/raid1/www/Hosts/bankrupt/TCRAP_Public/181107.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, November 7, 2018, Vol. 21, No. 221
Headlines
A U S T R A L I A
AIMS PROPERTY: Asks Unitholders to Hold Off Action on Wind Up Bid
COALCLIFF PTY: First Creditors' Meeting Set for Nov. 14
KINGSTON FINE: First Creditors' Meeting Set for Nov. 15
NIEDERTHAELER HOF: Second Creditors' Meeting Set for Nov. 14
PIEROTH WINES: Second Creditors' Meeting Set for Nov. 15
WOLF MINERALS: Second Creditors' Meeting Set for Nov. 14
C H I N A
TAHOE GROUP: Moody's Lowers CFR to B3, Outlook Negative
I N D I A
E-WAY GALLERY: CRISIL Assigns D Rating to INR6cr Loans
GOLDEN SHELTERS: CRISIL Lowers Rating on INR40cr Loan to D
ITCOS GRANITO: CARE Reaffirms B+ Rating on INR23.69cr LT Loan
JAIPAN INDUSTRIES: Ind-Ra Affirms BB- Long-Term Issuer Rating
KARAN INTERMEDIATES: CARE Hikes Rating on INR3.43cr Loan to BB-
KAYTEE CORP: Ind-Ra Hikes Long Term Issuer Rating to 'BB'
MAHESHWARI AGRO: CARE Lowers Rating on INR6cr Loan to B+/A4
MOTIL DEVI: CARE Lowers Rating on INR6.39cr LT Loan to B
NAV BHARAT: CRISIL Migrates B Rating to Not Cooperating Category
NAVAYUGA QUAZIGUND: CARE Lowers Rating on INR2030.35cr Loan to D
NILKANTH COTTON: CARE Lowers Rating on INR7.32cr LT Loan to D
P.K. & COMPANY: Ind-Ra Affirms BB- Issuer Rating, Outlook Stable
PEARL INFOTECH: CRISIL Migrates 'B' Rating to Not Cooperating
PK THUNGAN: CRISIL Migrates B+ Rating to Non-Cooperating Category
PRAJIT FOUNDATION: CRISIL Lowers Rating on INR10cr Loan to D
RELIGARE ENTERPRISES: Ind-Ra Cuts Long Term Issuer Rating to BB-
RELIGARE FINVEST: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
RELIGARE HOUSING: Ind-Ra Lowers Long Term Issuer Rating to 'BB-'
SADGURU SRI: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
SAFE AND SECURE: CARE Lowers Rating on INR19cr Loan to B+
SAI SWADHIN: CARE Lowers Rating on INR7.64cr LT Loan to D
SASA MUSA: CRISIL Lowers Rating on INR61.5cr Loans to D
SATGURU METALS: CARE Reaffirms B+ Rating on INR13.08cr Loan
SHASHI STRUCTURAL: CRISIL Migrates D Rating to Not Cooperating
SHIV SHAKTI: CRISIL Migrates B+ Rating to Not Cooperating
SNEHMANGAL DEVELOPERS: CRISIL Moves B Rating to Not Cooperating
SOORYA CASHEW: CRISIL Migrates B Rating to Not Cooperating
SRI LANGTA: CARE Migrates B+ Rating to Not Cooperating Category
SRI VISHNU: Ind-Ra Hikes LT Issuer Rating to 'B', Outlook Stable
SUBHASH HASTIMAL: CRISIL Migrates B+ Rating to Not Cooperating
U.S. SRIVASTAVA: Ind-Ra Maintains BB LT Rating in Non-Cooperating
VIDHATA INDUSTRIES: CARE Assigns B+ Rating to INR10cr Loan
WELCAST INDIA: Ind-Ra Lowers Issuer Rating to B, Outlook Stable
YAZDANI STEEL: CRISIL Hikes Rating on INR39.70cr Loan to B+
* INDIA: Gov't. Fears NBFC Defaults Without Liquidity Lifeline
N E W Z E A L A N D
PREET & CO: Unsecured Creditors Won't Be Paid, Liquidators Say
P A K I S T A N
PAKISTAN: China Pledges Aid But Won't Yet Commit
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A U S T R A L I A
=================
AIMS PROPERTY: Asks Unitholders to Hold Off Action on Wind Up Bid
-----------------------------------------------------------------
Yunita Ong at Business Times reports that AIMS Property
Securities Fund's responsible entity (RE), AIMS Fund Management,
has received a notice of meeting, explanatory memorandum and
proxy form from boutique Australian firm Samuel Terry Asset
Management calling a general meeting of unitholders to vote on
winding up the fund.
They disclosed this two days after Samuel Terry launched another
attempt to wind up AIMS Property Securities Fund, less than two
years after its previous bid, the report says. This time around,
Samuel Terry is pairing up with another unitholder, fellow Sydney
fund manager Sandon Capital Investments, to call for a winding-up
vote in Sydney on Dec. 10, BT discloses. The pair, as well as
their related parties, together have a voting share of roughly
18.6 per cent.
BT relates that AIMS Fund Management said on Oct. 31 it is
seeking advice on the contents of the notice of meeting to
determine its validity.
"Accordingly, there can be no assurance that the resolution
proposed to be considered at the meeting is valid. Subject to the
validity of the resolution, the RE intends to provide unitholders
with further information to assist unitholders to make an
informed decision as to how to vote on the winding up
resolution," the report quotes Company secretary Claud Chaaya as
saying.
He also said AIMS Fund Management recommends unitholders take no
action until after its detailed response is given and despatched
to all unitholders, the report relays.
"In particular, the RE strongly recommends that unitholders do
not complete the proxy form which also accompanies the Notice of
Meeting. Prior to any unitholder meeting, the RE also intends to
provide unitholders with a separate proxy form."
According to the report, Sandon Capital and Samuel Terry said on
Oct. 29 they were unhappy that the fund is trading at a discount
to net asset value (NAV), and with its investments in related
parties. These include stakes in Singapore-listed Aims AMP
Capital Industrial Reit and unlisted Aims Real Estate Opportunity
Fund.
"Unitholder funds have consistently been allocated to other
investment products managed by the AIMS Financial Group,
increasing the fees it receives," a letter from Samuel Terry to
shareholders said, BT relays.
"It is these fees - the quantum of which is unclear because (AIMS
Property Securities Fund) refuses to disclose them - that are
largely responsible for the fund continually trading well below
its NAV," the letter, as cited by BT, added.
BT relates that AIMS Capital Management said on Oct. 29 that
"short-term opportunity investors, like Samuel Terry and Sandon
Capital, have always tried hard to take advantage of our long-
term unitholders' interests". It also said it does not charge
AIMS Property Securities Fund any fund management fees or
performance fees, BT adds.
Aims Property Securities Fund (ASX:APW) is an Australia-based
diversified real estate securities fund, investing across a range
of unlisted and listed property trusts. The investment objective
of the Fund is to provide investors with regular quarterly income
and the potential for long term capital growth. The Fund invests
in a portfolio of property related securities diversified by
sectors, geographic locations and fund managers. Its portfolio
includes in sectors, such as office, industrial, childcare,
retail and healthcare, and in geographic locations, including
Victoria, Queensland, New South Wales, Australian Capital
Territory and Western Australia, among others. The Fund invests
in unlisted and listed property funds that covers around 11
different property related investments and manages around six
different specialist property investment managers. The Fund
manager is AIMS Fund Management Limited.
COALCLIFF PTY: First Creditors' Meeting Set for Nov. 14
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Coalcliff
Pty Ltd ATFT Massara Family Trust and Four Corners Plant Hire Pty
Ltd ATFT Coalcliff Plant Hire Unit Trust will be held at
Theartrette, Central Park Business Centre, 152-158 St Georges
Terrace, in Perth, WA, on Nov. 14, 2018, at 1:00 p.m.
Ian Charles Francis and Daniel Hillston Woodhouse of FTI
Consulting were appointed as administrators of Coalcliff Pty on
Nov. 2, 2018.
KINGSTON FINE: First Creditors' Meeting Set for Nov. 15
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Kingston
Fine Foods Pty. Ltd. will be held at the offices of Jones
Partners Insolvency & Business Recovery, at Level 13, 189 Kent
Street, in Sydney, NSW, on Nov. 15, 2018, at 10:00 a.m.
Michael Gregory Jones of Jones Partners was appointed as
administrator of Kingston Fine on Nov. 5, 2018.
NIEDERTHAELER HOF: Second Creditors' Meeting Set for Nov. 14
------------------------------------------------------------
A second meeting of creditors in the proceedings of:
* Niederthaeler Hof German Rhine Wines Pty Limited;
* Vicomte Bernard De Romanet Pty Limited; and
* Golden Grape Estate Pty Limited
has been set for Nov. 15, 2018, at 11:00 a.m. at the offices of
Pitcher Partners, at Level 22 MLC Centre, 19 Martin Place, 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 Nov. 14, 2018, at 4:00 p.m.
Paul Gerard Weston of Pitcher Partners was appointed as
administrator of Niederthaeler Hof German on Aug. 24, 2018.
PIEROTH WINES: Second Creditors' Meeting Set for Nov. 15
--------------------------------------------------------
A second meeting of creditors in the proceedings of Pieroth Wines
Pty Limited has been set for Nov. 15, 2018, at 11:00 a.m. at the
offices of Pitcher Partners, at Level 22 MLC Centre, 19 Martin
Place, 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 Nov. 14, 2018, at 4:00 p.m.
Paul Gerard Weston of Pitcher Partners was appointed as
administrator of Pieroth Wines on Aug. 24, 2018.
WOLF MINERALS: Second Creditors' Meeting Set for Nov. 14
--------------------------------------------------------
A second meeting of creditors in the proceedings of Wolf Minerals
Limited has been set for Nov. 14, 2018, at 4:00 p.m. at the
offices of Ferrier Hodgson, at Level 28, 108 St Georges Terrace,
in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 13, 2018, at 4:00 p.m.
Martin Bruce Jones and Ryan Eagle of Ferrier Hodgson were
appointed as administrators of Niederthaeler Hof on Oct. 10,
2018.
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C H I N A
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TAHOE GROUP: Moody's Lowers CFR to B3, Outlook Negative
-------------------------------------------------------
Moody's Investors Service has downgraded to B3 from B2 the
corporate family rating of Tahoe Group Co., Ltd, and to Caa1 from
B3 the backed senior unsecured rating of the notes issued by
Tahoe Group Global Co., Limited - a wholly owned subsidiary of
Tahoe - and guaranteed by Tahoe.
The outlook on all ratings is negative.
RATINGS RATIONALE
"The rating downgrade reflects Tahoe's weak financial management
and its heightened debt-refinancing risk over the next 12-18
months because of weaker-than-expected cash collections from
property sales and high levels of maturing debt over the next 12-
18 months," says Wenhan Chen, a Moody's Assistant Vice President
and Analyst.
As of September 2018, Tahoe had cash of RMB17.4 billion, which
could not fully cover its short-term debt of RMB64.7 billion as
of the same date, onshore bonds of RMB10.5 billion puttable by
the end of 2019, and outstanding land premium payments. The
company's cash/short-term debt ratio further declined to 27% as
of September 2018 from 39% at both the end of June 2018 and the
end of December 2017.
Tahoe is actively seeking new capital from its existing funding
channels and potentially alternative liquidity sources to meet
its refinancing needs. If the company fails to secure new
financing in the next few months, its ratings will come under
further downgrade pressure.
Tahoe's slow cash collection is a result of its focus on selling
mid-to-high-end properties in major cities. In the case of such
properties, developers require a long time to register sales and
obtain mortgage disbursements from banks, given tight regulatory
controls, especially in the major cities.
Moody's expects Tahoe's debt leverage, as measured by
revenue/adjusted debt, to remain weak at around 24% over the next
12-18 months, compared with 18% for the 12 months ended June 2018
and 17% at the end of 2017.
Its interest coverage, as measured by EBIT/adjusted interest,
will also stay weak at 1.3x- 1.4x over the next 12-18 months,
compared with 1.4x in 2017, given the company's high debt
leverage and increasing cost of borrowings. These levels place
the company's rating at the low B level.
Tahoe's B3 CFR reflects the company's large business scale
relative to many B-rated Chinese developers, long operating
history, and modestly diversified capital structure.
However, the B3 CFR is constrained by its weak liquidity and high
refinancing risk as well as its weak financial metrics.
Tahoe's senior unsecured rating of Caa1 is lower than the CFR by
one notch because of the risk of structural subordination. This
risk reflects Moody's expectation that the majority of claims
will be at the operating subsidiaries' level and will have
priority over claims at the holding company in a bankruptcy
scenario. In addition, the holding company lacks significant
mitigating factors for structural subordination. As a result, the
expected recovery rate for claims at the holding company will be
lower.
The outlook on the ratings is negative, reflecting Moody's
concerns over Tahoe's weak liquidity and high debt refinancing
risk.
Upward pressure is unlikely, given the negative outlook. However,
the outlook could return to stable if Tahoe can successfully term
out its debt maturity and improve its liquidity substantially,
with its cash/short term debt ratio above 1.0x on a sustained
basis.
On the other hand, downgrade pressure could arise if (1) Tahoe's
contracted sales or revenue growth is below Moody's expectations,
(2) it engages in aggressive debt-funded acquisitions, or (3) its
liquidity position or credit metrics weaken further.
Credit metrics and liquidity levels indicative of downward rating
pressure include (1) EBIT/interest coverage below 1x, or (2)
cash/short-term debt below 1.0x on a sustained basis.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Tahoe Group Co., Ltd. listed on the Shenzhen Stock Exchange in
2010. The company began its first residential property project in
Fuzhou in Fujian Province in 1996. Its operations are mainly
focused on residential property developments. It is also engaged
in commercial property developments. At June 30, 2018, its land
bank totaled around 18 million square meters by saleable gross
floor area.
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I N D I A
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E-WAY GALLERY: CRISIL Assigns D Rating to INR6cr Loans
------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating on the bank facilities
of E - Way Gallery (E Way).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL D (Assigned)
Proposed Cash
Credit Limit 2.5 CRISIL D (Assigned)
The ratings reflect the company's continuously overdrawn bank
limit because of weak liquidity. The firm has large working
capital requirement and below average financial risk profile.
However, it benefits from its promoters' extensive experience in
the trading business.
Key Rating Drivers & Detailed Description
* Overdrawn bank limit: Working capital-intensive operations have
led to high reliance on debt and overutilisation of the bank
limit.
Weaknesses
* Working capital-intensive operations: Gross current assets are
estimated at 230 days as on March 31, 2018, driven by substantial
inventory of 115 days and debtors of 92 days.
* Below average financial risk profile: Small networth of INR 1.5
crore, total outside liabilities to tangible networth (TOLTNW) of
6.17 times and debt protection metrics marked by interest
coverage and net cash accrual to total debt ratios of 1.02 times
and 0.05 time, respectively, in fiscal 2018.
Strengths
* Extensive industry experience of the promoters: E Way benefits
from its promoter industry experience of over 20 years, which has
resulted in steady orders from customers and longstanding
relationships with suppliers.
E Way is a partnership firm set up in 2014 in Manjeri (Malappuram
District,Kerala) and is engaged in trading in tiles and sanitary
ware. The operations are managed by Mr. Abdul Azeez. The firm has
a single showroom at Malappuram, which is spread over 70,000 sq
ft.
GOLDEN SHELTERS: CRISIL Lowers Rating on INR40cr Loan to D
----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Golden Shelters Private Limited (GSPL; part of the GS group) to
'CRISIL D/CRISIL D' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 10 CRISIL D (Downgraded from
'CRISIL A4+')
Term Loan 40 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
The ratings downgrade reflects delay in the servicing of debt
obligations by the group due to weak operating performance
leading to stretched liquidity profile.
The ratings also reflect the group's exposure to intense
competition and significant funding support to group companies.
However the group benefits from the extensive experience of
promoters in the wellness industry.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of GSPL and Prajit Foundation Pvt Ltd
(PFPL). That's because the two companies, collectively referred
to as the GS group, are in the same line of business and have
common promoters.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to intense competition: The group is a moderate player
in the wellness industry, which has low entry barriers leading to
intense competition from small players.
* Exposure to associate concerns: The group has extended
significant fund support of over 80% of its networth to associate
concerns. Incremental fund support and its impact on liquidity
will remain a key rating sensitivity factor.
Strength
* Established presence in the wellness industry: That's reflected
in healthy revenue. The promoters have an industry experience of
over 15 years.
Incorporated in 2002, GSPL conducts wellness courses at its
centre in Chittor district, Andhra Pradesh. The company started
leasing out commercial real estate space in fiscal 2013.
PFPL, incorporated in 2001, conducts yoga, meditation, and
wellness courses. It started operations in 2008.
ITCOS GRANITO: CARE Reaffirms B+ Rating on INR23.69cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Itcos Granito LLP (Itcos), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 23.69 CARE B+; Stable Reaffirmed
Long-term/Short- 2.50 CARE B+; Stable/CARE A4
term Bank Reaffirmed
Facilities
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Itcos continue to
remain constrained on account of its moderate financial risk
profile marked by modest scale of operations and net losses
booked during its first eight months of operations in FY18
(Audited)., refers to the period of April 1 to March 31).
Furthermore, the ratings continue to remain constrained on
account of its presence in the highly competitive ceramic
industry, fortunes linked to demand from cyclical real estate
sector and susceptibility of its profit margins to volatility in
raw material prices.
The ratings, however, continue to derive strength from successful
stabilization of its operations in FY18, highly experienced
partners along with their long standing presence in the ceramic
tiles industry, strategic location of its tile manufacturing
unit and established marketing network of other group entities.
Itcos's ability to increase its scale of operations along with an
improvement in profitability, capital structure and debt coverage
indicators along with efficient working capital management are
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate financial risk profile: Itcos commenced its commercial
operations from August 2017. During its first eight months of
operations in FY18 (A), the TOI of Itcos stood modest at INR19.39
crore while the PBILDT margin stood at 9.32%. However, Itcos
registered net losses during the year due to higher depreciation
for the year being first year of operations. Further, the gross
cash accruals of the firm stood at INR0.48 crore during 8MFY18
(A). As on March 31, 2018 Itcos's capital structure stood
leveraged marked by overall gearing ratio of 2.27 times mainly on
account of higher debt level and moderate net-worth base. The
debt coverage indicators of Itcos stood weak. Interest coverage
ratio stood moderate at 1.36 times during FY18 (A) mainly on
account of moderate operating profits and Total debt to GCA stood
at 35.98 times as on March 31, 2018 mainly due to high debt level
and low GCA. The current ratio of Itcos stood moderate at 1.08
times as on March 31, 2018 (A), while the average utilization of
working capital limits remained moderate at ~80% during the past
12 months period ended September, 2018.
Presence in a highly competitive ceramic industry and fortunes
linked to demand from cyclical real estate sector: Itcos operates
in a highly competitive segment of the ceramic industry marked by
low entry barriers, presence of large number of organized and
unorganized players with capex planned by existing players in the
industry as well as new entrants. Further, demand for such
products is directly linked to the fortunes of the real estate
sector which in turn is cyclical in nature.
Susceptibility of operating margins to volatility in prices of
raw material and fuel: Prices of raw material i.e. clay &
feldspar is market driven and expected to put pressure on the
margins of tile manufacturers. Another major cost component is
fuel expenses in the form of natural gas which is required to
fire the furnace. The profitability of Itcos remains exposed to
volatile LNG prices, mainly on account of its linkages with the
international demand/supply of natural gas. Hence, Itcos' ability
to control its cost structure would be crucial going forward
especially in light of competitive environment.
Key Rating Strengths
Successful stabilization of operations: Successful completion of
the project has been achieved within envisaged cost parameters.
Itcos commenced its commercial operations from August 2017 and
FY18 was the first year of operations having eight months of
commercial operations.
Experienced partners and well established presence in the ceramic
industry: Itcos has been formed by four key partners namely Mr.
Haresh Patel, Mr. Pravin Bhadja, Mr. Jignesh Bhadja and Mr.
Kishan Bhadja. Majority of the partners hold an experience of
more than a decade in same line of business through association
with other associate firms. All the partners have good reputation
in the ceramic industry.
Located in the ceramic hub with easy access to raw material, fuel
and labor: The manufacturing unit of Itcos is located at Morbi
(Gujarat) which is one of the largest ceramic clusters in India.
It provides easy access to raw material, fuel and labor.
Morbi (Gujarat) based Itcos was formed in June 2016 as a limited
liability partnership by twelve partners. Itcos has set up a
green-filed project in Morbi (Gujarat) for manufacturing of
glazed vitrified tiles with an installed capacity of 75000 Metric
Tonnes Per Annum as on March 31, 2018. Itcos commenced its
commercial operations from August 2017 and FY18 was its first
year of operations. The partners of the firm have vast experience
in the ceramic industry through their association with three
associate entities namely Shapphire Ceramic Private Limited,
Divyesh Industries and Sunfield Ceramic. These associate concerns
are mainly engaged into manufacturing of vitrified tiles.
JAIPAN INDUSTRIES: Ind-Ra Affirms BB- Long-Term Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Jaipan
Industries Limited's Long-Term Issuer Rating at 'IND BB- (ISSUER
NOT COOPERATING)'. The Outlook is Stable. The issuer did not
participate in the rating exercise despite continuous requests
and follow-ups by the agency. Thus, the rating is based on the
best available information. Therefore, investors and other users
are advised to take appropriate caution while using 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:
-- INR70 mil. Fund-based facilities affirmed with IND BB-
(ISSUER NOT COOPERATING)/Stable rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; Based on
the best available information
KEY RATING DRIVERS
The credit profile of Jaipan Industries improved in FY18. Its
revenue increased to INR275.8 million in FY18 from INR196.2
million in FY17, EBITDA margin rose to 13.8% from 6.7%, interest
coverage (operating EBITDA/gross interest expenses) improved to
6.8x from 1.6x and net financial leverage (total adjusted net
debt/operating EBITDA) enhanced to 0.6x from 2.9x. Ind-Ra is
unable to determine the sustainability of the credit profile of
Jaipan Industries, in the absence of any discussion with the
management about capex and other future plans.
Jaipan Industries did not participate in the surveillance
exercise and has not provided information about working capital
utilization, sanction letters, future projections, management
representation certifying timely debt service and others.
RATING SENSITIVITIES
Negative: A decline in revenue and/or operating profitability,
leading to deterioration in the credit metrics, on a sustained
basis, could lead to a negative rating action.
Positive: Any substantial increase in revenue, while maintaining
the credit metrics, could lead to a positive rating action.
COMPANY PROFILE
Jaipan Industries, which is listed on the Bombay Stock Exchange,
manufactures and markets various home appliances and non-stick
cookware under the brand Jaipan. Its manufacturing facilities are
in Mumbai and Silvassa (Dadra and Nagar Haveli). It also
outsources manufacturing of some of its products.
KARAN INTERMEDIATES: CARE Hikes Rating on INR3.43cr Loan to BB-
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Karan Intermediates Private Limited (KIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 3.43 CARE BB-; Stable Revised
Facilities from CARE B+; Stable
Long Term/Short 2.00 CARE BB-; Stable/CARE A4
Term Bank Long term rating revised
Facilities from CARE B+; Stable;
Short term rating assigned
Detailed Rationale & Key Rating Drivers
The revision in the long term rating assigned to the bank
facilities of KIPL is primarily on account of a significant
increase in its scale of operations and profitability during
FY18. The ratings, further, continue to derive strength from the
comfortable liquidity position along with the vast experience of
the promoters and location advantage.
The ratings, however, continue to remain constrained on account
of its moderate capital structure and moderate debt coverage
indicators along with KIPL's presence in a highly competitive and
fragmented chemical industry and susceptibility of operating
margin to volatile raw material prices.
The ability of KIPL to increase its scale of operations with
improvement in profitability and solvency position are the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate capital structure and debt coverage indicators: As on
March 31, 2018, the capital structure of KIPL moderated
marginally as marked by overall gearing ratio of 1.40 times (1.14
times as on March 31, 2017), owing to an increase in total level
of debt. The debt coverage indicators also remained moderate
marked by total debt to GCA of 4.03 times as on March 31, 2018
(11.57 times as on March 31, 2017), while the interest coverage
stood comfortable at 7.18 times during FY18 (38.59 times during
FY17).
Presence in highly fragmented and competitive chemical industry:
KIPL is into manufacturing of pharmaceutical and pesticide
intermediates. The chemical industry is highly fragmented in
nature with presence of huge number of organized as well as
unorganized players. Hence, KIPL being into the chemical
processing faces high degree of competition from numerous
players.
Susceptibility of operating margin to volatile raw material
prices: KIPL's profitability is susceptible to volatility in raw-
material price movement as it accounts for roughly 65% of the
total cost of sales and the entity holds raw-material inventory
for around a month. This might put pressure on the margins of
the company in case of its inability to pass on the raw material
price rise to the customers.
Key Rating Strengths
Significant increase in scale of operations and profitability:
During FY18, KIPL reported significant improvement in its total
operating income (TOI) which almost doubled and stood at INR10.48
crore as compared to INR3.64 crore during FY17, owing to an
increase in sales volume of its products led by capacity
expansion. Also, the PBILDT margin increased and stood healthy at
17.95% during FY18 as against 9.78% during FY17. Resultantly, the
company generated net profits of INR0.96 crore (9.13%) during
FY18 as compared to net losses of INR0.07 crore during previous
year.
Comfortable liquidity position: KIPL's overall liquidity position
stood comfortable marked by operating cycle of 8 days during
FY18, while the average working capital limit utilization
remained low at 35% during past 12 months ended September, 2018.
The current ratio remained moderate at 1.12 times as on March 31,
2018 (0.70 times as on March 31, 2017).
Experienced promoters: KIPL is promoted by Mr. Gautam Patel and
Mr. Vakesh Patel. Mr. Gautam Patel holds more than 25 years of
experience in manufacturing and marketing of chemicals and is
responsible for overall management and operations of the company.
Mr. Vakesh Patel holds around two decades of experience in
manufacturing and developing chemicals.
Location advantage: KIPL has its plant located at Khambhat
(Gujarat), with easy access to raw materials, labour, power and
logistics.
Ahmedabad-based (Gujarat), KIPL was incorporated during July,
1994 by two promoters namely Mr. Gautam Patel and Mr. Vakesh
Patel. The company is in the business of manufacturing
pharmaceuticals and pesticides intermediates like Chloro Acetyl
Chloride, Trichloro Acetic Acid, Sodium Bisulphate etc., and
operates with an installed capacity of 6,890 Metric Tonnes Per
Annum (MTPA) as on March 31, 2018 from Anand, Gujarat.
KAYTEE CORP: Ind-Ra Hikes Long Term Issuer Rating to 'BB'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Kaytee
Corporation Private Limited's (KCPL) Long-Term Issuer Rating to
'IND BB' from IND 'B+ (ISSUER NOT COOPERATING)'. The Outlook is
Stable.
The instrument-wise rating actions are:
-- INR242 mil. (increased from INR222 mil.) Fund-based working
capital limit upgraded with IND BB/Stable/IND A4+ rating;
-- INR35 mil. (increased from INR10 mil.) Non-fund-based working
capital limit upgraded with IND A4+ rating; and
-- INR17.3 mil. (reduced from INR25 mil.) Term loan due on March
2022 upgraded with IND BB/Stable rating.
KEY RATING DRIVERS
The upgrade reflects an improvement in KCPL's scale of operations
and credit metrics. The top line of the company improved to
INR1,043.87 million in FY18 (FY17: INR743.31 million), on account
of a higher quantities of the products sold. Interest coverage
was more or less stable at 1.16x in FY18 (FY17: 1.15x) while
financial leverage reduced to 6.79x in (7.67x). The improvement
was mainly due to an increase in absolute EBITDA from INR45.51
million in FY18 (FY17: INR38.56 million).
However, the scale of operations remains medium. Also, the credit
metrics continue to be weak due to modest EBITDA margins of 4.36%
in FY18 (FY17: 4.41%) with ROCE at 8.7% (7.5%). The weak credit
and financial profile is attributed to the company's presence in
the highly fragmented and intensely competitive textile industry,
which is also working capital intensive as evident by the
company's tight liquidity position with almost full utilization
of the working capital limits during the 12 months ended
September 2018.
However, the ratings are supported by the company's established
track record of 40 years and over 30 years of experience of
KCPL's directors in the same line of business.
RATING SENSITIVITIES
Negative: Further deterioration in the operating margins leading
to weaker credit metrics and/decline in overall revenue will be
negative for the ratings.
Positive: An improvement in EBITDA margin leading to improvement
credit metrics will be positive for ratings.
COMPANY PROFILE
KCPL was established in 1944 as a trading concern with interests
in cotton and yarns. It started manufacturing garments in 1974.
It was registered as a private limited company in June 1994. At
present, it is dealing in yarn, fabrics (trading) and garments
(manufacturing).
MAHESHWARI AGRO: CARE Lowers Rating on INR6cr Loan to B+/A4
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Maheshwari Agro (MHA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term/Short- 6.00 CARE B+; Stable/CARE A4;
term Bank Issuer not cooperating;
Facilities Revised from CARE BB-;
Stable/CARE A4 Based on
best available information
Long term Bank 0.88 CARE B+; Issuer not cooperating;
Facilities Revised from CARE BB-; Stable
Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MHA to monitor the ratings
vide e-mail communications/letters dated June 27, 2018, July 3,
2018, July 10, 2017, July 30, 2018, August 3, 2018, September 12,
2018, September 14, 2018, October 8, 2018, October 10, 2018,
October 11, 2018 and numerous phone calls. However, despite our
repeated requests, the firm has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The ratings on
MHA's bank facilities will now be denoted as CARE B+;Stable/CARE
A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on August 4, 2017, the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Thin profit margins: The profit margins continued to remain thin
marked by the PBILDT margin of 3.12% during FY17 (Provisional) as
against 1.63% during FY16. Further, the PAT margin stood low at
0.06% during FY17 (Provisional) [FY16 (Audited): 0.28%] owing
to low value addition nature of operations.
Working capital intensive nature of operations: The operations
are working capital intensive in nature and net working capital
as a % of capital employed stood high at 68 percent as on
March 31, 2017 (Provisional).
Partnership nature of constitution: Being a partnership firm, MHA
is exposed to inherent risk of partners' capital being withdrawn
at time of personal contingency and firm being dissolved upon the
death/retirement/insolvency of partners.
Susceptibility of margins to volatility in raw material prices
coupled with presence in fragmented agro processing industry: The
prices of agro commodities are subject to climatic risk and are
volatile in nature. Hence, any adverse movement in their price
can put pressure on the profit margins of the firm. Also, the
government intervenes in the market to keep a check on the
domestic price by levying minimum support price (MSP) to
safeguard the interest of farmers, which in turn limits the
bargaining power of buyers.
Key Rating Strengths
Experienced promoters in the agro processing industry: The
partners of the firm have vast experience of more than one and
half decades in the agro processing industry.
Improvement in TOI, capital structure and debt coverage
indicators during FY17: Total Operating Income (TOI) of the firm
improved by 25.41% and remained at INR49.99 crore during FY17
(Provisional) as compared to previous year, on the back of
increase in the demand from its customers. As on March 31, 2017
(Provisional), the capital structure of MHA improved over the
previous year and stood at moderately leveraged marked by an
overall gearing ratio of 1.72 times as against 2.78 times as on
March 31, 2016 (Audited). Total debt to GCA also improved to 8.50
times as on March 31, 2017 compared to 33 times as on March 31,
2016.
Bavla (Ahmedabad, Gujarat) based MHA was formed in 2009 as a
partnership firm by Mr. Dilip Rathi and Mr. Ghanshyam
Maheshwari. MHA is engaged in the business of processing and
trading of rice. MHA majorly sells its products in the Gujarat
region only.
MOTIL DEVI: CARE Lowers Rating on INR6.39cr LT Loan to B
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Motil Devi Organic Food Industries Pvt Ltd (MDOFI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.39 CARE B; Stable; Issuer not
Facilities cooperating; Revised from
CARE B+; Stable on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MDOFI to monitor the
rating vide e-mail communications/letters dated July 16, 2018,
August 1, 2018, September 3, 2018 and numerous phone calls.
However, despite our repeated requests, the company has not
provided the requisite information for monitoring the rating. In
line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the publicly available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on UAPL's bank facilities will now be denoted
as CARE B; ISSUER NOT COOPERATING. Further, Banker could not be
contacted.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings assigned to the bank facilities of Motil Devi Organic
Food Industries Pvt Ltd are constrained by its small scale of
operation with short track record, susceptibility of margins to
fluctuation in raw material prices, intensely competitive nature
of the industry with presence of many unorganized players,
working capital intensive nature of operation and weak financial
risk profile marked by moderately low profit margins, leveraged
capital structure and weak liquidity position. The rating,
however, derives strength from its experienced promoters and
satisfactory demand of the manufactured products.
Detailed description of the key rating drivers
At the time of last rating in September 13, 2017, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses:
Small scale of operation with short track record: MDOFI is a
small player in ice-cream manufacturing business with revenue and
PAT of INR8.37 crore and INR0.38 crore respectively in FY16.
Furthermore, the total capital employed was also modest at
INR9.05 crore as on March 31, 2016. The small scale restricts the
financial flexibility of the company in times of stress.
According to the management, during FY17, the company has earned
a total operating income of INR7.11 crore. Furthermore, the
commercial operation of the company has been started from April
2014, thus having only over three years of operational track
record.
Susceptibility of margins to fluctuation in raw material prices:
Raw material constituted around 60% of the total cost of sales
for the last two years (FY15-FY16). The company is in dairy
industry and susceptible to fluctuations in raw material prices.
Milk supply and its prices are exposed to several external risks
like government policies, cattle diseases, yield etc. Any
fluctuation in prices of milk will have a direct impact on the
profitability margins of the company. Intensely competitive
nature of the industry with presence of many unorganised players:
Dairy products like ice cream manufacturing industry is highly
fragmented and dominated by few large players having nationwide
presence. The competition is intense due to the presence of large
number of regional and local milk and dairy product suppliers.
Around 80% of the domestic dairy industry consists of unorganized
players, fragmented in various regions. MDOFI faces intense
competition from bigger private players and co-operative
societies with well established brands as well as unorganized
sectors comprising of local vendors.
Working capital intensive nature of operation: The operation of
the company is working capital intensive. The dairy industry is
characterized by the short supply of milk during peak of summers.
The company primarily procures the raw material during the winter
season when the milk is available in abundance and at low price
which leads to build up of finished goods which intern increases
the inventory period as on last accounting date which further
leads to high operating cycle. The average utilisation of bank
borrowing during last 12 months ended on July, 2017 was 90%.
Weak financial risk profile marked by moderately low profit
margins, leveraged capital structure and weak liquidity
position: Financial risk profile of the company has been low over
the years. Though the PBILDT margin has been satisfactory and
hovering around 14% during FY16, PAT margin was low and after a
net loss during FY15, it is hovering around 4% during FY16. The
capital structure of the company is leveraged marked by high
overall gearing ratio at 2.62x as on March 31, 2016. However, the
same has improved on the back of scheduled repayment of term loan
and accretion of profits to reserve. Interest coverage ratio was
adequate at 1.68x during FY16. Current ratio was below unity as
on March 31, 2016 due to high current portion of long-term debt.
Key Rating Strengths
Experienced promoters: MDOFI is currently managed by Mr. Deepak
Wadhvani, Director, having about two decades of experience in
similar line of business.
Satisfactory demand of the manufactured products: With growing
population and increasing purchasing power and growing propensity
to spend for the average consumer along with change in lifestyle
and food habits, demand for milk and milk products is growing
steadily primarily in the urban and semi-urban areas.
Motil Devi Organic Food Industries Pvt Ltd (MDOFI), incorporated
in December 2012 by one Mr. Deepak Wadhvani of Raipur, is engaged
in the business of manufacturing of ice cream. The company
started its commercial operation since April 2014 with an
installed capacity of 15,00,000 litres per annum. The company
market its products under the brand name of "Mental" in and
around Raipur.
Mr. Deepak Wadhvani, Director, looks after the day to day
operations of the company with adequate support from other
director and a team of experienced personnel.
NAV BHARAT: CRISIL Migrates B Rating to Not Cooperating Category
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Nav Bharat
Hatcheries (NBH) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 6.03 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term .69 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with NBH for obtaining
information through letters and emails dated July 23, 2018 and
August 31, 2018 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of NBH. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on NBH is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of NBH to 'CRISIL B/Stable Issuer not cooperating'.
Established in 2011 as a partnership between Mr. Pardeep Bansal
and Mr. Vasudev Bansal, NBH, is in the business of poultry
breeding and hatching. It has its unit in Jind, Haryana.
NAVAYUGA QUAZIGUND: CARE Lowers Rating on INR2030.35cr Loan to D
----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Navayuga Quazigund Expressway Private Limited (NQEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 2030.35 CARE D Revised from
Facilities CARE BB+; Stable
Detailed Rationale & Key Rating Drivers
The revision in rating assigned to bank facilities of NQEPL is on
account of delays in interest servicing owing to delay in project
completion.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in debt servicing: There are delays in interest servicing
(IDC) on account of delay in project completion.
Delay in project progress: The total physical progress achieved
till July 31, 2017 was 69.11% as against planned progress of 100%
while the financial progress till July 20, 2017 is 85.54% against
the planned financial progress of 100%. However, with revised
estimated project cost, financial progress until July 20, 2017
was 72.55%. As per the LIE report for July 2017, there was slow
progress of work due to prevailing unrest in Jammu & Kashmir,
floods, excessive rainfall & unavailability of land. Independent
Engineer (IE) has assessed the delays and recommended an
Extension of Time (EOT) to 419 days and 107 days (i.e. total 526
days) with the revised Scheduled Commercial Operation Date (SCOD)
as November 12, 2017.
Key Rating Strengths
Strong experience of promoters: NQEPL is promoted by Navayuga
Engineering Company Ltd (NECL) and Krishnapatnam Port Company Ltd
(KPCL). NECL holds 26% stake in NQEPL directly and 48% through
its step down subsidiary Navayuga Road Projects Pvt. Ltd, while
KPCL holds balance 26% stake. NECL is the flagship company of the
Navayuga group. It is an infrastructure development company
providing integrated engineering, procurement and construction
(EPC) services for ports, irrigation, roads & bridges, and power
projects. NECL has prior experience in successfully executing
toll road projects and apart from NQEPL, it has promoted several
other special purpose vehicle (SPVs) for executing road and port
projects.
Navayuga Quazigund Express Highways Pvt. Ltd (NQEPL) is a special
purpose vehicle (SPV) promoted mainly by Navayuga Engineering
Company Ltd (NECL) along with its step down subsidiary; Navayuga
Roads Projects Pvt Ltd and Krishnapatnam Port Company Ltd (KPCL)
to undertake rehabilitation, strengthening and four laning of the
Quazigund- Banihal section of NH- 1A from Km. 189.350 to Km.
204.700, including 2 tunnels (2 lane of 0.690 km & 8.450 km
length) in the state of Jammu & Kashmir on Design-Build-Finance-
Operate-Transfer (DBFOT) (Annuity) Basis (15.35km).The total
physical progress achieved till end of July 2017was 69.11% as
against planned progress of 100%.
NILKANTH COTTON: CARE Lowers Rating on INR7.32cr LT Loan to D
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Nilkanth Cotton Industries (NCI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.32 CARE D; Issuer not cooperating;
Facilities Based on best available
information Revised from
CARE B; Stable; ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from Nilkanth Cotton Industries
to monitor the ratings vide e-mail communications/letters dated
July 6, 2018, September 30, October 1, 2018, October 4, 2018,
October 8, 2018, October 17, 2018 and numerous phone calls.
However, despite CARE's repeated requests, the firm has not
provided the requisite information and monthly NDS for monitoring
the ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the publicly available
information, which however, in CARE's opinion is not sufficient
to arrive at a fair rating. The rating on Nilkanth Cotton
Industries' bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s). The rating has been revised on account of the
delays in debt repayments owing to weak liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: Nilkanth Cotton Industries has
been irregular in servicing its debt obligation due to weak
liquidity position of the firm. The firm has not repaid its term
loan debt obligations since August 31, 2018.
Jangvad, Jasdan-based (Rajkot) NCI was established as a
partnership firm in 2014 by six partners. The partners of NCI
include mainly Mr. Hareshbhai H Tadhani and Mr. Chandubhai H
Tadhani. The firm is engaged into the activity of cotton ginning,
bailing and cleaning. The main products of NCI includes cotton
seeds, cotton bales, cotton cake and cotton wash oil. The firm
has an installed capacity of 18144 Metric Ton per annum for raw
cotton processing and 2160 Metric Ton per annum for cotton seeds
processing as on March 31, 2016. The firm's manufacturing
facilities are equipped with 24 ginning machine, 1 pressing
machine and 5 expellers for crushing of cotton seeds. The firm
operated at 90% capacity utilization for the year ending on
March 31, 2016. The firm has an established selling network for
selling the products outside Gujarat i.e. Tamil Nadu and
Rajasthan.
P.K. & COMPANY: Ind-Ra Affirms BB- Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed P.K. & Company's
(PK) Long term Issuer Rating at IND BB-. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR50 mil. Fund-based limits affirmed with IND BB-/Stable
rating;
-- INR150 mil. Non-fund-based limits affirmed with IND A4+
rating; and
-- INR100 mil. Non-fund-based limits assigned with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects PK's continued small scale of
operations, although its revenue raised to INR404.42 million in
FY18 from INR147.81 million in FY17 on account of an increase in
work orders.
The ratings reflect modest PK's credit metrics. Its interest
coverage (operating EBITDA/gross interest expense) was 3.0x in
FY18 (FY17: 2.1x) and net leverage (total adjusted net
debt/operating EBITDAR) was 3.1x (2.9x). The improvement in the
coverage was driven by a proportionately higher rise in absolute
EBITDA than that in interest expenses, while the deterioration in
the leverage was due to a proportionately higher increase in debt
than that in absolute EBITDA.
The ratings remain constrained by PK's tight liquidity, indicated
by several instances of over-utilization of its fund-based
facilities, and high customer concentration risk. PK's work
orders are concentrated in Assam and Meghalaya. Moreover, the
firm operates in a highly competitive and fragmented construction
industry, which is susceptible to volatility in raw material
prices.
The ratings, however, continue to be supported by PK's average
EBITDA margin, albeit it fell to 8.4% in FY18 from 14.38% in FY17
due to an increase in material cost. Its return on capital
employed was 13% in FY18 (FY17: 9%).
The ratings also continue to be supported by the partners'
experience of more than two decades in the construction industry.
RATING SENSITIVITIES
Negative: Any further fall in the EBITDA margin, leading to any
deterioration in the credit metrics, and further stretched
liquidity may lead to a negative rating action.
Positive: Any significant rise in the revenue, along with any
improvement in the credit metrics, may lead to a positive rating
action.
COMPANY PROFILE
Incorporated in 1992, PK is a Guwahati-based partnership firm
that undertakes road and bridge construction projects in Assam
and Meghalaya. Its partners are Kirorimal Agarwala, Mahavir
Prasad Agarwala, Sajjan Kumar Agarwala, Shyam Sundar Agarwala and
Pawan Kumar Agarwala.
PEARL INFOTECH: CRISIL Migrates 'B' Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Pearl
Infotech (PI) to CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 7 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 3 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with PI for obtaining
information through letters and emails dated September 28, 2018
and October 5, 2018 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PI. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PI is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of PI to CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Pearl Infotech is a distributor of Micromax, LeEco & Vivo mobile
handsets in Karnataka with 2016-17 being its first year of
operations.
PK THUNGAN: CRISIL Migrates B+ Rating to Non-Cooperating Category
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of PK Thungan
Builders Private Limited (PKTBPL) to CRISIL B+/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 5 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 20 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with PKTBPL for
obtaining information through letters and emails dated
July 23, 2018 and August 31, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PKTBPL. Which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on PKTBPL
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of PKTBPL to CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Incorporated in 2014, PKTBPL based in Hyderabad, is promoted by
Mr. JVS Srinivas & Mr. PK Thungan. PKTBPL is engaged in
construction of tunnels for hydroelectric projects, power houses,
dams, and other types of heavy construction works mainly in
Andhra Pradesh.
PRAJIT FOUNDATION: CRISIL Lowers Rating on INR10cr Loan to D
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Prajit Foundation Private Limited (PFPL; part of the GS group)
to 'CRISIL D' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 10 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
The rating downgrade reflects delay in the servicing of debt
obligations by the group due to weak operating performance
leading to stretched liquidity profile.
The ratings also reflect the group's exposure to intense
competition and significant funding support to group companies.
However the group benefits from the extensive experience of
promoters in the wellness industry.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of Golden Shelters Private Limited (GSPL)
and PFPL. That's because the two companies, collectively referred
to as the GS group, are in the same line of business and have
common promoters.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to intense competition: The group is a moderate player
in the wellness industry, which has low entry barriers leading to
intense competition from small players.
* Exposure to associate concerns: The group has extended
significant fund support of over 80% of its networth to associate
concerns. Incremental fund support and its impact on liquidity
will remain a key rating sensitivity factor.
Strength
* Established presence in the wellness industry: That's reflected
in healthy revenue. The promoters have an industry experience of
over 15 years.
Incorporated in 2002, GSPL conducts wellness courses at its
centre in Chittor district, Andhra Pradesh. The company started
leasing out commercial real estate space in fiscal 2013.
PFPL, incorporated in 2001, conducts yoga, meditation, and
wellness courses. It started operations in 2008.
RELIGARE ENTERPRISES: Ind-Ra Cuts Long Term Issuer Rating to BB-
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Religare
Enterprises Limited's (REL) Long-Term Issuer Rating to 'IND BB-'
from 'IND BBB-' while maintaining it on Rating Watch Negative
(RWN).
The instrument-wise rating actions are:
-- INR1.76 bil. Senior secured non-convertible debentures (NCDs)
issued on March 28, 2013 ISIN INE621H07025 zero coupon bond
(14% XIRR) due on March 28, 2018 are withdrawn (paid in
full) and the rating is withdrawn; and
-- INR500 mil. Short-term debt (commercial paper)* downgraded;
maintained on RWN with IND A4+/RWN rating.
* Awaiting issuer's confirmation for instrument details
KEY RATING DRIVERS
The rating action reflects a rating downgrade of REL's principal
operating subsidiary, Religare Finvest Limited (RFL, 'IND
BB'/RWN; 85.6% owned directly and indirectly by REL). The notch
differential from RFL reflects RFL's reduced ability to provide
support in view of its own operational and financial challenges.
Ind-Ra believes REL's long-term support expectation from RFL,
which formed the main premise of rating linkage, has considerably
reduced. REL had not received dividends from RFL in FY17 and
FY18. During the 12 months ended October 2018, REL has repaid a
substantial part of its debt obligations, while has simplified
the group structure through merger of certain group companies
within itself.
RATING SENSITIVITIES
Any upgrade or downgrade in REL's ratings will depend on a
similar rating action on RFL. REL's ratings notch difference with
RFL would be contingent upon further changes in linkages with RFL
or on RFL's credit profile. In case of a significant rise in
REL's leverage or worsening of its own or group's liquidity,
REL's rating could be further notched down from RFL's long-term
rating.
COMPANY PROFILE
REL is a non-bank finance company, whose subsidiaries are engaged
in various businesses such as lending to small and medium
enterprises (RFL), housing finance (Religare Housing Development
Finance Corporation; 'IND BB-'/RWN), retail security broking
(Religare Broking Limited; 'IND A4+'/RWN) and health insurance
(Religare Health Insurance Company). The institutional equities
and capital markets business (Religare Capital Markets Limited)
has been deconsolidated from REL's balance sheet since October 1,
2011.
RELIGARE FINVEST: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Religare
Finvest Limited's (RFL) Long-Term Issuer Rating to 'IND BB' from
'IND BBB' while maintaining it on Rating Watch Negative (RWN).
The instrument-wise rating actions are:
-- INR7.5 bil. Lower Tier 2 sub-debt# downgraded; maintained on
RWN with IND BB/RWN rating;
-- INR150,000 bil. Long-term bank loans downgraded; maintained
on RWN with IND BB/RWN rating;
-- INR30.0 mil. Long-term debentures# downgraded; maintained on
RWN with IND BB/RWN rating;
-- INR30.0 mil. Commercial paper^ downgraded; maintained on RWN
with IND A4+/RWN rating; and
-- INR30.0 mil. Short-term bank loans downgraded; maintained on
RWN with IND A4+/RWN rating.
#Details in Annexure
^Unutilized
KEY RATING DRIVERS
The downgrade reflects the likelihood that recent developments
could further pressure RFL's liquidity and operations. RFL has
been directed by The Securities and Exchange Board of India
(SEBI) to pay within three months an amount of INR2 billion along
with due interest, to Fortis Healthcare Limited (FHL). This is as
a result of SEBI's finding that this amount was routed from FHL
to RFL during the tenure of the erstwhile sponsor of FHL and
Religare Enterprises Limited ('IND BB-'/RWN; holding company of
RFL). SEBI has put restrictions on the use of assets and funds of
RFL. Ind-Ra believes payment of this amount would pressure RFL's
already stressed liquidity position, given its limited
flexibility on the external funding front. Ind-Ra has been told
by RFL's management that it has appealed against the order.
RFL is also facing stress owing to its disputed fixed deposit of
INR7.9 billion kept with Laxmi Vilas Bank (LVB). This amount had
been adjusted by LVB against loans given to the erstwhile
promoter holding company of REL. The matter is under judicial
consideration. According to RFL's asset liability profile for
end-August 2018, the six-month inflows (loan receivables) and
available cash equivalents (excluding the fixed deposits with
LVB) at INR7.3 billion falls short of the six-month debt
repayment obligation of INR15.2 billion. While the company is
trying to rise funding, the quantum may still be inadequate. An
unfavorable ruling towards the aforesaid fixed deposits can
critically deepen RFL's liquidity stress and impact its ability
to operate smoothly.
RFL has been shrinking its balance sheet amid challenges on
external funding and due to regulatory directions. The company
has recognized as non-performing asset (NPA) its entire corporate
loans (26% of total loans at 1QFYE19), against which the Reserve
Bank of India had raised concerns in 2017, as they were given by
RFL to the entities known to its erstwhile promoter group. The
recognition led to RFL's 90-dpd gross NPA ratio rising to 43% at
end-June 2018 (1HFYE18: 8.9%; FYE17: 5.1%).
Moreover, Religare Enterprises has delayed the infusion of the
much-needed capital into RFL. The holding company's new
stakeholders group had planned in early 2018 to infuse equity
into RFL in a phased manner. While only INR2.96 billion has been
infused so far, the amount essential to re-start business
disbursals as well as replenish the equity base, still needs to
be brought in. The equity base may be potentially impacted due to
the remaining provisions/write-offs of corporate and other non-
performing loans.
RFL's auditor's report for FY17 has referred to the concerns
raised by the RBI on the corporate governance norms followed by
the company. According to the report, the RBI has also raised
concerns on the systems and processes followed in respect of the
loan amount in RFL's corporate loan portfolio as well as certain
assignment transactions.
RATING SENSITIVITIES
The agency continues to monitor the developments towards any
equity infusion in the company, which could help resolve the RWN
along with developments on liability towards the SEBI mandated
payment, decision on the disputed fixed deposit, and firming up
business strategy including re-start of business disbursals. In
case of an extended delay in equity infusion, which may be
critical for the revival of operations; or a weakness in the
liquidity profile on account of refinancing challenges or
otherwise, could lead to a further rating downgrade.
COMPANY PROFILE
RFL is a non-bank finance company that primarily provides loans
to SMEs through its product offering of loan against property and
working capital loans. RFL had total assets worth INR120.3
billion at end-March 2018.
RELIGARE HOUSING: Ind-Ra Lowers Long Term Issuer Rating to 'BB-'
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has undertaken the following
rating actions on Religare Housing Development Finance
Corporation Limited's (RHDFC) debt instruments:
-- INR10.0 mil. Long-term bank loan downgraded; maintained on
RWN with IND BB-/RWN rating;
-- INR1.0 bil. Non-convertible debentures (NCDs)* downgraded;
maintained on RWN with IND BB-/RWN rating;
-- INR2.0 mil. Commercial paper^ downgraded; maintained on RWN
with IND A4+/RWN rating; and
-- INR2.0 bil. Short-term bank loan downgraded; maintained on
RWN with IND A4+/RWN rating.
^ unutilized
*Details are given in Annexure
KEY RATING DRIVERS
The rating action reflects a rating downgrade of RHDFC's parent
Religare Finvest Limited (RFL; 'IND BB'/RWN), which owns 87.5% in
the company. The ratings of RHDFC are driven by the credit
strength of its parent RFL. The notch differential from RFL
reflects RFL's reduced ability to provide support in view of its
own operational and financial challenges. Ind-Ra believes RHDFC's
long-term support expectation from RFL, which formed the main
premise of rating linkage, has considerably reduced. RHDFC
contributes towards the expansion of the product portfolio of RFL
group.
RHDFC's loan book reduced to INR8.7 billion at end-June 2018
(1HFYE18: INR10 billion) due to reduced disbursements. Its asset
quality deteriorated, as gross non-performing assets (90 days
past due) rose to 4.2% at 1QFYE19 (FYE17: 2.4%), while near term
buckets are showing stress (30-90 days past due was 7.4%).
RATING SENSITIVITIES
Any upgrade or downgrade in RHDFC's ratings will depend on a
similar rating action on RFL. RHDFC's rating notch difference
with RFL's would be contingent upon further changes in its
linkages with RFL, a decline in its ownership and support, or a
decreased importance of RHDFC in the parent's lending business or
deterioration in RFL's credit profile.
COMPANY PROFILE
RHDFC provides housing loans to low-/middle-income borrowers in
the unorganized sector. In addition, it provides loans for
commercial real estate (FYE17: 13% share in the loan portfolio)
and loans against property (17% share in the loan portfolio).
SADGURU SRI: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sadguru Sri
Sakhar Karkhana Limited (SSSSKL) a Long-Term Issuer Rating of
'IND BB-'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR207 mil. Term loans due on September 2019 - March 2023
assigned with IND BB-/Stable rating.
KEY RATING DRIVERS
The ratings reflect SSSSKL's tight liquidity position as
indicated by negative operating cash flows, weak current ratio,
and high total outside liabilities/total net worth ratio, weak
debt service coverage ratio and high utilization of working
capital limits.
In FY18, operating cash flow turned negative to INR293 million
from positive INR350 million in FY17, on account of increased
working capital requirements which were met by availing
additional working capital facilities. The company's working
capital cycle elongated to 538 days in FY18 (FY17: 117 days).
SSSSKL's average maximum utilization of the fund-based working
capital limits was 99% during the 12 months ended August 2018.
Ind-Ra expects the company's liquidity position to remain tight
on account of pressure on operating profitability, resulting from
weak sugar prices and higher cane costs; increased working
capital requirements and moderate repayment obligations. However,
the measures introduced by the government to support the sugar
industry such as buffer stock, minimum support price, cane
subsidy, regulated release of sugar, among others, mitigate the
pressure to a certain extent. Furthermore, SSSSKL expects to
receive a subsidy of INR30 million from the state government
under the Green Clean Energy Fund Scheme in 3QFY19.
The ratings are also constrained by the company's modest credit
metrics as indicated by interest coverage (EBITDA/interest
expense) and net leverage (net debt/EBITDA) of 2.1x in FY18
(FY17: 0.7x) and 5.6x (9.2x), respectively. The improvement in
the credit metrics was on account of an increase in EBITDA to
INR337 million in FY18 (FY17: INR172 million) and a decline in
interest expense. The rise in the EBITDA was primarily on account
of increased contribution from high-margin co-generation segment
in the overall revenue and lower sales of sugar. Operating
margins, albeit moderate, improved significantly to 29.6% in FY18
(FY17: 11.1%). The company's return on capital employed was 12.9%
in FY18 (FY17: 4%). The decline in interest expenses was on
account of lower utilization of working capital limits in 1HFY18,
as the company had lower stocks on account of low sugar
production in Sugar Season (SS) 2016-17 and scheduled term debt
repayment.
The credit metrics are likely to moderate primarily on account of
increased working capital requirements, stemming from a likely
higher sugar production in SS2018-19 and regulated release of
sugar. Despite the likely moderation in credit metrics, Ind-Ra
expects to remain comfortable at the current rating level on
account of modest levels of term debt and absence of capex plans.
The ratings are, however, supported by partially integrated
nature of operations, which provide some degree of cushion
against volatility in the sugar industry. The company has signed
a long-term power purchase agreement with Maharashtra State
Electricity Distribution Company Limited for export of surplus
power. Revenue from power sales more than doubled to INR164
million in FY18 (FY17: INR72 million) on account of higher
availability of bagasse, while the overall revenue declined to
INR1,138 million (FY17: 1540 million) on account of lower sales.
Further, the ratings are supported by healthy cane availability,
cane recovery and yields in area of operations.
RATING SENSITIVITIES
Negative: A significant decline in operating profitability and/or
liquidity position leading to deterioration in credit metrics on
a sustained basis will be negative for the ratings.
Positive: A significant improvement in operating profitability
and/or liquidity position leading to a sustained improvement in
the credit metrics will be positive for the ratings.
COMPANY PROFILE
Incorporated in 2010, SSSSKL operates a partially integrated
sugar plant with cane crushing and cogeneration capacity of 2500
tons of cane crushed per day and 12MW, respectively, in Sangli,
Maharashtra.
SAFE AND SECURE: CARE Lowers Rating on INR19cr Loan to B+
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Safe and Secure Logistics Private Limited (SSLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 19.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE BB-; Stable
Short-term Bank 0.50 CARE A4; ISSUER NOT COOPERATING
Facilities
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SSLPL to monitor the
ratings vide email communications/letters dated September 3,
2018, September 6, 2018, October 9, 2018 and numerous phone
calls. However, despite our repeated requests, the firm has not
provided the requisite information for monitoring the ratings. In
line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the publicly available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on Safe and Secure Logistics Private Limited's
bank facilities will now be denoted as CARE B+; Stable; ISSUER
NOT COOPERATING/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on November 15, 2017, the following
were the rating strengths and weaknesses:
Key Rating Weakness
Modest scale of operations and low profitability margins: The
scale of operations of the company remained modest with
improvement in income and profitability on y-o-y basis.
Improvement is due to addition of new customers coupled with
continuity of business with existing clients having a good credit
profile. Further net worth base remained low at INR12.79
crore as on March 31, 2017. Further operating margin of the
company has remained low in the range of 2.5%-3% during last
three years ending FY17 and remained low owing to price pressures
on account of intense competition prevalent in the industry.
Moderately leveraged capital structure and weak debt coverage
indicators: The overall gearing remained moderately
leveraged owing to high dependence on external borrowings to
support the operations. Further the debt coverage
indicators remained weak owing to the same and low profit
margins.
Working capital intensive nature of operations: The operations
continue to remain working capital intensive in nature
with funds blocked in receivables as the company offers its
customers an extended credit period owing to an established
relationship as well as intense competition prevalent in the
industry. On account of this, the utilization of the working
capital limit remained high.
Presence in a fragmented and highly competitive industry: The
road freight transport industry is deregulated and highly
fragmented and unorganized nature of the industry results in
intense price competition and may lead to pressure on the
company's profitability in case of adverse situations.
Key rating Strengths
Experienced management with long track record of operations and
financial support from promoters: The key promoter, Mr. Rambilas
Agarwal has more than four decades experience in road transport
and logistics and is supported by an experienced second line of
management. The promoters have continued to support the growing
scale of operations of the company by infusing funds in the form
of equity to the tune of INR0.04 crore in FY17.
Established relationship with reputed clientele: SSLPL caters to
the requirements of various reputed players in automobile
manufacturing, processed food manufacturing industries with whom
it enters into renewable contracts (for a tenure of 1-3 years).
Incorporated in 1994, SSL is engaged in third party
transportation (of cars, small goods, dry materials, refrigerated
materials and food items) and warehousing. As on September 28,
2017, SSL has 35 branches and 24 warehouses located in different
cities across India, with an average storing capacity of ~2,000
sq. ft. per warehouse.
The key promoter, Mr Rambilas Agarwal, has been associated in the
road transportation business since 1970, through an associate
concern 'Haryana Freight Carrier Private Limited' (HFC). SSL
currently owns 7 vehicles while HFC provides fleet (of ~227
vehicles) to SSL for undertaking transportation (~35% of the
total vehicles required). Moreover, both the companies operate on
a common management platform with a high level of operational
synergies. SSL does hire and operate vehicles from other vendors
as well (~64% of the total vehicles required).
SAI SWADHIN: CARE Lowers Rating on INR7.64cr LT Loan to D
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sai Swadhin Commercials Private Limited (SSCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.64 CARE D Revised from CARE B;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
SSCPL is takes into account the on-going delay in the debt
servicing of the company.
Going forward, the ability of the company to regularize the debt
servicing obligations and timely repayment of debt will
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delays in debt servicing: There are on-going delays in
the debt servicing of the company. The term loan
installments are over-dues for more than three months and the
account is classified as NPA as confirmed by the banker.
Sai Swadhin Commercials Private Limited (SSCPL) was incorporated
in August, 2008, however after remaining dormant for seven years
the company started commercial operation from April 2015. The
company was promoted by Mr. Jami Ramesh, Mr. Jami Sivasai, Mrs.
Jami Kavita and Mrs. Jami Nirmala based out of Koraput, Odisha.
The company has been engaged in extraction of cashew nut shell
liquid and cashew de-oiled cake at its plant located at Ganjam,
Odisha. The plant has a processing capacity of 252,000 quintals
for cashew de-oiled cake and 108,000 quintals for cashew nut
shell liquid. The company procures its raw materials from
domestic markets and sales through dealers across all over India.
Presently, the company has around 25 dealers.
Mr. Jami Ramesh and Mr. Jami Sivasai looks after the day to day
activities of the company and has more than two decades of
experience in the same line of business through other similar
group companies they are equally supported by other directors and
a team of experienced professionals who are having adequate
experience in the similar line of business.
SASA MUSA: CRISIL Lowers Rating on INR61.5cr Loans to D
-------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sasa Musa Sugar Works Private Limited (SMSWPL) from 'CRISIL
B+/Stable' to 'CRISIL D Issuer Not Cooperating'.
The downgrade reflects the company's account being classified as
NPA by the bank since March 2018.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 55 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL B+/Stable')
Proposed Long Term 1.6 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Downgraded
from 'CRISIL B+/Stable')
Term Loan 4.9 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL B+/Stable')
CRISIL has been consistently following up with SMSWPL through
letters and emails dated August 28, 2018, and September 29, 2018,
among others, apart from telephonic communication, for obtaining
information. However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
has not received any information on either the financial
performance or strategic intent of SMSWPL, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on the
company is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with 'CRISIL
BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated its rating on the
long-term bank facilities of SMSWPL from 'CRISIL B+/Stable' to
'CRISIL D Issuer Not Cooperating'.
The downgrade reflects the company's account being classified as
NPA by the bank since March 2018.
SMSWL was promoted by the late Mr. Sheikh Mohammad Ibrahim in
1933. The company produces sugar at its factory in Sasa Musa
(Bihar).
SATGURU METALS: CARE Reaffirms B+ Rating on INR13.08cr Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Satguru Metals and Power Private Limited (SMPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 13.08 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating for bank facilities of SMPPL continue to remain
constrained by its small scale of operations with low
profitability margins, working capital intensive nature of
business, lack of backward integration vis-a-vis volatility in
raw material prices, highly competitive and fragmented industry
and cyclicality in the steel industry. However, the aforesaid
constraints are partially offset by its experienced promoters
along with satisfactory track record of operations, moderate
capital structure and debt coverage indicators and strategic
location of the plant with proximity to source of raw materials.
Going forward, the ability of the company to increase the scale
of operations and profitability margins and ability to
manage working capital effectively would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low profitability margins: SMPL is
a relatively small player in the iron & steel industry with total
operating income and net profit of INR59.14 crore and INR0.20
crore, respectively, in FY18. This apart, the company has
achieved INR30.00 crore in H1FY19. Further, total capital
employed was low at INR28.82 crore as on March 31, 2018. This
apart, PBILDT and PAT margin is low at 3.23% and 0.34%,
respectively, during FY18. The modest size restricts the
financial flexibility of the company in times of stress and it
suffers on account of economies of scale.
Working capital intensive nature of business: SMPL's business,
being manufacturing of MS ingots, cast iron and pig iron, is
working capital intensive by nature on the back of its strategy
to maintain raw material stock in view of expected rising raw
material prices coupled with the company's strategy to maintain
finished stocks as per demand in the marketplace. The same is
reflected by the operating cycle of 68 days during FY18. The
average utilization for the same was around 95% during the last
12 months ended September 30, 2018.
Lack of backward integration vis-a-vis volatility in raw material
prices: The degree of backward integration defines the ability of
the company to minimize price volatility risk and withstand
cyclical downturns generally witnessed in the steel industry.
SMPL does not have any backward integration for its basic raw
material (iron ore, pellet, coal etc.) and purchases the same
from the open market at spot rates. Since, the raw material is
the major cost driver (comprising around 75% of FY17's TOI) and
the prices of which are volatile in nature, the profitability of
the company is susceptible to fluctuation in raw material prices.
Hence, it is exposed to price volatility risk.
Highly competitive and fragmented industry: SMPL is engaged in
manufacturing of m s ingots, cast iron and pig iron which is
characterised by high fragmentation mainly due to presence of a
large number of unorganised players. The spectrum of the steel
industry in which the company operates is highly fragmented and
competitive marked by the presence of many organised as well as
unorganised players. Hence the players in the industry do not
have pricing power and are exposed to competition putting
pressure on profitability.
Cyclicality in the steel industry: Prospects of steel industry
are strongly co-related to economic cycles. Demand for steel
products is sensitive to trends of particular industries, such as
construction and infrastructure, which are the key consumers of
steel products. Slowdown in these sectors leads to decline in
demand of steel. Non-integrated players such as SMPL are more
susceptible to adverse industry scenario.
Key Rating Strengths
Experienced promoters along with satisfactory track record of
operations: The promoter of SMPL is Mr. Kripal Singh Dang,
Director, aged about 45 years, having around two decades of
experience in the iron & steel industry. He is being duly
supported by the other promoter director Mrs. Paramjeet Kaur,
having around decade long experience in similar line of business.
The promoters are actively involved in the strategic planning and
running the day to day operations of the company along with a
team of experienced personnel. Further, the company is in
operation for around a decade (since 2008) and has a satisfactory
track record of operation.
Strategic location of the plant with proximity to source of raw
materials: The manufacturing facility of SMPL is located in
Sundargarh, Odisha which is in close proximity to source of its
key raw materials, iron ore and coal, for manufacturing of its
products. This apart, the plant is well connected through road
and rail transport, thus facilitating easy transportation of raw
materials and finished goods. Human resource is also abundantly
available near plant at low cost.
Moderate capital structure and moderate debt coverage indicators:
The capital structure of the company, though deteriorated,
remained moderately comfortable marked by debt equity and overall
gearing ratios of 0.42x and 1.23x, respectively, as on March 31,
2018. Furthermore, the interest coverage ratio also remained
comfortable at 2.06x in FY18. However, total debt to GCA
deteriorated as on March 31, 2018 to 16.18x from 6.75x as on
March 31, 2017 due to increase in total debt during the period.
Incorporated in August 2008, Satguru Metals and Power Private
Limited (SMPL) is engaged in the manufacturing of MS ingots, cast
iron & pig iron with its facility located at Sundargarh, Orissa
with an installed capacity of MS Ingots- 16,000 MTPA & Cast & Pig
iron: 12,600 MTPA. Furthermore, in recent past, the company has
completed an expansion project with a project cost of INR5.25
crore (fully debt funded from bank and NBFC) for installing
rolling milling unit of structural products like angle, channel
etc. with an install capacity of 24,000 MTPA. The commercial
production of the said project has started from January 2018.
Mr. Kripal Singh Dang (aged, 44 years), having around two decades
of experience in iron & steel industry, looks after the day to
day operations of the company. He is supported by other director
Mrs. Paramjeet Kaur (aged, 65 years) and a team of experienced
professionals.
SHASHI STRUCTURAL: CRISIL Migrates D Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shashi
Structural Engineers Private Limited (SSEPL) to 'CRISIL D/CRISIL
D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 11 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 0.75 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 12.25 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SSEPL for
obtaining information through letters and emails dated September
28,2018 and October 5,2018 among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SSEPL. Which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on SSEPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SSEPL to 'CRISIL D/CRISIL D Issuer not
cooperating'.
SSEPL, promoted by Mr Amresh K Tiwari, supplies aggregates and
earthwork material to large civil construction players. It also
undertakes work for road construction on lower layers up to the
granular sub-base.
SHIV SHAKTI: CRISIL Migrates B+ Rating to Not Cooperating
---------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shiv Shakti
Dall Mill (SSD) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 1.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Fund- 1.5 CRISIL B+/Stable (ISSUER NOT
Based Bank Limits COOPERATING; Rating Migrated)
Working Capital 5.0 CRISIL B+/Stable (ISSUER NOT
Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SSD for obtaining
information through letters and emails dated July 23,2018 and
August 31,2018 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SSD. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SSD is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SSD to 'CRISIL B+/Stable Issuer not cooperating'.
Shiv Shakti Dall Mill (SSD), a proprietorship firm of Mr. Ashok
Lalwani was set up in 1992-93 in Tilda (Raipur- Chhattisgarh). It
is agro based firm and undertakes processing and trading of Dal.
The firm has two dal milling facility at Tilda.
SNEHMANGAL DEVELOPERS: CRISIL Moves B Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Snehmangal
Developers & Builders (SDB) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 10 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SDB for obtaining
information through letters and emails dated July 23,2018 and
August 31,2018 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SDB. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SDB is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SDB to 'CRISIL B/Stable Issuer not cooperating'.
Established in 2003, SDB, the proprietorship concern of Mr Yogesh
Behl, is in the process of setting up a hotel, Hotel Victory Inn,
in Pune.
SOORYA CASHEW: CRISIL Migrates B Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Soorya
Cashew Factory (SCF) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SCF for obtaining
information through letters and emails dated July 23,2018 and
August 31,2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SCF. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SCF is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SCF to 'CRISIL B/Stable Issuer not cooperating'.
SCF, set up in 2005 at Kollam (Kerala), processes and trades in
raw cashew nuts. The daily operations are managed by Mr Sahadevan
Pillai.
SRI LANGTA: CARE Migrates B+ Rating to Not Cooperating Category
---------------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of Sri
Langta Baba Steels Private Limited (SLBSPL) to Issuer Not
Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 25.00 CARE B+; Stable Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SLBSPL to monitor the
rating(s) vide email communications/letters dated October 16,
2018, September 17, 2018 and September 7, 2018 and numerous phone
calls. However, despite our repeated requests, the company has
not provided the requisite information for monitoring the
ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. Further, SLBSPL has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on SLBSPL's bank facilities will now
be denoted as CARE B+; Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings take into account relatively moderate scale of
operation, leveraged capital structure, lack of backward
integration vis-a-vis volatility in raw material prices, stiff
competition due to fragmented nature of the industry with
presence of many unorganized players, working capital intensive
nature of operations and stretched operating cycle. However, the
aforesaid constraints are partially offset by its experienced
promoters, moderate track record of operation and strategic
location of the plant.
Detailed description of the key rating drivers
At the time of last rating on December 14, 2017, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
Relatively moderate scale of operation: SLBSPL is a moderate
player in the iron and steel industry having total operating
income and PAT of INR123.20 crore and INR0.63 crore respectively
in FY17. The total net worth was also moderate at INR 20.47 crore
as on March 31, 2017. The moderate scale of operation restricts
the financial risk profile of the company limiting its ability to
absorb losses or financial exigencies in adverse economic
scenario. During 7MFY18, the company has achieved total operating
income of INR 82.05 crore and PBT of INR1.15 crore.
Lack of backward integration vis-Ö-vis volatility in raw material
prices: The degree of backward integration defines the ability of
the company to minimize price volatility risk and withstand
cyclical downturns generally witnessed in the steel industry. The
major raw materials for producing M.S ingots, M.S. Billets and
M.S. bars are pig iron and sponge iron. Since, raw material is
the major cost driver for SLBSPL accounting for about 84% of the
total cost of sales in FY17, any southward movement of finished
goods price with no decline in raw material price result in
adverse performance of the company. SLBSPL does not have any
backward integration for its raw materials and procures the same
from outside, exposing the company to price volatility risk.
Stiff competition due to fragmented nature of the industry with
presence of many unorganized players: The spectrum of the steel
industry in which the company operates is highly fragmented and
competitive marked by the presence of numerous players in
northern and eastern India. Hence the players in the industry do
not have pricing power and are exposed to competition induced
pressures on profitability. This apart, SLBSPL's products being
steel related, it is subjected to the risks associated with the
industry like cyclicality and price volatility.
Working capital intensive nature of business along with stretched
operating cycle: SLBSPL's business, being manufacturing of M.S.
bars, M.S. coils and M.S. ingots is working capital intensive by
nature as marked by high average inventory period. The average
inventory holding period remained high and deteriorated to 436
days in FY17 as against 365 days in FY16 on the back of its
strategy to maintain raw material stock in view of expected
hike in raw material prices coupled with increasing finished
goods inventory due to lower off take on account of sluggish
demand from the steel sector. However, the average creditors'
period also increased from 139 days in FY16 to 154 days in
FY17 on the back of higher credit period availed due to long
association with suppliers. All of these factors have led to
high operating cycle for the company which has deteriorated to
314 days in FY17 as against 244 days in FY16.
Leveraged capital structure: Overall gearing ratio was high at
2.00x as on March 31, 2017, on account of higher utilization of
working capital borrowings as on that date. This apart, current
ratio of the company was low at 1.04x as on March 31, 2017.
Average utilization of working capital borrowings was high during
last 12 months ended November, 2017.
Key Rating Strengths
Experienced promoter with moderate track record of operations:
The current promoters of SLBSPL are Shri Mohan Prasad Saw
(Graduate) aged 46 years and Shri Raj Kumar (Graduate) aged 42
years. Shri Mohan Prasad Saw is the Managing Director of SLBSPL
(having an experience of more than two decades in existing line
of business) and is involved in the strategic planning and
running the day to day operations of the company. He is being
duly supported by the other director coupled with a team of
experienced personnel. Further, SLBSPL commenced commercial
operation since August, 2008 and accordingly has a moderate track
record of commercial operations.
Strategic location of the plant: SBPL's plant is located at
Giridih which is in the vicinity of industrial belt of Jamshedpur
where the raw materials are available in abundance. Further, the
coal and iron-ore rich states of Jharkhand and Orissa are also
located nearby. The proximity to the raw material sources reduces
the transportation cost to the company. Besides, the region has
large number of steel manufacturers as well as end users. Hence,
the company has a large ready market to sell its products.
Sri Langta Baba Steels Pvt. Limited (SLBSPL) incorporated in the
year March 2005, was promoted by Shri Mohan Prasad Saw and Shri
Raj Kumar of Giridih, Bihar with Shri Mohan Prasad Saw being the
main promoter. The company commenced operation since August,
2008.SLBSPL is engaged in manufacturing M.S. ingots, M.S. bars
and M.S. coils at its facility in Giridih (Jharkhand) and is
currently running with an installed capacity of 15 Mtper hour for
M.S. ingots and M.S. bars and 8 MT per hour for M.S. coils.
SLBSPL sells its entire production in Jharkhand and Bihar.SLBSPL
is also engaged in trading of iron and steel related products and
the same accounted for around 53% of total operating income in
FY17, albeit manufacturing activity being the primary activity of
SLBSPL.
Mr. Mohan Kumar Saw (Managing director) having more than two
decades of experience in the same line of industry, looks after
the day to day operations of the company.
SRI VISHNU: Ind-Ra Hikes LT Issuer Rating to 'B', Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Sri Vishnu
Granites Limited's (SVGL) Long-Term Issuer Rating to 'IND B' from
'IND D'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR64 mil. Fund-based limits upgraded with IND B/Stable
rating;
-- INR5.27 mil. Term loan due on March 2018 withdrawn (paid in
full) and the rating is withdrawn; and
-- INR6 mil. Non-fund-based limits upgraded with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects SVGL's timely debt servicing since March
2018.
The ratings however are constrained by the company's tight
liquidity position, as reflected in its working capital
utilization of 105.06% on average for the 12 months period ended
on September 2018.
The ratings are also constrained by SVGL's modest credit metrics
and modest profitability margins during FY17-FY18. The net
leverage (adjusted net debt/operating EBITDA) reduced to 3.8x in
FY18 (FY17: 4.4x) because of the repayment of term loan while
interest coverage (operating EBITDA/gross interest expense) was
more or less stable at 2.0x (1.9x). EBITDA margin fell to 12.3%
(12.9%) due to a change in product mix and ROCE was 10% (10%).
The scale of operations remained small at INR180 million in FY18
(FY17: INR160 million). FY18 financials are provisional in
nature.
RATING SENSITIVITIES
Positive: A substantial improvement in the liquidity profile
along with the maintenance of the credit metrics will be positive
for the ratings.
Negative: Worsening of the liquidity profile will be negative for
the ratings.
COMPANY PROFILE
SVGL was incorporated in 1994 as a private limited company and
reconstituted as a limited company in 1994 in Secunderabad,
Telangana. SVGL processes rough granite blocks into granite slabs
and exports them. The company is promoted by Kishan Agarwal,
Kiran Agarwal and Naman Agarwal.
SUBHASH HASTIMAL: CRISIL Migrates B+ Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Subhash
Hastimal Lodha (SHL) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 15 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SHL for obtaining
information through letters and emails dated July 23, 2018 and
August 31, 2018 among others, apart from telephonic
communication. However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SHL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SHL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SHL to 'CRISIL B+/Stable Issuer not cooperating'.
SHL, a proprietorship firm of Mr Subhash Lodha, based in Pune,
Maharashtra, derives income from interest on loans and advances
extended to third parties, sale of electricity from its wind and
solar power plants, and rental income on commercial properties.
It also manages two hotels in Pune.
U.S. SRIVASTAVA: Ind-Ra Maintains BB LT Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained U. S.
Srivastava Memorial Educational Society's bank loan ratings 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:
-- INR42.9 mil. Term loan maintained in non-cooperating category
with IND BB (ISSUER NOT COOPERATING) rating; and
-- INR30.0 mil. Bank overdraft facility with maintained in non-
cooperating category with IND BB (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
September 8, 2015. Ind-Ra is unable to provide an update as the
agency does not have adequate information to review the rating.
COMPANY PROFILE
U. S. Srivastava Memorial Educational Society has been involved
in the field of education for the last two decades. The society
offers various undergraduate programs and postgraduate programs
in several branches of engineering, information technology,
management and pharmacy. It also has a school - Sherwood Academy
affiliated to Indian Certificate of Secondary Education.
VIDHATA INDUSTRIES: CARE Assigns B+ Rating to INR10cr Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Vidhata Industries Private Limited (VIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of VIPL is constrained
by the small & fluctuating scale, weak solvency position, working
capital intensive nature of operations and inherent risk
associated with the trading nature of business. The rating is
further constrained by the susceptibility of profitability
margins to the volatility in prices of wood and fortunes linked
to the real estate sector.
The rating, however, derives strength from the experienced
promoters, established business relationships with customers
& suppliers, flexibility in production to manufacture diverse
products and favorable location of operations.
Going forward, the ability of the company to profitably scale-up
its operations, while improving its overall solvency position and
managing its working capital requirements efficiently, will
remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small & fluctuating scale with weak solvency position: The scale
of operation of the company has remained small and fluctuating in
nature. The operating income of the company declined marginally
from INR78.20 cr. in FY16 to INR77.12 cr in FY17. It further
declined by about 28% in FY18 (Provisional; refers to the period
April 1 to March 31), owing to lower demand from the dealers
during July-September 2018 (post implementation of GST). However,
in 5MFY19 (Prov.), VIPL has achieved a total operating income of
about INR25 cr. (an increase of about 94% compared to the same
period last year). The PBILDT and PAT margins of the company
stood at 5.60% and 0.52%, respectively, in FY18 (Provisional; PY:
4.52% and 0.27%, respectively).
The capital structure of the company has remained weak, as on
March 31, 2018 (Provisional). The total debt to GCA ratio also
remained weak at 20.17x, as on March 31, 2018 (Provisional; PY:
19.88x).
Working capital intensive nature of operations: The operating
cycle of the company stood elongated at about 113 days, as March
31, 2017. The average utilization of the cash credit limit
remained at about 95% for the twelve month period ended Sept-
2018.
Inherent risk associated with the trading business: The company
is exposed to the risks associated with the trading nature of
business like inherently low profitability margins etc. In FY18,
the company derived ~77% of its total operating income from
trading.
Susceptibility to fluctuation in raw material prices and
fragmented nature of industry: The prices of wood have remained
volatile in the past, which coupled with highly competitive and
fragmented nature of the industry leads to susceptibility of
VIPL's profitability margins to fluctuations in the raw material
prices.
Fortunes linked to demand from the cyclical real estate industry:
VIPL supplies primarily to the real estate sector which is
cyclical in nature with the performance dependent upon the
overall economic conditions in the country.
Key Rating Strengths
Experienced promoters: The operations of the company are
currently being managed by Mr. Vishal Juneja and Mr. Amit Juneja.
The promoters are having experience of over 10 years in the
industry through their association with VIDL and prior engagement
in the plywood industry.
Established business relationship with customers and suppliers:
Presence of VIPL in the plywood industry for more than a decade
and favorable location of the plant in Punjab has led to
development of long term relationships with the suppliers and
therefore easy procurement of raw materials. On the customer
side, this has enabled the company to establish strong business
relationships with its clientele (long standing relationship of
around 5-7 years with some of the clients) in the market.
Flexibility in production to manufacture diverse products and
favorable location of operations: VIPL manufactures various
products such as Plywood, Block Boards, Decorative Veneers and
Doors and various sub segments in these products in various
specifications. Further, VIPL's manufacturing unit is located in
Ludhiana, Punjab, leading to easy availability of wood from
Punjab and surrounding states. The presence of VIPL in vicinity
to the wood producing regions gives it an advantage over
competitors in terms of easy availability of the raw material as
well as favorable pricing terms.
Vidhata Industries Private Limited (VIPL) started its operations
in 2008 with Mr. Vishal Juneja and Mr. Amit Juneja (brothers), as
its directors. The company is engaged in the trading and
manufacturing of Plywood, Block Boards, Decorative Veneers and
Doors at its manufacturing facility in Ludhiana, Punjab. The
company has its presence in overall 14 states in India with major
revenue accounting from states of Punjab, Madhya Pradesh and
Maharashtra.
WELCAST INDIA: Ind-Ra Lowers Issuer Rating to B, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Welcast India
Private Limited's (WIPL) Long-Term Issuer Rating to 'IND B' from
'IND B+ (ISSUER NOT-COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR200 mil. (increased from INR170 mil.) Fund-based working
capital limits affirmed with IND A4 rating; and
-- INR100 mil. Non-fund-based working capital limits assigned
with IND A4 rating.
KEY RATING DRIVERS
The downgrade reflects WIPL's continued small scale of operations
and moderate credit metrics. According to FY18 financials,
revenue was INR192.10 million (FY17: INR196.54 million), gross
interest coverage (operating EBITDA/gross interest expense) was
1.14x (1.26x) and net financial leverage (adjusted net
debt/operating EBITDAR) was 5.70x (5.42x). The revenue declined
due to the loss of a major customer. The metrics deteriorated due
to an increase in in the total debt, leading to an increase in
interest expense.
The ratings also factor in the WIPL's moderate liquidity
position, as reflected by its average 74% use of the fund-based
limits during the 12 months ended September 2018.
The ratings, however, continue to be supported by WPPL's founder-
promoter's experience of over two decades in the iron and steel
industry.
Moreover, WIPL's EBITDA margins are average with return on
capital employed at 12.28% in FY18 (FY17: 12.88%). The margins
rose to 9.88% in FY18 (FY17: 9.22%) due to a decline in raw
material cost.
RATING SENSITIVITIES
Negative: A decline in the EBITDA margin leading to deterioration
in the credit metrics, all on a sustained basis, could lead to a
negative rating action.
Positive: Sustained revenue growth, along with improved credit
metrics, all on a sustained basis, could lead to a positive
rating action.
COMPANY PROFILE
Incorporated in 1997, WIPL manufactures iron casts, manhole
covers, lampposts, brackets, lamp bases, fountains and basins.
YAZDANI STEEL: CRISIL Hikes Rating on INR39.70cr Loan to B+
-----------------------------------------------------------
CRISIL has upgraded its ratings on long-term bank facilities of
Yazdani Steel and Power Limited (YSPL) to 'CRISIL B+/Stable' from
'CRISIL C', while reaffirming the short term rating at 'CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 18 CRISIL B+/Stable (Upgraded
from 'CRISIL C')
Letter of Credit 6.29 CRISIL A4 (Reaffirmed)
Long Term Loan 39.70 CRISIL B+/Stable (Upgraded
from 'CRISIL C')
Proposed Long Term 33.25 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL C')
The upgrade reflects timely servicing of debt by the company and
an improved business risk profile on account of increase in
revenue and operating margin. Revenue is estimated at INR99.26
crore in fiscal 2018 from INR60.13 crore in fiscal 2017, driven
by improved market scenario, leading to better realisation and
capacity utilisation. Operating margin is estimated at 14.2% in
fiscal 2018 against 8% in fiscal 2017 driven by better
realization and better absorption of fixed cost with increase in
capacity utilisation. Furthermore, the company has generated cash
profit of INR7.43 crore in fiscal 2018 against loss of INR3.02
crore in the previous year. Liquidity is supported by constant
funding from the promoters in the form of unsecured loans.
The rating reflects its moderate and improving scale of
operations along with healthy profitability. The rating also
factors in promoters' extensive experience. These rating
strengths are partially offset by its large long-term debt, its
long working capital cycle and risks related to industrial
cyclicality.
Analytical Approach
CRISIL has treated unsecured loan of INR126 crore extended by the
promoters and associate companies as 75% equity and 25% debt as
these loans are subordinated to external debt and bear no
interest and are expected to stay in the business.
Key Rating Drivers & Detailed Description
Weakness:
* Working capital-intensive operations: Gross current assets
stood at 260 days as on March 31, 2018, primarily on account of
large inventory of 156 days and advances of INR28.25 crore as
advance to suppliers and related parties as on March 31, 2018.
However, debtors and creditors stood at 18 (29 days last year)
and 17 (363 days last year) days respectively as on March 31,
2018.
* Large debt obligation: YSPL has large long-term debts in its
book of accounts along with large repayment obligation per year.
As on March 31, 2018 total term loan stood at INR45.25 crore
against debt obligation of around INR10.5 crore per year. A
significant portion of expected business cash profit will be used
for repayments and hence, allocation of these funds for business
ramp up will be low. The fact that anticipated net cash accrual
should be sufficient to cover maturing debt in the coming years,
provides some comfort.
* Risk related to cyclicality in industry: The steel and iron
manufacturing industry in India is cyclical and highly
fragmented. The overall uncertain economic climate and
performance of end-user industry (Construction and infrastructure
development) may impact demand for its products, and hence, their
credit risk profile.
Strengths:
* Promoters' extensive industry experience and established
relationships with customers and suppliers: Presence of over two
decades in the iron and steel segment has enabled the promoters
to establish healthy relationships with suppliers and customers.
Outlook: Stable
CRISIL believes YSPL will continue to benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' if timely servicing of the debt along
healthy operating profitability is maintained and better
management of working capital, strengthens key credit metrics.
The outlook may be revised to 'Negative' if there is any
reduction in scale of operation or profitability, leading to
shortage of cash profit in comparison to its debt obligation.
YSPL was incorporated in October 2003 as Dinabandhu Steel & Power
Ltd (DSPL) by the Sahoo family. The company got its present name
after it was acquired by the Odisha-based Yazdani group in
May 2011. It manufactures thermo-mechanically treated (TMT) steel
bars, mild steel ingots, and sponge iron.
* INDIA: Gov't. Fears NBFC Defaults Without Liquidity Lifeline
--------------------------------------------------------------
MoneyControl reports that the Department of Economic Affairs
(DEA) fears "significant default" from large non-banking finance
companies (NBFCs) and housing finance companies (HFCs) in the
next 6 weeks if additional liquidity support is not forthcoming.
In an October 26 letter to the Ministry of Corporate Affairs
(MCA) discussing the financial stability impact of the IL&FS
default, the DEA described "the financial situation (as) still
fragile," the report relates.
MoneyControl says the letter points out that a prolonged
liquidity crunch could hurt fund mobilisation in the debt market,
impact productive sectors and affect economic growth at a time
when India has emerged as one of the fastest growing major
economies in the world.
According to the report, DEA said about INR2 lakh crore of
NBFC/HFC debt is due for redemption or rollover by the end of
December 2018. The department estimates a funding gap of as much
as INR1 lakh crore by the end of the year if the pace of
fundraising seen in the first half of October (about INR20,000
crore or 68 percent lower than the same period in August) is
sustained.
A further INR2.7 lakh crore of commercial paper and non-
convertible debetures will be due for redemption over January -
March 2019, the letter said, MoneyControl relays.
"Without additional liquidity support a significant default from
among the largest NBFC and HFC could occur within six weeks and
the financing cycle of productive sector would be adversely
affected," the letter stated.
MoneyControl says the DEA's fears underline key issues in the
ongoing spat between the Reserve Bank of India and the
government. The government wants the central bank to provide
liquidity support to NBFCs and HFCs, and relax lending strictures
for weak banks, the report notes. The RBI, on the other hand,
believes that the liquidity situation is under control and is
loath to relax its rules for weak banks with the NPA problem
still on the mend.
NBFCs and HFCs are increasingly significant for credit flow to
the economy capturing the space ceded by weak public sector
banks, the report says. Their business model is largely founded
on borrowing from banks and mutual funds to finance their loans.
After the IL&FS default which led to the sale of debt and
redemption in mutual funds - with outflows of INR2.11 lakh crore
in September - NBFCs' source of funding has dried up, says
MoneyControl.
MoneyControl notes that in a Financial Development and Stability
Council (FSDC) meeting on October 30, the government warned the
central bank about the NBFC liquidity crisis spilling over to
other sectors. The RBI is said to have assured the government
that the liquidity situation has not gone out of hand and has
continued to provide systemic durable liquidity through open
market purchase of government bonds.
The report relates that the outcome of that meeting appears to
have triggered a full-blown confrontation between the Finance
Ministry and the Reserve Bank. Media reports were abuzz on
November 1 that the government had or was considering invoking a
rare law (Section 7 of the RBI Act) to make the central bank act
on its view, and that RBI Governor had threatened to resign on
this subject.
It later took the Finance Ministry to issue a statement, saying
the autonomy of the central bank was "essential".
A prolonged liquidity distress will significantly erode the
NBFCs' credit standing, and prove negative for the broader
economy as a slowdown in credit growth will dampen overall
consumption and economic growth, credit rating firm Moody's
Investor Service said in a October 15 note, according to
MoneyControl.
However, commentary from the management of a few financial sector
firms indicates that liquidity pressures might be waning. HDFC
Asset Management Company, for instance, said liquid funds under
management grew to INR75,000 crore in October compared to an
average INR40,000 -50,000 crore. In an analyst call, Reliance
Nippon Asset Management said inflows into liquid funds in October
outpaced the outflows seen in September, MoneyControl reports.
"Given support coming in from banks for a buyout or onward
lending, inflow into liquid funds, and RBI's OMO, we believe it's
safe to assume that the risk-related to maturity of NBFCs/HFCs is
likely to wane over the next 20 days," said Edelweiss Research in
a November 1 note, MoneyControl relays.
MoneyControl adds the DEA letter said that in view of maintaining
financial stability, the new board of IL&FS led by veteran banker
Uday Kotak should continue as it would restore "confidence and
trust of the financial markets."
On October 31, the new board submitted a broad resolution plan
for IL&FS which included capital infusion at the group level,
selling subsidiaries and resolution for specific assets, the
report says.
====================
N E W Z E A L A N D
====================
PREET & CO: Unsecured Creditors Won't Be Paid, Liquidators Say
--------------------------------------------------------------
Anne Gibson at NZ Herald reports that unsecured creditors of a
former high-flying 10-branch Auckland Harcourts network owned and
run by Gurpreet Grewal will go unpaid.
Mike Lamacraft of Meltzer Mason has issued his second liquidation
report on failed businesses Preet & Co Real Estate and Preet & Co
Rentals, formerly of South and East Auckland, the Herald says.
Gurpreet, or Preet, Grewal was the sole director and shareholder
of both businesses. Harcourts Group is suing him in the High
Court at Auckland for NZ$1.27 million, awaiting a reserved
decision, the Herald discloses.
According to the Herald, Mr. Lamacraft said in a brief report
that one unidentified secured creditor of the failed agency got
money but unsecured creditors won't be paid.
"The sum of NZ$10,000 was distributed to the secured creditor,"
Mr. Lamacraft said of Preet & Co Real Estate, the Herald relays.
"No other creditors have been paid and at this stage it is clear
there will be no funds available to unsecured creditors."
The Herald relates that the liquidator paid just over NZ$1
million between April and October this year, including NZ$80,000
liquidator's fees, NZ$76,000 in KiwiSaver employer contributions,
NZ$75,000 accounting fees and NZ$35,000 PAYE tax.
The Herald says the main recoveries came from property sales
commissions. The ex-agency got NZ$795,000 during those six months
including NZ$611,000 from commissions, NZ$10,000 from asset sales
and just over NZ$100,000 in GST refunds.
Property management business Preet & Co Rentals will also be
unable to pay unsecured creditors, Mr. Lamacraft said: "There
will be no funds available to any other class of creditor."
One unnamed secured creditor got NZ$17,000 in the six-month
period.
The first Meltzer Mason report on April 6 this year showed Preet
& Co Real Estate had an estimated a NZ$5.2 million shortfall,
including bank debt of more than NZ$1 million and NZ$1.7 million
owed to Harcourts Group. Accounts for Preet & Co Rentals
estimated a NZ$1.6 million shortfall partly from NZ$1.2 million
owed in bank debt and more than NZ$150,000 owed to Harcourts
Group, the Herald discloses.
Preet & Co Real Estate (PEL) and Preet & Co Rentals (PRL) went
into liquidation in April 2018 owing creditors at least NZ$14
million.
PEL held the franchise rights for the Harcourts' brand for south
and east Auckland for the sales arm of the business. It had 10
branches with offices in Botany, Ellerslie, Otahuhu, Howick,
Manukau (two sites), Pakuranga, Papatoetoe, Meadowlands and
Manurewa.
===============
P A K I S T A N
===============
PAKISTAN: China Pledges Aid But Won't Yet Commit
------------------------------------------------
The Financial Times reports that Pakistan's prime minister Imran
Khan was welcomed in Beijing with full honours and promises of
support but hopes of Chinese help to rescue the country from a
looming balance of payments crisis were dented by the conspicuous
absence of any concrete announcement of generous aid.
According to the FT, Pakistan is seeking its 13th bailout since
the 1980s from the International Monetary Fund. An IMF delegation
is expected to visit Islamabad this week to begin discussions on
a crucially important new loan to help avert crisis.
The central bank's foreign reserves have sunk in recent months to
the equivalent of about seven weeks of imports, the FT says.
The FT notes that Pakistan has received $6 billion from Saudi
Arabia, and had hoped for a similar-sized package from China, its
northern neighbor and longtime "all weather" diplomatic partner.
The FT relates that senior Chinese diplomat Wang Yi said Beijing
would "provide support and help to the best of its ability" on
Nov. 2. But on Nov. 3, Chinese officials said they were still in
negotiations over the details of any aid package to Pakistan, a
departure from Beijing's usual practice of leaving the outside
world guessing about the outcome of state visits.
"During the visit the two sides have made it clear in principle
that the Chinese government will provide the necessary support
and assistance to Pakistan in tiding over the current economic
difficulties," Chinese vice foreign minister Kong Xuanyou said in
a briefing, according to Reuters, the FT relays. "As for
specific measures to be taken, the relevant authorities of the
two sides will have detailed discussions."
A senior government official in Islamabad said that the Chinese
side had pledged to continue to give periodic loans to Pakistan,
to help the South Asian country avoid default on foreign
payments, especially loans incurred for projects under the China
Pakistan Economic Corridor (CPEC), the FT relays.
"In the past, China has come to our rescue and their promise has
now been renewed. They will keep on extending loans to Pakistan
to help us avoid a crisis," he said.
"China likes to keep its commitments low-key. It is important to
note that unlike Saudi Arabia, they will not write a $6 billion
cheque to highlight their generosity," the official said, adding
that the implicit message was that China would help Pakistan keep
up with its CPEC payments, the FT relays. "If the US uses the IMF
to press Pakistan on this issue, Pakistan will have the means to
say, this is not a burden. We can deal with this."
Meeting Chinese president Xi Jinping in Beijing on Nov. 2, Mr
Khan said he had "inherited a very difficult economic situation"
as Pakistan went through a "low point" of both a fiscal and
current account deficit.
The FT says Mr. Khan is scheduled to speak at Import Expo in
Shanghai this week, a meeting designed to showcase China's
economic prowess in the face of trade tensions with the US.
He arrived in Beijing a day earlier than originally scheduled, to
allow more meetings with China's leaders, the report notes.
Cooling enthusiasm in Pakistan for the CPEC programme, which is a
cornerstone of Chinese president Xi Jinping's Belt and Road
investment drive has unsettled Beijing.
Economic adviser Abid Suleri, head of the Islamabad-based
Sustainable Development Policy Institute, a think-tank, told the
FT it was in China's interest to help Pakistan make CPEC
successful.
"In other parts of the world like Malaysia, the government has
scaled down the size of Chinese investments. In other places like
Sri Lanka, the Chinese-funded Hambantota port has become
controversial," the FT quotes Mr. Suleri as saying. "China needs
to make CPEC successful. This is the flagship for China."
Mr. Khan signed several co-operative agreements with Chinese
premier Li Keqiang on Nov. 2. None involved large investment
commitments, adds the FT.
*********
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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Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
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*** End of Transmission ***