/raid1/www/Hosts/bankrupt/TCRAP_Public/180625.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, June 25, 2018, Vol. 21, No. 124
Headlines
A U S T R A L I A
BAR NONNO: First Creditors' Meeting Set for July 3
CAPITAL MANAGEMENT: First Creditors' Meeting Set for July 2
CHINATEX (AUSTRALIA): Second Creditors' Meeting Set for July 2
GOLDBREAK HOLDINGS: First Creditors' Meeting Set for July 2
JOSE BART: First Creditors' Meeting Set for July 2
LESSO BUILDING: Second Creditors' Meeting Set for July 2
MICHAEL HILL: Winds Up Emma & Roe Brand; Six Stores to Close
C H I N A
EHI CAR SERVICES: S&P Lowers ICR to 'BB-', Outlook Stable
QINGHAI PROVINCIAL: S&P Places 'BB-' ICR on CreditWatch Negative
ZHENRO PROPERTIES: S&P Rates New U.S. Dollar Unsecured Notes 'B-'
H O N G K O N G
NOBLE GROUP: Investors to Offer US$100MM Trade Finance Facilities
I N D I A
AQUA GENO: CRISIL Reaffirms B+ Rating on INR6.25cr Packing Loan
B.L. INTERNATIONAL: CRISIL Cuts Rating on INR18.65cr Loan to B+
BENCHMARK IT: CRISIL Migrates B+ Rating from Not Cooperating
CANOPY ESTATES: CRISIL Maintains D Rating in Not Cooperating
D CORP: CRISIL Assigns B+ Rating to INR5.25cr Cash Loan
DMW CNC: CRISIL Withdraws B Rating on INR18.88cr Term Loan
ELLEN TEXTILES: Ind-Ra Maintains BB- LT Rating in Non-Cooperating
FAIRDEAL STEELS: Ind-Ra Maintains BB LT Rating in Non-Cooperating
GITA REFRACTORIES: CRISIL Assigns D Rating to INR4cr Cash Loan
GRANITE MART: CRISIL Reaffirms B Rating on INR6.3cr LT Loan
HI-TECH HYDRAULIC: Ind-Ra Raises Long-Term Issuer Rating to 'B'
KAYATHRI CONSULTANTS: CRISIL Cuts Rating on INR6.5cr Loan to D
KIAN CHEMICALS: CRISIL Migrates B Rating from Not Cooperating
LIFEWAYS INFRAESTATE: CRISIL Assigns B- Rating to INR7cr Loan
LILY REALTY: CRISIL Migrates B Rating to Not Cooperating Category
MEGAWIN LEATHER: CRISIL Withdraws D Rating on Bank Facilities
NANDAN PETROCHEM: Ind-Ra Maintains BB+ Rating in Non-Cooperating
ODITI APPLIANCES: CRISIL Reaffirms B+ Rating on INR7cr Term Loan
P.S. BHAT: CRISIL Reaffirms B+ Rating on INR5cr LT Loan
PAWAR PATKAR: Ind-Ra Maintains BB+ LT Rating in Non-Cooperating
P K K CONSTRUCTIONS: CRISIL Hikes Rating on INR4cr Loan to B+
PRAGATI SAHAYOG: CRISIL Reaffirms B Rating on INR5cr Cash Loan
ROSEBEY RESORTS: CRISIL Reaffirms B Rating on INR12.9cr Loan
SHAILESH TRADERS: CRISIL Assigns B+ Rating to INR3.25cr Cash Loan
SHRI HIRANYAKESHI: Ind-Ra Affirms BB Rating on INR101.27MM Loan
SHRI WARDHMAN: CRISIL Lowers Rating on INR7.cr Overdraft to B+
SPINAROO COMMERCIAL: CRISIL Assigns B+ Rating to INR2.85cr Loan
SRI KANYA: CRISIL Reaffirms B+ Rating on INR10cr Cash Loan
SUBASREE JEWELLERS: CRISIL Reaffirms B- Rating on INR2.29cr Loan
TIRUPATIBALAJI MILLS: CRISIL Assigns B+ Rating to INR1cr Loan
WATERO SANITARY: CRISIL Assigns B Rating to INR5.0cr Term Loan
WESTERN BIO: CRISIL Assigns B+ Rating to INR10cr Cash Loan
YOUNG INDUSTRIES: CRISIL Lowers Rating on INR6cr Loan to B
I N D O N E S I A
MULTIPOLAR TBK: Fitch Alters Outlook to Neg.; Affirms 'B-' LT IDR
P A K I S T A N
PAKISTAN MOBILE: Moody's Alters Outlook to Neg. & Affirms B1 CFR
- - - - -
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A U S T R A L I A
=================
BAR NONNO: First Creditors' Meeting Set for July 3
--------------------------------------------------
A first meeting of the creditors in the proceedings of Bar Nonno
Pty Ltd will be held at the offices of Worrells Solvency &
Forensic Accountants, Level 15, 114 William Street, in Melbourne,
Victoria, on July 3, 2018, at 2:30 p.m.
Ivan Glavas and Matthew Jess of Worrells Solvency & Forensic
Accountants were appointed as administrators of Bar Nonno on June
21, 2018.
CAPITAL MANAGEMENT: First Creditors' Meeting Set for July 2
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Capital
Management (WA) Pty Ltd will be held at 463 Scarborough Beach
Road, in Osborne Park, West Australia on July 2, 2018, at
10:30 a.m.
Simon Roger Coad of Ticcidew Insolvency was appointed as
administrator of Capital Management on June 20, 2018.
CHINATEX (AUSTRALIA): Second Creditors' Meeting Set for July 2
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Chinatex
(Australia) Pty Limited has been set for July 2, 2018, at 11:00
a.m. at Level 17, 383 Kent 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 29, 2018, at 4:00 p.m.
Said Jahani and Philip Campbell-Wilson of Grant Thornton
Australia were appointed as administrators of Chinatex
(Australia) on March 26, 2018.
GOLDBREAK HOLDINGS: First Creditors' Meeting Set for July 2
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Goldbreak
Holdings Pty Ltd will be held at the offices of Veritas Advisory,
Level 5, 123 Pitt Street, in Sydney, NSW, on July 2, 2018, at
3:00 p.m.
Steve Naidenov and Vincent Pirina of Veritas Advisory were
appointed as administrators of Goldbreak Holdings on June 20,
2018.
JOSE BART: First Creditors' Meeting Set for July 2
--------------------------------------------------
A first meeting of the creditors in the proceedings of Jose Bart
Marketing Pty Ltd will be held at Level 4, 232 Adelaide Street,
in Brisbane, Queensland, on July 2, 2018, at 10:00 a.m.
Peter Anthony Lucas of P A Lucas & Co was appointed as
administrator of Jose Bart on June 20, 2018.
LESSO BUILDING: Second Creditors' Meeting Set for July 2
--------------------------------------------------------
A second meeting of creditors in the proceedings of Lesso
Building Material Trading (Sydney) Pty Limited, trading as Lesso
Home Greenacre, has been set for July 2, 2018, at 11:00 a.m. at
the offices of BRI Ferrier (NSW), Level 30, Australia Square, 264
George Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 29, 2018, at 4:00 p.m.
Peter Paul Krejci and Andrew Cummins of BRI Ferrier were
appointed as administrators of Lesso Building on May 25, 2018.
MICHAEL HILL: Winds Up Emma & Roe Brand; Six Stores to Close
------------------------------------------------------------
Inside Retail Australia reports that Michael Hill has decided to
abandon plans to reposition its struggling Emma & Roe brand and
will instead wind up the business.
The move will see the listed jeweller refocus resources on its
core Michael Hill business after a strategic review identified a
need to reprioritize, the report says.
Inside Retail relates that six stores and an e-commerce platform
will be shut down in the closure, following on from the 24 stores
already closed since March.
According to Inside Retail, only a few months ago Michael Hill
had planned to reposition Emma & Roe in the so-called 'demi-fine'
part of the jewellery market. But on June 22 the jeweller
indicated that it wasn't the right time to be splitting its
priorities.
"We have decided that a singular focus on the Michael Hill brand
will best position us to deliver a stronger customer proposition
and financial results," the report quotes chief executive Phil
Taylor as saying.
Michael Hill will pursue negotiations with landlords to close its
six remaining Emma & Roe stores, while identifying redeployment
or redundancy plans for staff, the report states.
Lease termination and severance costs are currently estimated to
be no higher than AUD3.1 million, following the AUD5.8-AUD7.9
million in costs associated with the closure of Emma & Roe stores
earlier this year, according to Inside Retail.
The report notes that Emma & Roe was initially launched as a test
brand in 2014 after a review of the jewellery market conducted
under former chief Mike Parsell identified an opportunity for a
more fashion-focused offer that could compete with the likes of
Lovisa.
It was believed that Emma & Roe could focus on emerging
preferences for personalised jewellery while Michael Hill
maintained its focus on fine diamonds and bridal customers, the
report says.
But despite several years of heavy investment in opening stores
in both Australia and New Zealand, the business was never able to
find its feet and deliver sustainable same-store sales growth,
Inside Retail states.
It missed revenue targets in fiscal 2017, leading the brand to a
worse than expected AUD6.9 million loss, says Inside Retail.
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C H I N A
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EHI CAR SERVICES: S&P Lowers ICR to 'BB-', Outlook Stable
---------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
eHi Car Services Ltd. to 'BB-' from 'BB'. The outlook is stable.
At the same time, S&P lowered the issue rating on the company's
outstanding U.S.-dollar-denominated debt to 'BB-' from 'BB'.
S&P also removed all ratings from CreditWatch with negative
implications, where they had been placed on April 17, 2018, when
the New-York-listed company announced privatization plans.
China-based eHi is a provider of car rentals and services.
S&P said, "We downgraded eHi to 'BB-' because we anticipate eHi's
credit measures will improve at a rate slower than we initially
expected. In addition to eHi's incremental borrowings of US$200
million associated with its planned privatization, we estimate
eHi's debt-funded capital expenditures will raise debt to higher
levels than our original expectation. While eHi should be able to
increase its profit margins given the increased scale, such
benefits cannot effectively mitigate risks from quickly rising
debt.
"At the same time, we removed eHi from CreditWatch following o
clarification on eHi's expected ownership structure after its
privatization is completed. While new investors will help finance
the buyout in exchange for post-deal equity stakes, we believe
the current controlling shareholders will maintain a strong
influence on eHi's strategies and cash flows. Therefore, we don't
anticipate the transaction to trigger any immediate refinancing
risks for the company. In our base case, we assume the
transaction will go through, given the buy-out consortium's high
degree of control over eHi's voting power. The transaction is
subject to approvals by shareholders, noteholders and the U.S.
Securities and Exchange Commission."
S&P expects eHi to upgrade and expand its vehicle portfolio, to
improve its operating efficiency in China's growing but also
highly competitive car rental market. eHi's fleet was at 64,946
cars at the end of 2017, up from 56,916 in 2016, and 38,070 in
2015. At the same time, the company has accelerated vehicle
disposals to reduce fleet age. Hence its product prices and
utilization are generally stable, allowing the company to report
revenue per available car at Chinese renminbi (RMB) 123, RMB125
and RMB134 during 2015-2017. After netting out disposals, eHi's
capital expenditures remained high at around or above RMB2
billion per annum over the past three years.
eHi's increased use of program-car agreements speeds up its
vehicle upgrades but also implies a potential for more aggressive
leverage. Under the program-car agreement, car dealers agree to
buy back vehicles from eHi after one or two years at preset
rates. This allows eHi to be more effective in managing its asset
risks. S&P said, "On the other hand, we view these obligations to
support long-lived asset as debt-like. In 2015, 2016, and 2017,
approximately 29%, 49%, and 60% of the respective period-end
fleet sizes were subject to such program-car arrangements. We
estimate the level will further rise, with eHi's program cars set
to make up more than 80% of eHi's new vehicle acquisitions over
the next two years."
S&P said, "We believe eHi can continue to expand margins due to
its scale expansion. However, we have some reservations on its
ability to sustain the same level of improvement on its EBIT
coverage or other credit metrics, considering the more aggressive
capital expenditures. A larger scale helped eHi to improve its
EBIT margin to 17.4% in 2017, compared with 12.8% in 2016, and to
improve its EBIT coverage to 1.7x in 2017, compared with 1.2x in
2016. Still, its supplemental ratios such as the debt-to-capital
ratio and its ratio of funds from operations (FFO) to debt
further weakened in 2017 due to rising debt.
"The stable outlook on eHi reflects our expectation that the
company will continue to gradually improve its profit margins and
cash flows over the coming 12-24 months. We expect the company to
see relatively stable rental rates and utilization rates as it
expands its fleet. The increased scale should enable the company
to realize cost efficiencies. We expect eHi's EBIT margin to be
15%-25% and its EBIT interest coverage to be 1.3x-1.7x, generally
improving but still likely somewhat volatile driven by its
aggressive debt-funded growth plan.
"We may downgrade eHi if its utilization or pricing declines due
either to rising competition in China's car rental industry or
more aggressive capital expenditures. This scenario could result
its EBIT coverage dropping below 1.3x or the ratio of FFO to debt
falling below 12% on a prolonged basis. We may also consider a
downgrade if the company's liquidity buffer diminishes, driven by
even higher levels of committed capital expenditures or
difficulty in disposing of used vehicles.
"We may consider an upgrade if eHi can maintain its EBIT margin
above 18%, EBIT coverage above 1.7x, and if its ratio of FFO to
debt exceeds 20% for a sustained period of time. If eHi is able
to prudently expand its fleet while increasing its utilization
and rental rates, the company may be able to achieve these credit
measures."
QINGHAI PROVINCIAL: S&P Places 'BB-' ICR on CreditWatch Negative
----------------------------------------------------------------
S&P Global Ratings placed its 'BB-' long-term issuer credit
rating on Qinghai Provincial Investment Group Co. Ltd. (QPIG) on
CreditWatch with negative implications. At the same time, S&P
placed the 'BB-' long-term issue rating on the China-based
aluminum producer's outstanding U.S. dollar-denominated senior
unsecured notes on CreditWatch with negative implications.
S&P placed the ratings on CreditWatch with negative implications
because we believe QPIG faces increased refinancing risks for its
two US$300 million senior unsecured notes each due in September
and December 2018, respectively.
QPIG has total short-term debt of Chinese renminbi (RMB) 19.56
billion due in the 12 months ending May 2019, including the two
US$300 million notes (around RMB3.9 billion). As one of the
largest state-owned enterprises in Qinghai province, the company
was able to roll over its bank borrowing smoothly so far this
year. However, the company still does not have a concrete,
credible plan to refinance the two US$300 million notes.
S&P said, "While we believe QPIG should have enough financial
resources to repay the notes due in September, it relies on
market conditions to refinance the notes due in December. As of
May 31, 2018, QPIG has a cash balance of RMB2.96 billion, of
which about RMB1.49 billion is unrestricted. The company also has
RMB22.46 billion of unused bank credit lines, but all of these
are uncommitted. All of QPIG's U.S. dollar notes are currently
trading materially below par, making it extremely difficult to
tap the offshore bond market. At the same time, access to the
domestic bond market has become more difficult due to rising
defaults this year. QPIG hasn't issued any bonds in the domestic
market so far this year.
"We don't expect QPIG's highly leveraged financial position to
improve this year despite favorable operating conditions for
aluminum producers. In our view, the company's funds from
operation may be minimal, while its ratio of debt to EBITDA will
stay above 25.0x over the next 12 months."
The CreditWatch placement reflects QPIG's heightened refinancing
risk. The CreditWatch resolution will depend on the company's
ability to formulate a concrete and credible plan to refinance
and repay its near-term maturities, specifically the two
outstanding US$300 million notes due in September and December
this year.
S&P said, "We could lower the rating if QPIG doesn't come up with
a concrete and credible plan to secure refinancing. We could also
lower the rating by more than one notch if we see a lower
likelihood of extraordinary government support to the company
than we currently expect.
"We will likely affirm the rating if QPIG can successfully
execute a refinancing plan before the outstanding notes come due.
"Our issue ratings consider QPIG's capital structure as of Sept.
30, 2017. As of that date, the company has RMB8.39 billion of
secured debt and RMB11.69 billion of unsecured debt issued by its
operating subsidiaries, compared with its total debt of about
RMB40.04 billion.
"We equalize our ratings on QPIG's outstanding senior unsecured
notes to the issuer credit rating on the company. Although QPIG's
priority debt ratio is slightly above 50%, we do not notch down
the issue ratings considering the company's important government
status. We believe the Qinghai provincial government is unlikely
to dilute its ownership in QPIG, and therefore structurally
subordinated lenders would not have weaker recovery prospects
than other senior lenders."
ZHENRO PROPERTIES: S&P Rates New U.S. Dollar Unsecured Notes 'B-'
-----------------------------------------------------------------
S&P Global Rating assigned its 'B-' long-term issue rating to a
proposed issue of U.S.-dollar-denominated senior unsecured notes
by Zhenro Properties Group Ltd. (B/Stable/--). The China-based
developer intends to use the proceeds for refinancing its
existing debt. The issue rating is subject to S&P's review of the
final issuance documentation.
S&P said, "We rate Zhenro's senior unsecured notes one notch
lower than the issuer rating because of significant subordination
risks. In our calculation, the proposed notes will rank behind a
significant amount of priority debt in Zhenro's capital
structure. As. of Dec. 31, 2017, Zhenro's capital structure
consists of Chinese renminbi (RMB) 36.3 billion secured debt and
RMB8.8 billion unsecured debt issued by the company and its
subsidiaries. As such, the secured debt ratio is considerably
over our threshold of 50% for a one-notch subordination risk
adjustment."
The issuer credit rating on Zhenro reflects the company's high
leverage stemming from its quick expansion and aggressive growth
target. The rating also reflects Zhenro's limited record of
prudent financial management and high reliance on funding from
nonbank financial institutions. The company's growing operating
scale, good geographic diversity, and satisfactory margins temper
these weaknesses. Further support for the rating comes from the
company's execution capability in building quality products that
capture upgrade demand.
S&P said, "The stable outlook reflects our view that Zhenro will
maintain high growth in contracted sales and revenue in the next
12 months, without a material deterioration in its currently high
financial leverage. We also expect the company's margins to
stabilize owing to its increase in scale."
================
H O N G K O N G
================
NOBLE GROUP: Investors to Offer US$100MM Trade Finance Facilities
-----------------------------------------------------------------
Noble Group Limited on June 22 announced a binding commitment
with a consortium of investors, including Value Partners Limited
and Pinpoint Asset Management Ltd to provide New Noble with an
additional US$100 million of 3 year committed trade finance
facilities. The binding commitment is subject to the execution of
final detailed documentation. The individual members of the
Consortium collectively own approximately 5% of the shares in the
Company and have irrevocably agreed to vote their interests in
favor of the Restructuring.
The additional US$100 million in trade finance facilities provide
funding capacity allowing greater flexibility for the Company to
expand its trade flows, particularly in the high growth
opportunities in the LNG space.
In return for providing these additional trade finance
facilities, the Consortium will receive (a) US$7.5 million New
Asset Co Bonds; (b) US$7.5 million New Trading Co Bonds; (c)
US$10 million New Trading Hold Co Bonds; and (d) an arrangement
fee of US$5 million. In this regard, US$7.5 million of New Asset
Co Bonds that were to be issued to Existing Senior Creditors will
be re-allocated to the Consortium, and in exchange Existing
Senior Creditors will be issued an additional US$7.5 million New
Trading Co Bonds. Accordingly, the total amount of New Trading Co
Bonds will be increased from US$685 million (as originally
announced on 14 March 2018) to US$700 million, and the total
amount of New Trading Hold Co Bonds will be increased from US$270
million (as originally announced on 14 March 2018) to US$280
million.
Existing Perpetual Capital Securities
The Consortium members are also holders of the Company's US$400
million Existing Perpetual Capital Securities. As agreed under
the RSA, all holders will be offered to exchange their Existing
Perpetual Capital Securities into US$25 million of New Perpetual
Capital Securities, which shall carry the right to a non-
accumulative dividend of 2.5%.
Chairman Mr. Paul Brough commented:
"As I stated in the Company's announcement dated 25 April 2018,
the Company is determined to complete its restructuring on a
consensual basis in order to preserve and protect value for all
stakeholders. The provision of additional trade lines dedicated
to helping us build out our coal, liquids and LNG trade flows,
together with the Consortium's full support of a consensual
restructuring, represents an important further step towards
allowing New Noble to return to business as usual; with a well-
capitalized balance sheet and important tools of the trade in
place for its future success."
Value Partners and Pinpoint added:
"We are pleased to be able to support Noble during this critical
time as the Company seeks to implement its restructuring. We
believe this facility will strengthen the ability of the New
Noble management team to quickly build out its trade flows and we
look forward to providing other financing solutions to New Noble
as they may arise."
Further details will be released once the agreement is in final
legal form and executed.
Significant majority of creditors party to RSA; Company preparing
to launch scheme
Existing Senior Creditors representing approximately 85% of
Existing Senior Claims have now acceded to the RSA. The RSA,
which remains open for accession, contemplates a restructuring
transaction that is, among other things, approved by a majority
in number of holders of Existing Senior Claims representing 75%
in value of such claims voting at the Scheme Meetings. The
value threshold is comfortably met by the claims of the Existing
Senior Creditors that have already acceded to the RSA, and the
Company is now working towards launch of a UK scheme of
arrangement without further delay.
The Company continues to engage in discussions with the SGX on
the Restructuring. A circular to Shareholders containing further
information on the Restructuring, together with a notice of
SGM, will be despatched to Shareholders in due course.
About Noble Group
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
March 23, 2018, S&P Global Ratings lowered its long-term issuer
credit rating on Noble Group to 'D' from 'CC'.
S&P said, "We lowered the ratings because Noble has missed the
principal and coupon payment for its 2018 notes due March 20,
2018. Noble also missed the coupon payment on its 2022 notes due
March 9, 2018. In addition, the company said it would not make
the payments despite being given 30-day grace periods to meet
both obligations. The failure to make these payments will
trigger cross-defaults on the company's other obligations. We do
not expect Noble to meet any outstanding obligations as the
company preserves its assets during the restructuring process."
Noble is undergoing a debt restructuring, which management
expects to be completed by the end of July. S&P will conduct
another review the company's credit profile after the
restructuring is complete.
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I N D I A
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AQUA GENO: CRISIL Reaffirms B+ Rating on INR6.25cr Packing Loan
---------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Aqua Geno Exim (AGE).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 4 CRISIL A4 (Reaffirmed)
Packing Credit 6.25 CRISIL B+/Stable (Reaffirmed)
Term Loan 0.75 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the firm's average scale of
operations and low profitability in the intensively competitive
seafood processing industry, and its below-average financial risk
profile because of leveraged capital structure. These weaknesses
are partially offset by the promoters' extensive experience in
the seafood industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Average scale of operations and low profitability in the
intensely competitive seafood processing industry: Despite growth
of 27% over the four fiscals through 2018 on compounded basis,
revenue remains average, estimated at INR63.37 crore for fiscal
2018. The average scale of operations limits bargaining power
with customers, thereby constraining profitability, which has
remained modest, estimated at 2.7% in fiscal 2018. The seafood
export industry has several small players and large established
players operating in India's coastal areas. The competition
restricts scalability and exerts pressure on profitability.
* Below-average financial risk profile: The financial risk
profile is constrained by modest networth of INR2.15 crore and
high total outside liabilities to adjusted networth ratio of 4.81
times as on March 31, 2018. With modest accretions, working
capital debt has been large, which will keep capital structure
leveraged.
Strength
* Extensive experience of the promoters in the seafood industry:
The promoters have experience of over three decades in the
seafood industry. Before setting up AGE, they were involved in
the seafood industry through their other firms.
Outlook: Stable
CRISIL believes AGE will continue to benefit from its promoters'
extensive industry experience. The outlook may be revised to
'Positive' if revenue and operating profitability increase,
resulting in higher cash accrual, or if capital structure
improves because of sizeable fund infusion by the promoters. The
outlook may be revised to 'Negative' if decline in accrual, or
significant debt-funded capital expenditure, or larger-than-
expected working capital requirement weakens the financial risk
profile and liquidity.
Set up in 2013, AGE processes and exports seafood. The firm is
promoted by Mr Akbar Sherief and his family members.
B.L. INTERNATIONAL: CRISIL Cuts Rating on INR18.65cr Loan to B+
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of B.L.
International Private Limited (BLIPL) to 'CRISIL B+/Stable/CRISIL
A4' from 'CRISIL BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing 45 CRISIL A4 (Downgraded from
Credit & Export 'CRISIL A4+')
Bills Negotiation/
Foreign Bill
discounting
Overdraft 7 CRISIL B+/Stable (Downgraded
from 'CRISIL BB/Stable')
Proposed Fund- 7.53 CRISIL B+/Stable (Downgraded
Based Bank Limits from 'CRISIL BB/Stable')
Term Loan 18.65 CRISIL B+/Stable (Downgraded
from 'CRISIL BB/Stable')
Working Capital 11.82 CRISIL B+/Stable (Downgraded
Term Loan from 'CRISIL BB/Stable')
The downgrade reflects expectation of weak liquidity over the
medium term on account of sharp decline in net cash accrual which
renders it significantly inadequate for servicing the annual debt
repayment obligation, though supported through continuous
infusion of promoters fund in the form of unsecured loans. The
unsecured loans have increased to INR22.3 crore as on March 31,
2018 against INR14.95 crore as on March 31, 2017. Consistent
decline in operating margin to 2.2% in fiscal 2018 from 8.6% in
fiscal 2015 on account of intense competition in the export
market, primarily from Bangladesh manufacturers, led to net loss
of INR4.4 crore in fiscal 2018. Furthermore, the intense
competition also resulted in deterioration in business risk
profile marked by consistent decline in operating income to
INR138 crore in fiscal 2018 from INR187 crore in fiscal 2015
(compounded annual de-growth of 9.5%). Decline in profitability
and operating income have resulted in weakening of financial risk
profile and liquidity position.
The ratings reflect BLIPL's large working capital requirement and
weak financial risk profile marked by modest debt protection
metrics. These weaknesses are partially offset by promoters'
extensive experience and funding support.
Analytical Approach
Unsecured loans of INR22.3 crore from promoters as on March 31,
2018, have been treated neither as debt nor as equity as these
are non-interest bearing, subordinate to bank debt, and are
expected to support business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Debt protection metrics were
muted, with three year moving average interest coverage ratio of
1.4 times in fiscal 2018. Due to declining profitability, the
company reported negative net cash accrual of INR2.38 crore in
the fiscal.
* Weak liquidity: Net cash accrual of INR80 lakh is expected to
be significantly inadequate to meet debt obligation of around
INR6 crore in fiscal 2019. Repayment is likely to be serviced
through infusion of funds from promoters.
* Large working capital requirement: Gross current assets were
249 days as on March 31, 2018, because of a growing raw material
inventory and stretched receivables of 82 days. However, this was
supported by payables of 100 days; the remaining working capital
requirement is met through bank limit. Efficient management over
the medium term will remain a rating sensitivity factor.
* Geographical concentration in revenue: Exports, primarily to
Europe, account for over 90% of revenue, leading to concentration
risk. However, this is partially offset by healthy client
relationship. The company has taken steps to widen its customer
base by including other large retailers such as Hennes & Mauritz
AB, Adolfo Domniguez, and C&A Modals. Nevertheless, operating
revenue will remain vulnerable to slowdown in target markets and
high geographical and customer concentration.
Strengths
* Extensive experience of promoters: Two decades of presence in
the ready-made garments business has enabled the promoters to
build an established base of 20-25 customers and ensure steady
offtake.
* Funding from promoters: Unsecured loans from promoters
increased to INR22.3 crore as on March 31, 2018, from INR14.95
crore as on March 31, 2017. These loans are expected to bridge
the shortfall between cash accrual and debt obligation over the
medium term.
Outlook: Stable
CRISIL believes BLIPL will continue to benefit from its
established relationship with customers and promoters' extensive
experience. The outlook may be revised to 'Positive' if a
substantial improvement in cash accrual or working capital
management strengthens financial risk profile. The outlook may be
revised to 'Negative' if profitability declines further or
stretch in working capital cycle leads to deterioration in
capital structure.
Set up as a partnership firm by Mr Deepal Aggarwal and Ms Pushpa
Aggarwal in 1989, Noida-based BLIPL was reconstituted as a
private limited company effective July 1, 2013. The company
manufactures and exports ready-made garments (women's woven and
knitted garments).
BENCHMARK IT: CRISIL Migrates B+ Rating from Not Cooperating
------------------------------------------------------------
CRISIL is migrating the ratings of Benchmark IT Solutions India
Pvt Ltd (BSIPL) from CRISIL B+/Stable/ Issuer Not Cooperating' to
'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Rupee Term Loan 10 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING')
Due to inadequate information and in line with Securities and
Exchange Board of India guidelines, CRISIL had migrated its
ratings on the bank facilities of Benchmark IT Solutions India
Pvt Ltd (BSIPL) to CRISIL B+/Stable/Issuer Not Cooperating'.
However, the management has subsequently shared the requisite
information for a comprehensive review of the ratings.
Consequently, CRISIL is migrating the ratings from CRISIL
B+/Stable/ Issuer Not Cooperating' to 'CRISIL B+/Stable'.
The rating continues to reflect BSIPL's improving but modest
scale of operations, average financial risk profile and weak debt
protection metrics. These weaknesses are partially offset by the
extensive experience of its promoters in the software development
industry, and their funding support.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Turnover, estimated at INR8.2 crore
in fiscal 2018, is likely to post 25% growth in fiscal 2019.
However, growth in revenue is dependent on the successful receipt
of new orders in the intensely competitive software development
industry. Thus scale of operations is expected to remain modest
over the medium term.
* Average financial risk profile: Networth was estimated at a
modest INR3.16 crore as on March 31, 2018. Gearing was 2.78 times
because of debt-funded capital expenditure undertaken in fiscal
2017. Debt protection metrics, however, are modest, with interest
coverage and net cash accrual to total debt ratios of 1.55 times
and 0.06 time, respectively, in fiscal 2018.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' experience of over two decades and established
relations with customers and suppliers should support the
business.
Outlook: Stable
CRISIL believes BSIPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if increase in revenue and profitability, leads to
high cash accrual. The outlook may be revised to 'Negative' if
stable revenue or decrease in profitability results in low cash
accrual and large working capital requirement.
Incorporated in 2003, BSIPL, promoted by technocrats Mr Ganesh
Patil and Mr Rahul Asanikar, provides information technology
services such as application development, enterprise integration
solutions, and mobile based custom applications. Overseas
projects account for nearly 95% of revenue.
CANOPY ESTATES: CRISIL Maintains D Rating in Not Cooperating
------------------------------------------------------------
CRISIL has been following up with Canopy Estates Private Limited
(CEPL) for getting information through letters, dated
December 31, 2017 & May 31, 2018, apart from various e-mails &
telephonic communications. However, the issuer has continued to
be non-cooperative.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Mortgage Loan
Facility 20 CRISIL D (ISSUER NOT COOPERATING)
Proposed Long
Term Bank Loan
Facility 30 CRISIL D (ISSUER NOT COOPERATING)
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 CEPL. 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
the group is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information'
corresponding to CRISIL BB rating category or lower. Based on the
last available information, the rating on bank facilities of CEPL
continues to be 'CRISIL D Issuer Not Cooperating'
There have been instances of delay in servicing debt; this was
because of weak liquidity. CRISIL has held discussions with the
banker, which has confirmed the ongoing delays.
CEPL, incorporated in 2005 and promoted by Mr Yasir Rizvi,
undertakes real estate and property development. It mainly
develops residential spaces. During 2010, the company entered
into joint development agreement for developing residential and
commercial projects.
About the Canopy Group
CEPL is part of the Canopy group, promoted by the Rizvi family in
1996. The group undertakes residential real estate development in
and around Bengaluru. Mr Yasir Rizvi has more than 25 years of
experience in construction and real estate development. The
promoters have completed about 10 projects including villas, row
houses, budget and luxury apartment, and duplex penthouses, with
total saleable area of around one million square foot over the
past 17 years.
D CORP: CRISIL Assigns B+ Rating to INR5.25cr Cash Loan
-------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long
term bank facilities of D Corp Agro Foods Private Limited
(DCORP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 5.2 CRISIL B+/Stable (Assigned)
Cash Credit 5.25 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility .05 CRISIL B+/Stable (Assigned)
The rating reflects exposure to risks, related to project
implementation, and timely stabilisation and commensurate ramp-up
in sales. The ratings also factor in the below-average financial
risk profile, due to the debt-funded capital expenditure and
working capital requirement. These weaknesses are partially
offset by extensive experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to implementation and offtake risk: Commercial
operations are expected to commence from July 2018. Timely
implementation, stabilisation, and commensurate ramp-up in sales,
during the initial phase of operations, will remain critical,
especially amidst intense competition, and hence, be monitored
closely.
* Moderate financial risk profile: Financial risk profile may
remain under pressure due to high gearing, led by the ongoing
debt-funded capex, and reliance on working capital debt.
Strength
* Promoter's extensive experience in agro-industry: The promoters
have been in agro-industry for over 30 years and have developed
deep understanding of the dynamics of the local market, which
will help anticipate price trends and calibrate purchasing and
stocking decisions.
Outlook: Stable
CRISIL believes DCORP will continue to benefit from the
promoters' extensive industry experience. The outlook may be
revised to 'Positive' if timely implementation and stabilization
of the project leads to higher revenue and cash accruals. The
outlook may be revised to 'Negative' if delay in project
implementation and stabilization leads to lower revenue or
margin, and weakens financial risk profile, particularly
liquidity.
DCORP, incorporated in 2015 by Mr. Gajanan Desai, is setting up
unit for processing of cashew and its byproducts at Palghar,
Maharashtra and is expected to start operations from Jul
DMW CNC: CRISIL Withdraws B Rating on INR18.88cr Term Loan
----------------------------------------------------------
CRISIL has withdrawn its ratings on the bank facilities of DMW
CNC Solutions India Private Limited (DMW) on the request of the
company and receipt of a no objection / due certificate from its
bank. The rating action is in line with CRISIL's policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.9 CRISIL A4 (Issuer Not
Cooperating; Rating Withdrawn)
Cash Credit 4.0 CRISIL B/Stable/Issuer Not
Cooperating (Issuer Not
Cooperating; Rating Withdrawn)
Proposed Long Term 16.46 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating Withdrawn)
Term Loan 18.88 CRISIL B/Stable/Issuer Not
Cooperating; Rating Withdrawn)
CRISIL has been consistently following up with DMW for obtaining
information through letters and emails dated November 9, 2017,
and January 17, 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 they are arrived at without any
management interaction and are 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 DMW. This restricts CRISIL's
ability to take a forward DMW 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, the rating on bank facilities of DMW
continues to be 'CRISIL B/Stable/CRISIL A4 Issuer Not
Cooperating'.
Set up in 2005, DMW CNC manufactures precision machined
components and sub-assemblies. DMW was set up in 1991.
ELLEN TEXTILES: Ind-Ra Maintains BB- LT Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Ellen Textiles
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:
-- INR16 mil. Term loan due on March 2018 maintained in Non-
Cooperating Category with IND BB- (ISSUER NOT COOPERATING)
rating;
-- INR25 mil. Fund-based limit maintained in Non-Cooperating
Category with IND BB- (ISSUER NOT COOPERATING) /IND A4+
(ISSUER NOT COOPERATING) rating; and
-- INR2.8 mil. Non-fund-based limit maintained in Non-
Cooperating Category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 11, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Formed in 1980, Ellen Textiles manufactures polyester yarn in the
count range of 48-64 and combed cotton yarn in the count range of
40-60.
FAIRDEAL STEELS: Ind-Ra Maintains BB LT Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Fairdeal
Steels 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 action is:
-- INR85 mil. Fund-based working capital limits maintained in
Non-Cooperating Category with IND BB (ISSUER NOT COOPERATING)
/IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 17, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1995, Jalandhar-based Fairdeal Steels trades hot-
rolled coils, sheets and plates. The company is promoted by Mr.
Rakesh Garg and Mr. Mahavir Garg.
GITA REFRACTORIES: CRISIL Assigns D Rating to INR4cr Cash Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Gita refractories Private Limited (GRPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Working
Capital Facility 3.26 CRISIL D (Assigned)
Long Term Loan .54 CRISIL D (Assigned)
Letter of Credit
Bill Discounting 2.10 CRISIL D (Assigned)
Bank Guarantee .10 CRISIL D (Assigned)
Cash Credit 4.00 CRISIL D (Assigned)
The rating reflects the company's delay in paying interest due to
weak liquidity. The company has a below-average financial risk
profile reflected in negative networth due to accumulated losses
in the three fiscals ended March 31, 2017. However, it benefits
from the extensive experience of its promoter in the renewable
energy sector.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: Networth is negative due
to accumulated losses in the past three fiscals through 2017. Due
to poor profitability, debt protections metrics are below
average, with interest coverage and net cash accrual to total
debt ratios estimated at 0.8 times and negative 0.01 time,
respectively, for fiscal 2017. The financial risk profile is
expected to be weak over the medium term on account of
accumulated losses.
Strength
* Extensive experience of the promoter: GRPL is a part of the
Gilada group, which is promoted by Mr Rajgopal Gilada, who has
experience of around a decade in the power sector. In 1994, he
started the Gilada group with Gilada Finance and Investments Ltd
as its flagship company. The group diversified into refractories,
renewable energy, and concrete sleepers over the years. CRISIL
expects GRPL to benefit from the experience of its promoter in
the refractory Sector.
GRPL incorporated in 1988 is part of the Gilada Group, promoted
by Mr. Rajgopal Gilada. The company is engaged in manufacturing
of refractory material. Its product line includes High Alumina
Bricks, Magnesia Carbon Bricks, Magnesite, Mag-chrome Bricks,
Chrome-Mag Bricks, Chromite Bricks, along with Monolithics
consisting of Conventional, LC/ULC Castables and Ramming,
Felting, Gunning and Spraying mixes.
GRANITE MART: CRISIL Reaffirms B Rating on INR6.3cr LT Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on
the bank loan facilities of Granite Mart Limited (GML)
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 13.5 CRISIL A4 (Reaffirmed)
Cash Credit 0.5 CRISIL B/Stable (Reaffirmed)
Letter of Credit 5.0 CRISIL A4 (Reaffirmed)
Packing Credit 8 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 6.3 CRISIL B/Stable (Reaffirmed)
The ratings reflect GML's company's large working capital
requirements and susceptibility of its operating margins to
volatility in raw material prices and to foreign exchange rates.
These rating weakness are partially offset promoters' extensive
industry experience.
Key Rating Drivers & Detailed Description
Weakness
* Working Capital Intensive Operations: The Company has working
capital intensive operations as seen in the GCA days of 546 as on
March 31,2018.
* Exposure to Intense Competition: The industry is highly
fragmented and also has large numbers of players. The same
results in constraining the Company in having bargaining power
hence exposing the Company to intense competition
Strengths
* Promoter's extensive industry experience: The Company is
promoted by Mr. Mudit Kumar Agarwal, Mr. Kamal Kumar Agarwal and
Mr. Ashok Kumar Agarwal. All the promoters have vast experience
in export of granite slabs.
Outlook: Stable
CRISIL believes that GML will continue to benefit over the medium
term from its promoter's extensive industry experience and its
established customer relationship. The outlook may be revised to
'Positive' if GML's scale of operations and operating
profitability increases significantly, on a sustained basis,
leading to an improvement in its financial risk profile.
Conversely, the outlook may be revised to 'Negative' if the
company's revenues or operating profitability decline, or if the
company undertakes a 'larger than expected' debt funded capital
expenditure leading to weakening of its financial risk profile.
GML has been incorporated in 2003 and has been taken up by the
present management in acution.The Company in involved in export
of granite slabs, Tiles and Monuments. The Company exports to US,
Canada and UK.The Company has the manufacturing unit in Medak
District of Telangana.
HI-TECH HYDRAULIC: Ind-Ra Raises Long-Term Issuer Rating to 'B'
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Hi-Tech
Hydraulic Engineers' (HTHE) Long-Term Issuer Rating to 'IND B'
from 'IND D'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR31.25 mil. (reduced from INR35.86 mil.) Term loan due on
December 2022 upgraded with IND B/Stable rating;
-- INR60 mil. Fund-based working capital limit upgraded with
IND B/Stable rating; and
-- INR30 mil. Non-fund-based working capital limits upgraded
with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects timely debt servicing by HTHE over the six
months ended May 2018. The ratings, however, remain constrained
by HTHE's stretched liquidity, considering the firm nearly fully
utilized its fund-based facilities during the six months ended
May 2018. This was due to an elongated net working capital cycle
of 245 days in FY18 (FY17: 300 days). The improvement in the
cycle in FY18 was due to an improvement in debtor collection
days. FY18 financials are provisional.
The ratings remain constrained by HTHE's small scale of
operations and modest credit metrics. In FY18, its revenue rose
to INR225.1 million in FY18 from INR203.3 million in FY17, driven
by an increase in orders from customers. Its net leverage (total
adjusted net debt/operating EBITDAR) marginally improved to 4.5x
in FY18 from 4.4x in FY17, with interest coverage (operating
EBITDAR/gross interest expense + rents) slightly enhancing to
1.8x from 1.7x. Meanwhile, HTHE's EBITDA margin was comfortable
at 10.4%-15.8% during FY16-FY18.
However, the ratings continue to be supported by HTHE's
established operational track record and the partners' operating
experience of over a decade in manufacturing hydraulic machinery
components.
RATING SENSITIVITIES
Negative: A negative rating action could result from any
deterioration in the overall credit metrics due to a decline in
the EBITDA margin and/or liquidity due to a further elongation of
the net working capital cycle.
Positive: A positive rating action could result from any
significant revenue growth, while maintaining the EBITDA margin,
and any improvement in the liquidity due to a reduction in the
net working capital cycle.
COMPANY PROFILE
Hyderabad-based HTHE is a partnership firm engaged in the
manufacturing of hydraulic machinery components and heavy
structural fabrication work.
KAYATHRI CONSULTANTS: CRISIL Cuts Rating on INR6.5cr Loan to D
--------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Kayathri Consultants Private Limited (KCPL) to 'CRISIL D/
CRISIL D' from 'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6.5 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 5.0 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Proposed Long Term 1.5 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B-/Stable')
The rating downgrade reflects delay in repayment of bank debt by
KCPL. These delays have been due to liquidity crunch in the
company.
Rating also reflects its below average financial risk profile.
This weakness is partially off-set by its promoter's extensive
experience.
Key Rating Drivers & Detailed Description
Weakness
* Below Average financial risk profile: The firm has weak
financial risk profile marked by high gearing of 4.99 times and
weak debt protection metrics as classified by interest coverage
and NCATD of 1.43 times and 0.04 times respectively in fiscal
2018.
Strength
* Extensive experience of promoters: The promoters of KCPL have
been in the business for more than 15 years. Backed by their
experience, the company has established healthy relationship with
its clients, which is going to help the business in the medium
term.
Incorporated in 2010 by Mr K Sivakumar, KCPL fabricates and
installs mechanical structures for railways and petroleum oil
companies. The company also undertakes tender-based turnkey
projects for petroleum companies and southern railways. Its major
clientele includes Indian Oil Corporation Ltd (IOCL), Bharat
Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation
Ltd (HPCL), Reliance Industries Ltd (RIL) and Southern Railways.
KIAN CHEMICALS: CRISIL Migrates B Rating from Not Cooperating
-------------------------------------------------------------
CRISIL is migrating the rating of Kian Chemicals Ltd (KCL) from
'CRISIL B/Stable Issuer Not Cooperating' to 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit .75 CRISIL B/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Long Term Loan 14.00 CRISIL B/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Due to inadequate information, CRISIL, in line with Securities
and Exchange Board of India guidelines, had migrated the rating
on the long-term bank facilities of KCL to 'CRISIL B/Stable
Issuer Not Cooperating'. However, the management has subsequently
shared the information necessary to carry out a comprehensive
review of the rating. Consequently, CRISIL is migrating the
rating from 'CRISIL B/Stable Issuer Not Cooperating' to 'CRISIL
B/Stable'.
The rating continues to reflect the firm's nascent stage of
operations and susceptibility to offtake and ramp-up related
risks and weak financial risk profile because of a small networth
and leveraged capital structure. These weaknesses are partially
offset by proximity to raw material availability and industrial
customers and financial support from promoters by way of equity
and unsecured loans.
Key Rating Drivers & Detailed Description
Weaknesses
* Nascent stage of operations, and susceptibility to offtake
risk: Project has been delayed by about 15 months, and operations
are expected to commence in June 2018. Because of early phase of
operations, exposure to risks related to adequate ramp-up in
sales remains critical and hence key monitorable.
* Weak financial risk profile: The financial risk profile is weak
marked by a small networth and large debt levels leading to high
gearing. A large part of debt is unsecured loans from
promoters/associates.
Strengths
* Proximity to raw material availability and industrial
customers: Being in early phase, capacity utilisation is likely
to remain moderate. However, proximity to Gujarat - a major
textile and plastic manufacturing hub - should ensure easy access
to raw material, availability of contractors and skilled
labourers, strong customer base, and community support.
* Financial support from the promoter in the form of equity and
unsecured loans: Equity infused and unsecured loans extended were
outstanding at INR5.5 crore and INR16.5 crore, respectively, as
on March 31, 2018. The promoter is likely to continue providing
need-based funding support in future.
Outlook: Stable
CRISIL believes KCL will benefit over the medium term from its
proximity to raw material sources, and prospective customer base.
The outlook may be revised to 'Positive' if timely stabilisation
of operations helps increase sales and cash accrual. The outlook
may be revised to 'Negative' if delay in ramp-up of operations,
low accrual, or large working capital requirement weakens
financial risk profile, particularly liquidity.
Formed in 2015 in Abu Road, Rajasthan, KCL is setting up a
manufacturing unit for hyaluronic acid (H acid) and dyes. It is
promoted by Mr Rajendra Patel, founder of the Jason group, which
develops real estate projects in Ahmedabad.
LIFEWAYS INFRAESTATE: CRISIL Assigns B- Rating to INR7cr Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the bank
facility of Lifeways Infraestate Private Limited (LIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 7 CRISIL B-/Stable (Assigned)
The rating reflects company's exposure to significant demand risk
along with risks and cyclicality inherent in the real estate
industry. These weaknesses are partially offset by promoter's
extensive experience of promoter in real estate industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to significant demand risk: The ongoing project is
exposed to significant demand risk on account of limited sales
resulting in low advances. With upcoming repayment obligations,
booking progress and collection of advances will remain key
rating factors.
* Exposure to risks and cyclicality inherent in Indian real
estate industry: LIPL remains exposed to the inherent risks and
cyclicality associated with the Indian real estate industry
because of a highly fragmented market structure due to the
presence of a large number of regional players.
Strength
* Extensive experience of promoter: LIPL benefits from the
extensive experience of promoters of over 10 years in real estate
industry. The promoter has successfully completed residential and
commercial projects in Lucknow.
Outlook: Stable
CRISIL believes LIPL will sustain its business risk profile over
the medium term backed by the extensive industry experience of
its partners. The outlook may be revised to 'Positive' if robust
response to project result in healthy cashflows. The outlook may
be revised to 'Negative' if low cash inflows, because small flow
of advances or delay in implementation of projects or cost
overrun, weakens liquidity.
Incorporated in 2010, LIPL is promoted by Agarwal family. LIPL is
engaged in residential real estate projects and is currently
undertaking construction of towers in Celebrity Gardens Project
in Lucknow, Uttar Pradesh.
LILY REALTY: CRISIL Migrates B Rating to Not Cooperating Category
-----------------------------------------------------------------
CRISIL has been following up with Lily Realty Pvt Ltd (Lily
Realty; part of the Pashmina group) for getting information
through letters and emails, dated May 9, 2018, and May 14, 2018,
May 25, 2018 apart from various telephonic communications.
However, the issuer has continued to be non-cooperative.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 20 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 310 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company'.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Lily Realty, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on Lily
Realty is consistent with 'Scenario 2' 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 Lily Realty to 'CRISIL
B/Stable Issuer Not Cooperating'
The ratings on long-term bank facilities of Lily Realty continue
to reflect exposure to project implementation risk and
susceptibility to cyclicality inherent in the real estate sector.
These weaknesses are partially offset by the promoter's extensive
experience and financial flexibility to provide support, in case
of need.
Incorporated in March 2007 and promoted by Mr Asit Koticha
(founder of ASK Investment Holdings Pvt Ltd), Lily Realty is a
special-purpose vehicle set up by the Pashmina group to develop a
premium residential project, Pashmina Waterfront, with a total
saleable area of around 30 lakh square foot. The property is
being developed in two phases with four towers each at a total
cost of INR1450 crore. Phase I of the project was launched in
November 2011 and is in advanced stage of completion. Phase II is
still in the early stage and the company is awaiting approvals to
commence construction.
MEGAWIN LEATHER: CRISIL Withdraws D Rating on Bank Facilities
-------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Megawin Leather (India) Private limited (MLPL) and subsequently
withdrawn the ratings at the company's request and on receipt of
no-objection certificate from bankers. The rating action is in
line with CRISIL's policy on withdrawal of its rating on bank
loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL D (Rating reaffirmed
and Withdrawn)
Letter of Credit 3 CRISIL D (Rating reaffirmed
and Withdrawn)
Set up in 2008 by Mr. Govindaraj and Mr. Arun Prasad, MLPL is
engaged in the processing of raw leather to finished leather and
manufacture of shoes.
NANDAN PETROCHEM: Ind-Ra Maintains BB+ Rating in Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Nandan
Petrochem Ltd.'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 BB+ (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR50 mil. Term loan due on March 2018 maintained in non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING)
rating;
-- INR360 mil. Fund-based limits maintained in non-cooperating
category with IND BB+ (ISSUER NOT COOPERATING) rating; and
-- INR20 mil. Non-fund-based limits maintained in non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 20, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Nandan Petrochem manufactures automotive and industrial
lubricating oils, greases, specialty products at its plants in
Taloja and Silvassa each.
ODITI APPLIANCES: CRISIL Reaffirms B+ Rating on INR7cr Term Loan
----------------------------------------------------------------
CRISIL has reaffirmed its rating on the long term bank facilities
of Oditi Appliances LLP (OAL) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (Reaffirmed)
Term Loan 7 CRISIL B+/Stable (Reaffirmed)
The rating reflects modest scale of operations, working capital
intensive operations driven by high debtor days. Also financial
risk profile continues to remains modest because of high total
outside liabilities to adjusted networth (TOLTNW). These rating
weakness are partially offset by the extensive experience of
partners in the industry and healthy return on capital employed
(RoCE).
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: The home appliance industry is
marked by intense competition with the presence of many small and
large players. Although OAL's scale is expected to increase in
the medium term it will remain a modest player in the industry.
* Working capital intensive operations: Operations will remain
working capital intensive, as reflected in gross current assets
of 417 days estimated as on March 31, 2018, mainly because of
large receivables and inventory. Working capital requirement will
be partly supported by credit from suppliers.
* Weak Financial risk profile: Financial risk profile remains
weak because of low estimated networth level of INR6.45 Cr as on
March 2018, resulting in high TOLTNW at 5.3 times during same
fiscal. Crisil expects financial risk profile to improve over the
medium term but it will continue to remain weak.
Strengths
* Extensive experience of partners in the home appliance
industry: Presence of nearly a decade in the home appliance
industry through group companies has enabled the promoters to
understand market dynamics and establish strong relationship with
clients and suppliers.
* Healthy RoCE: OAL expected RoCE for fiscal 2019 is around 8%.
This is expected to improve to about 10% in the medium term as
scale of operations improves.
Outlook: Stable
CRISIL expects OAL to benefit from the extensive experience of
its partners in the industry.The outlook may be revised to
'Positive' if timely implementation and stabilisation of the
project leads to more than expected revenue, profitability, and
cash accrual during the initial phase of operations. Conversely,
the outlook may be revised to 'Negative' in case of significant
cost or time overruns in the project execution or delays in
stabilizing the operations of the unit translating into weakening
of its debt servicing ability.
OAL is a partnership firm incorporated on 17th January 2017 under
Limited Liability Partnership Act, 2008. The firm is setting up a
manufacturing unit for ceiling fans, electric and gas geysers,
LPG stoves, heavy duty motor of exhaust and motor of coolers in
Guwahati and Kundli.
P.S. BHAT: CRISIL Reaffirms B+ Rating on INR5cr LT Loan
-------------------------------------------------------
CRISIL has reaffirmed its rating on the bank facilities of
P.S. Bhat Brother (PSBB) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.5 CRISIL B+/Stable (Reaffirmed)
Proposed Cash
Credit Limit 2.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5.0 CRISIL B+/Stable (Reaffirmed)
The rating reflects geographical concentration in PSBB's revenue
profile, low operating margin due to intense competition, and
below-average financial risk profile driven by weak capital
structure and debt protection metrics. These weaknesses are
partially offset by promoter's extensive experience in the
pharmaceuticals industry, and established relationships with
principals and customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Geographical concentration in revenue profile and low operating
margins: The firm's operations are limited to Mangalore, which
exposes credit risk profile to changes in local demand-supply
dynamics and political conditions. Also, there is intense
competition from other pharmaceutical traders in the region
thereby leading to low operating margins for the firm. CRISIL
believes that the firm's business risk profile is expected to
remain constrained due geographical concentration in the revenue
profile and intensive competition in its business.
* Below-average financial risk profile: PSBB has a below average
financial risk profile marked by a low net worth and weak debt
protection metrics. Due to low accretion to reserves, small
capital base and low margins, CRISIL believes that the firm's
financial risk profile is expected to remain below average going
ahead as well.
Strengths
* Proprietor's extensive experience and their established
relationships with principals and customers: PSBB was set up in
1928 by Mr. P Sadananda Bhat and his family members. Current
proprietor, Mr. Manohar S Shetty, who acquired the firm in April
2013, also has experience of three decades in the pharmaceutical
distribution business. This, along with PSBB's longstanding
presence, has led to healthy relationship with distributors who
are its customers and suppliers (90 national and international
drug manufacturing companies such as Piramal Healthcare Ltd,
Abbott Healthcare Pvt Ltd, Ranbaxy Laboratories Ltd, and Cipla
Ltd.
Outlook: Stable
CRISIL believes PSBB will continue to benefit over the medium
term from proprietor's extensive experience and established
relationship with principals and customers. The outlook may be
revised to 'Positive' if significant growth in revenue and
profitability or sizeable equity infusion results in a better
capital structure. Conversely, the outlook may be revised to
'Negative' if decline in revenue or profitability or if stretch
in its working capital cycle leads to deterioration in liquidity.
Set up in 1928, PSBB is a wholesale distributor for
pharmaceutical companies in Mangalore, Karnataka. Operations are
managed by current proprietor, Mr. Manohar S Shetty.
PAWAR PATKAR: Ind-Ra Maintains BB+ LT Rating in Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Pawar Patkar
Construction 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:
-- INR140 mil. Fund-based working capital limits maintained in
Non-Cooperating Category with IND BB+ (ISSUER NOT
COOPERATING) rating; and
-- INR430 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
June 21, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Pawar Patkar Construction undertakes civil construction projects
(primarily roads and military buildings) for the Maharashtra
government and the government of India. The company is managed by
Mr. Sanjay K Patkar and Mr. Kailas Pawar.
P K K CONSTRUCTIONS: CRISIL Hikes Rating on INR4cr Loan to B+
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of P K K Constructions (PKK) to 'CRISIL B+/Stable' from 'CRISIL
B/Stable'; while reaffirming its short-term rating at 'CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL A4 (Reaffirmed)
Cash Credit 4 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term 0.5 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
The upgrade reflects significant improvement in the business
profile of PKK, driven by improved revenue and cash accrual in
fiscal 2018. The estimated revenue and cash accrual for fiscal
2018 is around INR8 crores and INR0.4 crore as against INR3.5
crores and INR0.1 crore, respectively in fiscal 2017. CRISIL
believes that PKK will maintain its improved business profile
over the medium term supported by its healthy order book and
proven execution capacity.
The ratings reflect modest scale of operations amidst intense
competition and intensive working capital nature of operations.
These weaknesses are partially mitigated by partners experience
in civil construction industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amidst intense competition: The firm
has modest scale of operations as reflected in estimated revenue
of INR8 Cr in fiscal 2018 Also, the firm's present scale of
operations, will continue to restrict its ability to bid for
larger tenders and thereby limit its growth prospects over the
medium term.
* Intensive working capital operations: Firm's operations were
working capital intensive in nature as marked by estimated GCA
days of around 300 days in fiscal 2018. The GCA days were high
due to huge inventory levels.
Strengths
* Extensive experience of promoters in civil construction
industry: The partners have been in this business from over 2
decades. Also, the partners have executed projects for PWD and
Harbour Engineer Division, Kerala. Successful implementation of
these projects has helped the company to establish good
relationship with its key clients.
Outlook: Stable
CRISIL believes PKK will benefit over the medium term from its
partner's extensive experience and healthy order book. The
outlook may be revised to 'Positive' if substantial and sustained
growth in revenue and profitability leads to sizeable cash
accrual and improved financial risk profile. Conversely, the
outlook may be revised to 'Negative' if low cash accrual,
stretched working capital cycle or any large debt-funded capital
expenditure weakens financial risk profile, particularly
liquidity.
Set up in 2013 as a partnership firm, PKK undertakes civil
construction contracts, related to construction of bridges and
other allied works, mainly in Kerala. PKK's operations are
managed by Mr. P K Kommed Kutty along with his family members.
PRAGATI SAHAYOG: CRISIL Reaffirms B Rating on INR5cr Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long-
term bank loan facility of Pragati Sahayog Development Services.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the firm's small scale of
operations with regional concentration, and the inherently weak
credit risk profile of its borrowers. These weaknesses are
partially offset by the promoters' extensive experience in
development activities in rural areas.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations with regional concentration: Having
been in existence for about 5 years, Pragati remains a small
microfinance institution (MFI) with a loan book of just INR4.23
crore as on March 31, 2018, and of INR3.34 crore as on March 31,
2017. Pragati mainly provides bridge finance loans to self-help
groups (SHGs) formed by Samaj Pragati Sahayog (SPS), a non-
government organisation registered under the Society Registration
Act that mentors and promotes SHGs. Furthermore, operations are
concentrated in Dewas and Khargone in Madhya Pradesh, which are
drought-prone areas, further constraining the firm's business
risk profile. As the firm does not have any aggressive plans to
scale up business, its growth is likely to remain constrained
over the medium term.
* Weak credit profile of the borrowers: Pragati predominantly
provides loans to SHGs comprising individuals, who have
inherently weak credit risk profile and limited financial
flexibility. Furthermore, it mainly lends to farmer communities
in the drought prone areas of Dewas and Khargone. The debt
servicing capacity of the SHGs financed by Pragati is hence
susceptible to natural calamities such as drought and floods.
Strength
* Experience of the promoters: Pragati's board comprises
experienced professionals associated with social and
developmental activities. The board is involved in operations and
has strong understanding of the people and the region in which
Pragati operates. Though Pragati has a track record of merely
five years, the functions were earlier carried out under SPS,
which has been operational for over a decade.
Outlook: Stable
CRISIL believes Pragati will benefit from its promoters'
extensive experience over the medium term. The outlook may be
revised to 'Positive' if scale and diversity of operations,
capitalisation and resource profile improve substantially. The
outlook may be revised to 'Negative' if decline in asset quality
or earnings leads to stress on the firm's corpus.
Pragati is an erstwhile Section 25 (Section 8, 2013) firm
promoted by the trustees of SPS, a non-government organisation
registered under the Society Registration Act that mentors and
promotes SHGs. SPS is involved in formation of SHGs, providing
saving and credit linkages through SHG-bank linkage programme,
and organising training and livelihood programmes for SHGs.
Pragati was set up in 2012 to provide financial assistance
exclusively to SHGs formed by SPS. Pragati provides bridge
finance loans to SHGs comprising women farmers in drought-prone
blocks of Dewas and Khargone.
ROSEBEY RESORTS: CRISIL Reaffirms B Rating on INR12.9cr Loan
------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long-
term bank facilities of Rosebey Resorts LLP (RRL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 0.1 CRISIL B/Stable (Reaffirmed)
Term Loan 12.9 CRISIL B/Stable (Reaffirmed)
The rating reflects exposure to risks associated with timely
completion and stabilisation of an ongoing hotel project and to
inherent cyclicality in the hospitality industry, along with
geographical concentration in the revenue profile. These rating
weaknesses are partially offset by the extensive industry
experience of the partners and the long-tenor debt repayment
structure.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks associated with timely completion and
stabilisation of the project: The project is in the initial stage
of construction and its completion would significantly depend on
the timely infusion of funds by the partners and disbursal of
bank loans. Furthermore, the stabilisation of operations and
occupancy of the hotel will remain critical.
* Exposure to cyclicality in the hospitality industry: The firm
will remain vulnerable to cyclical demand, over the medium term.
* Geographical concentration in revenue: As the entire revenue
will be derived from a single hotel in Raipur, Chhattisgarh, any
slowdown in demand or any force majeure event can adversely
impact the business risk profile.
Strengths:
* Extensive industry experience of the partners: A decade-long
experience of the partners in the hospitality industry should
continue to support the business risk profile over the medium
term.
* Long-tenor debt repayment structure: The eight-year debt
repayment structure will support liquidity in the initial years
of operations.
Outlook: Stable
CRISIL believes RRL will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' if timely completion of the project and ramp'up in
operations lead to better cash accrual. The outlook may be
revised to Negative if cost or time overruns in the project, or
delay in ramp up of operations, weaken the financial risk
profile, particularly liquidity.
The firm was established in 2013 as a private limited company,
Rosebey Resorts Pvt Ltd, and was reconstituted as a limited
liability partnership (LLP) firm under the current name in
November 2016. Mr Mahabir Agarwal, Mr Ashok Agarwal, Mr Vivek
Agarwal, Ms Suman Bansal, and Mr Ajay Agarwal are the current
partners. The firm is setting up a luxury hotel in Sakri, Raipur.
SHAILESH TRADERS: CRISIL Assigns B+ Rating to INR3.25cr Cash Loan
-----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long
term bank facility of Shailesh Traders (ST).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.25 CRISIL B+/Stable (Assigned)
Proposed Long
Term Bank Loan
Facility 2.75 CRISIL B+/Stable (Assigned)
The rating reflects firm's modest scale of operations in the
intensely competitive agro commodity trading industry, and
average financial risk profile marked by modest networth and
average debt protection metrics. These weaknesses are partially
offset by the extensive experience of its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: With net sales of INR69 crores in
fiscal 2018, scale remains modest in a competitive segment and
will continue to be so despite expected healthy revenue growth
over the medium term.
* Average financial risk profile: Networth is estimated to be
small at INR1.9 crore as on March 31, 2018. However, total
outside liabilities to tangible networth ratio is estimated to be
moderate at 3.8 times on March 31, 2018. Financial risk profile
will remain average over the medium term, because of continued
low operating margin.
Strength
* Extensive experience of promoters: Presence of around 6-7 years
in the agro commodity trading industry has enabled the promoters
to establish healthy relationship with suppliers and customers.
Outlook: Stable
CRISIL believes ST will continue to benefit over the medium term
from its promoters' extensive experience. The outlook may be
revised to 'Positive' in case of a significant and sustained
improvement in revenue, operating profitability, and financial
risk profile. The outlook may be revised to 'Negative' if decline
in revenue or operating profitability, stretch in working capital
cycle, or any debt-funded capital expenditure further weakens
financial risk profile.
Incorporated in 2012, ST is engaged in trading of chana. The firm
is operated by the proprietor Mr. Sanjay Ghar.
SHRI HIRANYAKESHI: Ind-Ra Affirms BB Rating on INR101.27MM Loan
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shri
Hiranyakeshi Sahakari Sakkare Karkhane Niyamit's (SHSSKN) bank
loans as follows:
-- INR101.27 mil. (reduced from INR324.47 mil.) Term loans due
on April 2021 affirmed with IND BB/Stable rating.
KEY RATING DRIVERS
The rating is constrained by SHSSKN's higher debt burden in FY17
with debt/income increasing to 69.52% (FY16: 66.9%), despite
working capital loans reducing to INR698.70 million (INR793.22
million), due to a fall in operating income to INR2,397.90
million (INR2,977.07 million). Consequently, interest coverage
also turned negative 0.32x in FY17 (FY16: 1.64x).
The rating factors in SHSSKN's moderate liquidity profile, as
reflected by considerable working capital limits outstanding at
INR1,870.73 million as of May 2018 (31 May 2017: INR732.86
million). According to SHSSKN, the high working capital level is
due to accumulated inventory. The inventory level for FY17 was
INR1,526.64 million (FY16: INR2,461.05 million) and may have
increased to INR2,680.93 million in FY18.
The rating also factors in SHSSKN's volatile operating margins
(FY17: negative 5.26%; FY16: 18.63%; FY15: 3.83%) due to
fluctuations in average recovery in sugar. The recovery fell to
9.81% in FY17 (FY16: 11.37% FY15: 10.73%) and is likely to have
been 10.81% for FY18. The cost of production also marginally
increased for FY17 to INR2,784 million (FY16: INR2,524.04
million).
The rating, however, is supported by SHSSKN's continued large
scale of operations. However, sales declined in FY17 because the
entity's crushing days declined to 62 days in FY17, after
remaining above 120 days during FY12-FY16. This led to the
volumes of the canes crushed falling to 0.27 million metric tons
for FY17 (FY16: 67 million metric tons). However, the management
expects the volumes to have increased to 0.69 million metric tons
for FY18, resulting in an improvement in revenue to INR2,839.01
million.
The rating is also supported by the six-decade-long experience of
SHSSKN's management in the sugar industry and the entities
diversified revenue sources in the form a co-generation plant and
distilleries and proximity to raw material sources. SHSSKN sold
power to Tata Power Company Limited at INR2.64 per unit till
January 2018 and from February 2018, it has started selling power
to Hubli Electricity Supply Company Limited and Bangalore
Electricity supply company Ltd. at INR4.38 per unit.
RATING SENSITIVITIES
Positive: A significant increase in the scale of operations
leading to higher profitability and low leverage, and an
improvement in the liquidity profile on a sustained basis will be
positive for the ratings.
Negative: Deterioration in the credit metrics as well as the
overall liquidity profile on a sustained basis will be negative
for the ratings.
COMPANY PROFILE
SHSSKN sells sugar, spirit and power in the domestic market. It
is a cooperative entity registered in 1956 under the Multi State
Cooperative Societies Act, as it has members both in Karnataka
and Maharashtra. SHSSKN operates in 233 villages in Karnataka and
77 villages in Maharashtra within a radius of 22 miles. It was
formed for the benefit of sugar cane growers and to provide
employment in the areas surrounding the factory.
SHRI WARDHMAN: CRISIL Lowers Rating on INR7.cr Overdraft to B+
--------------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facilities
of Shri Wardhman Academy For Technical Education, Jabalpur
(SWATE) to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 7.5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Proposed Long Term
Bank Loan Facility 1.1 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Term Loan 2.4 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in the financial risk
profile, particularly liquidity, wherein the net cash accruals
are expected to tightly match against the fixed debt repayments
over the medium term. Additionally the liquidity is expected to
remain constrained with possible cash-flow mismatch if the
occupancy levels decline. CRISIL believes that the occupancy
levels over the medium term will be key driver of its liquidity
over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Geographic concentration in revenue: Students form Madhya
Pradesh account for 85-90% of the students for most courses
offered by the society, exposing it to geographical concentration
risk.
* Susceptibility to regulatory changes: The establishment and
operations of higher educational institutions are governed by
government and quasi-government agencies, such as the University
Grants Commission, All India Council for Technical Education
(AICTE), universities, and state governments. Any change in
regulations will affect the society's business.
* Below-average financial risk profile: SWATE's has below-average
financial risk profile marked by modest net worth of INR12.95
cr., low gearing of 1.05 times as on March 31, 2017. The society
has subdued debt protection metrics with interest coverage ratios
of 1.80 times, respectively, for 2016-17. Financial risk profile
may remain below-average over the medium term.
Strengths
* Established market position and strong track record: SWATE's
business risk profile is supported by increasing demand for
technical courses in India, backed by rising youth population
between 15 and 20 years. SWATE, with its objective of providing
quality education in diverse fields, has capitalised on healthy
growth prospects and become a reputed private college groups in
Madhya Pradesh within six years.
Outlook: Stable
CRISIL believes SWATE will continue to benefit from its
established brand in Madhya Pradesh and from healthy demand for
the educational courses it offers. The outlook may be revised to
'Positive' if the society generates more-than-expected fee income
and operating surplus, leading to a significant increase in cash
accrual and interest coverage ratio. The outlook may be revised
to 'Negative' if cash accrual is low, or if the society
undertakes large, debt-funded capital expenditure.
SWATE was set up by the Jain family of Madhya Pradesh in 2006 in
Jabalpur, Madhya Pradesh. It operates one institute, Gyan Ganga
Institute of Technology and Sciences (GGITS), which offers
engineering and management courses.
SPINAROO COMMERCIAL: CRISIL Assigns B+ Rating to INR2.85cr Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Spinaroo Commercial Private Limited
(SCPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 0.6 CRISIL B+/Stable (Assigned)
Proposed Term Loan 0.9 CRISIL B+/Stable (Assigned)
Proposed Letter
of Credit 3.5 CRISIL A4 (Assigned)
Cash Credit 2.15 CRISIL B+/Stable (Assigned)
Proposed Cash
Credit Limit 2.85 CRISIL B+/Stable (Assigned)
The ratings reflect the company's working capital-intensive
operations and weak capital structure. These weaknesses are
partially offset by the extensive experience of promoters and
healthy debt protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Gross current assets were
140 days as on March 31, 2018, due to sizeable inventory of 67
days and moderate receivables of 58 days.
* Weak capital structure: Networth was small estimated to be at
INR46 lakh and gearing high at 7.1 times, as on March 31, 2018.
Strengths
* Extensive experience of promoters: Presence of around one
decade in the aluminium foil segment has enabled the promoters to
develop deep understanding of local market dynamics, which helps
anticipate price trends and calibrate purchasing and stocking
decisions. Extensive experience will also help the company forge
significant business linkage over and above financial support.
* Healthy debt protection metrics: Moderate profitability
resulted in robust debt protection metrics, with interest
coverage and net cash accrual to total debt ratios estimated to
be at around 2.6 times and 0.13 time, respectively, for fiscal
2018.
Outlook: Stable
CRISIL believes SCPL will benefit from its promoters' extensive
experience and funding support. The outlook may be revised to
'Positive' if higher revenue growth while maintaining
profitability leads to better cash accrual. The outlook may be
revised to 'Negative' if financial risk profile, particularly
capital structure and liquidity, weakens further if lower-than-
expected sales or profitability leads to weak cash accrual; or if
working capital cycle stretches further.
Incorporated in August 2012 and promoted Mr Amit Sultania and Mr
Aditya Todi, SCPL manufactures aluminum foils, containers, and
paper cups.
SRI KANYA: CRISIL Reaffirms B+ Rating on INR10cr Cash Loan
----------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Sri Kanya Corporation (SKC) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 8 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5 CRISIL B+/Stable (Reaffirmed)
The rating reflects below-average financial risk profile marked
by its modest net worth, high TOL/TNW, and below-average debt
protection metrics. The rating of the firm is also constrained on
account of its exposure to intense competition in the steel
trading business resulting in its low profitability margins.
These weaknesses are partially offset by extensive experience of
promoter in the steel trading business, its established relations
with customers and moderate working capital management.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: As on March 31, 2017
networth was modest at INR6.56 crores and estimated networth at
INR7.86 Cr as on March 2018. High TOL/TNW of 6.13 times as on
March 2017 and estimated TOL/TNW of 6.21 times as on March 2018.
Debt protection metrics were below average as indicated by its
NCATD and interest coverage ratio of 0.03 and 1.52 times for
fiscal 2017 and estimated NCATD and interest coverage ratio of
0.05 and 1.71 times for fiscal 2018.
* Exposure to intense competition in the steel trading segment:
The steel trading industry is marked by intense competition on
account of the large number of steel traders in the local market
due to low value added nature in the trading operations,
resulting in stiff competition.
Strengths
* Extensive experience of the promoters in the steel trading
business, and established relations with customers: SKC promoters
have an extensive experience of around 2 decades in the steel
trading industry and has enabled the promoters to establish
strong relationship with customers and suppliers.
* Moderate working capital management: Working capital management
has been moderate as reflected in GCA days of 73 days as on March
17 and estimated GCA of around 66 days as on March 2018.
Outlook: Stable
CRISIL believes that SKC will continue to benefit over the medium
term from its promoters' extensive industry experience and its
established relations with customers. The outlook may be revised
to 'Positive' if the firm registers a sustained improvement in
its profitability margins, or there is a better-than-expected
improvement in its capital structure on the back of sizeable
capital additions by its promoter. Conversely, the outlook may be
revised to 'Negative' in case of a steep decline in SKC's
profitability margins, or significant deterioration in its
capital structure caused most likely by a stretch in its working
capital cycle.
SKC was set up as a proprietorship firm in 1994 by Mr. D
Srinivas. The firm trades in mild steel structural products, and
cement. The firm is based in Visakhapatnam, Andhra Pradesh.
SUBASREE JEWELLERS: CRISIL Reaffirms B- Rating on INR2.29cr Loan
----------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B-/Stable/CRISIL A4' ratings on
the bank facilities of Subasree Jewellers (SJ).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.85 CRISIL A4 (Reaffirmed)
Cash Credit 2.10 CRISIL B-/Stable (Reaffirmed)
Long Term Loan 2.29 CRISIL B-/Stable (Reaffirmed)
Working Capital
Demand Loan 1.76 CRISIL B-/Stable (Reaffirmed)
The ratings continue to reflect the firm's modest scale of
operations in the fragmented gold jewellery retailing industry,
and its below-average financial risk profile. These weaknesses
are partially offset by the extensive experience of its promoter.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and exposure to intense competition:
The firm's modest scale is indicated by estimated revenue of
INR19 crore in fiscal 2018. The domestic jewellery industry is
highly fragmented and dominated by the unorganised sector, as it
is neither capital nor technology intensive. CRISIL believes SJ
will remain exposed to competition because of its small scale in
the fragmented jewellery industry.
* Below-average financial risk profile: Modest networth and high
gearing'estimated at INR2.9 crore and 3.79 times, respectively,
as on March 31, 2018'may continue to constrain the financial risk
profile. Debt protection metrics are average, with net cash
accrual to total debt and interest coverage ratios estimated at
9% and 2.02 times, respectively, in fiscal 2018. Accrual is just
sufficient to meet debt obligation, and the shortfall is met
through fund support from the promoter.
Strength
* Extensive experience of the promoter: The promoter, Mr K
Vijayakumar, has been in the jewellery business for over 3
decades and has gained insight about the industry and has
established strong relationship with local clients.
Outlook: Stable
CRISIL believes SJ will maintain a stable business risk profile
over the medium term backed by the extensive experience of the
promoter. The outlook may be revised to 'Positive' if increase in
revenue or improved working capital management strengthens the
business risk profile. The outlook may be revised to 'Negative'
if aggressive debt-funded expansion, stretch in working capital
cycle, or decline in profitability weakens the financial risk
profile.
SJ retails jewellery through its single showroom in Coimbatore,
Tamil Nadu. The firm is promoted by Mr K Vijayakumar, a second-
generation entrepreneur.
TIRUPATIBALAJI MILLS: CRISIL Assigns B+ Rating to INR1cr Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating on the bank
facilities Tirupatibalaji Mills Private Limited (TBMPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B+/Stable (Assigned)
Rupee Term Loan 0.5 CRISIL B+/Stable (Assigned)
The rating reflects exposure to volatility in raw material
prices, forex movements and Indian government policies towards
import of raw material and modest scale of operation in an
intensely competitive industry. These rating weakness are
partially offset by extensive experience of the promoters in the
trading of agro commodities and promoter funding to support the
liquidity profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to volatility in raw material prices, forex movements
and Indian government policies towards import of raw material:
Company operating margins exposed to the fluctuations in raw
material prices, also exposed to forex movements as it imports
raw material from different countries and also it is exposed to
government policies as government put a ban on imports of pulses
in FY2018.
* Modest scale of operation in an intensely competitive industry:
The pulses trading business is highly fragmented, with numerous
small-scale unorganized players catering to local demands. With
numerous players in this industry the scale of operation is small
with revenue of around INR10 crores in FY2018.
Strengths
* Extensive experience of the promoters in the trading of agro
commodities: The promoters have experience of over a decade in
the same industry. The firm has been able to establish a wide
customer base with in its portfolio.
* Promoter funding to support the liquidity profile: Promoters of
the company brought in INR2.9 crores in the business in the form
of unsecured loans in FY2018 to support liquidity profile.
Outlook: Stable
CRISIL believes TBMPL will continue to benefit from the industry
experience of its partners. The outlook may be revised to
'Positive', if increase in scale of operations and profitability,
or promoters funding strengthens capital structure. The outlook
may be revised to 'Negative' if low cash accrual due to lower
than expected ramp-up in operations or profitability, or stretch
in working capital cycle weakens financial risk profile.
TBMPL was incorporated in 2010 and is engaged in trading of
pulses and manufacturing of roasted chana and papad. The company
also undertakes job work for different customers.
WATERO SANITARY: CRISIL Assigns B Rating to INR5.0cr Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the bank
facilities of Watero Sanitary LLP (WSL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.4 CRISIL B/Stable (Assigned)
Term Loan 5.0 CRISIL B/Stable (Assigned)
The rating reflects a nascent stage of operations and a modest
financial risk profile. These weaknesses are partially offset by
the extensive experience of the partners in the sanitary ware
segment.
Analytical Approach
For arriving at its ratings, CRISIL has taken a standalone view
of WSL.
Key Rating Drivers & Detailed Description
Weaknesses
* Nascent stage of operations: Operations began from July 2017,
and till March 2018, sales were around INR4 crore. However,
despite the start-up phase, the firm is expected to benefit from
the established distribution network of group company, Sunora
Tiles Pvt Ltd (STPL), which makes ceramic times.
* Modest financial risk profile: The gearing was average at 1.38
times as on March 31, 2018, despite capital infusion of INR5
crore by the partners. Debt protection metrics were weak, with
net cash accrual to total debt and interest coverage ratios of 1%
and 1.15 times, respectively, for fiscal 2018. However, the
partners have infused additional INR50 lakh during fiscal 2018,
thus supporting the financial risk profile
Strength
* Experience of the partners: The key partners have been
associated with STPL for a decade. This has enabled them to
establish a strong relationship with dealers across India and is
likely to benefit WSL.
Outlook: Stable
CRISIL believes WSL will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' if substantial growth in sales and stable operating
margin lead to healthy cash accrual and hence to a strong
financial risk profile. The outlook may be revised to 'Negative'
if a low operating margin or a stretched working capital cycle
significantly weakens the financial risk profile.
WSL, established in August 2016 by 14 partners, manufactures
sanitary ware at its facility in Morbi, Gujarat. Project
installation work was completed during in 2017 and sales have
commenced from July 2017.
WESTERN BIO: CRISIL Assigns B+ Rating to INR10cr Cash Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating on the long-
term bank facility of Western Bio Vegetable Seeds Private Limited
(WBVSPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Cash
Credit Limit 10 CRISIL B+/Stable (Assigned)
Proposed Term Loan 2 CRISIL B+/Stable (Assigned)
The rating reflects a modest scale of operations and below
average financial risk profile. These weaknesses are partially
offset by experience of the promoters in the agricultural seeds
sector.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Scale of operations remains modest,
with turnover of INR39 crore during fiscal 2018. WBVSPL derived
its revenue majorly from sale of vegetable seeds, which exposes
operations and profitability to demand-supply dynamics. This,
along with low value addition, limits bargaining power with
suppliers and distributors, is expected to continue to constrain
the business risk profile over the medium term.
* Below average financial risk profile: Networth and gearing were
below average at INR3.85 crore and 2.44 times, respectively, as
on March 31, 2018, which constrains the overall financial risk
profile.
Strengths
* Experience of promoter: The business risk profile is supported
by the promoter's experience of over two decades in the vegetable
seeds industry. The promoter family has in production of seeds
resulting in an established and healthy relationship with
farmers, universities, and seed companies, as well as the
establishment of a strong dealer/distributor network.
Outlook: Stable
CRISIL believes WBVSPL will continue to benefit from the the
experience of the promoters. The outlook may be revised to
'Positive' if there is significant increase in scale of
operations and operating profitability, leading to higher cash
accruals which strengthens the overall financial risk profile.
Conversely, the outlook may be revised to 'Negative' if the
financial risk profile and liquidity, weakens with a decline in
the operating margin, stretched working capital cycle, or
sizeable debt-funded capital expenditure.
Incorporated in 2011, WBVSPL was promoted by Patel family. The
company has an track record in research and development,
production, processing, and marketing high-performing vegetable
seeds.
YOUNG INDUSTRIES: CRISIL Lowers Rating on INR6cr Loan to B
----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Young Industries (YI) to 'CRISIL B/Stable' from 'CRISIL
B+/Stable', while reaffirming the short-term facilities at
'CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Inland/Import
Letter of Credit 2 CRISIL A4 (Reaffirmed)
The downgrade reflects deterioration in the business risk
profile, as indicated by a decline in revenues from last three
years through 2018, due to a slump in demand for the firm's
products. Also, with subdued operating profitability in past two
fiscals through 2018, financial risk profile deteriorated further
with gearing estimated at 5.85 times as on March 31, 2018, and
the interest coverage ratio below 1 time in fiscal 2018.
The ratings continues to reflect a modest scale of operations and
large working capital requirement in an intensely competitive
industry, and a weak financial risk profile. These weaknesses are
partially offset by the extensive experience of the partners in
the radiator and heat exchanger industry, and an established
clientele relationship.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and large working capital
requirement: Operating income was modest at INR18 crore in fiscal
2018. Gross current assets are estimated at 188 days as on March
31, 2018, due to large inventory of 120 days as lead time for
manufacturing is long and a sizeable stock of jigs-dies has to be
maintained.
* Weak financial risk profile: The networth was low, estimated at
INR1.4 crore, and the gearing high, estimated 5.85 times, as on
March 31, 2018. Debt protection metrics were muted, with interest
coverage and net cash accrual to total debt ratios estimated at
0.8 time and a negative 0.04 time, respectively, for fiscal 2018.
Strengths
* Extensive industry experience of the partners: The partners,
members of the Talab family, have an experience of more than four
decades in the radiator and heat exchanger industry.
* Established client relationship: The firm is an approved vendor
for Kirloskar Cummins Ltd, Kirloskar Pnuematic Ltd, Hindustan
Power Plus Ltd, Hindustan Motors Ltd, Indian Railways, Ashok
Leyland Ltd, Larsen & Toubro Ltd, Supernova Engineers Ltd, Cooper
Corporation Pvt Ltd, and Greaves Cotton Ltd, from which it
derives around 95% of revenue.
Outlook: Stable
CRISIL believes YI will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' in case of a significant increase in revenue and
profitability, leading to sizeable cash accrual. The outlook may
be revised to 'Negative' if the financial risk profile,
particularly liquidity, weakens because of low cash accrual, a
stretched working capital cycle, or large capital expenditure.
YI was established in 1971 as a partnership firm by Mr Osman
Talab and Ms Zehra Talab. Their son, Mr Salim Talab, also a
partner in the firm now, manages operations. The firm
manufactures radiators, oil coolers, and heat exchangers used in
diesel engines, power generators, and locomotives, at its unit in
Pune, Maharashtra.
=================
I N D O N E S I A
=================
MULTIPOLAR TBK: Fitch Alters Outlook to Neg.; Affirms 'B-' LT IDR
-----------------------------------------------------------------
Fitch Ratings has revised the Outlook on Indonesian holding
company PT Multipolar Tbk's Long-Term Issuer Default Rating to
Negative from Stable and affirmed the rating at 'B-'. Fitch
Ratings Indonesia has also downgraded Multipolar's National Long-
Term Rating to 'BB+(idn)' from 'BBB-(idn)' and revised the
Outlook to Negative from Stable. At the same time, Fitch has
withdrawn Multipolar's 'B-' senior unsecured rating because its
USD230 million notes due 2018 were repaid early in July 2017.
The Outlook revision reflects a weakening in Multipolar's
liquidity due to a lack of dividends from subsidiary PT Matahari
Putra Prima Tbk (MPPA) and the refinancing of its bond. Fitch
therefore believes Multipolar will be increasingly reliant on the
sale of assets to cover its operational expenses, interest
payments and debt amortisation at the holding-company level.
Multipolar refinanced the USD230 million senior unsecured notes
with a USD250 million loan at the holding-company level that has
amortising principal repayment terms compared with the bullet
nature of the bonds. This exacerbates its liquidity pressure as
Fitch does not expect MPPA's dividends to resume in the near term
due to a challenging and competitive retail environment that has
had a significant impact on the hypermart operator's performance.
'BB' National Ratings denote an elevated default risk relative to
other issuers or obligations in the same country. Within the
context of the country, payment is uncertain to some degree and
capacity for timely repayment remains more vulnerable to adverse
economic change over time.
KEY RATING DRIVERS
Weak Liquidity: The rating action reflects the company's weak
liquidity for 2018 and 2019 as a result of the amortising
principal repayment under its new financing facility and
substantially weaker cash flow generation. Dividend receipts from
a department store investment and IT subsidiary of around IDR250
billion-300 billion will not be sufficient to cover Multipolar's
operational expenses, interest payments and the debt principal
amortisation of the USD250 million loan from PT Bank Negara
Indonesia (Persero) Tbk (BBB-/Stable).
Asset-Sale Reliance: Multipolar's options to address the
shortfall include asset sales and the disposal of some of its
investments, which it has done previously. This includes its sale
of a 3% stake in PT Matahari Department Store Tbk (MDS) in 2016
and property sales at its property-management company in 2017.
Fitch believes the company is in advanced discussions on these
asset sales. A prolonged completion of these sales will heighten
the company's liquidity pressure.
Challenging Modern Retail Structure: MPPA has not paid any
dividends since 2017 and Fitch does not expect payments to resume
in the next 24 months due to challenges in generating cash flow.
MPPA recorded negative EBITDA of more than IDR1.2 trillion in
2017 due to weakening consumer purchasing power and a competitive
environment. Fitch has fully deconsolidated MPPA as it believes
its cash flow will primarily be used to service its own debt due
to the company's significant level of leverage, the presence of
Temasek Holdings (Private) Limited as a significant minority
shareholder, and the weakening in Multipolar's credit profile,
which affects its ability to support MPPA.
Fitch expects MPPA to resolve its liquidity needs through a
rights issue that the company has publicly announced. MPPA's debt
is unsecured with no recourse to Multipolar due to the absence of
corporate guarantees and cross-default clauses.
Weak Fixed-Charge Coverage: Fitch expects Multipolar's fixed-
charge coverage to remain weak below 1.0x in 2018 and 2019,
driven by lower dividend receipts and the smaller size of its
other subsidiaries. Most of Multipolar's cash flow comes from
dividends from its 17.48% stake in Indonesian non-food retailer
MDS after MPPA stopped paying dividends. The dividend
concentration from MDS is partially alleviated by its solid
credit profile. Fitch estimates that MDS's credit profile will
remain broadly stable in 2018 and 2019 with a stable EBITDA
margin of around 15%, low leverage and an ample cash balance.
Fitch does not expect any material improvement in dividends
coming from Multipolar's smaller subsidiaries such as PT
Multipolar Technology (an IT service company), and PT Matahari
Pasific and PT Nadya Putra Investama (property-management
companies). Each of these smaller subsidiaries generated less
than IDR210 billion of EBITDA in 2017. Their capacity for
shareholder returns is therefore not as significant as MDS's
IDR201 billion annually - unless they sell assets that allow them
to distribute special dividends.
Change in Majority Shareholder: Fitch believes the recent change
of Multipolar's majority shareholder to be neutral to its credit
profile as the ultimate shareholders remain broadly unchanged. PT
Inti Anugerah Pratama (IAP) became the majority shareholder of
Multipolar in 2017 and now owns 72.29%. Fitch expects IAP to
manage its own liquidity needs independently and it is not likely
to require significant dividend payouts from Multipolar. Fitch
will continue monitoring the parent-and-subsidiary linkage
between the two companies to assess the impact on Multipolar's
credit profile.
DERIVATION SUMMARY
Multipolar's rating is comparable with Parkson Retail Group
Limited (B-/Stable). The retail operations of both companies are
weak at the moment due to a combination of soft consumer spending
and increasing competition from other retail formats. This has
resulted in the weakening credit metrics of Parkson and
Multipolar. Fitch expects Parkson's leverage, measured as FFO
payables-adjusted net leverage, to range between 6x and 7x, which
is high in the context of marginal EBITDA generation, and FFO
coverage at around 1x. Similarly, Multipolar's adjusted fixed-
charge coverage is also weak. Multipolar's Negative Outlook is
underpinned by its weak liquidity, which will be dependent on
asset disposal.
Multipolar's National Long-Term Rating is well-positioned
relative to PT Tiphone Mobile Indonesia Tbk (B+(idn)/Rating Watch
Negative). Both companies face liquidity challenges from the
principal repayment of their debt. However, Multipolar's debt
amortisation schedule is more gradual compared with the IDR1
trillion of Tiphone's bonds maturing in July 2018. Multipolar's
available assets and investments place it in a better liquidity
position than Tiphone, which is likely to need additional funding
sources to cover its negative cash flow from operations and debt
repayment. The lower liquidity pressure on Multipolar and its
availability of assets and track record of asset sales justify
the three-notch difference in the ratings between Multipolar and
Tiphone.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- MDS will maintain its dividend payout policy of 70%
- No dividend will be paid by MPPA in 2018 and 2019 as the
company continues facing challenging operational and
financial conditions
- Working capital loans at MPPA will continue to be rolled over
- Annual consolidated capex of IDR350 billion-IDR500 billion
(excluding MPPA)
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to a
Revision of the Outlook to Stable
- Sustainable improvement in holding company liquidity through
an increase in dividends and the cash balance to cover
operational expenses, interest and debt repayment
- Fixed-charge coverage, adjusted for MPPA deconsolidation and
dividends, rising above 1.0x on a sustained basis
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Inability to complete asset disposal plans or sell its
investments to address its liquidity pressures
- Deterioration in MDS's operating performance that would limit
its ability to pay a dividend
LIQUIDITY
Asset Sales Critical to Liquidity: Fitch expects Multipolar's
subsidiaries, such as Multipolar Technology, Matahari Pasific,
Nadya Putra Investama and PT Multifiling Mitra Indonesia Tbk, to
be able to manage their liquidity comfortably given their
adequate credit metrics. On the other hand, asset divestment is
likely to continue in the next two years to cover operational
needs and debt servicing at the holding-company level.
===============
P A K I S T A N
===============
PAKISTAN MOBILE: Moody's Alters Outlook to Neg. & Affirms B1 CFR
----------------------------------------------------------------
Moody's Investors Service has revised to negative from stable its
outlook on the B1 corporate family rating (CFR) of Pakistan
Mobile Communications Limited (Jazz).
At the same time, Moody's has affirmed the company's B1 CFR.
RATINGS RATIONALE
On June 20, 2018, Moody's changed the outlook on Pakistan's
sovereign rating to negative from stable and affirmed the
country's B3 local and foreign currency long-term issuer and
senior unsecured debt ratings.
"Despite Jazz's strong fundamental credit quality, the company's
B1 CFR is constrained to no more than two notches above the
sovereign's B3 rating," says Annalisa DiChiara, a Moody's Vice
President and Senior Credit Officer. "As a result, we have
changed Jazz's rating outlook to negative, in line with that of
Pakistan's sovereign rating, depsite the company's sollid
business fundamentals."
Because Jazz is predominantly a domestic entity, with
substantially all of its revenues derived from, and assets based
in, Pakistan, Moody's believes that the company's fundamental
creditworthiness needs to closely reflect the potential risks
that it shares with the sovereign.
Non-financial corporates are not usually rated more than two
notches above the sovereign.
"We continue to take into account Jazz's strong fundamental
credit quality by affirming its B1 CFR, which is at a rating
level two notches above that of the sovereign," adds DiChiara,
who is also Moody's Lead Analyst for Jazz. "We expect that Jazz
will maintain its leading market position in the telecom market
in Pakistan and preserve strong financial metrics for its rating
level."
Despite intense competition in a highly fragmented market and the
difficult regulatory environment, Jazz continues to grow its
revenue and subscriber base, partly reflecting the solid growth
in mobile data revenue, owing to higher bundle penetration and
continued network expansion.
Moody's expects that Jazz will maintain its market leading
position given its strong brand and extensive network coverage,
and largest spectrum holding among domestic operators.
Jazz had about 55.5 million customers at May 2018, equating to a
subscriber market share of 36.9%, as of the same date, according
to the Pakistan Telecommunication Authority (PTA).
Jazz's financial profile will remain strong for its B1 rating
level, with leverage -- as measured by adjusted debt/EBITDA --
likely to remain below 1.5x and EBITDA margins to stay in the
50%-55% range.
Moody's expects that Jazz's cash and projected cash flow over the
next 12 months to be sufficient to cover projected capital
spending, working capital needs and short-term debt maturities.
In addition, Jazz's liquidity position should improve following
the receipt of proceeds from the disposal of its tower assets.
Proceeds will be used to pre-pay around 25% of total debt
following an agreement with lenders and provide sufficient funds
to support Moody's projected level of dividends of around PKR26
billion.
Around 25% of the company's total reported debt was denominated
in US dollars at December 31, 2017. Although the majority of
Jazz's US-dollar debt is unhedged, Moody's believes the company's
strong financial metrics provide a buffer to absorb a significant
depreciation in the Pakistani rupee, as it estimates that a 20%
depreciation in Pakistani rupee would only cause a slight
increase in leverage of around 0.3x.
Jazz's rating does not include any uplift from its indirect
parent, Global Telecom Holdings SAE (GTH), and its ultimate
shareholder, VEON Ltd. (Ba2 stable); both of which are globally
diversified and larger telecommunications groups.
While VEON has demonstrated its direct financial support to GTH
by extending shareholder loans and guaranteeing some of its debt,
VEON's direct support to Jazz has been limited to the sharing of
technology, procurement and management expertise.
Jazz accounted for 16% of VEON's revenue in fiscal 2017,
rendering a modest contribution to its parent company.
Given Moody's guidelines on the differential between government
and corporate ratings, it is unlikely that Jazz will experience
any upward rating pressure in the absence of an upgrade of
Pakistan's sovereign rating.
Alternatively, Jazz would need to generate a substantially
greater revenue share from outside Pakistan for Moody's to
upgrade the company's CFR. However, this scenario seems unlikely
over the near to medium term.
Nevertheless, an upgrade is possible in the medium to long term,
if, in addition to a sovereign upgrade, Jazz maintains its: (1)
strong market position, with an adjusted EBITDA margin in excess
of 35%; (2) current solid balance sheet and financial profile;
(3) strong relationships with its parent and banks; and (4)
sufficient buffer under its bank loan covenants.
Jazz's rating would be under downward pressure if Moody's
downgrades the sovereign rating, because Moody's will seek to
maintain the current gap of two notches between their ratings.
Given Jazz's fundamental credit quality, it is unlikely its
rating will be downgraded for reasons other than a downward
sovereign rating action, absent a precipitous decline in its
credit profile.
Such a decline would be evident if: (1) its market share in
Pakistan declines significantly; (2) it pays large dividends;
thereby reducing the company's available retained cash flow to
the extent that its adjusted retained cash flow/debt falls below
20%; and (3) the company faces difficulty in accessing capital to
fund growth, or repay or refinance credit lines, as and when they
fall due.
The principal methodology used in this rating was
Telecommunications Service Providers published in January 2017.
Pakistan Mobile Communications Limited (Jazz), which was
established in 1990, is Pakistan's largest mobile operator by
number of subscribers. The company had 55.5 million customers, or
a market share of around 36.9%, at May 2018, according to the
Pakistan Telecommunication Authority.
Jazz is 85% indirectly owned by Global Telecom Holdings SAE
(GTH).
GTH, headquartered in the Netherlands, is a global
telecommunications operator, with investments in three countries:
Pakistan, Bangladesh and Algeria. GTH is 57.7% indirectly owned
by VEON Ltd. (Ba2 stable), which is domiciled in Bermuda and
headquartered in the Netherlands.
VEON is a global telecommunications provider, with operations in
12 countries, including strong market shares in Russia and
Ukraine.
*********
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
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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,
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Editors.
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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.
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