE Lowers Rating on INR20cr Loan to D
WATERLINE HOTELS: ICRA Reaffirms B- Rating on INR27cr Loan
YADU SUGAR: Ind-Ra Migrates 'D' Issuer Rating to Non-Cooperating
YOGESH CONSTRUCTION: ICRA Withdraws B+ Rating on INR4cr Loan
J A P A N
KAWASAKI KISEN: Egan-Jones Upgrades Debt Ratings to B
N E W Z E A L A N D
CBL INSURANCE: Liquidation Hearing Deferred Until July 30
SEEDLING NZ: Placed Into Receivership
S I N G A P O R E
ACESIAN PARTNERS: Unit's Judicial Manager Files Writ of Summons
HYFLUX LTD: To Meet Bank Lenders This Week on Restructuring
T A I W A N
TAICHUNG COMMERCIAL: Fitch Affirms 'BB+' LT IDR; Outlook Stable
X X X X X X X X
* ASIA: Default Risk Rising as Governments Allow Failures
- - - - -
=================
A U S T R A L I A
=================
ADVENTURE FUND: Second Creditors' Meeting Set for June 13
---------------------------------------------------------
A second meeting of creditors in the proceedings of Adventure
Fund Global, trading as International Children's Care
(Australia), has been set for June 13, 2018, at 10:00 a.m. at the
offices of Chartered Accountants Australia New Zealand, 33
Erskine 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 June 13, 2018, at 9:00 a.m.
Hugh Sutcliffe Martin of Bernardi Martin was appointed as
administrator of Adventure Fund on May 8, 2018.
CUDGEGONG LABOUR: First Creditors' Meeting Set for June 15
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Cudgegong
Labour Services Pty Ltd will be held at the offices of Smith
Hancock, Level 4, 88 Phillip Street, in Parramatta, NSW, on
June 15, 2018, at 12:00 p.m.
Peter Hillig of Smith Hancock was appointed as administrator of
Cudgegong Labour on June 4, 2018.
ECLIPSE RESOURCES: Second Creditors' Meeting Set for June 12
------------------------------------------------------------
A second meeting of creditors in the proceedings of Eclipse
Resources Pty Ltd has been set for June 12, 2018, at 9:30 a.m. at
COMO The Treasury Boardroom Corner of St Georges Terrace and
Barrack Street, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 11, 2018, at 3:00 p.m.
Mervyn Jonathan Kitay of Worrells Solvency was appointed as
administrator of Eclipse Resources on Sept. 27, 2017.
ENDEAVOUR INDUSTRIES: First Creditors' Meeting Set for June 15
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Endeavour
Industries Ltd will be held at Club Maitland City, 14 Arthur
Street, in Rutherford, NSW, on June 15, 2018, at 11:00 a.m.
Mitchell Griffiths and Chad Rapsey of Rapsey Griffiths Insolvency
+ Advisory were appointed as administrators of Endeavour
Industries on June 4, 2018.
KENNETH BLACKLEY: First Creditors' Meeting Set for June 18
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Kenneth
Blackley Enterprises Pty Ltd, trading as "HAPPY CAT DRY
CLEANERS", will be held at the offices of Amos Insolvency,
25/ 185 Airds Road, in Leumeah, NSW, on June 18, 2018, at
11:00 a.m.
Peter Andrew Amos of Amos Insolvency was appointed as
administrator of Kenneth Blackley on June 5, 2018.
REMOTE HORIZONS: Clifton Hall Appointed as Liquidator
-----------------------------------------------------
Daniel Lopresti of Clifton Hall was appointed as Liquidator of
Remote Horizons Pty Ltd, formerly trading as BT Remote Solutions,
on June 4, 2018.
TZUKURI PTY: Intellectual Property Up for Sale
----------------------------------------------
Andrew Scott and Christopher Hill of PPB Advisory, in their
capacity as Liquidators of Tzukuri Pty Limited, has offered for
sale all intellectual property and related assets behind
Tzukuri's unlosable glasses with a rechargeable Bluetooth beacon
embedded within acetate eyewear.
* Proven application - smart features within ultra-light eyewear
* A registered patent and a provisional patent
* Existing hardware and software
* Numerous potential applications
Firm bids are requested by June 13, 2018.
Andrew Scott and Christopher Hill of PPB Advisory were appointed
as administrators of Tzukuri Pty on Dec. 20, 2017. The company
was wound up on May 4, 2018.
=========
C H I N A
=========
HENGDELI HOLDINGS: Fitch Affirms Then Withdraws 'B-' IDR
--------------------------------------------------------
Fitch Ratings has affirmed watch retailer Hengdeli Holdings
Limited's Long-Term Issuer Default Rating (IDR) at 'B-'. The
Outlook is Stable. Simultaneously, Fitch has chosen to withdraw
the ratings on Hengdeli for commercial reasons.
KEY RATING DRIVERS
Hengdeli's rating is supported by stable performance of the
remaining operations and sound liquidity profile. The company is
in a net cash position. The rating is constrained by Hengdeli's
small operating scale after the disposal of its core operations.
DERIVATION SUMMARY
After the disposal, Hengdeli's remaining operations have a much
smaller operating scale and weaker profitability than global
retailing peers rated at 'B-', such as Chinese department store
operator Parkson Retail Group Limited (B-/Stable). However, the
company has a stronger liquidity position with a net cash
position, compared with high leverage and low fixed-charge
coverage for similarly rated peers.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
- Moderate sales growth of 1%-2% for 2018-2021
- Gross margin of 17%-18% for 2018-2021
- Stable operating expenses at 16% of sales for 2018-2021
- Annual capex of CNY100 million in 2018-2019
RATING SENSITIVITIES
No longer relevant as the ratings have been withdrawn.
LIQUIDITY
Adequate Liquidity: The company is in net cash position. As of
end-2017, Hengdeli had CNY964 million of cash and CNY669 million
of bank deposits, which are sufficient to cover bank loans of
CNY109 million. The 2018 senior notes were redeemed in full in
July 2017 with proceeds from the disposal of Xinyu Group and
Harvest Max.
HUAYUAN PROPERTY: S&P Assigns 'B+' Long-Term ICR, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' long-term issuer credit
rating to Huayuan Property Co. Ltd. (Huayuan). The outlook is
stable.
The rating reflects Huayuan's small operating scale, low market
share, and exposure to execution risks due to its expansion
outside of its home market of Beijing. S&P said, "We also expect
the company's leverage to remain elevated owing to its aggressive
growth appetite. Huayuan's improving geographic diversification
and lower funding costs than that of peers because of its status
as a state-owned enterprise temper these weaknesses. We assess
the company's stand-alone credit profile (SACP) as 'b'."
The credit profile of Huayuan's parent Huayuan Group Co. Ltd.
(Huayuan Group) supports the rating. S&P assesses Huayuan as a
core subsidiary of Huayuan Group and expect the company to remain
the primary driver of the group credit profile (GCP), which it
assesses as 'b+'.
S&P said, "In our view, Huayuan's property development business
will continue to account for more than 95% of Huayuan Group's
consolidated revenue over the next two years. The group's other
businesses, including retail, financial investment, and high-
technology development, are still in early stages and are unable
to generate significant cash flows.
"In our view, Huayuan Group would continue to receive moderate
extraordinary support from the Xicheng district government in
Beijing. Huayuan Group is 100% owned by the Xicheng District
State-owned Assets Supervision and Administration Commission of
the State Council.
"We believe Huayuan's growth appetite is aggressive and will
contribute to execution risks. The company targets contracted
sales of Chinese renminbi (RMB) 12 billion in 2018, from only
RMB7.7 billion in 2017. We also believe Huayuan's expansion
outside Beijing is still at an early stage and the company has a
limited market share and brand recognition, despite its long
history of operations in Beijing itself. The company had a record
of being cautious and muted in land acquisitions. However, its
growth appetite has significantly increased since 2016 following
a change of management in 2014."
Huayuan's improving geographic and product diversity temper the
execution risks, in our view. Huayuan's sales and project
diversity, although lower than peers', has been gradually
improving as the company has been increasing its presence in the
cities it already operates in and expanding into tier-two cities.
Huayuan's land bank is spread across seven cities as of 2017,
compared to only three cities before 2015. The company has
expanded its footprint to China's western region (such as in
Chongqing) and southern region (such as in Guangdong province)
since 2015. It has also enriched its product mix by acquiring
high-end villa projects in Guangzhou, compared with a mid-end
focus in the past.
S&P said, "In our view, Huayuan's profitability in the next two
years will face pressure from rapidly growing land and
construction costs. Most of the cities the company operates in
are tier-one or tier-two cities with intense competition and
policy restrictions. Given that most of these cities face policy
pressure, we believe contracted sales growth cannot fully offset
increasing costs. We therefore expect Huayuan's gross margin to
decrease to 22%-23% in 2018 and 2019, from 27.8% in 2017.
"We believe Huayuan's land bank is insufficient to support its
growth appetite, and the company will need to make significant
new land acquisitions in the coming years. The company's current
land reserves of 3.8 million square meters (sqm) is only
sufficient for development in the next two to three years.
Huayuan has made aggressive land acquisitions in the first five
months of 2018; it spent RMB8.3 billion for land in Chongqing,
Tianjin, Foshan, Changsha, and Zhuozhou. Beijing only accounts
for 5% of the land bank.
"We anticipate that Huayuan's debt would increase to about RMB22
billion in 2018 and about RMB28 billion in 2019, from RMB17.8
billion in 2017, to fund the expansion. Its debt-to-EBITDA ratio
will also increase to about 8.6x in 2018, from 5.4x in 2017. At
the same time, EBITDA interest coverage is likely to tighten to
around 2.5x in 2018, from 4.6x in 2017.
"In our view, Huayuan has competitive funding costs and fair
funding access, compared to other developers with similar scale.
The company's overall funding cost has declined over the past
three years, thanks to its state-owned background. Its average
funding cost was low at 5.61% in 2017. However, we expect the
average funding cost to increase, given tightening domestic
credit conditions. We view the alternative funding risk is
limited in Huayuan, given that less than 10% of its funding comes
from entrusted loans.
"The stable outlook reflects our expectation that Huayuan will
maintain moderate growth in contracted sales and lower but stable
profitability over the next two years. We anticipate that the
company's leverage will moderately increase, given its aggressive
growth appetite and need for land acquisition expenditure."
The outlook also factors in our expectation that moderate
extraordinary support from the Xicheng district government will
remain for Huayuan through Huayuan Group.
S&P could lower the rating if Huayuan's debt-to-EBITDA ratio
significantly deteriorates from our expectation of about 9x. This
could happen if: (1) the company's debt-funded land acquisition
is materially larger than its expectation over the next two
years; or (2) the company's revenue is significantly weaker than
its estimate.
S&P may also lower the rating if it assesses that government
support to Huayuan Group has weakened.
An upgrade is less likely in the coming 12 months. S&P could
raise the rating if Huayuan can control its financial leverage
while continuing to expand, such that its debt-to-EBITDA ratio
stays below 5.0x for a sustainable basis.
In a less likely scenario, S&P could also raise the rating if it
assesses that government support to Huayuan Group has
strengthened.
* CHINA: Debt Collectors Use New Technology to Recover Loans
------------------------------------------------------------
The Financial Times reports that debt collectors in China are
harnessing new technologies such as artificial intelligence in a
bid to collect on an estimated RMB1.3tn ($200bn) debt bubble that
has formed in the country's peer-to-peer lending industry.
According to the FT, thousands of online businesses connecting
private lenders to people in need of cash sprang up across the
country over the past five years, but a spate of scandals has put
these lenders in the crosshairs of regulators. Many P2P lenders
have been shut down since mid-2017 as lending controls have been
implemented and licenses required, the FT notes.
The FT relates that an estimated RMB1.3tn in outstanding P2P debt
as of May, according to online lending intelligence firm
Wdzj.com, and a rising number of defaults have opened the door to
a wave of start-ups using new technologies to try to recover
tardy loans.
"People's usage of P2P debt is very high but the government only
monitors the banking system closely," the FT quotes Cherry Sheng,
chief executive of Shanghai-based debt collection group Ziyitong
and a former manager at Citigroup and ANZ Bank, as saying. "This
has become an opportunity for start-ups with advanced technology
to move into this market."
Ziyitong, which has sought to recover RMB150bn since it was set
up in 2016, recently launched an AI platform to help recover
delinquent loans for some 600 debt collection agencies, and more
than 200 lenders including Alibaba Group and Postal Savings Bank
of China, Ms. Sheng said, the FT relays.
The FT says the system scrapes the internet for information on
borrowers and their friends, then contacts the borrower via phone
using a dialogue robot. The conversations are recorded and
analysed by an algorithm that then determines the phrasing with
the highest likelihood of pressuring the person to pay back the
loan. The system also calls friends of the borrower and asks them
to relay the urgency of making payments.
In May, the AI system had a recovery rate of 41 per cent for
large clients on loans delinquent for up to one week, according
to Ms. Sheng, compared with a rate of as low as 20 per cent via
traditional debt collection methods for similar loans, the FT
relates. Ziyitong plans to expand the system to loans that have
been unpaid for longer periods of time.
The FT says Yigou, another debt collection start-up, has launched
a mobile phone application that allows collection agents to
search thousands of individual debt records and choose cases,
streamlining connections between lenders and collectors. The
company can also provide geo-locational data on some borrowers to
help the agents track them down.
"Technology has become very important in this industry," the FT
quotes Wen Yong, an executive at the company, as saying. He noted
that many P2P companies have been forced to start their own
collection units due to the level of unpaid debt in the sector.
The FT notes that while regulators are trying to cut off the flow
of cash from shadow banking and asset managers that has fed the
level of available P2P funds, debt collectors expect bad loans to
increase in the industry in coming months.
"The [P2P lenders] don't report to anyone so the level of debt is
not very clear, but we think the default rate is high," Ms.
Sheng, as cited by the FT, said.
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I N D I A
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AGRI TILL: CARE Assigns B+ Rating to INR9cr LT Loan
---------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Agri
Till India (ATI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.00 CARE B+; Stable Assigned
Short-term Bank
Facilities 9.00 CARE A4 Assigned
The ratings assigned to the bank facilities of ATI are
constrained by its small scale of operations, low profitability
margins, high gearing and foreign exchange fluctuation risk. The
ratings are further constrained by susceptibility of margins to
fluctuation in raw material prices, partnership nature of
constitution and seasonal nature of business. The ratings,
however, derive strength from experienced partners, short
operating cycle and positive demand outlook.
Going forward, the ability of the firm to increase its scale of
operations while improving its profitability margins and overall
solvency position would remain key rating sensitivities.
Detailed description of the key rating drivers
Weaknesses
Small scale of operations and low profitability margins The
firm's scale of operations has remained small marked by Total
Operating Income (TOI) of INR44.73 crore in FY18 (Prov.) (refers
to the period April 1 to March 31). The small scale of operations
limits the firm's financial flexibility in times of stress and
deprives it from scale benefits. Although, the scale of
operations of the firm increased from INR39.12 crore in FY17 to
INR44.73 crore in FY18 (Prov.); however the same continues to
remain small. Further, the profitability margins of the firm
stood low marked by PBILDT margin and PAT margin of 4.97% and
0.40%, respectively in FY18 (Prov.) due to highly fragmented and
competitive nature of the industry.
High gearing and total debt to GCA: The capital structure of the
firm stood leveraged with overall gearing ratio of 1.92x as on
March 31, 2018 (Prov.) due to high dependence upon external
borrowings. Additionally the total debt to GCA of the firm stood
weak at 9.13x for FY18 (Prov.).
Foreign exchange fluctuation risk: ATI derives a 25-30% of its
income from exports (~30% of its total income in FY18 Prov.)
while the raw material procurement is done completely from the
domestic market. The firm hedges 10% of its export receivable
however, the
firm still remains exposed to risks associated with adverse
fluctuations in the foreign currency.
Susceptible to volatility in raw material prices: The main raw
materials for the firm's products are iron & steel sheet. The raw
material cost constituted ~78% of the total cost of sales in FY18
(Prov.), thereby making profitability sensitive to raw material
prices mainly due to the reason that the major raw material is
commodity in nature and witness frequent price fluctuations. Thus
any adverse change in the prices of the raw material may affect
the profitability margins of the firm.
Partnership nature of constitution: ATI's constitution as a
partnership firm has the inherent risk of possibility of
withdrawal of the partners' capital at the time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of partners. Moreover,
partnership firms have restricted access to external borrowing as
credit worthiness of partners would be the key factors affecting
credit decision of the lenders.
Seasonal nature of business: The firm's major sales takes place
mainly in the months of October, November, February and March,
when harvesting is done in North and Central region which
comprises of Uttar Pradesh, Bihar, Madhya Pradesh, Punjab etc.
The firm sales are concentrated to these months with around 60%
share in total sales thereby making its business operations
seasonal in nature. Further, the agro based industry can be
adversely affected by climatic conditions. The monsoon has a huge
bearing on crop availability which determines the demand for the
products of ATI.
Strengths
Experienced partners: ATI is currently being managed by Mr. Rahul
Rajpal and Mr. Rohit Rajpal as its partners. Both the partners
have a work experience of around one and a half decades through
their association with ATI since 2011 and previously as managers
in Agriculture Disc Corporation (Family business) which was also
engaged in manufacturing of agricultural implements.
Short operating cycle: The operating cycle of the firm stood at 9
days for FY18 prov (PY: 32 days). The firm offers a credit period
of up to one and a half months to its customers. On the supply
side, the firm receives a credit period of upto two months from
its suppliers. The average utilization of working capital limits
stood at 60% for last 12 months period ended April 2018.
Positive demand outlook: Over the last few years, there has been
considerable progress in agriculture mechanization. With the
growing seasonal demand and high cost of labour, the need for
mechanization is being increasingly felt. However, with the
increase in the irrigation facilities and modernization of the
cropping practices, the demand for agricultural equipment has
shown an increasing trend in the southern and western parts of
the country as well.
Agri Till India (ATI) was established in November 2011 as a
partnership firm by Mr. Rahul Rajpal and Mr. Rohit Rajpal,
sharing profit and losses equally. The firm is engaged in
manufacturing of disc blades and rotavator blades at its
manufacturing facility in Karnal, Haryana with an installed
capacity of manufacturing 4200 metric tonnes and 1500 metric
tonnes of disc blades and rotavator blades respectively per annum
as on January 29, 2018 respectively. The firm's products find
application in the agriculture industry. The firm is ISO
9001:2008 certified for its manufacturing process. ATI procures
its raw material i.e. iron and steel sheets mainly from Punjab
and Orissa. The finished products are sold to wholesalers across
PAN India. The firm also exports the blades to more than 20
countries which include USA, Thailand, Brazil, Iran, Canada,
Singapore, etc. Exports constituted 30% of the total operating
income in FY18 (Prov.).
ANAND ELECTRICALS: CRISIL Migrates B Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the ratings on bank facilities of Anand
Electricals to CRISIL B/Stable/CRISIL A4 Issuer not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Cash Credit 2 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
Letter of Credit 2 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term 10 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Migrated)
CRISIL has been consistently following up with Anand Electricals
(AE) for obtaining information through letters and emails dated
April 20, 2018, May 11, 2018 and May 16, 2018 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
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 Anand Electricals, which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Anand Electricals is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the ratings on bank
facilities of Anand Electricals to CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Formed in 2005 as a proprietorship firm by Mr Ramakrishna Vetal,
AE, an EPC contractor, undertakes projects to set up transmission
lines and towers for public and private entities.
ANJANA EXPLOSIVES: Ind-Ra Maintains 'B' Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Anjana
Explosives Limited's Long-Term Issuer Rating in the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND B (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR30 mil. Fund-based working capital limits maintained in
non-cooperating category with IND B (ISSUER NOT COOPERATING)
/IND A4 (ISSUER NOT COOPERATING) rating; and
-- INR25 mil. Non-fund-based working capital limits maintained
in non-cooperating category with IND A4 (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
February 4, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1989, Anjana Explosives manufactures explosive
products such as slurry explosives, detonating fuse,
pentaerythritol tetra nitrate and cast boosters. The
manufacturing units are located in Nalgonda District, Telangana.
ARKITON TILES: ICRA Assigns B+ Rating to INR6.95cr Term Loan
------------------------------------------------------------
ICRA has assigned the long-term rating of [ICRA]B+ to the
INR6.95-crore term loan facilities and the INR3.50-crore cash
credit facilities of Arkiton Tiles LLP. ICRA has also assigned
the short-term rating of [ICRA]A4 to the INR1.35-crore non-fund
based bank guarantee facilities of ATL. The outlook on the long-
term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-
Term Loan 6.95 [ICRA]B+ (Stable); Assigned
Fund-based-
Cash Credit 3.50 [ICRA]B+ (Stable); Assigned
Non-fund Based-
Bank Guarantee 1.35 [ICRA]A4; Assigned
Rationale
The assigned ratings favorably factor in the extensive experience
of ATL's promoters in the ceramic industry, the benefits derived
from its associate concern's marketing and distribution network
and its location-specific advantage ensuring an easy availability
of raw materials.
However, the assigned ratings are constrained by the nascent
stage of the firm's operations, as it is still in the project
stage and the risks associated with the stabilisation of the
plant, as per the expected operating parameters. The ratings also
remain constrained by the highly fragmented nature of the ceramic
tiles industry resulting in intense competition. Furthermore, the
ratings also take note of the cyclical nature of the real estate
industry which is the main consuming sector and the exposure of
the firm's profitability to volatility in raw material and gas
prices. The assigned ratings also factor in ATL's financial
profile, which is likely to remain average in the near term,
given the debt-funded nature of the project (debt to equity ratio
of 1.55 times) and impending debt repayment obligations.
Outlook: Stable
ICRA believes that ATL will continue to benefit from the
experience of its promoters and its location with easy access to
raw material and the distribution network of its associate
concerns. The outlook may be revised to Positive with timely
stabilisation and ramp up of its scale of operation and the
expected profit margins, or with the generation of adequate cash
accruals to service its debt repayment obligations. The outlook
may be revised to Negative in case of any substantial delays in
project commencement and lower-than-expected growth in scale,
coupled with low profitability leading to lower-than-expected
cash accruals.
Key rating drivers
Credit strengths
Vast experience of promoters in the ceramic industry: The key
promoters of the firm have reasonable experience of more than
five years in the ceramic industry vide their association with
other ceramic entities that operate in the same business sector.
ATL also derives support from the marketing and distribution
network of its associate concerns.
Favourable location: The manufacturing facility of the firm 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
Risks associated with stabilisation and successful scale up of
operations: Being in a nascent stage with the operations yet to
be commissioned (expected from June 2018), the firm remains
exposed to the risks associated with stabilisation and successful
scale up of operations of the plant, as per the expected
parameters. Moreover, the debt repayments, coupled with the
gestation period are likely to keep ATL's credit profile
constrained over the near term. The commissioning of operations
without any significant cost overruns would remain a key rating
sensitivity.
Margins under pressure from intense competition and cyclicality
in the real estate industry: The firm faces stiff competition
from established tile manufacturers as well as unorganised
players, which limits its pricing flexibility. Further, the real
estate industry is the key end-user for ceramic wall 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: Raw material and fuel are the two major
components determining the cost competitiveness in the ceramic
industry. The company can, however, exercise little control over
the prices of its key inputs such as natural gas/coal and raw
materials, and thus the profitability margins are likely to
remain exposed to the movement in raw material and gas/coal
prices and its ability to pass on any upward movement to the
customers.
Incorporated on September 2017, ATL is promoted by Mr. Akash
Patel, Mr. Pintubhai Kavar, Mr. Hitesh Chatrola, Mr. Dhirajlal
Barasara, Mr. Nakul Vadsola and their family members. The
promoters have more than five years of experience in the ceramic
industry through their association with other ceramic entities
involved in similar business operation. ATL proposes to
manufacture digital glazed wall tiles with an installed capacity
of 8,000 boxes per day. The manufacturing facility is located at
Morbi, Gujarat and the commercial operations are expected to
commence from June 2018.
ARYAN SILK: CRISIL Migrates B+ Rating to Not Cooperating
--------------------------------------------------------
CRISIL has migrated the rating on bank facility of Aryan Silk
Mills to CRISIL B+/Stable Issuer not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with Aryan Silk Mills
(ASM) for obtaining information through letters and emails dated
April 20, 2018, May 11, 2018 and May 16, 2018 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
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 Aryan Silk Mills, which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Aryan Silk Mills is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facility of Aryan Silk Mills to CRISIL B+/Stable Issuer not
cooperating'.
ASM, based in Mumbai, is a partnership firm established in 1982
by Mr Subhash Arya and family. It manufactures man-made and
cotton fabric (shirtings and suitings) under the brand Aryan
Silk. The firm's facility for design work is in Bhiwandi,
Maharashtra. ASM follows an asset-light model and outsources the
manufacturing and processing work to vendors.
ASTRA ROCKS: CRISIL Reaffirms 'B' Rating on INR12MM Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its rating on the long term bank loan
facilities of Astra Rocks and Minerals Private Limited (ARMPL) at
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2 CRISIL B/Stable (Reaffirmed)
Term Loan 1 CRISIL B/Stable (Reaffirmed)
The ratings continues to reflect the company's exposure to risks
related to stabilisation of operations, exposure to intense
competition in quarrying industry and below average financial
risk profile. These weaknesses are partially offset by the
extensive entrepreneurial experience of the promoters
Key Rating Drivers & Detailed Description
Weakness:
* Exposure to risks related to stabilization of operations: The
company is still in nascent stages of operations and are yet to
stabilize. The operations are expected to stabilize over the next
12 months, supported by improvement in capacity utilizations and
demand. Stabilization of the project will remain a key
monitorable over the medium term.
* Exposure to intense competition in the quarrying industry:
The company faces competition from other granite quarrying
companies across Andhra Pradesh, Telangana, Tamil Nadu and
Karnataka. This is likely to limit its bargaining power with
customers.
* Below average financial risk profile: The company's financial
risk profile is marked by modest net worth of INR2.02 Cr and high
gearing of 5.00 times as on March 2017. Debt protection metrics
marked by interest coverage ratio and NCATD at 1.25 times and
0.01 times respectively for fiscal 2017.Owing to nascent stages
of operations, the company's financial metrics, such as net
worth, gearing and debt protection metrics, are likely to remain
weak over the medium term.
Strengths:
* Extensive entrepreneurial experience of promoters: The
promoters, Dr Satish Chandra and his wife Dr Swati have vast
entrepreneurial experience: doctors by profession, they set up a
hospital in Vijayawada. Experience in quarrying, however, is
limited.
Outlook: Stable
CRISIL believes ARMPL will continue to benefit from the extensive
entrepreneurial experience of the promoters. The outlook may be
revised to 'Positive' if operations stabilise as envisaged, and
support steady cash accrual and debt protection metrics.
Conversely, the outlook may be revised to 'Negative' if
significant delay in stabilisation of operations, or low cash
accrual leads to stretched liquidity.
ARMPL is a Vijayawada-based company involved in quarrying and
selling of rough granite blocks. Incorporated in December 2014,
operations began in December 2016. The company is promoted by Dr.
Satish Chandra and his wife Dr. Swati.
ATUL COMMODITIES: CRISIL Migrates B+ Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the ratings on bank facilities of Atul
Commodities Private Limited to CRISIL B+/Stable/CRISIL A4 Issuer
not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Letter of Credit 3 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term 0.35 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Migrated)
Secured Overdraft 3.15 CRISIL B+/Stable (Issuer Not
Facility Cooperating; Rating Migrated)
CRISIL has been consistently following up with Atul Commodities
Private Limited (ACPL) for obtaining information through letters
and emails dated April 20, 2018, May 11, 2018 and May 16, 2018
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
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 Atul Commodities Private
Limited, which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Atul Commodities Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the ratings on bank
facilities of Atul Commodities Private Limited to CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
Established in 1997, ACPL, trades in PVC sheets, flexes and other
PVC products used for printing advertisements and signs. The
company is in Kolkata with branch offices in Delhi and Mumbai. Mr
Atul Kamdar and Mr Ketan Kamdar are the promoters.
AZEN MEDICAL: CARE Downgrades Rating on INR16.85cr Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Azen Medical Welfare and Research Society (AMWRS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 16.85 CARE D Revised from CARE B+;
Facilities ISSUER NOT COOPERATING
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
AMWRS is on account of on-going delays in debt servicing due to
stressed liquidity condition of the society. Going forward, the
ability to regularise the debt servicing obligations and timely
repayment of debt will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
On-going delays in debt servicing: As reported by the banker as
on May 23, 2018, there have been ongoing delays in servicing of
installments and interest on term loans. The delays were due to
stretched liquidity position owing to lower accruals from the
business operations and higher dependence on external borrowings
for setting up the plant.
Azen Medical Welfare & Research Society (AMWRS), registered under
Registration of Societies Act, 1860 was established in March,
2000. The society remained non-operational till 2011. In 2011,
AMWRS has undertaken a project to setup a general hospital with
cancer treatment centre with other facilities like pathology
centre, outdoor and indoor patient treatment etc. at Dimapur in
Nagaland. During June 2015 the project got completed and the
operation started from July 2015. In this initial stage, the
hospital has started with 100 beds and daily average 225 indoor
and outdoor patient consultation.
The day to day affairs of the hospital is looked after by Mr.
Yashitsungba Ao, Chairman, with the help of the Managing
Director Mr. Y. Along Aier and other 16 members.
BIRESHWAR COLD: CRISIL Migrates B Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Bireshwar
Cold Storage Private Limited to CRISIL B/Stable Issuer not
cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term 4.01 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Migrated)
Working Capital 0.6 CRISIL B/Stable (Issuer Not
Loan Cooperating; Rating Migrated)
Working Capital 0.24 CRISIL B/Stable (Issuer Not
Term Loan Cooperating; Rating Migrated)
CRISIL has been consistently following up with Bireshwar Cold
Storage Private Limited (BCSPL) for obtaining information through
letters and emails dated April 20, 2018, May 11, 2018 and May 16,
2018 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
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 Bireshwar Cold Storage Private
Limited, which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Bireshwar Cold Storage Private Limited
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Bireshwar Cold Storage Private Limited to CRISIL
B/Stable Issuer not cooperating'.
Set up in 1974 and promoted by Mr. Taraknath Pal, BCSPL provides
cold-storage facilities to potato farmers and traders. Unit is in
Kotulpur in Bankura district, West Bengal.
DABANG METAL: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Dabang Metal
Industries' Long-Term Issuer Rating at 'IND D' while
simultaneously migrating it to the non-cooperating category. The
issuer did not participate in the surveillance exercise despite
continuous requests and follow-ups by the agency. Thus, the
rating is based on the best available information. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND D
(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR55.00 mil. Fund-based working capital limits (Long-
term/Short-term) affirmed and migrated to non-cooperating
category with IND D (ISSUER NOT COOPERATING) rating; and
-- INR1.25 mil. Term loan (Long-term) due on November 2017
affirmed and migrated to non-cooperating category with IND D
(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information.
KEY RATING DRIVERS
The affirmation reflects instances of delays in servicing of term
loans by DMI for three months ended March 2018.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months would be positive for the ratings.
COMPANY PROFILE
Dabang Metal Industries was incorporated in 2012 but began
commercial production in February 2013. The company is engaged in
drawing of copper wires of thickness of 1-6 mm used in
electricity cables. Its manufacturing facility located in
Kotdwar, Uttarakhand has an annual capacity of 4,000 tons.
DELTA JEWELLERS: Ind-Ra Hikes Long Term Issuer Rating to 'BB+'
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Delta Jewellers
Pvt Ltd.'s (DJPL) Long-Term Issuer Rating to 'IND BB+' from 'IND
BB'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR100 mil. Fund-based working capital limits Long-term
rating upgraded; short-term rating affirmed IND BB+/
Stable/IND A4+ rating.
KEY RATING DRIVERS
The upgrade reflects a significant improvement in DJPL's revenue
and credit metrics in FY18. As per FY18 provisional financials,
revenue surged to INR538.4 million (FY17: INR370.48 million)
owing to the commencement of operations at its new hotel in
Durgapur. FY18 was the first full year of operations.
Interest coverage (operating EBITDA/gross interest expense)
improved to 3.98x in FY18P (FY17 2.42x) and net financial
leverage (total adjusted net debt/operating EBITDAR) to 2.23x
(4.11x) due to an improvement in EBITDA margin to 4.4% (4.2%) and
a decline in debt.
The ratings also factor in the company's modest liquidity
position with around 87% average utilization of the fund-based
limits during the 12 months ended April 2018.
RATING SENSITIVITIES
Positive: A substantial improvement in revenue while maintaining
the credit metrics will be positive for the ratings
Negative: A decline in revenue will be negative for the ratings.
COMPANY PROFILE
Incorporated in 2006, DJPL is a franchise of Tanishq. The company
has its registered office and retail showroom in Durgapur, West
Bengal and is managed by Mr. Dokania and family. The company has
started its own hotel under the name Delta Suites
EAST INDIA: CRISIL Lowers Rating on INR11MM Cash Loan to B+
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank loan facilities of
East India Holdings Private Limited (EIHPL) to 'CRISIL
B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Letter of Credit 6 CRISIL A4 (Downgraded from
'CRISIL A4+')
Proposed Long Term 3 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in the company's business
risk profile as reflected in the operating losses of INR6.20
crore incurred by the company in fiscal 2017.Further the
operating margin remained subdued in fiscal 2018 at around 1.80%.
Also the liquidity risk profile of the company is expected to
remain under pressure on account of sizeable repayments towards
the arrears pertaining to revised electricity tariff rates.
The ratings reflect the company's average scale of operations and
susceptibility of its profitability to volatility in raw material
prices. These weaknesses are partially offset by the extensive
experience of the promoter in the steel industry, and moderate
financial risk profile because of healthy capital structure.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in fragmented industry: The steel
industry is highly competitive as it has a large number of
organised and unorganised players. EIHPL remains a modest player
with annual billet manufacturing capacity of 125,000 tonne. Its
scale is expected to remain modest over the medium term, with
revenue expected at INR250 crore in fiscal 2019.
* Susceptibility of profitability to volatility in raw material
prices: The company's modest scale and exposure to intense
competition limit bargaining power with suppliers and customers,
leading to low profitability. CRISIL believes the operating
margin will remain modest over the medium term.
Strength
* Extensive industry experience of the promoter: The promoter's
experience of more than two decades in the steel and allied
industry have helped the company establish healthy relationships
with customers and suppliers, resulting in repeat orders and
ensuring ease in raw material procurement.
* Moderate and improving financial risk profile: The networth was
comfortable at INR19.77 crore as on March 31, 2018 while gearing
remained low and is expected to remain so over the medium term.
The financial risk profile will remain comfortable, supported by
absence of debt-funded expansion and moderate bank line
utilisation.
Outlook: Stable
CRISIL believes EIHPL will continue to benefit from the extensive
industry experience of its promoter. The outlook may be revised
to 'Positive' if cash accrual is higher than expected, backed by
a substantial increase in revenue and improvement in the
operating margin, while working capital cycle remains stable. The
outlook may be revised to 'Negative' if financial risk profile
and liquidity weaken because of decline in profitability,
stretched working capital cycle, or larger-than-expected debt-
funded capital expenditure.
EIHPL, incorporated in 1999 and promoted by Mr O P Agarwal,
manufactures mild steel billets. The company has a capacity of
125,000 tonne per year.
EVERGREEN VENEERS: ICRA Reaffirms B Rating on INR12cr Cash Loan
---------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to INR12.00
crore fund-based limits at [ICRA]B and the short term rating
assigned to INR13.00 crore non fund-based limits of Evergreen
Veneers Private Limited (EVPL) at [ICRA]A4. ICRA has also
reaffirmed the ratings of [ICRA]B/[ICRA]A4 to INR3.05 crore
unallocated limits of EVPL. The outlook on the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 12.00 [ICRA]B (Stable); Reaffirmed
Non-Fund based
limits 13.00 [ICRA]A4; Reaffirmed
Unallocated limits 3.05 [ICRA]B (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The rating reaffirmation is constrained by substantial decline in
turnover from INR46.36 crore in FY2016 to INR27.32 crore in
FY2017 due to lower raw material availability; coupled with
decline in manufacturing operations of the company and shift in
focus to TMT bars trading in FY2017 and in FY2018 to keep the
revenue intact; The rating is also constrained by significant
increase in working capital intensity to 80% in FY2017 from 49%
in FY2016 due to high receivables; weak coverage metrics with
interest coverage ratio of 1.06 times and NCA/Debt of 2.12% for
FY2017 due to increased debt levels; Highly competitive and
fragmented nature of plywood industry with presence of numerous
players in both the organized and the unorganized markets.
However, the rating positively factors in the long track record
of more than two decades of the promoters in the plywood
industry; improvement in operating profitability in FY2017 at
10.32% due to closure of veneer manufacturing operations which
has comparatively low margin than plywood segment; and proximity
to Visakhapatnam port results in ease of access to imported
core/face veneers.
Outlook: Stable
ICRA believes EVPL will continue to benefit from the extensive
experience of its promoters in the plywood industry. The outlook
may be revised to 'Positive' if substantial growth in revenue and
profitability strengthens the financial risk profile. The outlook
may be revised to 'Negative' if margins decline significantly, or
if the company continues to incur cash losses or further stretch
in working capital intensity resulting in bad debts.
Key rating drivers
Credit strengths
Experience of promoters in the plywood industry: Incorporated in
1992, EVPL is into manufacturing of plywood, face veneer, core
veneer and trading in timber. It has an annual installed capacity
of 300 lakh sq. mt. for veneers and 15 lakh 2 sq. mt for plywood
respectively. The plywood being manufactured by the unit is
boiling water resistant, pest proof and powder proof. The company
markets their plywood and face veneer with brand names such Du'k,
Mount, and Montek.
Improved operating profitability in FY2017: The operating profit
margins increased to 10.32% in FY2017 from 5.02% in FY2016 due to
higher proportion of income from plywood sales as the margins are
higher in plywood sales as compared to veneer sales. Due to
export ban in Myanmar for timber exports, the company has stopped
manufacturing of veneer in FY2017 whose sales have dropped from
INR24.75 crore in FY2015 to INR8.24 crore in FY2016 to INR5.50
crore in FY2017. The Visakhapatnam plant is now engaged in
manufacturing of plywood though its capacity utilization reduced
to around 40-45% in FY2017 as against 60% in FY2016.
Credit challenges
Decline in operating income from INR46.36 crore in FY2016 to
INR27.32 crore in FY2017 due to lower raw material availability:
The operating income declined by 40% in FY2017 to INR27.32 crore
in FY2017 from INR46.36 crore in FY2016 primarily due to decrease
in raw material availability. There was a steady decline in the
manufacturing operations of the company and shift in focus to TMT
bars trading in FY2017 with trading revenues of INR6.77 crore for
FY2017.
Significant increase in working capital intensity to 80% in
FY2017: The working capital intensity of the company increased
from 49% in FY2016 to 80% in FY2017 primarily owing to increased
receivable and inventory days. The debtor days increased owing to
higher credit period offered to its wholesale customers. For
manufacturing plywood, face/core veneer are procured
predominantly from Singapore and Indonesia which caused the
inventory days to increase to 139 days in FY2017 compared to 86
days in FY2016.
Financial profile characterised by weak debt coverage indicators:
The gearing is moderate at 0.89 times as on March 31, 2017,
interest coverage ratio of 1.06 times and NCA/Debt of 2.12% for
FY2017 owing to lower profitability and higher debt levels.
Intense competition, given the fragmented nature of the plywood
industry: Highly competitive and fragmented nature of plywood
industry with presence of numerous players in both the organized
and the unorganized markets results in high competition. The
industry is marked by the presence of established players like
Archidply, Centuryply, Kitply, etc. which have well established
brand presence. This limits EVPL's pricing flexibility and
bargaining power with customers, thereby putting pressure on its
revenues and margins.
Evergreen Veneers Private Limited (EVPL) is a private limited
company incorporated in 1992. The promoters and directors Mr.
Vijay Gupta and Mr. Ashok Kumar Aggarwal have extensive
experience in manufacturing plywood, face veneer, core veneer and
trading in timber. The company started its operations with 1
peeling machine, 1 hot press and 1 dryer initially. Over the
years, the capacity has been increased to the present levels of 4
peeling machines (large), 4 peeling machines (small), 2 hot
presses, 6 dryers, and 4 thermo fluid heaters (boilers). The
company also has a resin manufacturing unit on the premises. All
the products of the company are certified with IS 303, IS 710 &
IS 1659 by the Bureau of Indian Standards.
GAURISHANKER BIHANI: ICRA Reaffirms B+ Rating on INR15cr Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the
INR15.00-crore cash credit facility and INR5.00-crore untied
limits of Gaurishanker Bihani at [ICRA]B+. The outlook on the
long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-
Cash Credit 15.00 [ICRA]B+ (Stable); Reaffirmed
Unallocated
Limit 5.00 [ICRA]B+ (Stable); Reaffirmed
Rationale
The rating reaffirmation considers GSB's low operating
profitability due to the trading nature of business, which
coupled with nominal accretion and high working capital debt,
results in high gearing and depressed debt coverage indicators.
The working capital intensity, despite improvement witnessed
during FY2018, remained on the higher side, adversely impacting
the liquidity position of the firm, as reflected by high
utilisation of the working capital as well as channel financing
limits. GSB is also likely to remain exposed to volatility in
steel prices and the demand scenario in the construction and
infrastructure sectors, which remained muted in the last few
years, though some signs of improvement were seen in the recent
past.
The rating also takes into account the risk associated with the
entity's profile as a partnership firm, including the risk of
capital withdrawal by the partners. The rating, however,
favorably factors in the experience of the promoters in the
trading business and the established relationship with Tata Steel
Ltd. (TSL) as the firm is an exclusive project distributor for
TSL's TISCON brand in West Bengal.
Going forward, the firm's ability to effectively manage its
receivables and inventory levels while growing its scale of
operations and improving profitability will remain the key rating
sensitivities.
Outlook: Stable
ICRA believes that GSB will continue to benefit from the
partners' extensive experience and established position of TSL's
TISCON brand which provides competitive advantage over other
players. The outlook may be revised to Positive if substantial
growth in revenue and profitability strengthens the financial
risk profile. The outlook may be revised to Negative if the
demand scenario in the construction and infrastructure sectors
weakens significantly and if cash accrual is lower than expected,
or a stretch in the working capital cycle weakens liquidity.
Key rating drivers
Credit strengths
Experience of the promoters in the steel trading business: The
firm have more than eight decades of experience in the iron and
steel trading industry. The customer base of GSB comprises
primarily construction and heavy-engineering companies located in
West Bengal. Established relationship with clients results in
repeat orders.
Exclusive project distributor for Tata Steel's TISCON brand in
West Bengal: GSB trades in TMT bars and HR products and caters to
the raw material requirements of primarily construction and
heavy-engineering companies. The firm is the exclusive project
distributor of Tata Steel's TISCON brand TMT bars in West Bengal.
GSB also deals in TSL's HR products though the volume is low
compared to the TMT's sales value. While TMT bars are mainly sold
to construction and heavy-engineering companies, HR products are
sold to retailers.
Credit challenges
Limited value addition and intensely competitive nature of the
steel-trading business result in low profitability: Low margin in
trading sales and intense competition in the metals trading
industry kept the firm's operating margin at low level. The same
declined further to 3.71% in FY2017 from 4.40% in the previous
year due to decreased spread between realisation and purchase
price.
Gearing rises due to increase in debt in FY2017; coverage
indicators continue to remain depressed: The working capital
requirement of GSB is high since the firm makes payment in cash
for purchases from TSL and in turn extends credit period to its
customers. It also maintains adequate inventory levels. Out of
GSB's total debt of INR48.45 crore as on March 31, 2017, working
capital loan (consisting of cash credit and channel finance)
stood at INR39.59 crore. The remaining is interest-bearing
unsecured loans from partners and relatives. Rise in working
capital loans further increased the gearing, which remained high
at 5.66 times as on March 31, 2017, compared to the preceding
year. Low operating profitability and high working capital debt
resulted in weak coverage indicators with interest coverage of
1.11 times and a total debt relative to OPBDITA of 10.69 times in
FY2017.
High working capital requirement exerts pressure on the liquidity
of the business- GSB's working capital intensity increased to 46%
in FY2017 from 38% in FY2016 due to increase in debtors as
substantial sales were made during the year-end in FY2017. Though
the intensity has improved during FY2018, it remained on the
higher side, adversely impacting the liquidity position of the
firm as also reflected by high utilisation of cash credit and
channel financing limits.
Vulnerability to fluctuation in steel prices and cyclicality in
the construction and infrastructure sectors: The firm's
profitability and cash flows are likely to remain susceptible to
volatility in steel prices to an extent. Moreover, the demand of
products traded by GSB, i.e., TMT bars and HR coils are mainly
derived from the construction and infrastructure sectors which
exhibit significant cyclicality in tandem with the macro-economic
scenario. The key consuming segments have exhibited signs of
improvement in the recent past though a broad-based recovery
remains to be seen.
Risks associated with the entity's status as a partnership firm:
The legal status of the entity as a partnership firm exposes it
to the risks of capital withdrawal by the partners.
Gaurishanker Bihani was incorporated in 1936 as a proprietorship
firm by Late Gaurishanker Bihani and in 1974, it was
reconstituted as a partnership firm. Based in Kolkata, West
Bengal, GSB is an exclusive project distributor for Tata Steel's
TISCON TMT bars in West Bengal (WB) and an authorised dealer of
TSL's HR flat products.
GSB posted gross sales of INR172.32 crore (provisional) during
FY2018. In FY2017, the firm reported a net profit of INR0.38
crore on an operating income of INR122.00 crore.
GOPINATH DAIRY: CRISIL Migrates D Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Gopinath
Dairy Products Private Limited to CRISIL D Issuer not
cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.9 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Proposed Cash 0.1 CRISIL D (Issuer Not
Credit Limit Cooperating; Rating Migrated)
Rupee Term Loan 30 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with Gopinath Dairy
Products Private Limited (GDPPL) for obtaining information
through letters and emails dated April 24, 2018, May 11, 2018 and
May 16, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
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 Gopinath Dairy Products
Private Limited, which restricts CRISIL's ability to take a
forward looking view on the entity's credit quality. CRISIL
believes information available on Gopinath Dairy Products Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Gopinath Dairy Products Private Limited to CRISIL D
Issuer not cooperating'.
Incorporated in 1994 as Glaze Polycoat Pvt Ltd, it was renamed
Gopinath Dairy Products Pvt Ltd. The company is promoted by Mr
Rajesh Chitalia, Mr Lallubhai Chitalia and Ms Sonal Chitalia. It
has set up a plant for processing milk and milk products at
Turbhe, Navi Mumbai.
GUJARAT ECO: CRISIL Withdraws B- Rating on INR34.57MM Loan
----------------------------------------------------------
CRISIL has reaffirmed its rating on the bank facilities of
Gujarat Eco Textile Park Limited (GETPL) and subsequently
withdrawn the rating at the company's request and on receipt of a
no-objection certificate from the bankers. The withdrawal is in
line with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 21.43 CRISIL B-/Stable (Rating
Bank Loan Facility reaffirmed and Withdrawn)
Rupee Term Loan 34.57 CRISIL B-/Stable (Rating
reaffirmed and Withdrawn)
Incorporated in October 2005, GETPL is a special purpose vehicle
(SPV) promoted by the Luthra group of companies to set up a
textile park near Surat. The SPV wasamong the first textile parks
to be approved under SITP, supported by the Ministry of Textiles,
Government of India.
JAY BHAWANI: CRISIL Withdraws B+ Rating on INR5MM Cash Loan
-----------------------------------------------------------
CRISIL has withdrawn its rating on the long-term bank facilities
of Jay Bhawani Coal Fields Private Limited (JBCFPL) following a
request from the company and on receipt of a 'no dues
certificate' from the banker. The rating action is in line with
CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Withdrawn)
Letter of Credit 2 CRISIL A4 (Withdrawn)
Established in 2012 JBCFPL is a surat based firm promoted by Mr.
Brij Mohan Mandani and his family. Firm is into processing and
grading of non-coking coal.
JHARKHAND MEGA: CRISIL Moves D Rating to Not Cooperating
--------------------------------------------------------
CRISIL has migrated the rating on bank facility of Jharkhand Mega
Food Park Private Limited (JMFPPL)to CRISIL D Issuer not
cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 33.95 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with JMFPPL for
obtaining information through letters and emails dated April 24,
2018, May 11, 2018 and May 16, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
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 Jharkhand Mega Food Park
Private Limited, which restricts CRISIL's ability to take a
forward looking view on the entity's credit quality. CRISIL
believes information available on Jharkhand Mega Food Park
Private Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facility of Jharkhand Mega Food Park Private Limited to CRISIL D
Issuer not cooperating'.
JMFPPL was incorporated in 2009 as a special-purpose vehicle
(SPV) by a group of entities, the primary stakeholders are GenX
Venture Capital Inc, Empower India Limited, Patanjali Avurved
Ltd, Ranchi Industrial Area Development Authority, and Green
Coast Nurseries India Pvt Ltd.
JSW STEEL: Fitch Withdraws BB(EXP) Rating on Proposed Bonds
-----------------------------------------------------------
Fitch Ratings has withdrawn the 'BB(EXP)' expected rating
assigned to India-based JSW Steel Limited's (JSWS, BB/Stable)
proposed US dollar senior unsecured notes. The company had
intended to use the proceeds from the issue to repay debt, fund
capex or any other purpose in accordance with regulations.
KEY RATING DRIVERS
Fitch is withdrawing the expected rating as JSWS' proposed debt
issuance is no longer expected to convert to final ratings, as
the company has not proceeded with the notes issue within the
previously envisaged timeline. The expected rating on the
proposed notes was assigned on March 11, 2018. JSWS is evaluating
its options and may issue notes at a later stage.
KHEDUT COTEX: CARE Lowers Rating on INR8.40cr LT Loan to D
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Khedut Cotex Private Limited (KCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long- term Bank 8.40 CARE D; ISSUER NOT COOPERATING
Facilities Revised from CARE B+; Issuer
not cooperating; Based on best
available information
CARE has been seeking information from KCPL to monitor the
rating(s) vide e-mail communications/letters dated February 16,
2018, February 28, 2018, March 5, 2018, March 16, 2018, April 6,
2018, April 18, 2018, April 30, 2018, May 3, 2018, May 11, 2018,
May 16, 2018 and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating of
Khedut Cotex Private Limited's bank facilities will now be
denoted as CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The revision in rating takes into account ongoing delays in debt
repayment owing to weak liquidity position.
Detailed description of key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: There are ongoing delays in
servicing its debt obligation due to weak liquidity position of
the firm.
Gondal (Rajkot) based Khedut Cotex Private Limited (KCPL) was
established in August, 2015 by Mr. Amit Maganbhai Damasiya and
Mr. Kanubhai Vashrambhai Padshala as a private limited company
which is engaged into cotton ginning and pressing. The
manufacturing unit of the company is located in Amreli, Gujarat
which has an installed capacity of 216 tonnes per day as on March
31, 2016. KCPL sells the manufactured product to local traders.
Status of non-cooperation with previous CRA: ICRA has put long-
term rating assigned to the bank facilities of Khedut Cotex
Private Limited in to 'Non Cooperation' vide press release dated
March 9, 2018 on account of non-cooperation by KCPL with ICRA's
efforts to undertake a review of the rating outstanding.
KOLEY MULTIPURPOSE: CARE Reaffirms B+ Rating on INR12.19cr Loan
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Koley Multipurpose Himghar private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 12.19 CARE B+; Stable Reaffirmed
Short-term Bank
Facility 0.20 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Koley Multipurpose
Himghar private Limited are constrained by its post project
stabilization risk, seasonality of business with susceptibility
to vagaries of nature, regulated nature of business and
competitive and fragmented nature of industry. However, the
aforesaid constraints are partially offset by its experienced
management and proximity to potato growing areas. Going forward,
ability to increase its scale of operation, improve profitability
margins and ability to manage working capital effectively would
remain as the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management: KMHPL is currently establishing a cold
storage unit. The day to day operations of the company will look
after by Smt. Priyanka Koley (Promoter) along with Mr. Prasenjit
Koley (Director) and Smt. Saraswati Koley (Director) who have
experience around 08 years, 12 years and 10 years respectively,
in similar line of business.
Proximity to potato growing area: KMHPL's storage facility will
be located at Midnapore, West Bengal which is one of the major
potato growing regions of the state. The favourable location of
the storage unit, in close proximity to the leading potato
growing areas provides it with a wide catchment and making it
suitable for the farmers in terms of transportation and
connectivity.
Key Rating Weaknesses
Post project stabilization risk: KMHPL has set up a cold storage
facility in Midnapore (West Bengal). The project was completed
and the company has started its commercial operation from April
2018.The seasonality nature of the potato crop and regulation of
rental rent by the government are few of the factors on which
cold storage business depends. Hence, there is post project
stabilization risk involved with respect to which the ability of
revenue generation of the company on a sustainable basis as
envisaged in the project scope needs to be seen. This apart, the
company has achieved revenue of INR0.08 crore as on May 22, 2018.
Seasonality of business with susceptibility to vagaries of nature
The cold storage business is seasonal in nature as potato is a
winter season crop with its harvesting period commencing in
February. The loading of potatoes in cold storages begins by the
end of February and lasts till March. Additionally, with potatoes
having a perceivable life of around eight months in the cold
storage, farmers liquidate their stock from the cold storage by
end of season i.e., generally in the month of November. The unit
remains non-operational during the period from December to
January. Moreover, lower agricultural output may have an adverse
impact on the rental collections as the cold storage units
collect rent on the basis of quantity stored and the production
of potato is highly dependent on vagaries of nature.
Regulated nature of business: In West Bengal, the basic rental
rate for cold storage operations is regulated by state government
through West Bengal State Marketing Board. Due to ceiling on the
rentals to be charged it is difficult for cold storage units like
KMHPL to pass on sudden increase in operating costs leading to
downward pressure on profitability.
Competitive and fragmented nature of industry: Despite the nature
of business being capital intensive, the entry barrier for new
cold storage is low, backed by capital subsidy schemes of the
government. As a result, the potato storage business in the
region has become competitive, forcing cold storage owners to
lure farmers by providing them interest bearing advances against
stored potatoes which augments the business risk profile of the
companies involved in the trade. KMHPL is mainly into storage of
potatoes which is highly fragmented and competitive in nature due
to presence of many small players with low entry barriers. In
such a competitive scenario smaller companies like KMHPL in
general are more vulnerable on account of its limited pricing
flexibility.
Koley Multipurpose Himghar Private Limited (KMHPL) was
incorporated in 2016. The company is promoted by Smt. Priyanka
Koley. The company has established a cold storage unit at
Gobindapur in the district of Midnapore with a storage capacity
of 172000 quintals. The company is providing cold storage
services primarily for potatoes to the farmers and traders on a
rental basis. Besides providing cold storage facility, the unit
is also works as a mediator between the farmers and marketers of
potato, to facilitate sale of potatoes stored and also provide
interest bearing advances to farmers for farming purpose against
potatoes stored. The day to day operations of the company are
look after by Smt. Priyanka Koley (Promoter) along with Mr.
Prasenjit Koley (Director) and Smt. Saraswati Koley (Director)
who have experience around 08 years, 12 years and 10 years
respectively, in similar line of business.
KOTAK URJA: ICRA Moves 'D' Rating to Not Cooperating Category
-------------------------------------------------------------
ICRA has moved the long-term and short term rating for the bank
facilities of Kotak Urja Private Limited (KUPL) to the 'Issuer
Not Cooperating' category. The rating is now denoted as "[ICRA]D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-
Cash Credit 22.00 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
Long Term-
Term Loan 8.00 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
Short Term-
Letter of Credit 5.00 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
Short Term-
Bank Guarantee 7.00 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
Long Term/Short
Term-Unallocated 16.57 [ICRA]D ISSUER NOT COOPERATING;
Rating moved to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity.
Kotak Urja Private Limited (KUPL) is a Bangalore based company
and was incorporated in 1997. It is engaged in the design,
development, manufacture, integration, installation,
commissioning and after sales service of various solar
photovoltaic (lighting) and solar thermal (heating) applications.
KUPL has the facilities to manufacture solar water heating
systems and solar photo-voltaic modules. The company also has a
R&D facility to design & develop new solar photo-voltaic products
and provide customized solutions to customers to suit their
requirements.
KUNDAN INDUSTRIES: Ind-Ra Migrates BB+ Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kundan
Industries Limited's Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR487.2 mil. Fund-based facilities migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING)
/IND A4+ (ISSUER NOT COOPERATING) rating; and
-- INR150 mil. Non-fund-based facilities migrated to non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 24, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Kundan Industries manufactures stainless steel industrial
fasteners.
MAINI CONSTRUCTION: Ind-Ra Retains BB- Rating in Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Maini
Construction Equipments Private Limited's Long-Term Issuer Rating
in the non-cooperating category. The issuer did not participate
in the rating exercise despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using the rating. The rating
will continue to appear as 'IND BB- (ISSUER NOT COOPERATING)' on
the agency's website.
The instrument-wise rating actions are:
-- INR90 mil. Fund-based working capital limit maintained in
Non-Cooperating Category with IND BB- (ISSUER NOT
COOPERATING)/IND A4+ (ISSUER NOT COOPERATING rating; and
-- INR19 mil. Non-fund-based working capital limit maintained in
Non-Cooperating Category with IND A4+ (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 29, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Maini Construction Equipments manufactures aluminum formwork, cup
lock scaffolding and wall formwork, as well as solar structures.
MAKALU TRADING: CRISIL Migrates D Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the ratings on bank facilities of Makalu
Trading Limited to CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 275 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with Makalu Trading
Limited (MTL) for obtaining information through letters and
emails dated April 25, 2018, May 11, 2018 and May 16, 2018 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
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 Makalu Trading Limited, which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Makalu Trading Limited is consistent with 'Scenario 1' outlined
in the 'Framework for Assessing Consistency of Information with
CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the ratings on bank
facilities of Makalu Trading Limited to CRISIL D/CRISIL D Issuer
not cooperating'.
MTL, incorporated in 1981 by Mr Vinod Jatia and his family
members, primarily trades in iron and steel products such as hot-
and cold-rolled coils, sheets, and plates, sponge iron lumps, and
fines.
MARBILANO TILES: ICRA Hikes Rating on INR14.08cr Loan to B+
-----------------------------------------------------------
ICRA has upgraded the long-term rating to [ICRA]B+ from [ICRA]B
assigned to the INR14.08 crore term loan (reduced from INR15.00
crore) and INR7.00 crore cash credit limit (enhanced from INR4.00
crore) of Marbilano Tiles LLP (MTL). ICRA has reaffirmed the
short-term rating at [ICRA]A4 assigned to the INR2.00 crore non-
fund-based limit of MTL. The outlook on the long-term rating is
Stable. ICRA has also upgraded the long term rating to
[ICRA]B+(Stable) from [ICRA]B(Stable) and short term rating
reaffirmed at [ICRA]A4 to the INR0.92 crore unallocated limits of
MTL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 14.08 [ICRA]B+(Stable) upgraded
Term Loan from [ICRA]B(Stable)
Fund-based- 7.00 [ICRA]B+(Stable) upgraded
Cash Credit from [ICRA]B(Stable)
Non-fund Based- 2.00 [ICRA]A4; Reaffirmed
Bank Guarantee
Unallocated 0.92 [ICRA]B+(Stable upgraded
from [ICRA]B(Stable),
[ICRA]A4; Reaffirmed
Rationale
The upgrade in the long-term rating takes into account the timely
commissioning of the project within the estimated cost alongside
the achievement of estimated operating parameters in terms of
scale and profitability. Nonetheless, the ratings continue to
remain constrained by the firm's relatively moderate scale and
profitability margins, leveraged capital structure and its
average coverage indicators. Further, the ratings factor in the
highly fragmented nature of tiles industry resulting in intense
competition and the exposure of MTL's profitability to volatility
in raw material and gas prices. The ratings are also constrained
by the linkage of business operations to cyclical nature of real
estate industry, which is the main consuming sector. The ratings,
however, continue to favourably factor in the experience of
partners of MTL in the ceramic industry and its proximity to raw
material sources, by virtue of its presence in Morbi (Gujarat).
Outlook: Stable
ICRA believes MTL will continue to benefit from the experience of
its partners in the ceramic industry and expects the scale of
operations of MTL to grow with improvement in capacity
utilisation levels. 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 resulting in any delay in servicing debt
obligations or adverse capital structure, or if any major debt
funded capex, or a stretch in working capital cycle weakens
liquidity.
Key rating drivers
Credit strengths
Experience of partners in the ceramic tiles industry: The
partners of the firm have extensive experience in the ceramic
industry through their associations with other companies in the
ceramic industry.
Timely commissioning and stabilisation of operations: The firm
completed the project within estimated cost and commissioned
production in a timely manner in April 2017. MTL has been able to
successfully stabilise its operations as reflected by revenue of
INR48.26 crore in FY2018.
Location-specific advantage: The manufacturing facility of the
firm is located in the ceramic hub of Morbi (Gujarat), which
provides easy access to quality raw materials like body clay,
feldspar and glazed frit in Gujarat and Rajasthan.
Credit challenges
Limited track record of operations with moderate financial risk
profile: MTL commenced production of glazed vitrified floor tile
and wall tiles from April 2017 and has reported moderate
operating income of INR48.26 crore in FY2018. The firm witnessed
operating margin of 11.88% and reported net loss of INR0.13 crore
due to high depreciation and interest cost in FY2018. Given the
limited accruals during the last fiscal and high debt levels
including term loan and cash credit, the gearing of the firm
stood at 2.09 times as on March 31, 2018 while debt coverage
indicators remained average with interest coverage of 2.59 times,
NCA/Debt of 16% and TD/OPBDIITA of 3.88 times in FY2018. The
receivables and creditors remained high as on March 31, 2018
which led to working capital intensity at 18% in FY2018. The
liquidity position of the firm remained weak as reflected by high
average utilization of ~87% during the period from April 2017 to
March 2018.
Margins subject to pressure from intense competition and
cyclicality in the real estate industry: The ceramic tile
manufacturing industry remains highly fragmented with competition
from the organised as well as the unorganised segments, most of
which are located in Gujarat and operate with low cost
structures, create a pressure on prices. Further, the real estate
industry accounts for the maximum consumption of ceramic tiles,
and hence the firm's profitability and cash flows are expected to
remain vulnerable to cyclicality in the real estate industry.
Vulnerability of profitability to fluctuations in raw material
and energy costs: Raw material and fuel are the two major
components determining cost competitiveness in the ceramic
industry. The firm can, however, exercise little control over the
prices of key inputs such as natural gas/coal and raw materials,
and thus the firm's margins are expected to remain exposed to the
movement in raw material and gas/coal prices and its ability to
pass on any upward movements to its customers.
Established in November 2015, as a limited liability partnership
firm, MTL manufactures glazed vitrified floor and wall tiles and
commenced operations in April 2017. The firm's manufacturing unit
is situated at Morbi in Gujarat and has an installed capacity to
manufacture 63,000 MT tiles per annum of tiles. The partners of
the firm have past long-standing experience in ceramic industry
by virtue of being associated with other ceramic companies.
In FY2018, on a provisional basis, the firm reported net loss of
INR0.13 crore on an operating income of INR48.26 crore.
MARUTHI SAW: CRISIL Assigns B+ Rating to INR1MM Overdraft
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Maruthi Saw Mill - Bangalore (MSMB).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 8 CRISIL A4 (Assigned)
Overdraft 1 CRISIL B+/Stable (Assigned)
The ratings reflect the firm's below-average financial risk
profile because of small networth and high total outside
liabilities to tangible networth (TOLTNW) ratio, and its modest
scale of operations in the intensely competitive timber trading
industry. These weaknesses are partially offset by the partners'
extensive experience in the business.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: The financial risk
profile is constrained by high TOLTNW ratio and small networth.
Working capital-intensive operations will keep the financial risk
profile below average over the medium term.
* Modest scale of operations and susceptibility to intense
competition: The firm's modest scale is reflected in operating
income of around INR12 crore in fiscal 2018. The timber trading
business has low entry barriers due to small capital requirement.
As a result, there are many unorganised players in the timber
industry, leading to intense competition, modest scale, and low
profitability.
Strength
* Partners' extensive experience in timber trading: The partners
have been in the timber trading business since more than a decade
and have expanded the firm' reach in the domestic market.
Outlook: Stable
CRISIL believes MSMB will continue to benefit from its partners'
extensive experience. The outlook may be revised to 'Positive' if
there is a substantial increase in revenue and cash accrual, or
improvement in capital structure led by equity infusion. The
outlook may be revised to 'Negative' if any large, debt-funded
capital expenditure, or a steep decline in profitability or
revenue leads to deterioration in the financial risk profile.
MSMB, set up on April 1, 2018, and based in Bengaluru, processes
and trades in timber. Mr Manilal Limbani, Mr Purushottam Limbani,
Ms Geetaben Patel, and Mr Vinodkumar Limbani are partners in the
firm.
MOTOR FAB: CRISIL Assigns B+ Rating to INR30MM Loan
---------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Motor Fab Sales Private Limited (MFSPL; part of the
MGS group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 5 CRISIL B+/Stable (Assigned)
Cash Credit 5 CRISIL B+/Stable (Assigned)
Inventory Funding
Facility 30 CRISIL B+/Stable (Assigned)
The ratings reflect a weak financial risk profile and large
amount of loans and advances, low bargaining power with the
principal, Tata Motors Limited (TML), and exposure to intense
competition. These rating weaknesses are partially offset by an
established market position, a strong relationship with TML,
diversified revenue streams, and efficient working capital
management.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profile of Motor and General Sales Pvt Ltd (MGSPL)
and MFSPL. That's because the two companies, together referred to
as the MGS group, are in similar businesses, and have operational
linkages and a common management.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: The gearing is high, estimated at
more than 20 times as on March 31, 2018. The gearing was 41.04
times, on account of large debt of INR134.15 crore against a
small networth of INR3.2 crore, as on March 31, 2017. The debt
protection metrics were also weak: The interest coverage and net
cash accrual to total debt ratios were 1.2 times and 0.05 time,
respectively in fiscal 2017. The metrics are expected to remain
weak over the medium term. Further, the group also has large
amount of loans and advances, constraining the liquidity.
* Low bargaining power with the principal and exposure to intense
competition: The low bargaining power is because of the strong
market position of TML; this constrains operating profitability.
While the group is one of the leading authorised dealers for
commercial vehicles (CVs) of TML, the principal faces competitive
pressures from other brands, such as Ashok Leyland Ltd and
Mahindra & Mahindra Ltd. The group too faces intense competition
from other dealers in its area of operations as principals have
been encouraging more dealerships (thereby increasing
competition) to improve penetration and sales. This has created
the need for differentiation, and hence dealers have to refurbish
their dealership outfits and service centres regularly. All these
demand constant expenditure, resulting in a lower margin as well
as higher overheads per vehicle, and may impact operating
profitability. The business risk profile will remain exposed to
risks relating to intense competition and low negotiating power
with the principal.
Strengths
* Established market position, strong relationship with TML, and
diversified revenue streams: The group has been in operations
since 1955. Over the years, the promoters have gained
considerable industry experience, which has helped to scale-up
operations and expand. The group has a diversified revenue
profile through sales of CVs, spares, and accessories, workshop
service income, fabrication for CV bodies, a cinema theatre,
jewellery trading and other businesses. On consolidated basis,
the group recorded operating income of 647 crores in 2016-17 and
is estimated to record around INR660 crores in 2017-18.
Diversified revenue streams and the strong relationship with the
principal should continue to support the business risk profile
over the medium term.
* Efficient working capital management: Gross current assets
(GCAs) were 61 days, due to low receivables and inventory of 3
days and 23 days, respectively, as on March 31, 2017. GCAs are
estimated at 70-80 days as on March 31, 2018. Working capital
management is likely to remain efficient over the medium term.
Outlook: Stable
CRISIL believes the MGS group will continue to benefit over the
medium term from its established market position and strong
relationship with TML. The outlook may be revised to 'Positive'
if increase in revenue and profitability leads to better-than-
expected cash accrual, or any equity infusion strengthens the
financial risk profile. The outlook may be revised to 'Negative'
if low cash accrual or large, debt-funded capital expenditure
weakens the financial risk profile.
MGSPL, incorporated in 1955, is promoted by Mr Divas Gupta, Mr
Raghav Gupta, and Ms Shivani Gupta. The company is an authorised
dealer of CVs for TML. In addition, it sells automobile body
parts, does fabrication for CV bodies, and runs a cinema theatre.
MFSPL incorporated in 1991, has the same promoters. It is an
authorised dealer of CVs for TML and also trades in jewellery.
NANCY KRAFTS: CRISIL Reaffirms B Rating on INR1.9MM LT Loan
-----------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of Nancy
Krafts (NK; part of the Nancy group) at 'CRISIL B/Stable/CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing
Credit 3.5 CRISIL A4 (Reaffirmed)
Letter of credit
& Bank Guarantee 1.1 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.9 CRISIL B/Stable (Reaffirmed)
Standby Line
of Credit 0.5 CRISIL B/Stable (Reaffirmed)
The ratings continue to working capital-intensive operations and
stretched liquidity. However these weaknesses are partially
offset by Promoters' extensive experience in garment business,
and well-established relationships with customers.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of NK, Nancy Krafts Pvt Ltd (NKPL). This
is because the three entities, collectively referred to as the
Nancy group, are in the same line of business, with a common
customer base, and common promoters and management.
The unsecured loans from the promoters of Nancy group as on 31st
March 2017 of INR1.18 crore is treated as debt.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations: Operations are working
capital intensive, with gross current assets at 536 days as on
March 31st, 2017, mainly driven by stretch in the group's debtor
days to 420 days in March 31st, 2017 and is estimated to remain
along similar lines fiscal 2018. The increase in debtor days is
attributed to slow realisation from overseas markets.
* Stretched liquidity: The group's liquidity is stretched, with
almost fully utilised bank limits for the 12 months through April
2018, constraining its financial flexibility.
Strength
* Promoters' extensive experience in garment business, and well-
established relationships with customers: The Nancy group
manufactures ready-made garments, entirely for export. The
promoters, with over 30 years of business experience, along with
their family members, are personally involved in all aspects of
the business. They are also technically qualified and have a
sound understanding of the garment export industry.
Outlook: Stable
CRISIL believes the Nancy group will continue to benefit over the
medium term from its established relationships with customers.
The outlook may be revised to 'Positive' if improvement in
working capital management or in operating revenue and
profitability margins strengthens liquidity. Conversely, the
outlook may be revised to 'Negative' if more-than-expected
deterioration in working capital due to large working capital
requirement because of further stretch in its debtor days or
debt-funded capital expenditure, or a decline in profitability
margins puts pressure on its already weak liquidity.
NK was set up in 1980 as partnership firm.
NKPL was established in 1981 as a partnership firm and later
reconstituted as a private limited company.
The two entities manufacture ready-made garments, especially for
women and children, at their plants in New Delhi. The entities
cater to the export market and supply their products to retailers
and wholesalers in Latin America, Mexico, Spain, the US, and
Europe.
NARAYAN AGRO: Ind-Ra Maintains 'C' LT Rating in Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Narayan Agro
Foods Limited's Long-Term Issuer Rating in the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue appear as 'IND C (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR70 mil. Fund-based working capital limit (Long-term)
maintained in Non-Cooperating Category with IND C (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 15, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Narayan Agro Foods produces dairy products at its plant in
Kotkapura (Punjab).
NEOTECH FOUNDRIES: CARE Assigns B+ Rating to INR9.54cr LT Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Neotech Foundries Private Limited (NFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 9.54 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of NFPL is constrained
by project implementation risk, volatility in raw material
prices, working capital intensive nature of business, intensely
competitive nature of the industry with sluggish growth in end
user industries and cyclicality associated with steel industry.
The rating, however, derives strength from the experienced
promoters and strategic locational advantage of the plant.
Going forward, the ability of the company to increase the scale
of operations with improvement in profitability margins and
to manage working capital effectively will be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters: Though, NFPL was incorporated in October
2011, the promoters of the company have long experience in
similar line of business. Mr. Soumen Midya (aged 54 years),
having more than two decades of experience in alloy steel and
iron casting
manufacturing business along with his father Mr. Gunakar Midya
(aged 86 years), having around three decades of experience in
similar line of business looks after the overall management of
the company along with adequate support from a team of
experienced personnel.
Strategic locational advantage of the plant: The manufacturing
unit of the company is located in central India at Bhilai of
Chhattisgarh which is an important industrial hub and one of the
main steel cities in India. It is popularly known as the 'steel
city of central India' or the 'Industrial Cubo'.
The place is rich in important minerals like iron ore, dolomite,
manganese, graphite, quartz, building stone, lead etc. Most
of the raw materials required by the company are met from the
nearby location like Chhattisgarh and Jharkhand. Accordingly the
company will be able to save simultaneously on transportation
cost and raw material consumption cost, which gets reflected in
the increasing PBILDT level over the last three financial years.
Key Rating Weaknesses
Project implementation risk: NFPL proposes itself to be engaged
in manufacturing of alloy steel and iron casting items with
manufacturing capacity located at Bhilai with an aggregate
project cost of INR12.00 crore, which is proposed to be financed
by way of promoter's contribution of INR2.02 crore, term loan
from bank of INR7.00 crore and unsecured loan from promoters
amounting to INR2.98 crore. The company has already invested the
entire amount till April 30, 2018 for setting up of the aforesaid
project. The project is expected to be operational from June,
2018.The financial closure of the aforesaid term loan from the
bank has already been achieved and repayment of the same have
started from March 2016.However, repayment of the above term loan
has been made through continuous infusion of unsecured loan from
promoters.
Volatility in raw material prices: The company does not have
backward integration for its basic raw-materials (i.e. pig iron,
MS Scrap, alloys and chemicals) and it procures the same from
open market at spot prices. Since the raw-material is the major
cost driver and the prices of which are volatile in nature, the
profitability of the company is susceptible to fluctuation in
raw-material prices.
Working capital intensive nature of business: The operations of
the company are estimated to remain working capital intensive. As
the company is engaged in manufacturing of alloys steel and iron
casting items, it is required to maintain a large quantity of raw
material inventory to mitigate the raw material price
fluctuations risk and smooth running of its production process.
Further, the company has proposed to allow credit of around two
months to its clients. Furthermore, the company has proposed to
pay its suppliers upfront for availing cash discounts.
Intensely competitive and cyclical industry: NFPL is entering in
the alloy steel and iron casting manufacturing unit which is
primarily dominated by large players and characterized by high
fragmentation and competition due to the presence of numerous
players in India owing to relatively low entry barriers. High
competitive pressure limits the pricing flexibility of the
industry participants which induces pressure on profitability.
The fortunes of companies like NFPL from the alloy & iron steel
casting industry are heavily dependent on the mineral,
engineering and paper industry. Steel consumption and, in turn,
production mainly depends upon the economic activities in the
country. Slowdown in these sectors may lead to decline in demand
of steel& alloys. Furthermore, all these industries are
susceptible to economic scenarios and are cyclical in nature.
Neotech Foundries Private Limited (NFPL) was incorporated as a
Private Limited Company on October 25, 2011. The company was
setting up an alloy steel and iron casting manufacturing unit at
Bhilai Industrial Estate at Chhattisgarhi with an installed
capacity of 5000 MTPA.
The project cost was INR12.00 crore, which was financed by way of
promoter's contribution of INR2.02 crore, unsecured loan from
promoters of INR2.98 crore and term loan from bank of INR7.00
crore.The project is almost completed and the entire amount
towards the project is expensed in full. Moreover, the company is
expected to start commercial operation from June, 2018.
Mr. Soumen Midya (aged 54 years), having more than two decades of
experience in alloy steel and iron casting manufacturing business
along with his father Mr. Gunakar Midya (aged 86 years), having
around three decades of experience in similar line of business
looks after the overall management of the company along with
adequate support from a team of experienced personnel.
NORTHERN ARC 2018: Ind-Ra Assigns BB+ Rating on INR12.18MM Loan
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Northern Arc
2018 MFI Bamani (an ABS transaction) the following final ratings:
-- INR206.98 mil. Series A1 pass-through certificates (PTCs)
issued on March 27, 2018 with an 11.50 coupon rate due on
December 17, 2019 assigned with IND A- (SO)/Stable rating;
and
-- INR12.18 mil. Series A2 PTCs issued on March 27, 2018 with a
15 coupon rates due on December 17, 2019 assigned with IND
BB+(SO)/Stable rating.
The microfinance loan pool assigned to the trust is originated by
Village Financial Services Limited (VFS).
KEY RATING DRIVERS
Originator's Servicing, Underwriting & Collection Capabilities:
The final ratings are based on the origination, servicing,
collection and recovery expertise of VFS, the legal and financial
structure of the transaction and the credit enhancement (CE)
provided in the transaction. The agency is of the opinion that
the issuer's origination and servicing capabilities are of an
acceptable standard. The company follows the Joint Liability
Group (JLG) model of microfinance for its operations. VFS offers
loans for income-generating purposes and these loans are given
based on the repayment ability of the borrowers. VFS's strong
origination team of 159 branches and over 500 field officers has
enabled it to build strong customer relationships, especially in
West Bengal and Bihar, apart from presence in six other states.
Since lending is in the form of JLGs, the borrowers are grouped
together with a designated leader. VFS's sourcing field officer
is mandated to collect EMIs from the designated leader of the
group on a fortnightly basis, after an initial moratorium of 28
days since the first disbursement date. All borrowers from the
JLG hand over their respective EMI amount to the designated
leader of the group either a day before or on the day of the
collection.
Once the amount is collected, the field officer immediately
deposits the same in VFS's bank account and records the same in
the system. In case one of more borrowers in the pool are not
able to pay their EMIs on the due date, and other members of the
JLG are not able to compensate for the same, the branch manager
immediately steps in to ensure immediate recovery. Escalations to
area managers are also swift in case the branch managers are
unable to ensure timely collections.
Transaction Structure: The final rating of Series A1 PTCs
addresses the timely payment of interest on monthly payment dates
and the ultimate payment of principal by the final maturity date
of December 17, 2019, in accordance with transaction
documentation. The final rating of Series A2 PTCs addresses the
timely payment of interest on monthly payment dates after
complete redemption of Series A1 PTCs, and ultimate payment of
principal by the final maturity date on December 17, 2019, in
accordance with the transaction documentation.
Availability of Credit Enhancement: The transaction benefits from
the internal CE on account of excess interest spread,
subordination and over-collateralization. The levels of
overcollateralization available to Series A1 and A2 PTCs are
15.00% and 10.00%, respectively; of the initial pool principal
outstanding (POS). The total internal CE including
overcollateralization available to Series A1 and A2 PTCs is
23.01% and 17.25% respectively, of the initial POS. The
transaction also benefits from the external CE of 6.00% of the
initial POS in the form of fixed deposits held with Fincare Small
Finance Bank ('IND A-/Stable') in the name of the originator with
a lien marked in favor of the trustee.
Key Pool Characteristics: The collateral pool assigned to the
trust at par had an aggregate outstanding principal balance of
INR243.50 million, as of the pool cut-off date of 22 March 2018.
The pool, comprising 11,642 loans, has a weighted average (WA)
seasoning of 15.42 weeks and a WA amortization of 21.92%,
implying a moderate repayment track record of underlying
borrowers. Also, the average original loan balance was
INR27,127.9 and a WA rate of interest was 24.12%. As of the pool
cut-off date of March 22, 2018, there were no delinquent accounts
in the pool.
Key Assumptions: Ind-Ra has derived a base case gross default
rate in the range of 4%-5%. The agency has analyzed the
characteristics of the pool and established its base case
assumptions through the key performance variables, viz. default
rate, recovery rate and prepayment rate, which collectively
affect the credit risk in a transaction.
RATING SENSITIVITIES
As part of its analysis, Ind-Ra built a pool cash flow model
based on the transaction's financial structure. The agency
analyzed historical data to determine the base values of key
variables that would influence the level of expected losses in
this transaction. The base values of the default rate, recovery
rate, time to recovery, collection efficiency, prepayment rate
and pool yield were stressed to assess whether the level of CE
was sufficient for the current rating levels.
Ind-Ra also conducted rating sensitivity tests. If the
assumptions for the base case default rate are worsened by 30%,
the model-implied rating sensitivity suggests that the ratings of
Series A1 and A2 PTCs will not be downgraded.
COMPANY PROFILE
VFS, headquartered in Kolkata, West Bengal, is the first micro
finance company in eastern India. It has been registered with the
Reserve Bank of India as non-banking financial company status
since September 2013. The company started its microfinance
operations in the financial year 2005-2006. Mr. Ajit Kumar Maity,
the promoter of VFS, has been engaged in microfinance activities
for the last three decades through the Village Welfare Society
and Village Micro Credit Services. In January 2006, Village Micro
Credit Services acquired a Kolkata-based NBFC called Spencer
Vinimay Private Limited, which was later renamed as Village
Financial Services Limited. It was regulated by the Reserve Bank
of India and was focused towards engaging in microfinance
activities.
VFS's asset under management stood at INR5,057.46 million on
December 31, 2017 compared to INR3,862.1 million on March 31,
2017. As of December 2017, the gross NPA of VFS's portfolio stood
at 0.62%.
NV AUTOSPARES: CRISIL Migrates D Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of NV
Autospares Private Limited to CRISIL D Issuer not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.5 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Funded Interest 1.55 CRISIL D (Issuer Not
Term Loan Cooperating; Rating Migrated)
Long Term Loan 4.2 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term
Bank Loan Facility .52 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Working Capital
Term Loan 4.23 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with NV Autospares
Private Limited (NV) for obtaining information through letters
and emails dated April 26, 2018, May 11, 2018 and May 16, 2018
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
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 NV Autospares Private Limited,
which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on NV Autospares 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 NV Autospares Private Limited to CRISIL D Issuer
not cooperating'.
NV, incorporated in 2005, is promoted by Mr Ahire. The company
manufactures seat frames and press parts. Its manufacturing
facility is at Nashik in Maharashtra.
PARAM TEX: CRISIL Migrates B+ Rating to Not Cooperating
-------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Param Tex
Fab Private Limited to CRISIL B+/Stable Issuer not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Proposed Cash 3 CRISIL B+/Stable (Issuer Not
Credit Limit Cooperating; Rating Migrated)
Proposed Long Term 2.8 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Migrated)
Proposed Term Loan 5.2 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with Param Tex Fab
Private Limited (PTFPL) for obtaining information through letters
and emails dated April 26, 2018, May 11, 2018 and May 16, 2018
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
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 Param Tex Fab Private Limited,
which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Param Tex Fab Private Limited is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Param Tex Fab Private Limited to CRISIL B+/Stable
Issuer not cooperating'.
Set up in January 2005, PTFPL manufactures grey fabric. It is
promoted by Mr Sunil Mandora, Mr Babanlal Agarwal and Mr
Omprakash Bhandari and its manufacturing facility is located at
Shirpur in Dhule district (Maharashtra).
PCM STRESCON: CRISIL Migrates B Rating to Not Cooperating
---------------------------------------------------------
CRISIL has migrated the ratings on bank facilities of PCM
Strescon Overseas Ventures Limited to CRISIL B/Stable/CRISIL A4
Issuer not cooperating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 61.5 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Letter Of
Guarantee 25.65 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Letter of Credit 21.85 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Proposed Bank
Guarantee 20 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term 31 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Migrated)
Proposed Term Loan 12 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
CRISIL has been consistently following up with PCM Strescon
Overseas Ventures Limited (PCM) for obtaining information through
letters and emails dated April 26, 2018, May 11, 2018 and May 16,
2018 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
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 PCM Strescon Overseas Ventures
Limited, which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on PCM Strescon Overseas Ventures Limited
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the ratings on bank
facilities of PCM Strescon Overseas Ventures Limited to
CRISIL B/Stable/CRISIL A4 Issuer not cooperating.
PCM, incorporated in 2006, manufactures pre-compressed heavy-haul
concrete sleepers. The West Bengal-based company is promoted by
PCM Cement Concrete Pvt Ltd, PCM Alloy Steels Private Limited and
Heaven Mercantile Private limited.
PONGALUR PIONEER: Ind-Ra Affirms 'BB+' Long Term Issuer Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Pongalur Pioneer
Textiles Private Limited's (PPTPL) Long-Term Issuer Rating at
'IND BB+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR57.50 mil. Fund-based working capital limits affirmed with
IND BB+/Stable rating;
-- INR150.50 mil. (reduced from INR184.82 mil.) Long-term loans
due on April 26, 2024 affirmed with IND BB+/Stable rating;
and
-- INR215.00 mil. Non-fund-based working capital limits affirmed
with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects PPTPL's continued modest scale of
operations as indicated by revenue of INR1,140 million as per
FY18 provisional financials (FY17: INR984 million). The growth in
revenue was on account of higher order execution.
The ratings remain constrained by PPTPL's tight liquidity
position as reflected by near full utilization of its fund-based
limits during the 12 months ended 24 May 2018.
However, the ratings continue to benefit from the company's
comfortable credit metrics due to strong operating margin. During
FY18P, EBITDA margin was 11% (FY17: 12%), gross interest coverage
(operating EBITDA/gross interest expenses) was 2.2x (2.18x) and
net financial leverage (total adjusted net debt/operating
EBITDAR) was 2.2x (2.4x)
The ratings also continue to be supported by the promoters' two
and a half decades of experience in the manufacturing of cotton
yarn.
RATING SENSITIVITIES
Positive: A further improvement in the revenue, while maintaining
the credit metrics will lead to a positive rating action.
Negative: A further deterioration in the operating profitability
leading to deterioration in the credit metrics on a sustained
basis will lead to a negative rating action.
COMPANY PROFILE
Established in 1990 by Mr. V Selvapathy, Tirupur-based PPTPL
manufactures warp cotton yarn. The company has installed capacity
of 66,856 spindles and manufactures combed warp cotton yarn in
66s, 72s and 91s counts. The company sells yarn in Coimbatore and
Mumbai markets.
It has five wind mills situated in Edayarpalayam, Coimbatore and
Karungulam with a total capacity of 1.675MW. These mills cater to
35% of its power requirements.
RAMESH COMPANY: ICRA Reaffirms B+ Rating on INR14cr Cash Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ to the
INR14-crore cash-credit facility and INR6-crore untied limits of
Ramesh Company. The outlook on the long-term rating is stable.
The above unallocated limits of INR6 crore has also been rated on
a short-term scale for which the rating has been reaffirmed at
[ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-Based
Cash Credit 14.00 [ICRA]B+ (Stable); Reaffirmed
Unallocated Limit 6.00 [ICRA]B+ (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The ratings reaffirmation consider RC's low operating
profitability due to the trading nature of business, which
coupled with nominal accretion and high working capital debt
results in high gearing and depressed debt coverage indicators.
The working capital intensity, in spite of improvement during
FY2018, remained on the higher side, adversely impacting the
liquidity position of the firm, as also reflected by high
utilisation of the working capital as well as channel financing
limits. RC is also likely to remain exposed to volatility in
steel prices and the demand scenario in the construction and
infrastructure sectors, which remained muted in the last few
years, though some signs of improvement were seen in the recent
past. The ratings also take into account the risk associated with
the entity's profile as a partnership firm, including the risk of
capital withdrawal by the partners.
The ratings, however, favorably factor in the experience of the
promoters in the trading business and the established
relationship with Tata Steel Ltd. (TSL) as the firm is a dealer
for TSL's Astrum brand HR products.
Going forward, the firm's ability to effectively manage its
receivables and inventory levels while growing its scale of
operations and improving profitability will remain the key rating
sensitivities.
Outlook: Stable
ICRA believes that RC will continue to benefit from the partners'
extensive experience and established position of TSL's Astrum
brand HR products which provide competitive advantage over other
players. The outlook may be revised to Positive if substantial
growth in revenue and profitability strengthens the financial
risk profile. The outlook may be revised to Negative if the
demand scenario in the construction and infrastructure sectors
weakens significantly and if cash accrual is lower than expected,
or a stretch in the working capital cycle weakens liquidity.
Key rating drivers
Credit strengths
Experience of the promoters in the steel trading business: The
promoters have long experience in the iron and steel trading
industry. The customer base of RC comprises primarily HR product
retailers in West Bengal. Established relationship with clients
results in repeat orders.
Authorised dealer for Tata Steel's Astrum brand HR sheets and
coils in West Bengal: RC trades in Tata Steel's HR products which
find application in the automotive, earth moving equipment,
railways, fabrication, construction and industrial machineries.
The firm is the distributor of TSL's Astrum brand HR products in
West Bengal.
Credit challenges
Limited value addition and intensely competitive nature of the
steel-trading business result in low profitability: Low margin in
trading sales and intense competition in the metals trading
industry kept the firm's operating margin at a low level. The
same remained stagnant and stood at 6.04% in FY2017 compared to
5.98% in the previous year.
Gearing rises due to increase in debt in FY2017; coverage
indicators continue to remain depressed: The working capital
requirement of RC is high since the firm makes payment in cash
for purchases from TSL and in turn extends credit period to its
customers. It also maintains adequate inventory levels. Out of
RC's total debt of INR58.14 crore as on March 31, 2017, working
capital loan (consisting of cash credit and channel finance)
stood at INR49.04 crore. The remaining is interest-bearing
unsecured loans from partners and relatives. The increase in
working capital loans further increased the gearing, which
remained high at 7.31 times as on March 31, 2017, compared to the
preceding year. Low operating profitability and high working
capital debt resulted in weak coverage indicators with interest
coverage of 1.09 times and a total debt relative to OPBDITA of
8.99 times in FY2017.
High working capital requirement exerts pressure on the liquidity
of the business: RC's working capital intensity increased to 61%
in FY2017 from 57% in FY2016, primarily due to increase in
debtors as substantial sales were made during end-FY2017. Though
the working capital intensity has improved during FY2018, it
remained on the higher side, adversely impacting the liquidity
position of the firm as reflected by high utilisation of cash
credit and channel financing limits.
Vulnerability to fluctuation in steel prices and cyclicality in
the construction and infrastructure sectors: The firm's
profitability and cash flows are likely to remain susceptible to
volatility in steel prices, to an extent. Moreover, the demand of
products traded by RC, i.e., HR sheets and coils are mainly
derived from the construction and infrastructure sectors which
exhibit significant cyclicality, in tandem with the macro-
economic scenario. The key consuming segments have exhibited
signs of improvement in the recent past, though a broad-based
recovery remains to be seen.
Risks associated with the entity's status as a partnership firm:
The legal status of the entity as a partnership firm exposes it
to the risks of capital withdrawal by the partners.
RC was incorporated in 1960 as a proprietorship firm to undertake
distributorship of Tata Steel's various HR products. In 1974, it
was reconstituted as a partnership firm. Based in Kolkata, RC is
an authorised dealer of Tata Steel Limited's hot-rolled (HR)
products, sold under the brand, Tata Astrum, in West Bengal.
RC posted gross sales of INR129.40 crore (provisional) in FY2018.
In FY2017, the firm reported a net profit of INR0.52 crore on an
operating income of INR107.03 crore.
RIDHI ENTERPRISES: ICRA Withdraws B Rating on INR0.50cr Loan
------------------------------------------------------------
ICRA has withdrawn the long-term rating of [ICRA]B with Stable
outlook and short-term rating of [ICRA]A4, assigned to INR5.50
crore bank facilities of Ridhi Enterprises.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 0.50 [ICRA]B (Stable); Withdrawn
Non-fund based 5.00 [ICRA]A4; Withdrawn
Rationale
The ratings are withdrawn in accordance with ICRA's policy on
withdrawal and suspension, as desired by the firm and based on
no-objection certificate provided by its lenders.
Ridhi Enterprises (RE) was established in 1996 by Mr. Hareshkumar
Shah as a proprietorship concern for executing civil construction
work, mainly for the Municipal Corporation of Greater Mumbai
(MCGM). The firm was converted into a partnership concern in
FY2016. It is registered as a class 'AA' contractor with MCGM.
Since its inception, the firm has executed projects related to
road repairs, construction and repairs of drainage and sewerage
systems for MCGM. In addition, the firm also undertakes sub-
contract works from the sub-contractors of MCGM.
SAHIL POLYPLAST: Ind-Ra Maintains B+ LT Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Sahil
Polyplast Private Limited's (SPPL) Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND B+ (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR90.00 mil. Fund-based working capital limit maintained in
non-cooperating category with IND B+ (ISSUER NOT
COOPERATING)/IND A4 (ISSUER NOT COOPERATING) rating;
-- INR35.00 mil. Proposed fund-based working capital limit
maintained in non-cooperating category with Provisional
IND B+ (ISSUER NOT COOPERATING) /Provisional IND A4 (ISSUER
NOT COOPERATING) rating;
-- INR10 mil. Proposed non-fund-based working capital limit
maintained in non-cooperating category with Provisional
IND A4 (ISSUER NOT COOPERATING) rating; and
-- INR15 mil. Non-fund-based working capital limit maintained in
non-cooperating category with IND A4 (ISSUER NOT
COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 27, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 1997 in Delhi, Sahil Polyplast is a plastic
granules dealer in north India.
SHIVAM COTTON: CARE Assigns B+ Rating to INR12.99cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shivam
Cotton Industries (SCI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.99 CARE B+; Stable Assigned
The ratings assigned to the bank facilities of SCI are
constrained on account of its moderate scale of operations
coupled with low profit margins, moderate capital structure, weak
debt coverage indicators and moderate liquidity position along
with working capital intensive nature of operation during FY17
(refers to the period April 1 to March 31). Further, the rating
is also constrained due to its partnership nature of
constitution, presence in highly fragmented industry, seasonality
association with cotton availability and susceptibility of
margins to cotton price fluctuations and prices and supply for
cotton being highly regulated by government.
The rating, however, derives comfort from experienced promoters
and proximity to cotton growing area of Gujarat. SCI's ability to
increase its scale of operations with improvement in profit
margins, capital structure and debt coverage indicators along
with better working capital management will be the key rating
sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters: SCI was established as a partnership firm
in 1998 by six partners. Currently, the firm is managed by five
key partners named Mr. Shailesh V. Patel, Mr. Vikram R. Patel,
Mr. Vipul V. Patel, Mr. Alpesh V. Patel and Mr. Raj Patel. All
the partners hold vast experience of more than two decades in
same line of business.
Proximity to cotton growing area of Gujarat: The manufacturing
facility of SCI is located at Vadodara in Gujarat. Gujarat
produces majority of the production of cotton; hence, SCI's
presence in the cotton producing region results in benefit
derived from a lower logistic expenditure, easy availability and
procurement of raw materials at effective prices and consistent
demand for finished goods resulting in a sustainable and clear
revenue visibility.
Vadodara (Gujarat) based Shivam Cotton Industries (SCI) is a
partnership firm established in 1998. It has six partners
named Mr. Shailesh V. Patel, Mr. Vikram R. Patel, Mr. Alpesh V.
Patel, Mr. Vipul V. Patel, Ms. Bhavna S. Patel and Mr. Raj
S. Patel. SCI is engaged into the business of cotton ginning and
pressing. It has an installed capacity of 70,000 quintals of
cotton bales per month, 3,000 quintals of cotton seeds per month
and 2,000 quintals of oil per month as on March 31,
2018.
SHRI LAKSHMI: NCLT Admits Insolvency Process vs. Firm
-----------------------------------------------------
The Economic Times reports that the National Company Law Tribunal
has admitted insolvency proceedings against BSE-listed Shri
Lakshmi Cotsyn after the Kanpur-based textile manufacturer failed
to repay nearly INR4,000 crore in loans to a consortium of about
10 lenders led by Central Bank of India.
"There is default in the payment of the financial debt.
Therefore, as per section . . . the present application filed
. . . deserves to be admitted," said VP Singh, member judicial,
and Saroj Rajware, member technical, of National Company Law
Tribunal's Allahabad chapter, in their June 1 order, notes the
report.
Union Bank of India had filed the insolvency application against
the company earlier this year.
The other lenders in the consortium are State Bank of India
(through merged group entities), Union Bank of India, Bank of
Baroda, Indian Bank, Canara Bank and Syndicate Bank. The total
amount claimed by the lenders would be between INR3,500 crore and
INR4,000 crore, said two people with knowledge of the matter, the
report relates.
Rohit Sehgal has been appointed as the interim resolution
professional, The Economic Times discloses.
"This is a going concern. It is a challenge for me to bring it
back to normal health," the report quotes Sehgal, a partner at
AAA Insolvency Professionals, a Delhi-based firm, as saying. The
company has been incurring losses for the last few quarters, he
Economic Times notes.
The company reported INR28-crore loss for the October-December
quarter, the report discloses. Due to consecutive losses, the
company has been skipping repayments since 2013. Earlier, banks
had declared it as a wilful defaulter amid objections raised by
the company management.
Earlier, Central Bank of Indiahad approached the Debt Recovery
Tribunal to recover the consortium's loans, the report recalls.
The authorised share capital of the corporate debtor company is
INR50 crore and paid-up share capital is INR28.47 crore.
Shri Lakshmi Cotsyn Limited engages in the manufacture of, and
dealing in all types of textiles, yarn, clothes, dress material,
readymade garments and other textile items. It manufactures home
furnishing products and denim fabric, terry towels, bed linen,
cotton fusible interlining, embroidered fabric, technical textile
products and ballistic products.
SHUKRANA IMPEX: Ind-Ra Maintains 'B+' Rating in Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Shukrana Impex
Private Limited's Long-Term Issuer Rating in the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will
continue appear as 'IND B+ (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR50 mil. Fund-based limits maintained in Non-Cooperating
Category with IND B+ (ISSUER NOT COOPERATING) /IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 28, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Shukrana Impex manufactures garments at its plant in Gurugram and
exports them mainly to Dubai, South Africa and Germany.
SPACETECH EQUIPMENT: CARE Reaffirms B Rating on INR3.25cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Spacetech Equipment And Structurals Private Limited (STES), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 3.25 CARE B; Stable Reaffirmed
Short term Bank
Facilities 7.00 CARE A4 Reaffirmed
LT/ ST bank 4.75 CARE B; Stable/CARE A4
Facilities Reaffirmed
(Proposed)
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of STES is
constrained on account of Growing albeit small scale of
operations, Moderate operating margin and low net profit margin ,
Highly Leverage capital structure and weak debt coverage
indicators and working capital intensive nature of operation. The
ratings are also constrained on account of its presence in highly
competitive industry, volatility in raw material prices and
foreign exchange fluctuation risk. The ratings however, derive
strength from long track record of operation and experienced
promoters in the industry and healthy order book position. The
ability of STES to increase its scale of operations and
improvement in profitability margins and capital structure along
with efficient management of working capital cycle are the key
rating sensitivities.
Outlook: Stable
Detailed description of the key rating drivers
Key rating Weakness
Highly Leverage capital structure and weak debt coverage
indicators: The gearing level has slightly deteriorated to 4.14x
as on March 31, 2018 from 4.20x as on March 31, 2017 though there
has been increase in debt level on account of availment of
additional working capital limit, there has been increased in
tangible net worth of the company due to accretions of profit to
reserves, however it continues to be relatively small. Debt
coverage indicators have improved in FY18 (prov) with interest
coverage and total debt to GCA at 2.44x and 11.92x respectively
as against 1.33x and 32.95x respectively in FY17 on account of
accretions of profit during FY18 (prov).
Working capital intensive nature of operations: The working
capital cycle has improved to 89 days in FY18(prov.) from 237
days in FY17 on account of improvement in the collection and
inventory days as STES was dealing earlier with government based
organization due to which there were delay payment. But now STES
is concentrating more on exports orders to avoid delays in
payment as all payment are done against LC. However, the
operations continues to remained working capital intensive with
higher debtors and creditors which has further resulted in fully
utilisation of its cash credit limit for past twelve months ended
April 30, 2018.
Growing albeit small scales of operations and thin profit
margins: The total operating income during FY18 (prov) has
increased by 261.37% to INR42.28 crore from INR11.70 crore in
FY17 on account INR300 crores of received from Bangladesh based
multiple companies during FY17 which will be executed in next
three years out of which INR40 crore has been booked during FY18
and rest will be booked in phase wise manners in coming years.
PBILDT margin has declined significantly from 12.55% in FY17 to
4.75% in FY18 (prov.) on account of high material cost. In
FY18 STES has supplied material hence the material cost to total
sales has been increased from 60% in FY17 to 84% in FY18 (Prov.).
In coming years there will be only labour cost (for installation
and commissioning at Bangladesh based company's plant) due to
which profit margins are expected to improve. However, PAT margin
has improved to 1.71% in FY18 (prov.) from 0.83% in FY17 on
account of reduction in finance cost.
Volatile raw material prices & foreign exchange fluctuation risk:
STES is exposed to volatility in input (MS Sheets & plates,
welding Rod, Grinding wheel, SS Sheet etc.) prices in the absence
of any long-term contract with suppliers and especially on the
back of its high inventory holding (average inventory of around 4
months), it is exposed to the risk of raw material price
fluctuation as it is not able to pass on the rise in raw material
prices. Moreover, STES procures the raw materials in batches
which further expose the company to volatility in prices. STES
exports around 40% thereby exposing it to forex risk. Further,
STES has does not follow hedging policy, thus affecting its
profitability.
Present in competitive nature of industry: STES is engaged into
steel manufacturing industry which is highly fragmented
with a high level of competition from both the organized and
largely unorganized sector, along with the susceptibility of
margins to volatile raw material prices.
Key rating Strengths
Experienced and resourceful promoters and their financial
support: Promoters have an average experience of more than three
in the field of Design, Engineering, Fabrication & Project
Engineering & Project management, for the hard Core Industries
like Petroleum, Petrochemical, Fertilizers, Cement, Steel,
Ceramics etc. in India and Abroad. Extensive experience of
promoters have help STES to generate more revenue and developed
strong business relations with reputed customers. Furthers to
support growing scale of operations directors have infused owns
capital continuously in form of unsecured loan.
Long track record and reputed clientele base: STES is in
existence for more than three decades and carry out its activity
in manufacturing & supply of critical capital equipment's
required for core industries such as Petroleum, Fertilizers,
Chemical, Cement, Steel, Ceramics etc. in India and abroad. Over
the years the promoters have developed strong business relations
with reputed customers. The aforementioned has helped STES
achieve consistent growth over the past three years ending
March 31, 2018.
Healthy order book position: STES has an order book of INR300
crore from Bangladesh based companies during FY17 which will be
executed in next three years out of which INR40 crore has been
booked during FY18 and rest will be booked in phase wise manners
in coming years.
Incorporated in the March 1992, Spacetech Equipment and
Structural Private Limited (STES) is engaged into manufacturing
and supply of a broad array of critical equipment and structures
viz. pressure vessel, air receiver, gas holder erection &
installation, process equipment, fertilizers & chemicals storage
and installation, process columns & tower which finds application
in petroleum, fertilizers, chemical, cement, steel, and ceramics
industry. STES has its plant located at Ambernath spread over
1700 sq.ft. STES procures raw material namely MS Sheets & plates,
welding Rod, grinding wheel, SS Sheet etc. from domestic players
and generates around 60% of revenue in FY17 from domestic market
and balance from overseas market (Bangladesh, Nigeria, Iran, Oman
& Srilanka).
STAR AQUA: CRISIL Lowers Rating on INR10MM Cash Loan to D
---------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Star Aqua International Private Limited (SAIPL), as:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Issuer Not
Cooperating: Downgraded from
'CRISIL B/Stable' Issuer Not
Cooperating)
Long Term Loan 8.27 CRISIL D (Issuer Not
Cooperating: Downgraded from
'CRISIL B/Stable' Issuer Not
Cooperating)
CRISIL has been consistently following up with SAIPL for
obtaining information through letters and emails dated February
8, 2017 and March 23, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
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 SAIPL. 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
SAIPL 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 downgraded the rating to 'CRISIL D' as the account has
classified as NPA due to weak liquidity.
Set up in 2006 by Mr.Shaik Abdul Aziz, involved in end-to-end
activities for shrimp exports from Nellore (Andhra Pradesh).
SVM CERA: ICRA D Rating Remains in Not Cooperating Category
-----------------------------------------------------------
The ratings for the INR8.30-crore bank facilities of SVM Cera
Private Limited continue to remain under 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 5.50 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain under
'Issuer Not Cooperating'
Category
Non-fund Based 2.80 [ICRA]D ISSUER NOT COOPERATING;
Letter of Credit Rating continues to remain under
'Issuer Not Cooperating'
Category
Non-fund Based- (0.50) [ICRA]D ISSUER NOT COOPERATING;
Bank Guarantee Rating continues to remain under
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity to
monitor its performance with repeated reminders for payment of an
overdue surveillance fee. Despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA based on the best
available/dated/limited information on the issuer's performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this
rating, as it may not adequately reflect the credit risk profile
of the entity.
SVM Cera Private Limited (formerly known as M/s. Matalvuoto Films
(India)) was incorporated in January 1986. With effect from
April 1, 2014, the name was changed from the erstwhile SVM Cera
Tea Limited to SVM Cera Limited. Further, with effect from
September 29, 2015, the name was changed from SVM Cera Limited to
SVM Cera Private Limited. The company manufactures ceramic glaze
frit (CGF) at its unit located at Ankleshwar, Gujarat. The
company's operations are handled by Mr. K.M. Bhanderi, under the
leadership of Chairman Mr. S.V. Mohta and other professional
directors.
SVS FOOD: ICRA B- Rating Remains in Not Cooperating Category
------------------------------------------------------------
The rating for the INR7.00 crore bank facilities of SVS Food
Processors Private Limited continues to remain in the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]B-
(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 5.50 [ICRA]B- (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Term loan 1.50 [ICRA]B- (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
The rating is based on no updated information on the entity's
performance since the time it was last rated in November 2016.
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating
as the rating does not adequately reflect the credit risk profile
of the entity. The entity's credit profile may have changed since
the time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with SVS Food Processors Private Limited, ICRA has been
trying to seek information from the entity so as to monitor its
performance, but despite repeated requests by ICRA, the entity's
management has remained non-cooperative. In the absence of
requisite information, and in line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 01, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
SVS Food Processors Private Limited (SVSPL) was incorporated as a
private limited company in 2012. The company had set up a flour
mill with 60,000 TPA capacity and the unit is located on a three-
acre land at Singannaguda village, Medak district, Telangana,
which is around 43 km from Hyderabad. The company is promoted by
Mr. D. Narendra Reddy and Mr. C.H. Narsimha Reddy.
THEOS TILES: CRISIL Assigns B+ Rating to INR6.9MM Term Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating on the bank
facilities of Theos Tiles LLP (Theos).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 6.9 CRISIL B+/Stable
Cash Credit 4 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 1.1 CRISIL B+/Stable
The rating reflects exposure to project implementation risk and
susceptibility of profitability to raw material prices. These
rating weaknesses are partially offset by extensive experience of
the promoters in the ceramic industry and strategic location of
the plant.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to project implementation risk: Theo's project is in
the nascent stage of starting the production, and the company
faces moderate project implementation risk. Timely project
completion and stabilisation of operations without any cost
overrun will remain a key rating sensitivity factor.
* Susceptibility of operating margin to raw material price
volatility and low bargaining power: Raw materials such as
feldspar and quartz account for 40 to 50 percent of the total
cost of sales, while gas and power constitute about 20 to 25
percent. Due to intense competition in the market, it will be
difficult for marginal players like Theos to pass on raw material
prices to customers. CRISIL believes that Theos' operating margin
will be susceptible to raw material price volatility and will
remain a key rating sensitivity factor, over the medium term.
Strengths
* Extensive experience of the promoters: Promoters of Theos have
experience of more than decade and have long track record in the
industry which has enabled them to build established
relationships with customers. CRISIL believes that Theos will to
benefit from the extensive experience of its promoters and its
established relationships with clients, over the medium term.
* Strategic location ensuring availability of raw materials and
labor: Theos' manufacturing facilities are located in Morbi, the
hub of the ceramic industry in India. Morbi accounts for around
65 - 70 per cent of India's ceramic tile production. Q-7 is
expected to derive significant benefits from being present in
Morbi; these include easy access to Feldspar (main raw material)
and availability of contractors and skilled laborers. Other
critical infrastructure such as gas and power is also readily
available in Morbi.
Outlook: Stable
CRISIL believes that Theos will benefit from the long experience
of its partners in the industry. The outlook may be revised to
'Positive' in case of timely stabilization of operations and
healthy ramp up in sales. Conversely the outlook may be revised
to 'Negative' in case of delay in commencement in operations or
lower than expected revenue and profitability.
Incorporated in 2017, Theos is a Gujarat based entity which is
setting up a plant to manufacture ceramic wall tiles. It is
promoted by Mr. Rohit Patel, Mr. Gopal Kundariya and family. Its
manufacturing plant is located in Morbi.
TRANSMARINUS: Ind-Ra Assigns BB LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Transmarinus
(TRANS) a Long-Term Issuer Rating of 'IND BB'. The Outlook is
Stable.
The instrument-wise rating action is:
-- INR20.00 mil. Fund-based working capital limit assigned with
IND BB/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect TRANS's small scale of operations. The firm's
revenue increased to INR550.00 million in FY18 (provisional
financials) from INR442.66 million in FY17, primarily driven by
an increase in order inflow from existing and the addition of new
customers.
The ratings also reflect TRANS's thin operating margin as it
operates a low-margin freight forwarding logistics services
provision business. The operating margin declined to 4.00% in
FY18 from 4.90% in FY17 on account of competitive bidding.
The ratings further reflect the firm's partnership structure,
where there is an inherent risk of capital withdrawal.
The ratings, however, are supported by the firm's comfortable
credit metrics. In FY18, its interest coverage (operating
EBITDA/gross interest expense) was 3.08x in FY18 (FY17: 3.66x)
and financial leverage (total adjusted debt/operating EBITDAR)
was 0.56x (0.17x). The deterioration in the metrics was majorly
on account of higher utilization of the fund-based limits that
led to a rise in interest expense.
The ratings are also supported by TRANS's comfortable liquidity,
indicated by average fund-based limit utilization of 43.4% for
the 12 months ended March 2018. Its working capital cycle was 24
days in FY18 (FY17: 24 days). Moreover, the partners have an
experience of over two decades in the logistics industry.
RATING SENSITIVITIES
Negative: Any decline in the operating margin or any
deterioration in the working capital cycle leading to any
deterioration in the credit metrics and/or liquidity would be
negative for the ratings.
Positive: Any significant increase in the revenue and the
operating margin leading to any improvement in the credit metrics
would be positive for the ratings.
COMPANY PROFILE
Formed in 2010, TRANS provides freight forwarding logistics
services to various large manufacturers and industrial houses in
Ludhiana and nearby locations.
USHA FABS: Ind-Ra Migrates B+ LT Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Usha Fabs
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will
continue to appear as 'IND B+ (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR60 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B+ (ISSUER NOT COOPERATING) /IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 19, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Usha Fabs is engaged in the manufacture and export of garments.
Its manufacturing facility is in Gurugram.
VAG BUILDTECH: CRISIL Cuts Rating on INR25MM Cash Loan to B+
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Vag Buildtech Ltd (VBL) to 'CRISIL B+/Stable' from 'CRISIL BB-
/Negative,' while reaffirming the short-term rating at 'CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Cash Credit 25 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
Proposed Long Term 15 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Negative')
The rating downgrade reflects weakening of the credit risk
profile of Sunil Hitech Engineering Ltd (SHEL), VBL's parent
entity, amidst an unprecedented stretch in the working capital
cycle and liquidity. As per information available in public
domain and ascertained through reliable sources, SHEL's liquidity
remain under pressure, with irregularities in servicing of bank
debt observed for over 30 days. VB's order book mainly comprises
orders from SHEL and its special-purpose vehicles and joint
ventures. Stretched liquidity in SHEL could adversely impact
execution of orders and operations of VBL. Though VBL can now bid
directly for orders, limited bank debt can affect the bidding
capabilities.
The ratings continue to reflect the working capital-intensive
nature, and average scale of operations, in an intensely
competitive civil construction industry, and below-average
financial risk profile. These weaknesses are partially offset by
moderate order pipeline.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive nature of operations: Operations are
highly working capital intensive, as evident from the high gross
current assets of 170-200 days over the past three fiscals (172
days as on March 31, 2017). That's due to the long collection
period and multiple deposits required to be kept with customers
in the form of earnest money and retention money.
* Average scale of operations and exposure to intense
competition: Intense competition keeps the scale of operations
average, as reflected in estimated revenue of INR192 crore in
fiscal 2018. Revenue depends on the company's ability to
successfully bid for new tenders, as sizeable part of business is
tender-based. This also requires access to adequate bank debt,
especially the non-fund based limit. Any hurdles in executing
orders, inability to win new orders, or delay in implementation
of projects can adversely impact revenue and business risk
profile.
* Below-average financial risk profile: Financial risk profile is
marked by a moderate networth and high total outside liabilities
to tangible networth ratio of INR20 crore and 3.54 times,
respectively, as on March 31, 2017. Liquidity remains stretched
due to large working capital requirement leading to nearly full
utilisation of bank debt.
Strength
* Order book offering near-term visibility: Orders worth over
INR600 crore, to be executed over the next 24-36 months, offer
revenue visibility for the near term, though counterparty credit
risk on all such orders remains a key monitorable.
Outlook: Stable
CRISIL believes VBL's credit risk profile will continue to be
constrained amid liquidity pressure faced by the parent, SHEL.
The outlook may be revised to 'Positive' in case of improvement
in credit risk profile of the parent, or if VBL is able to ramp
up its revenue and cash accrual and manage its working capital
requirement efficiently. The outlook may be revised to 'Negative'
if VBL's financial risk profile, especially liquidity, weakens
because of a significant stretch in the working capital cycle or
decline in revenue and accrual.
VBL, formerly known as Ecological Road Construction Pvt Ltd, was
incorporated in 2012, with the parent, SHEL holding a 72% stake.
The Mumbai-based company undertakes civil construction projects
related to buildings, roads, waste management, and solar power.
VIRTUE MARKETING: CARE Lowers Rating on INR20cr Loan to D
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Virtue Marketing Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 15 CARE D Revised from
Facilities CARE BB+; Stable
Short-term Bank 20 CARE D; Revised from
Facilities CARE A4+
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities of
Virtue Marketing Private Limited is on account of stretched
liquidity position resulting in delays in debt servicing.
Establishing a clear debt servicing track record with improvement
in its liquidity position is the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in meeting of debt obligations
The company had strained liquidity position during the year which
resulted in delays in meeting debt obligations.
Incorporated in 2013, Virtue Marketing Private Limited is
promoted by Mr. Ramesh Jain and Mr. Hitesh Jain. VMPL is
currently engaged in the trading of Aluminium Plates, Aluminium
Coils, Aluminium Foils, Aluminium Wires, Aluminium Ingots,
Aluminium Conductors, Aluminium Extrusions, steel products and
scraps. The product range finds application in transport,
machinery, defense, healthcare, automobile, engineering etc.
WATERLINE HOTELS: ICRA Reaffirms B- Rating on INR27cr Loan
----------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B- to the
INR27.00-crore fund-based facilities of Waterline Hotels Private
Limited (WHPL). The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-
Term Loan 27.00 [ICRA]B-(Stable); Reaffirmed
Rationale
The rating reaffirmation factors in the low sales velocity of the
premium luxury apartments at Miraya Rose, which resulted in
lower-than-expected cash accruals from the real estate project.
The rating also factors in the company's financial profile, which
is characterised by stretched liquidity due to high debt
servicing requirements in the near term. While the lease income
from the commercial space is expected over longer period, the
servicing for the related debt is bulked up in FY2019. Hence,
with lease income, together with cash accruals from pending
collections and future sales is estimated to meet only a part of
the debt servicing requirement, the extension of the repayment
period for a portion of the term loan remains imperative for
improving the company's liquidity position. The company is also
in the process of tying up the remaining vacant commercial space
for long-term lease. Nonetheless, the rating positively considers
the extensive experience of the promoters in the real estate and
the hospitality sectors. The rating also positively factors in
the near completion of Miraya Rose project and cash accruals from
the company's hotel operations.
Outlook: Stable
The Stable outlook reflects ICRA's expectation that Waterline
Hotels Private Limited will continue to benefit from the
extensive experience of promoters in the hospitality and real
estate sectors. The outlook may be revised to 'Positive' if sales
velocity and income from commercial property improve, and the
company is able to convert the existing loans to one with
favourable repayment terms. The outlook may be revised to
'Negative' if the company faces a significant liquidity constrain
because of lower-than-expected sales velocity in both residential
and commercial spaces or if the debt servicing requirement
remains unchanged.
Key rating drivers
Credit strengths
Extensive experience of promoters in real estate segment: The
company is managed by experienced promoters. Moreover, the Group
has an established brand presence in the real estate segment; it
has developed large residential and commercial properties in
Bangalore.
Tie-up of commercial space with long-term lease: In FY2018, the
company let out a significant part of its commercial space on
long-term lease. It is also in the process of tying up the
remaining vacant commercial space. The company is also expected
to convert a part of the existing loan into LRD Loan, thereby
synchronising the cash flow from leases with debt repayments.
Collections from Miraya Rose project to aid debt repayment: The
company has nearly completed the construction of the project,
Miraya Rose, and the apartments are in ready-to-occupy condition.
Hence, the collections from sale of this project are to be
primarily used for debt repayments.
Credit challenge
High debt servicing requirement in FY2019: The company has
significant debt repayments in the medium term which is expected
to lead to a cash flow mismatch if the sales velocity does not
improve and the collections are not obtained in time, or if the
tenure of current loans is not increased.
Low sales velocity in Miraya Rose: The project Miraya Rose is
witnessing low sales velocity. The company sold one unit in
FY2017 and five units in FY2018. The project still has nine more
units to sell. The company might face liquidity crunch if the
sales velocity does not match up to the repayment obligations.
Small-scale operations of hotel: The company operates a single
hotel, Holiday Inn & Suits, which has 122 rooms. Because of the
intense competition in the hospitality sector, the revenue growth
in the hotel has remained stagnant in the recent past.
Incorporated on March 28, 2008, Waterline Hotels Private Limited
owns a 122-room five-star hotel under the name Holiday Inn &
Suits. The hotel is located at Whitefield, an IT hub in
Bangalore, and has been operational since August, 2011. Besides,
Holiday Inn & Suits, the company has also developed a residential
project Miraya Rose in Whitefield, Bangalore. The project was
completed in December 2017. The total project cost was around
INR156 crore, which was funded through a debt of INR68.0 crore
and promoter contribution of INR6.0 crore, while the remaining
was funded through customer advances.
YADU SUGAR: Ind-Ra Migrates 'D' Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Yadu Sugar
Limited's (YSL) Long-Term Issuer Rating at 'IND D'. The ratings
have also been migrated to the non-cooperating category. The
issuer did not participate in the surveillance exercise, despite
continuous requests and follow ups by the agency. Thus, the
rating is on the basis of best available information. Investors
and other users are advised to take appropriate caution while
using these ratings. The rating will now appear as 'IND D (ISSUER
NOT COOPERATING)' on the agency's website.
The instrument-wise rating action is:
-- INR1.020 bil. Fund-based working capital limits (Long-
term/Short-term) affirmed and migrated to non-cooperating
category with IND D (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information.
KEY RATING DRIVERS
The ratings reflect continued delays in debt servicing by YSL
considering the company's account has been classified as SMA 2 by
the banker.
The ratings have also been migrated to the non-cooperating
category as the company did not provide Ind-Ra with the latest
financials and information related to working capital utilization
for the last two months, despite continuous requests and follow-
ups.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could result in a positive rating action.
COMPANY PROFILE
Incorporated in 1998, YSL has a 500TCD sugar mill and a 32MW co-
generation plant in Sujanpur, Uttar Pradesh.
YOGESH CONSTRUCTION: ICRA Withdraws B+ Rating on INR4cr Loan
------------------------------------------------------------
ICRA has withdrawn the long-term rating of [ICRA]B+ ISSUER NOT
COOPERATING with Stable outlook and short-term rating of [ICRA]A4
ISSUER NOT COOPERATING, assigned to INR9.00 crore bank facilities
of Yogesh Construction.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 4.00 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Withdrawn
Non-fund based 5.00 [ICRA]A4 ISSUER NOT
COOPERATING; Withdrawn
Rationale
The ratings are withdrawn in accordance with ICRA's policy on
withdrawal and suspension, as desired by the firm and based on
no-objection certificate provided by its lenders.
The Mumbai-based Yogesh Construction was established in 2007 by
Mr. Yogesh Shah and his father, Mr. Pravin Shah, as a family
partnership firm to execute civil construction work for the
Municipal Corporation of Greater Mumbai (MCGM). Prior to 2007, it
was engaged in similar operations through a proprietorship firm
of Mr. Pravin Shah. Yogesh Construction primarily undertakes
Government contracts for drainage, sewerage construction and road
repair work for MCGM and Surat Municipal Corporation (SMC). The
firm is registered as 'AA' grade contractor with MCGM. The firm
also receives operational synergies through a group company,
Ridhi Enterprises, which is also engaged in executing civil
contract works for MCGM.
=========
J A P A N
=========
KAWASAKI KISEN: Egan-Jones Upgrades Debt Ratings to B
-----------------------------------------------------
Egan-Jones Ratings Company, on May 30, 2018, upgraded the foreign
commercial paper and local commercial paper on debt issued by
Kawasaki Kisen Kaisha, Ltd. to B from C.
Kawasaki Kisen Kaisha, Ltd., also referred to as "K" Line, is one
of the largest Japanese transportation companies.
====================
N E W Z E A L A N D
====================
CBL INSURANCE: Liquidation Hearing Deferred Until July 30
---------------------------------------------------------
The Auckland High Court has set aside three days, starting
July 30, to hear the Reserve Bank of New Zealand's application to
liquidate CBL Insurance Limited (in interim liquidation).
The hearing was originally set down for June 5 and June 6.
Parties opposing the liquidation recently asked the Reserve Bank
to give consideration to some additional options for dealing with
CBL Insurance. The hearing was deferred at the request of the
Reserve Bank to allow any stakeholders the opportunity to present
such options and for the Reserve Bank and the interim liquidators
to consider those options properly.
As reported in the Troubled Company Reporter-Asia Pacific on
Feb. 26, 2018, The New Zealand Herald said the High Court has
ordered CBL Insurance be placed into interim liquidation on an
application by the Reserve Bank as the insurer's prudential
supervisor.
In the High Court in Auckland on Feb. 23, Justice Patricia
Courtney ordered the appointment of McGrathNicol's Kare Johnstone
and Andrew Grenfell as interim liquidators of CBL Insurance, the
Herald discloses. The application was made without notice and
determined on Feb. 23, the judgment said.
CBL Insurance Limited provides building and construction related
credit and financial surety insurance, bonding, and reinsurance
products. CBL Insurance is a subsidiary of NZX-listed CBL
Corporation.
SEEDLING NZ: Placed Into Receivership
-------------------------------------
Auckland-based Seedling NZ Limited has been placed into
receivership.
KordaMentha partners, Natalie Burrett --
nburrett@kordamentha.co.nz -- and Neale Jackson --
njackson@kordamentha.co.nz -- have been appointed Receivers.
Seedling has been operating for 10 years, with growth into the US
market in recent years. Receiver, Natalie Burrett, says the
company has effectively exhausted its options to secure its
working capital needs.
Seedling is an established retailer and wholesaler. The
'Seedling' brand is strongly recognised across New Zealand and
Australia, with customers including Whitcoulls, Smith &
Caughey's, Myers and David Jones.
Receivers will look to transition the business through a sale
process and ultimately to a new owner who has the resources
required to capitalise on Seedling's full potential.
"We are currently assessing the options that are available to
optimise the value of Seedling's assets" Mr. Burrett said.
Seedling NZ Limited distributes children's educational arts and
craft projects across Australasia through retail and wholesale
channels, offering unique activities, toys and crafts for
children. Currently, Seedling employs 8 staff in New Zealand.
=================
S I N G A P O R E
=================
ACESIAN PARTNERS: Unit's Judicial Manager Files Writ of Summons
---------------------------------------------------------------
The Business Times reports that a judicial manager of Acesian
Partners' subsidiary has filed a writ of summons against the
listed company.
Acesian Partners said the writ of summons was served on the
company and private-owned Acesian Engineering and Active Building
Technologies on June 4, BT relates.
According to the report, the additional judicial manager, Muk
Siew Peng -- smuk@kordamentha.com -- has filed this writ of
summons together with the subsidiary under judicial management,
Acesian Star (S) Pte Ltd in Singapore's High Court against the
three entities and four key employees of Acesian Partners.
This court filing came after Acesian Partners said on June 1 that
the High Court has extended the judicial management period for
Acesian Star (S) by another six months to Nov 15, 2018.
Last October, Acesian Partners said that the High Court had
approved the application by Takenaka Corp for the appointment of
Ms Muk from KordaMentha as additional judicial manager of Acesian
Star (S).
Takenaka Corp had voted against a proposed scheme of arrangement
(SA) tabled for Acesian Star (S) at a meeting held with the
latter's creditors last August. But the majority of the
creditors present had voted in favour of the proposed SA.
The listed company had forewarned then that Takenaka Corp would
take steps to challenge the outcome of the meeting held last
August and to remove Acesian Partners' existing judicial
managers.
Takenaka Corp and Acesian Partners have been embroiled in a legal
spat over alleged claims and counter-claims linked to work at
Changi Airport's Terminal 4.
HYFLUX LTD: To Meet Bank Lenders This Week on Restructuring
-----------------------------------------------------------
The Business Times reports that Hyflux Ltd said on June 4 that it
is meeting its bank lenders this week to discuss its debt
restructuring.
According to the report, the water project developer filed for
court protection against creditors' claims on May 22, a move that
buys it time to address its cashflow problems.
It now has to come up with a convincing business plan to satisfy
its key lenders - and the Singapore High Court - that it deserves
a six-month moratorium to revive its business and reorganise its
debts, the report says.
Meanwhile, Hyflux said it is also continuing discussions with a
number of its other key stakeholders, including counterparties to
its ongoing projects and trade creditors, BT relays.
"The relevant stakeholders are being engaged . . . to ensure that
ongoing projects are completed as scheduled so that the milestone
payments are received," Hyflux said in a statement to the
Singapore Exchange. The steps should improve the Hyflux's short-
term liquidity constraints and other strains on its finances, it
said.
BT relates that Hyflux and its advisers have also been engaging
in "preliminary discussions with interested financiers" regarding
the provision of funding to the group, it added. The parties are
in preliminary discussions to enter into non-disclosure
agreements to further such discussions, Hyflux said.
Hyflux shares remain suspended from trading, as its financial
position remains unclear pending the outcome of the court-
supervised reorganisation process, adds BT.
About Hyflux
Singapore-based Hyflux Ltd -- https://www.hyflux.com/ -- provides
various solutions in water and energy areas worldwide. The
company operates through two segments, Municipal and Industrial.
The Municipal segment supplies a range of infrastructure
solutions, including water, power, and waste-to-energy to
municipalities and governments. The Industrial segment supplies
infrastructure solutions for water to industrial customers.
As reported in the Troubled Company Reporter-Asia Pacific on
May 24, 2018, Hyflux Ltd. said that the Company and five of its
subsidiaries, namely Hydrochem (S) Pte Ltd, Hyflux Engineering
Pte Ltd, Hyflux Membrane Manufacturing (S) Pte. Ltd., Hyflux
Innovation Centre Pte. Ltd. and Tuaspring Pte. Ltd. have applied
to the High Court of the Republic of Singapore pursuant to
Section 211B(1) of the Singapore Companies Act to commence a
court supervised process to reorganize their liabilities and
businesses. The Company said it is taking this step in order to
protect the value of its businesses while it reorganises its
liabilities.
The Company has engaged WongPartnership LLP as legal advisors and
Ernst & Young Solutions LLP as financial advisors in this
process.
===========
T A I W A N
===========
TAICHUNG COMMERCIAL: Fitch Affirms 'BB+' LT IDR; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed most of the ratings of EnTie
Commercial Bank, Far Eastern International Bank (FEIB), King's
Town Bank (KTB), Sunny Bank Ltd., Taichung Commercial Bank
Company Limited, Taipei Star Bank (TSB) and The Shanghai
Commercial & Savings Bank, Ltd. (SCSB). The Rating Outlooks are
Stable. The National Short-Term Ratings of Taichung and Sunny
have been upgraded to 'F1(twn)' from 'F2(twn)'.
KEY RATING DRIVERS
ISSUER DEFAULT RATINGS, NATIONAL RATINGS AND VIABILITY RATINGS
The banks' ratings are driven by their intrinsic credit profiles
and have been affirmed with Stable Outlooks as Fitch expects the
banks to maintain their financial strength, underpinned by
largely stable profitability and capitalisation as well as a
strong liquidity profile in 2018 and 2019. Their ratings are
mostly constrained by their smaller franchise - particularly for
FEIB, Taichung, Sunny and TSB - but are counterbalanced by their
ability to sustain adequate capital buffers relative to their
growth and risk-taking.
Fitch expects Taiwan's modest economic recovery to help sustain
the banks' credit profiles, underpinned by easing margin
pressure, sustained benign credit costs, and adequate asset
quality. Many of the banks reviewed have above-sector average
level of property exposure; however, Fitch views associated risks
to have moderated in light of stabilising property prices and a
continuing low interest rate environment. Fitch expects most
banks to pursue reasonable loan growth without noticeably
undermining their underwriting quality or capitalisation.
Many of the banks reviewed have increased loans to SMEs over the
last two years in search of higher yield. The associated risks,
however, are mitigated partly by adequate collateralisation and
the government's guarantee. The impaired loan ratio and operating
profit/risk-weighted assets were largely stable for the overall
sector. However, performance varied among the banks reviewed,
mostly as a result of their different franchise and niche
strategy.
SCSB is rated the highest at 'A-'/'a-' among the banks reviewed
due to its satisfactory capitalisation and robust earnings,
backed by its long-established SME clients and greater-China
franchise through its Hong Kong-based subsidiary, Shanghai
Commercial Bank Limited (A-/Stable/a), and major Chinese partner,
Bank of Shanghai. KTB is rated at 'BBB'/'bbb', higher than most
Fitch-rated small banks in Taiwan, as it maintains sound capital
generation by consistently implementing its strategy to diversify
credit exposure by investing in foreign bonds and pursuing
selective lending in niche markets.
Fitch expects EnTie to continue to sustain its above-peer
capitalisation through earnings retention and modest growth,
which will provide a sufficient buffer for the likely asset
quality volatility associated with its high single-borrower
lending concentration.
FEIB's rating affirmation reflects Fitch's expectations that the
bank will sustain its capitalisation through managed credit
growth and maintain largely stable profitability and asset
quality over the next year or two. The ratings also consider its
below-peer risk-adjusted profitability and modest banking
franchise.
Sunny's ratings are constrained by its small franchise, below-
peer profitability and capitalisation and concentrated property
exposure, mitigated by its average asset quality. Taichung's
ratings reflect Fitch's expectation that the bank's credit growth
will remain moderate in 2018-2019 and the bank will sustain its
capitalisation commensurate with its risk profile. The ratings
also reflect its less diversified earnings and weaker-than-peer
asset quality.
The upgrade in the National Short-Term Ratings for Sunny and
Taichung reflect the two banks' sound short-term liquidity
profile, which Fitch believes is in line with similarly rated
banks in the system.
A limited franchise and business scope underpin TSB's weak
profitability and constrain its ratings. This is in spite of
Fitch's view that the bank has consistently maintained adequate
underwriting standards and modest appetite for risks, resulting
in sound asset quality.
SUPPORT RATING AND SUPPORT RATING FLOOR
FEIB, Taichung and SCSB have a Support Rating of '4' and Support
Rating Floors of 'B+', reflecting their low systemic importance.
KTB's Support Rating is '5' and its Support Rating Floor is 'NF'
due to its smaller presence in the financial system.
SUBORDINATED DEBT
FEIB and Taichung's Basel II-compliant subordinated debt is rated
one notch below their National Long-Term Ratings to reflect its
subordinated status and the absence of a going-concern loss-
absorption mechanism.
FEIB and Taichung's Basel III-compliant subordinated debt is
rated two notches below their National Long-Term Ratings, which
are anchored by their respective Viability Ratings, to reflect
the bonds' limited recovery prospects. Bondholders risk
significant loss at the point of non-viability, which is reached
upon government receivership or a regulatory order for resolution
or liquidation, because the bonds would rank equally with common
shares in Taiwan.
RATING SENSITIVITIES
ISSUER DEFAULT RATINGS, NATIONAL RATINGS AND VIABILITY RATINGS
The banks' ratings are sensitive to a significant increase in
risk appetite in pursuit of yield, which could result in
significant deterioration in asset quality and heightened
impairment costs leading to weakening profitability and
capitalisation. A sharp property-market decline and an abrupt
interest rate increase hurting borrower repayment capacity could
weaken their credit profile, though not Fitch's base case.
Rating upside prospects are limited in light of the banks' modest
franchises and concentration risks for several of the banks.
Lower-rated banks' financial strength would also be constrained
by modest profit generation capacity owing to thin margins and
relatively weaker fee income.
Excessive risk-taking - particularly in Asian emerging markets -
may put downward pressure on SCSB's ratings. Upside potential is
limited by the bank's growing emerging market operations and
exposures, including those in China.
A downgrade of EnTie's ratings could stem from failure to
maintain adequate capitalisation relative to its risk-taking
and/or inability to sustain its niche in fee-based structured
finance and property-related lending.
Downward rating pressure on KTB could stem from failure to
execute its strategy or an unexpected change in senior
management. Any notable deterioration in asset quality arising
from its rapid growth in SME loans could also pressure the bank's
credit profile.
Pressure for negative rating action for FEIB, Sunny, Taichung and
TSB is likely to come from excessive risk-taking leading to
weaker asset quality or capitalisation. This could come from
rapid growth in emerging markets in Asia or new product lines or
a relaxation of underwriting standards for growth. They are also
more sensitive to a market downturn given below-average capital
generation and/or a lower capital buffer.
SUPPORT RATING AND SUPPORT RATING FLOOR
The Support Ratings and Support Rating Floors are sensitive to
changes in Fitch's assumptions around the propensity of the
Taiwan government (AA-/Stable) to provide timely support to the
banks, or in the banks' level of systemic importance.
SUBORDINATED DEBT
The subordinated debt ratings of FEIB and Taichung are sensitive
to the same considerations that might affect their Viability
Ratings.
The rating actions are as follows:
EnTie:
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
FEIB:
Long-Term Issuer Default Rating affirmed at 'BBB-'; Outlook
Stable
Short-Term Issuer Default Rating affirmed at 'F3'
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'
Subordinated debt (Basel II Tier 2 capital) affirmed at 'A-(twn)'
Subordinated debt (Basel III-compliant) affirmed at 'BBB+(twn)'
KTB:
Long-Term Issuer Default Rating affirmed at 'BBB'; Outlook Stable
Short-Term Issuer Default Rating affirmed at 'F3'
National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
Sunny:
National Long-Term Rating affirmed at 'A-(twn)'; Outlook Stable
National Short-Term Rating upgraded to 'F1(twn)' from 'F2(twn)'
Taichung:
Long-Term Issuer Default Rating affirmed at 'BB+'; Outlook Stable
Short-Term Issuer Default Rating affirmed at 'B'
National Long-Term Rating affirmed at 'A-(twn)'; Outlook Stable
National Short-Term Rating upgraded to 'F1(twn)' from 'F2(twn)'
Viability Rating affirmed at 'bb+'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'
Subordinated debt (Basel II Tier 2 capital) affirmed at
'BBB+(twn)'
Subordinated debt (Basel III-compliant) affirmed at 'BBB(twn)'
TSB:
National Long-Term Rating affirmed at 'A-(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
SCSB:
Long-Term Issuer Default Rating affirmed at 'A-'; Stable Outlook
Short-Term Issuer Default Rating affirmed at 'F1'
National Long-Term Rating affirmed at 'AA(twn)'; Stable Outlook
National Short-Term Rating affirmed at 'F1+(twn)'
Viability Rating affirmed at 'a-'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'
===============
X X X X X X X X
===============
* ASIA: Default Risk Rising as Governments Allow Failures
---------------------------------------------------------
Bloomberg News reports that Asian companies face increased risk
of default as politicians in the region accept more corporate
failures, adding to strains as refinancing costs climb.
Bloomberg says China is allowing more defaults to happen as it
promotes more market-driven pricing in bond markets, while
India's overhaul of its bankruptcy courts is forcing large
delinquent borrowers into the courts. According to Bloomberg,
JPMorgan Chase & Co. has revised its default-rate forecast for
Asian high-yield bonds to 2.8 percent, citing negative surprises
such as China Energy Reserve & Chemicals Group Co.'s recent debt
failure.
"It certainly looks like defaults will pick up in Asia,"
Bloomberg quotes David Kidd, a partner at Linklaters, who focuses
on restructuring and insolvency matters, as saying. "There seems
to be a political willingness to allow defaults."
According to Bloomberg, five companies in the region have
defaulted on dollar bonds this year, up from two last year. China
Energy Reserve defaulted on its bonds in May, as did Hong Kong
developer Hsin Chong Group Holdings Ltd.
A record $282 billion of dollar bonds are due in Asia ex-Japan in
the two years through 2020, coming at a time when analysts
forecast the 10-year U.S. Treasury yield to rise to 3.56 percent
by the first quarter of 2020, Bloomberg notes. The yield has
climbed more than fifty basis points this year, exceeding 3.1
percent in May before falling back.
"People are going to refinance at higher rates, so there's going
to be a lot more pressure on those companies," the report quotes
Paul Forgue, managing director and head of Asia restructuring
practice at Alvarez & Marsal, as saying. "As their debt servicing
increases, the risk of default down the road is definitely
higher."
According to Bloomberg, S&P Global Ratings sees selective
defaults in Southeast Asia, where conglomerates have also become
more aggressive in acquisitions, resulting in increased debt
loads. Weaker companies in Indonesia would likely face the risk
of financial difficulties if the rupiah weakens to over 15,000
against the dollar for six to 12 months, according to Xavier
Jean, an analyst at S&P, Bloomberg relays. The rupiah in recent
days has traded a little under 14,000. A weaker local currency
pushes up the cost to service foreign debt.
"The currency is the big thing to look out for," Mr. Jean, as
cited by Bloomberg, said.
Overall, liquidity has tightened in the region compared to last
year, and China is focusing on cleaning up debt at local
government-related entities, Bloomberg relates citing Clara Lau,
an analyst at Moody's Investors Service. That may trigger
defaults this year, she said.
"There should be no assumption that the PRC government will prop
up failing companies no matter how large," Bloomberg quotes
Mr. Kidd as saying. "The prevailing view now is that we will see
some large defaults."
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***