/raid1/www/Hosts/bankrupt/TCRAP_Public/181112.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, November 12, 2018, Vol. 21, No. 224
Headlines
A U S T R A L I A
BROGEN NOMINEES: Second Creditors' Meeting Set for Nov. 19
CAYLAMAX DEMOLITIONS: First Creditors' Meeting Set for Nov. 16
FIRBANK BAY: Second Creditors' Meeting Set for Nov. 19
HLM DEVELOPMENTS: First Creditors' Meeting Set for Nov. 16
LANGTON ROOFING: First Creditors' Meeting Set for Nov. 19
NAMU FOODS: Second Creditors' Meeting Set for Nov. 20
OWARRA PTY: Second Creditors' Meeting Set for Nov. 19
PICTON PRESS: Proposal to Resume Operations Under Directors OK'd
SHORTLAND WATERS: Aveo Buys Golf Club for AUD1.25MM
C H I N A
CHINA HUAYANG: S&P Discontinues SD Long-Term Issuer Credit Rating
LOGAN PROPERTY: S&P Alters Outlook to Positive & Affirms BB- ICR
MEINIAN ONEHEALTH: Fitch Gives BB+(EXP) to New USD Unsec. Notes
YIHUA ENTERPRISE: Moody's Affirms B2 CFR & Alters Outlook to Neg.
* CHINA: Big Brokers Seek to Up Capital as Default Risks Linger
I N D I A
AEROSPACE ENGINEERS: CRISIL Moves B+ Rating to Not Cooperating
ARROW CABLES: CRISIL Migrates B+ Rating to Not Cooperating
AUTO CZARS: CARE Reaffirms B+ Rating on INR3.50cr LT Loan
BEST EDUCATION: CRISIL Assigns 'B' Rating to INR5.80cr Loan
CHOUNDESHWARI SAHAKARI: CRISIL Assigns B Rating to INR8cr Loan
JSM PROTEINS: CRISIL Lowers Rating on INR15cr Loan to D
KALOSONA HIMGHAR: CRISIL Migrates B+ Rating to Not Cooperating
LEEL ELECTRICALS: CARE Lowers Rating on INR595cr Loan to D
LITTLE SCHOLAR'S: CRISIL Assigns B+ Rating to INR8.08cr LT Loan
MOTIL DEVI: CRISIL Assigns B Rating to INR6cr Loans
N.S. POLYMER: CARE Assigns B+ Rating to INR6.90cr LT Loan
R J TRADELINKS: CARE Migrates C Rating From Not Cooperating
RAGHUL SPINNING: CRISIL Assigns B+ Rating to INR6cr Loan
RUSHABH TRADING: CRISIL Assigns B+ Rating to INR7cr Cash Loan
SAPTRISHI REALTORS: CRISIL Moves B+ Rating to Non-Cooperating
SHAH PACKWELL: CRISIL Migrates D Rating to Non-Cooperating
SHREE GANESH: CRISIL Migrates B+ Rating to Not Cooperating
SHREEGOPAL GOVIND: CRISIL Migrates B+ Rating to Not Cooperating
SINGH TECHNO: CARE Assigns B+ Rating to INR6.50cr LT Loan
SP SUGAR: CRISIL Migrates B Rating to Non-Cooperating Category
SRI SAI VISHWAS: CRISIL Assigns B+ Rating to INR12.5cr Loans
SUKHMAA SONS: CRISIL Lowers Rating on INR10cr Loan to B+
SURABI JEWELLERSS: CRISIL Withdraws B+ Rating on INR.7cr Loan
TRIVENI ENTERPRISES: CRISIL Assigns B+ Rating to INR3cr Loan
VTJ SEA: CRISIL Migrates D Rating to Not Cooperating Category
N E W Z E A L A N D
CBL INSURANCE: Liquidation Inevitable as Directors Retreat
P H I L I P P I N E S
SAN FRANCISCO DEL MONTE: Placed Under PDIC Receivership
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A U S T R A L I A
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BROGEN NOMINEES: Second Creditors' Meeting Set for Nov. 19
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A second meeting of creditors in the proceedings of Brogen
Nominees Pty Ltd, trading as Rangeway Supermarket, has been set
for Nov. 19, 2018, at 12:00 p.m. at the offices of Cor Cordis, at
Mezzanine Level, 28 The Esplanade, 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. 16, 2018, at 4:00 p.m.
Clifford Stuart Rocke and Jeremy Joseph Nipps of Cor Cordis were
appointed as administrators of Brogen Nominees on Oct. 15, 2018.
CAYLAMAX DEMOLITIONS: First Creditors' Meeting Set for Nov. 16
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Caylamax
Demolitions Pty Ltd will be held at the offices of SV Partners,
at 22 Market Street, in Brisbane, Queensland, on Nov. 16, 2018,
at 9:30 a.m.
David Michael Stimpson of SV Partners was appointed as
administrator of Caylamax Demolitions on Nov. 6, 2018.
FIRBANK BAY: Second Creditors' Meeting Set for Nov. 19
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A second meeting of creditors in the proceedings of Firbank Bay
Pty Ltd, trading as The Fire House - Ringwood, has been set for
Nov. 19, 2018, at 2:30 p.m. at the offices of Worrells Solvency &
Forensic Accountants, at Level 15, 114 William Street, in
Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 16, 2018, at 5:00 p.m.
Matthew Kucianski of orrells Solvency & Forensic Accountants was
appointed as administrator of Firbank Bay on Oct. 12, 2018.
HLM DEVELOPMENTS: First Creditors' Meeting Set for Nov. 16
----------------------------------------------------------
A first meeting of the creditors in the proceedings of HLM
Developments Pty Ltd will be held at the offices of Chamberlains
SBR Chartered Accountants, at Wangcentral, 15/17 Ely Street, in
Wangaratta, Victoria, on Nov. 16, 2018, at 10:30 a.m.
Chris Chamberlain and Steven Priest of Chamberlain's SBR were
appointed as administrators of HLM Developments on Nov. 8, 2018.
LANGTON ROOFING: First Creditors' Meeting Set for Nov. 19
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Langton
Roofing and Constructions Pty Limited will be held at the offices
of Condon Associates Group, at Level 6, 87 Marsden Street, in
Parramatta, NSW, on Nov. 19, 2018, at 11:00 a.m.
Schon Gregory Condon RFD of Condon Associates Group was appointed
as administrator of Langton Roofing on Nov. 7, 2018.
NAMU FOODS: Second Creditors' Meeting Set for Nov. 20
-----------------------------------------------------
A second meeting of creditors in the proceedings of Namu Foods
Pty Ltd has been set for Nov. 20, 2018, at 11:00 a.m. at the
offices of Mackay Goodwin, at Level 10, 239 George Street, in
Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 19, 2018, at 4:00 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Namu Foods on
Oct. 17, 2018.
OWARRA PTY: Second Creditors' Meeting Set for Nov. 19
-----------------------------------------------------
A second meeting of creditors in the proceedings of Owarra Pty
Ltd has been set for Nov. 19, 2018, at 10:00 a.m. at the offices
of Hall Chadwick at Level 4, 240 Queen Street, in Brisbane,
Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 16, 2018, at 5:00 p.m.
Blair Pleash of Hall Chadwick was appointed as administrator of
Owarra Pty on Oct. 15, 2018.
PICTON PRESS: Proposal to Resume Operations Under Directors OK'd
----------------------------------------------------------------
Wide Format Online reports that a creditors meeting has agreed to
a proposal that would allow Picton Press - which went into
administration in May owing AUD9 million - to resume operations
under owner/directors Dennis Hague and Gary Kennedy despite major
unsecured creditors getting only 1-2 cents on the dollar in the
deal.
Administrator Jeremy Nipps of Cor Cordis was appointed to run the
business five months ago after the Australian Taxation Office
(ATO) launched a court action to recover a debt of AUD1.3
million, the report notes.
The report relays that the ATO, an unsecured creditor along with
several paper merchants, is set to receive just 1-2 cents on the
dollar under a Deed of Company Arrangement (DOCA) that was
approved in a vote at a creditors' meeting in Perth on Nov. 8.
Under the DOCA that was also approved in a separate meeting of
Picton employees, unsecured creditors owed less than AUD10,000
are expected to get up to 100 cents in the dollar, but those owed
in excess of AUD10,000 will receive just 1-2 cents in the dollar,
based on current estimates, the report discloses.
Secured creditors - including Westpac, NAB and the CBA - who are
owed a total of about AUD5.5 million, are not bound by the DOCA
but have agreed to continue their support of the directors to
allow the business to continue to trade, according to Wide Format
Online.
About 24 current staff members included in the agreement will
retain their jobs.
Wide Format Online quoted Mr. Nipps as saying, "The proposal the
directors put forward was essentially seeking a compromise of the
creditors' claims so the business could restructure its
operations with a view to continuing to operate. Employees get to
retain their jobs and the company continues to operate."
Owner/directors Dennis Hague and Gary Kennedy will continue
running the business with all of their key personnel, including
the general manager, Mr. Nipps, as cited by Wide Format Online,
said.
The report adds that Mr. Nipps expects the DOCA to be in place in
about a week.
Jeremy Joseph Nipps and Clifford Stuart Rocke of Cor Cordis were
appointed as administrators of Picton Press on May 22, 2018.
SHORTLAND WATERS: Aveo Buys Golf Club for AUD1.25MM
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Michael Parris at The Newcastle Herald reports that Shortland
Waters Golf Club members said they feel "dudded" after retirement
village developer Aveo bought the 50-hectare course for just
AUD1.25 million.
The Newcastle Herald relates that club president Ron Freeman said
Shortland Waters had no option but to sell to Aveo after going
into voluntary administration this year.
According to the report, the club has been suffering a cash-flow
crisis after a delay in the construction of new holes to replace
those lost to an Aveo retirement village being built in the
middle of the course.
The club agreed to sell off part of the course to Aveo two years
ago in a deal which rescued the club, at least temporarily, from
financial difficulty, the report says. Aveo took out a caveat
over the course, which has thwarted the club's attempts to borrow
money to trade out of its difficulties.
The company told the Newcastle Herald in August that it "would
not be a candidate" to take over managing the course. It has now
entered into a deed of company arrangement with administrator
Rapsey Griffiths to pay AUD1.25 million for the club and lease it
back to members for 20 years.
The Newcastle Herald relates that a prominent Hunter developer
with detailed knowledge of the course's value said the land next
to Newcastle University had redevelopment potential. He said
AUD1.25 million was a "steal" and about 20 per cent of the land's
market value, the report relays.
The report notes that club members and creditors, most of whom
are club employees, voted last month to accept Aveo's offer,
which includes a 20-year lease for AUD1 a year and a buy-back
option if members can find AUD3.5 million seven years from now.
Aveo has agreed not to start further residential development on
the subject land while the club's lease is in place.
The Newcastle Herald reports that Rapsey Griffiths said it was
finalising the sale to Aveo after the parties executed the deed
of company arrangement a week ago.
It is understood the sale will be completed this week, the report
says.
"Through the voluntary administration process, Rapsey Griffiths
has consulted with the club's board, members and creditors
regarding the club's financial situation," the administrator said
in a statement, the report relays. "This is a positive outcome
for 15 staff and 492 members of the golf club and will provide
continuity of this important asset for the local community."
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C H I N A
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CHINA HUAYANG: S&P Discontinues SD Long-Term Issuer Credit Rating
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S&P Global Ratings discontinued its 'SD' long-term issuer credit
rating on China Huayang Economic and Trade Group Co. Ltd.
(Huayang) because the rating has been outstanding for 30 days and
it is unlikely to be raised any time soon. Huayang is a China-
based trading and petrochemicals company.
S&P lowered the rating on Huayang to 'SD' from 'B+' on Oct. 2,
2018, after the company defaulted on the interest and principal
payments of its medium-term notes (MTN) that were issued in 2015
and put back by investors. Subsequently, cross-default clauses
have been triggered for some of Huayang's commercial papers (CP),
including short-term CP. In addition, the noteholders of MTN
issued in 2014 have requested early repayment of the notes. As
such, an upgrade is unlikely in the near future.
LOGAN PROPERTY: S&P Alters Outlook to Positive & Affirms BB- ICR
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S&P Global Ratings revised its rating outlook on China-based
property developer Logan Property Holdings Co. Ltd. to positive
from stable. At the same time, S&P affirmed its 'BB-' long-term
issuer credit rating and on the company and its 'B+' long-term
issue rating on the company's outstanding senior unsecured notes.
S&P said, "We revised the outlook to reflect our view that
Logan's leverage will improve over the next 12-18 months amid
further strengthening of the company's business position. Solid
revenue growth, good cash collection and higher-than-average
margins will drive this trend. We also expect Logan to replenish
its China land bank in a disciplined manner, with moderate debt
growth relative to the company's scale and growth history. As a
result, we expect the company's ratio of proportional
consolidated debt to EBITDA to improve to close to 4x over the
next 12-18 months.
"In our view, Logan's operating performance will continue to
strengthen. The company targets a 50% compound annual growth over
2018-2020. We estimate Logan's contracted sales will reach its
revised target of Chinese RMB70 billion in 2018, representing a
year-on-year growth of around 60%. We further expect sales to
expand to at least 30% in 2019 based on abundant saleable
resources and solid demand in the Greater Bay Area where the
company has a strong market position. By our estimates, a
majority of the company's saleable resources in the next two
years will come from Shenzhen, Zhuhai, Foshan, Dongguan, Huizhou,
where regional demand is relatively resilient despite a cooling
market nationally. The company also has two projects in Singapore
that we expect to perform well."
Logan's earnings and margin visibility in 2018 and 2019 is also
high, based on Logan's strong contracted sales performance and
good increase in the average selling price over the past two
years. As of June 2018, the company had locked in unrecognized
sales of RMB47.4 billion, which we estimate to have gross margins
between 33% and 35%. We also believe the company's competitive
land costs at RMB3,943 per square meter (sqm), compared with its
average selling price of RMB19,706 per sqm in the first six
months, would provide some downside buffer and flexibility to cut
prices to boost sales if needed.
S&P said, "We believe Logan will continue to replenish its lank
bank for growth but in a controlled manner. It has abundant
saleable resources of over RMB400 billion, of which 22% and 50%
are located in Shenzhen and other parts of the Greater Bay Area,
respectively. During the first half, the company acquired RMB15.7
billion of new land in the open market, equivalent to about 44%
of cash proceeds for the same period. The company also has stakes
in urban renewal projects, which could translate into more
resources in the medium to long term. For example, it recently
obtained the remaining 30% share of a Shenzhen urban renewal
project for around RMB3 billion. We expect the company to
maintain land acquisitions at 50%-60% of its cash proceeds from
sales, or RMB33 billion-RMB35 billion in 2018 and RMB43 billion-
RMB45 billion in 2019.
"We have proportionally consolidated the borrowing and EBITDA of
Logan's joint ventures to reflect the increasing financial risk
of its business expansion through off-balance sheet structures.
We estimate the company's look-through debt-to-EBITDA will reach
around 4.5x-4.7x in 2018 and improve to close to 4x in 2019, from
5.1x in 2017. Further improvement to the company's credit profile
hinges on the company establishing a stronger track record of
deleveraging and to move away from an aggressive pace of
expansion. In addition, the extent of a sector downturn could
also test Logan's resilience in adverse market conditions."
Principal liquidity sources include:
-- Unrestricted cash balance of about RMB27 billion at the
end of June 2018.
-- Funds from operations over the 12 months to June 2019 of
RMB36 billion-RMB38 billion, based on: (1) cash receipts from
contracted sales, joint ventures and other segments that S&P
estimates at RMB67 billion-RMB69 billion; (2) construction
costs that we estimate at RMB15 billion-RMB16 billion; (3)
selling, general, and administrative expenses, taxes,
interest, and other expenses of RMB16 billion-RMB17 billion.
Principal liquidity uses include:
-- Short-term debt maturities of about RMB13.8 billion as of
June 30, 2018;
-- Committed but unpaid land premiums of around RMB7 billion, as
of July 1, 2018;
-- Dividend other maintenance capital expenditure of RMB1.5
billion-RMB2 billion over the 12 months to June 2019.
S&P said, "The positive outlook on Logan reflects our view that
the company will improve its financial leverage over the next 12
months, supported by strong sales execution and solid revenue
growth. We also anticipate the company to maintain its high
margins and disciplined land acquisitions.
"We could raise the rating if Logan continues to replenish its
land reserves in a disciplined manner while maintaining high
profitability. An indication of this could be the debt-to-EBITDA
ratio, after proportionally consolidating debt at the joint
ventures, improves to close to 4.0x. We could also upgrade the
company if it substantially improves its scale and diversity to
be comparable to those of larger peers in the 'BB' rating
category, while maintaining stable leverage.
"We may revise the outlook back to stable if Logan's
proportionally consolidated debt-to-EBITDA ratio does not improve
toward 4.0x as we expect. This could be due to a lack of
discipline in land acquisitions, or weaker-than-expected sales
due to weaker market conditions."
MEINIAN ONEHEALTH: Fitch Gives BB+(EXP) to New USD Unsec. Notes
---------------------------------------------------------------
Fitch Ratings has assigned Meinian Onehealth Healthcare Holdings
Co., Ltd.'s (Meinian, BB+/Stable) proposed US dollar senior
unsecured notes an expected rating of 'BB+(EXP)'. The proposed
notes will be issued by Meinian's indirectly wholly owned
subsidiary Mei Nian Investment Limited, and unconditionally and
irrevocably guaranteed by Meinian.
The notes are rated at the same level as Meinian's senior
unsecured rating because they constitute its direct and senior
unsecured obligations. The final rating on the proposed US dollar
notes is subject to the receipt of final documentation conforming
to information already received.
Meinian's ratings are supported by the company's leadership in
China's private health check-up market, stable customer base,
visible expansion path and positive industry dynamics.
Meinian's ratings are constrained by its relatively low FFO
fixed-charge coverage and high FFO adjusted gross leverage, which
are mitigated by its flexible rental terms. Meinian's scale is
currently small; and while Fitch expects the company to benefit
from rapid industry growth, its post-investment free cash flow
(FCF) may remain persistently negative and the company faces
execution risks in the expansion.
KEY RATING DRIVERS
Market Leader in China: Fitch thinks Meinian's market-leading
position and strong portfolio of corporate customers will be
maintained in the coming years. Meinian has been the largest
medical examination service provider in China in recent years and
solidified its market position with last year's acquisition of
Ciming Health Checkup Management Group Co., Ltd. (Ciming), which
was previously the third-largest provider. Fitch estimates
Meinian's market share by revenue to be over 20%, and expects its
high brand recognition and comprehensive network of check-up
centres and service platforms to support its market leadership in
the short to medium term.
Improving Customer Mix: Meinian's corporate customers provide a
stable client base, but the company is expanding among individual
customers, who are typically less price sensitive than corporate
customers. Individuals accounted for 23% of Meinian's health
check-up revenue in 2017, up from 15% in 2016. Not only would a
higher proportion of individual customers increase revenue, but
profitability would also benefit with higher customer traffic and
lower seasonality of visits, resulting in better operating
leverage as fixed costs of the medical centres, like staff and
rental costs, should remain the same in general.
Increasing Health Consciousness: Fitch believes Meinian will
benefit from growth in the medical examination industry. The
overall industry is likely to grow rapidly with structural
support from rising health awareness, an ageing population and
higher disposable income. Fitch expects growth of private
providers like Meinian to outpace the overall industry's thanks
to demand for higher quality services than those from public
providers, increasing demand for early detection of diseases and
enhanced corporate employee benefits.
Expansion Strategy: Meinian plans to almost triple the number of
check-up centres in the next four years through acquisitions of
minority and controlling interests in these centres. Meinian has
also teamed up with third parties to jointly invest in check-up
centres through investment funds, which could reduce the
company's cash outlay per centre. Expansion through acquisitions
of both minority and controlling interests in centres and
investment funds allow Meinian to increase its network faster
with limited financial commitments than its peers, which
generally rely on investment in centres that they own and
operate.
Promising Growth Prospects: Fitch expects Meinian to continue to
see relatively high revenue growth and gradual improvements in
profitability as it expands its network, attracts more individual
customers and provides more customised services with higher
margins. Fitch believes Meinian has adequate internal and
external resources to support its expansion through acquisitions.
However, execution risks may arise during the active acquisitions
and fast expansion. Consistent service quality at individual
check-up centres will depend on effective implementation of
Meinian's operational standards and management system.
3Q18 Growth Decelerated: Meinian's revenue growth slowed in 3Q18,
partly due to the company's efforts to reduce seasonality and
encourage users to get health check-ups earlier in the year. The
company was also negatively affected by media reports regarding
certain instances of doctors practicing without multi-site
licenses in Guangzhou. Revenue growth was 23.6% yoy in 3Q18,
compared with 53.6% in 2Q18 and 65.0% in 1Q18. In response to the
media reports, management has placed more emphasis on quality
control and disclosed that revenue growth has gradually recovered
in September. Fitch expects Meinian to continue to expand its
service network but at a more controlled pace.
Moderately Weak Financial Profile: Meinian's financial profile is
likely to remain moderately weak in the short term, given its
expansion plan. Fitch expects capex and acquisitions to continue
to rise in 2018-2021 from 2017 levels. In addition, rental
expenses may increase in line with the expansion in its check-up
service centre network. As a result, Meinian's FFO adjusted net
leverage may rise in 2018-2019 to 3.4x-3.5x from 3.1x in 2017.
Meinian's total debt had reached CNY5.2 billion by end-3Q18, up
considerably from CNY3.0 billion at end-2017. Fitch believes 4Q18
performance is critical to Meinian's full-year 2018 financial
metrics as October-December is usually the peak season for sales
and cash collection.
DERIVATION SUMMARY
Meinian's clear market leadership in China's private health
check-up market and stable customer base generally compare
favourably against peers and balances its financial profile,
which is moderately weak in the 'BB' range. Although there are no
other rated peers specifically in this market, Fitch benchmarks
against retail companies that also use leased operating premises,
but recognises the private health check-up market in China is
more stable and has higher growth visibility.
Meinian presents a stronger business profile relative to China-
based 361 Degrees International Limited (BB/Stable) as Meinian is
the leader in its market while 361 Degrees ranks lower in the
sportswear market. Although the sportswear market is also likely
to grow in China, Fitch thinks the less fragmented health check-
up market and the strong base of corporate customers provides
Meinian with more stable traffic and growth prospects. Meinian's
stronger business profile justifies a rating above 361 Degrees
despite a moderately weak financial profile due to rental
expenses forming a big share of costs.
Meinian's financial profile is more comparable to global retail
issuers, such as Marks and Spencer Group Plc (BBB-/Stable) as
rental expenses are an important cost component. Meinian's
financial metrics are largely in line with those of Marks and
Spencers except that Meinian generates stronger operating
margins. Meinian also enjoys more promising growth potential and
more positive industry dynamics relative to Mark and Spencer.
However, Meinian is rated below Mark and Spencer due to its much
smaller operation scale and consistent negative post-investment
FCF, which is expected to sustain in the next few years.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Average revenue growth of over 30% in 2018-2021.
- EBITDA margin of 22%-23% in 2018-2021.
- Rental expense to revenue ratio of 9%-10% in 2018-2021.
- Capex of CNY1.4 billion-1.9 billion in 2018-2021 (including
initial minority investments in new medical centres).
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action:
- Greater operating scale coupled with sustained neutral
or positive post-investment FCF.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
- Significant loss of market share in health check-up services.
- FFO adjusted gross leverage sustained above 4.5x (2017:
4.5x).
- FFO fixed-charge coverage sustained below 2.2x (2017: 2.6x).
LIQUIDITY
Adequate Liquidity: Meinian's debt maturity profile is dependent
upon short-term financing (representing around 60% of total debt)
but its liquidity is sufficient to meet its obligations. Short-
term debt of almost CNY3.0 billion at end-1H18 can be covered by
CNY1.5 billion of available cash and around CNY2.7 billion of
unutilised credit facilities, but these facilities are
uncommitted as committed facilities are uncommon in the Chinese
banking environment.
YIHUA ENTERPRISE: Moody's Affirms B2 CFR & Alters Outlook to Neg.
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Moody's Investors Service has affirmed the B2 corporate family
rating of Yihua Enterprise Co., Ltd. and affirmed the B3 backed
senior unsecured notes issued by Yihua Overseas Investment Ltd.
The notes are guaranteed by Yihua Group.
Moody's has also changed the outlook on the ratings to negative
from stable.
RATINGS RATIONALE
The negative outlook on Yihua Group's ratings reflect Moody's
concerns over the company's higher earnings volatility and
refinancing risks in the next 12-18 months.
"More challenging macro and funding conditions in the coming 12-
18 months will raise the company's earnings volatility and
refinancing risks, thereby narrowing its rating headroom," says
Stephanie Lau, a Moody's Vice President and Senior Analyst.
Moody's projects Yihua Group's adjusted debt/EBITDA will rise
toward 7.5x in the next 12-18 months, from 6.3x in FY2017. Our
projection reflects the ongoing US-China trade tension may slow
the group's revenue growth and lower its profitability, thereby
increasing its leverage ratio. The projected adjusted debt/EBITDA
ratio has narrowed the company's rating headroom.
US exports under Yihua Lifestyle - a key listed-subsidiary of
Yihua Group - accounts for around 30% of Yihua Lifestyle's total
revenue. In the first nine months of 2018, Yihua Lifestyle's
profitability has declined moderately, namely affected by a rise
in raw material cost and currency movements. In the first nine
months of 2018, Yihua Lifestyle contributed to around 67% of
Yihua Group's total revenue.
On the other hand, the company has high refinancing needs in the
next 12-18 months. At the end of 3Q 2018, the company had RMB5.9
billion of cash and projected annual operating cash flow of
around RMB1.5 billion in the next 12 months. However, it has debt
obligations maturing over the next 12 months, namely RMB8.6
billion in short-term bank borrowings, long-term bank borrowings
due within one year and maturing onshore bonds, as well as RMB1.0
billion in onshore puttable bonds.
Beyond the next 12 months, the company has to refinance RMB1.5
billion of onshore bonds due and RMB1.2 billion of puttable bonds
in 4Q 2019.
Moody's notes that Yihua has maintained access to the domestic
bond market, and issued RMB700 million and RMB500 million at the
end of October 2018, at 7.2% and 7.5%, with three year tenure
puttable at the end of second year. Moody's also notes that Yihua
has land and financial assets as alternative liquidity and
external sources.
Moody's will monitor the company's liquidity in the next 6-12
months, through refinancing its existing debt or other asset
disposal plans.
Given the negative ratings outlook, Moody's will unlikely upgrade
Yihua's ratings over the next 12-18 months.
Nevertheless, the ratings outlook could return to stable if the
company: (1) shows meaningful improvement in its liquidity under
satisfactory terms and conditions; (2) maintain stable operations
and a conservative acquisition strategy; and (3) continues to
maintain stable financial metrics, such that adjusted debt/
EBITDA is below 7.5x.
Yihua Group's rating is likely to be downgraded if the company
fails to improve its liquidity or maintain stable operations.
Specifically, downgrade pressure will emerge if the company's (1)
adjusted debt/EBITDA exceeds 7.5x on a sustained basis; or (2)
shareholdings in Yihua Lifestyle and Yihua Healthcare show a
material decline; or (3) weak liquidity persists.
Yihua Enterprise (Group) Co., Ltd. was established in April 1995
and is based in Shantou, China. Yihua Group is a diversified
private company that operates in four key segments: (1) furniture
manufacturing, (2) healthcare, (3) property development, and (4)
financial investment. As of the end of September 2018, the
company held 29.02% and 37.08% stakes in two listed companies,
Yihua Lifestyle and Yihua Healthcare, respectively. Yihua
Lifestyle and Yihua Healthcare's market cap is around RMB6.4
billion and RMB9 billion respectively as of November 6, 2018.
* CHINA: Big Brokers Seek to Up Capital as Default Risks Linger
---------------------------------------------------------------
Bloomberg News reports that Chinese brokerages are boosting
capital to protect against a market plunge that threatens the
value of $640 billion worth of shares pledged as collateral.
According to Bloomberg, securities firms have extended more than
a third of China's stock-backed loans, which may go sour and
force lenders to offload the shares. To cushion themselves, at
least three of the country's biggest brokerages have announced
capital raising plans in recent months, joining the nation's big
banks in strengthening buffers.
Questions surrounding the stability of brokerages has been a key
concern for investors as China's stock market has plunged 20
percent this year, Bloomberg says. The sector, which is a
barometer of local investor sentiment, has suffered more than
most, with Bloomberg Intelligence's gauge for China-listed
brokerages down 28 percent in 2018. Capital-raising efforts
should help them deal with any uncertainties.
"The market slump has stunted the brokers' profitability,"
Bloomberg quotes Sean Hung, a senior analyst at Moody's Investors
Service in Hong Kong, as saying. "Provisions required to be set
aside for stock-pledged loans are also eating into capital."
Bloomberg relates that the extent of their difficulties can be
seen in the relatively small stabilization fund brokers stumped
up this year. Amid the 2015 market turmoil, they forked out
CNY120 billion ($17 billion) to prop up the markets. When
authorities pushed again in October, they committed just CNY25.5
billion, Bloomberg discloses citing the Securities Association of
China.
Every 10 percent decline in the value of bad stock-pledged loans
will erode net capital by as much as 8.9 percent at the largest
brokerages, according to an analysis by Bloomberg Intelligence.
Stock-pledged loans are riskier than margin-finance loans because
regulatory restrictions make it harder to liquidate the
collateral, they have a longer tenor and the loan value is
higher.
Bloomberg relates that amid the market downturn, GF Securities
Co. said in May that it would raise as much as CNY15 billion by
privately placing shares. Huatai Securities Co., one of China's
largest brokerages by market value, is planning to sell at least
$500 million of global depositary receipts and the Hong Kong
Economic Times reported that Shenwan Hongyuan plans to raise
about $1.5 billion through a Hong Kong listing next year. Shenwan
Hongyuan Securities Co.'s parent injected a similar amount in
January.
According to Bloomberg, top Chinese brokers still have their net
capital to risk capital reserves ratio -- a key risk-control
metric -- at about 200 percent against the required 100 percent
level. However, a significant decline will reflect poorly in
their annual ratings issued by the securities regulator, Hung
said. No broker has won the top AAA rating in at least seven
years, Bloomberg discloses citing government data.
Raising capital also offers securities firms the chance to
diversify away from traditional revenue streams in China,
Mr. Hung, as cited by Bloomberg, said. A push for expansion is
gaining urgency as competition heats up with the government's
decision to allow foreign firms to take control of local
brokerages.
"The brokers that are aggressively raising capital are the
leading domestic players now looking to tap overseas markets,"
Bloomberg quotes Mr. Hung as saying.
=========
I N D I A
=========
AEROSPACE ENGINEERS: CRISIL Moves B+ Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the ratings on bank facilities of Aerospace
Engineers to 'CRISIL B+/Stable/CRISIL A4 Issuer not cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 3 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with AE for obtaining
information through letters and emails dated August 28, 2018,
September 29, 2018, October 5, 2018 and October 9, 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 AE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AE 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 ratings on bank
facilities of AE to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Furthermore, the company has not paid the fee for conducting
rating surveillance as agreed to in the rating agreement.
AE, was established as proprietorship firm in 2002 and converted
into Private limited company in 2016, manufactures and supplies
precision (metallic and non-metallic) aeronautical components to
defense and aerospace companies primarily in India. The
manufacturing unit is in Salem, Tamil Nadu, and Mr. R Sundaram is
the proprietor.
ARROW CABLES: CRISIL Migrates B+ Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Arrow Cables
Limited (ACL) to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 10 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 6.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with ACL for obtaining
information through letters and emails dated August 27, 2018,
October 5, 2018 and October 9, 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 ACL. Which restricts CRISIL's
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes information available on ACL 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 ACL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Established in 1996, Arrow Cables Limited (ACL) manufactures
power conductors and power cables. The company is promoted by Mr.
K.S.Varma and is based in Hyderabad.
AUTO CZARS: CARE Reaffirms B+ Rating on INR3.50cr LT Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Auto Czars, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3.50 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 3.00 CARE A4 Reaffirmed
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of Auto Czars
continues to remain constrained by its small scale of operations
coupled with low net worth base, leveraged capital structure and
weak coverage indicators. The ratings further continue to remain
constrained on account of working capital intensive nature of
business along with highly competitive industry. The ratings
however continue to draw comfort from experienced promoters,
growing scale of operations and moderate profit margins. Going
forward, the ability of the company to managing its working
capital requirements to support the scale of operations coupled
with improvement in capital structure shall be key rating
sensitivities.
Detailed Description of Key Rating Drivers
Key rating weakness
Small though growing scale of operations with low net worth base:
The scale of operations of the firm has remained small as marked
by a total operating income and gross cash accruals of INR51.77
crore and INR0.58 crore respectively during FY18 (FY refer to
April 1 to March 31). Furthermore, the firm's networth base was
relatively small at INR5.06 crore as on March 31, 2018. Though,
the risk is partially mitigated by the fact that the scale of
operation is growing continuously. AutoCzars's total operating
income grew from INR34.23 crore in FY16 to INR51.77 crore in FY18
reflecting a compounded annual growth rate of 22.98% owing to
higher quantity sold.
Leveraged Capital Structure and Weak Coverage Indicators: The
capital structure of the firm continues to remain leveraged owing
higher dependence on the external debt as marked by overall
gearing ratio which remained around 2x as on the balance sheet
date of the past two financial years i.e. FY17-FY18. The coverage
indicators of the firm continues to remain weak as marked by
interest coverage and total debt to GCA of 1.67x and 16.92x in
FY18 on account of high interest cost led by higher debt levels.
Working capital intensive in nature: Operating cycle of the firm
continues to remain moderate at 55 days in FY18 however, the
operations of the firm continues to remain working capital
intensive in nature on account of high dependence on external
borrowings to meet on working capital requirements. The firm
procures the spare parts from Maruti Suzuki India Limited and
gets a credit period of around one month resulting in average
creditor days of 27 days in FY18. The firm maintains an adequate
level of inventory to meet the immediate demand of the customer
resulting in an average inventory holding 17 days in FY18. The
firm offers an average credit period of around two months to its
customers resulting in average collection period of 65 days in
FY18. A credit period extended to the customer increases Auto
Czars' dependence on working capital limits to make payment to
its supplier resulting in almost full utilization of its average
working capital limits for the past twelve months ending
September 2018.
Competitive nature of the industry: The firm faces stiff
competition from the other organized and unorganized sector. The
firm is comparative a small players catering to a limited market
which has restricted the bargaining power of the firm and has
exerted pressure on its margins.
Key rating strengths
Experienced management: The operations of AutoCzars are currently
being managed by Mr. Amit Jain & Mr. Vishnu Bhargava. Mr. Amit
Jain & Mr. Vishnu Bhargava are postgraduates by qualification.
Mr. Vishnu Bhargava has an experience of more than three and a
half decades in trading of auto parts through his association
with this entity and Mahindra & Mahindra Limited. Mr. Amit Jain
has experience of around two and a half decades in trading
industry through his association with this entity and Maruti
Suzuki India Ltd.
Moderate profitability margins: The profitability margins are
generally on the lower side in the trading nature of the business
due to intense market competition given the highly fragmented
nature of the industry. Considering the trading nature of the
firm, the profitability margins marked by PBILDT and PAT
continues to remain moderate around 3% and 1% respectively for
the past two financial years i.e. FY17-FY18.
Delhi based Auto Czars was established as a partnership firm in
2008 and is currently being managed by Mr. Amit Jain and Mr.
Vishnu Bhargava as the partners sharing profit and losses in the
ratio 49% and 51% respectively. The firm is an authorized
distributor of spare parts of Maruti Suzuki India Limited in West
Delhi. The customer base comprises of authorized service centers
and retailers and workshops. Auto Czars also operates ten retail
outlets in and around West Delhi.
BEST EDUCATION: CRISIL Assigns 'B' Rating to INR5.80cr Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Best Education Trust (BET).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 3.45 CRISIL B/Stable (Assigned)
Long Term Loan 5.80 CRISIL B/Stable (Assigned)
Overdraft .75 CRISIL A4 (Assigned)
The ratings reflect the society's exposure to intense competition
and susceptibility to the regulatory environment regarding the
education sector. The weaknesses are partially offset by
established position in the education sector.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition and susceptibility to the
regulatory environment regarding the education sector: The
society has been operating a school affiliated with ICSE in
Bengaluru for more than 10 years and has 90% occupancy. However,
it faces competition from other schools in the region. Also,
inflow of students will depend on ability to offer quality
education and recruit and retain the best faculty.
Strength
* Established position in the education sector: Established in
fiscal 2007, BET runs Attibele Public School in Bengaluru, which
offers education under ICSE and SSC curricula up to Standard 12.
The school has a proven track record of more than a decade.
Outlook: Stable
CRISIL believes BET will benefit over the medium term from
increasing demand for its courses. The outlook may be revised to
'Positive' if the society scales up operations substantially,
while maintaining profitability and capital structure. The
outlook may be revised to 'Negative' if any large, debt-funded
capital expenditure weakens the financial risk profile or if cash
accrual declines steeply.
BET was founded in fiscal 2007 by Mr. Muniraju D (founder
secretary and principal). It operates Attibele Public School in
Bengaluru.
CHOUNDESHWARI SAHAKARI: CRISIL Assigns B Rating to INR8cr Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating on the bank
facilities of Choundeshwari Sahakari Soot Girani Limited (CSSGL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B/Stable (Assigned)
Working Capital
Term Loan 8 CRISIL B/Stable (Assigned)
The rating reflects the extensive experience of CSSGL's promoter
in the cotton industry, and its long track record and established
market position in industry. These rating strengths are partially
offset by weak financial risk profile and susceptibility to
adverse movements in cotton prices.
Key Rating Drivers & Detailed Description
Strength
* Promoters experience in the cotton yarn industry: CSSGL has
been an established player in the cotton yarn industry for more
than 22 years, with Mr. Sunil Sangale, Chairman having extensive
industry experience.
Weakness
* Weak financial risk profile: Financial risk profile of CSSGL is
weak as reflected in high gearing of 2.22 times as on March 31,
2018 and poor debt protection metrics as reflected in interest
coverage of 0.2 times and NCAAD of -0.07 times for fiscal 2018.
CRISIL believes that financial risk profile is expected to remain
weak over the medium term due to expected PAT level losses
expected to be reported in fiscal 2019 due to higher interest and
depreciation costs owing to large debt funded capex undertaken in
fiscal 2018.
* Susceptibility to adverse movements in cotton prices and
changes in government policies: Prices of cotton, the key raw
material accounting for over 70% of company's turnover, are
volatile as availability depends on extent of rainfall. Cotton
prices are also affected by change in international demand.
Outlook: Stable
CRISIL believes CSSGL will benefit over the medium term from its
promoter's extensive experience. The outlook may be revised to
'Positive' if there is significant increase in cash accrual
arising due to significant growth in revenue and profitability
while also improving working capital cycle leading to improvement
in financial risk profile especially liquidity. Conversely, the
outlook may be revised to 'Negative' if there is lower than
anticipated cash accrual generation arising due to decline in
scale of operations or decline in operating margin or
deterioration in working capital cycle weakens the financial risk
profile.
Registered in 1996, CSSGL is a co-operative organization was
formed under the leadership of Devang Koshti Samaj & it's stering
committee. All the members are basically weavers as an occuption.
The organization manufactures 100% cotton yarn operating in
Kolhapur.
JSM PROTEINS: CRISIL Lowers Rating on INR15cr Loan to D
-------------------------------------------------------
CRISIL has migrated its rating on the long-term bank facilities
of JSM Proteins Private Limited (JSM) to 'CRISIL D/CRISIL D
Issuer Not Cooperating' from 'CRISIL BB-/Stable/CRISIL A4+ 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
---------- ----------- -------
Bank Guarantee 0.5 CRISIL D (Downgraded from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Cash Credit 8.5 CRISIL D (Downgraded from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
Letter of Credit 15.0 CRISIL D (Downgraded from
'CRISIL A4+ ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with JSM through
letters and emails dated July 10, 2018, and August 17, 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 JSM, 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 JSM to 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL BB-/Stable/CRISIL A4+ Issuer Not
Cooperating'.
The downgrade reflects the company's account being classified as
NPA by the bank since March 2018.
Set up by Mr. Manoj Wadhwa in 2010, JSM is a trader and
distributor of edible oil, dairy products, and sugar, mainly in
Haryana. The company commenced commercial operations in February
2011 after the edible oil trading business of its group entity,
Shubh Marketing, was transferred to it.
KALOSONA HIMGHAR: CRISIL Migrates B+ Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Kalosona
Himghar Udyog Private Limited (KHUPL) to 'CRISIL B+/Stable Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 0.4 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Working Capital 0.6 CRISIL B+/Stable (ISSUER NOT
Term Loan COOPERATING; Rating Migrated)
CRISIL has been consistently following up KHUPL for obtaining
information through letters and emails dated October 05, 2018 and
October 9, 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 KHUPL. Which restricts
CRISIL's ability to take a forward-looking view on the entity's
credit quality. CRISIL believes information available on KHUPL 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 KHUPL to 'CRISIL B+/Stable Issuer not cooperating'.
KHUPL, formed in 2006 by Mr Priyo Mohan Dey and Mr Mukti Padho
Kundu, provides cold storage facility for potatoes and trades in
potatoes. The promoters also process rice through group
companies, and have over three decades of experience. The cold
storage is in Arambagh, West Bengal, and has capacity of 170,000
quintals.
LEEL ELECTRICALS: CARE Lowers Rating on INR595cr Loan to D
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
LEEL Electricals Limited (LEEL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 455.00 CARE D Revised from CARE BB;
Facilities Negative
Long term/Short 595.00 CARE D Revised from CARE BB;
term Bank Negative/ CARE A4
Facilities
Detailed Rationale & Key Rating Drivers
The revision in the ratings for the bank facilities of LEEL takes
into account the stressed liquidity position primarily on account
of the working capital-intensive nature of business operations
leading to cash flow mismatches and ongoing devolvements of LC
(letter of credit). The rating revision also factors in the
exposure to raw material price volatility, forex risks and
exposure to overseas subsidiaries. Going forward, the ability of
LEEL to profitably scale-up its operations while maintaining its
capital structure and effectively manage its working capital
requirements shall be the key rating sensitivities. The higher-
than-envisaged exposure towards overseas subsidiaries shall also
have a bearing on the credit profile of the company and remains a
key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Stressed liquidity & Working capital intensive operations: The
liquidity of the company has been under stress due to certain
cash flow mismatches primarily on working capital intensive
operations of the company. As a result of the stress on
liquidity, there are ongoing devolvements in the letter of credit
(LC). LEEL's operating cycle has remained on the higher side in
the past primarily due to high inventory holding period. Further
after the LOU's were discontinued, company has though placed a
proposal for enhancement in the working capital lines or
interchangeability between the fund and non-fund based limits but
has not been able to secure the same so far. Since the operations
of the company are working capital intensive, this situation has
led to cash flow mismatches and devolvements of LC due to
stretched liquidity position. Going forward, the ability of the
company to improve its liquidity position shall remain critical.
Weak Financial risk Profile: LEEL registered total operating
income of INR1950.80 crore in FY18 (refers to period from April
01 to March 31) as against a total operating income of INR2977.31
crore in FY17. Consumer durable business (CDB) segment was sold
in May 2017 to Havells India Ltd, which contributed to the
revenue mix till Q1FY18. On a comparable basis, the revenue from
the other two segments namely OEM & packaged AC and the Heat
Exchangers & components together contributed INR1504.57 crore to
the net sales in FY18 as compared to INR1128.36 crore to the net
sales in FY17. The PBILDT margins for FY18 moderated to 5.39%
(9.13% in FY17) on account of increase in Input costs of raw
material especially of Aluminum, Copper and Sheet Metal. The
total operating income in Q1FY19 registered a decline by 45%
compared to Q1FY18 primarily on account of the CDB segment income
which contributed to the operations till May 08, 2017 with a
total sales of INR423.53 crore in Q1FY18 as compared to NIL in
Q1FY19. The profitability in absolute terms also registered
decline in Q1FY19 primarily due to CDB segment, which contributed
to the operations in Q1FY18 till May 8, 2017 & also further also
due to higher raw material cost due to rise in the prices of raw
materials aluminum & copper in Q1FY19 compared to Q1FY18.
Further, the financial profile also weakened due to the lean
season and also due to slowing down of the railway diesel loco
business of Heat exchanger due to government's plan to gradually
discontinue the diesel locomotive and moving towards electrical
locomotives, which has impact the business both in terms of
volume and margins. The PBILDT margins stood at 7.38% in Q1FY19
as against 8.16% in Q1FY18.
Exposure to raw material price volatility: The main raw material
for manufacturing of air conditioners and coils are aluminum and
copper. The prices of the same have been very volatile in the
past, thus making LEEL's profitability susceptible to the
fluctuations in the raw material prices.
Exposure to overseas subsidiaries: LEEL now has exposure to two
of its subsidiaries in form of equity investment and corporate
guarantee to the debt availed by the subsidiaries. The non-
current investments in the subsidiaries stand at INR106.30 crore
as on March 31, 2018. Further, loss of INR18 crore arising from
the diminution in the value of investments in wholly owned
subsidiary Noske Kaesar Rail & vehicle Germany (NK Germany) has
been recognised in FY18 as an exceptional expense by the Company.
This was on account of market conditions in Europe that NK
Germany continued to incur losses leading to complete erosion of
net-worth & post the balance sheet date the subsidiary had to
file for insolvency proceedings under Germany laws resulting in
the impairment loss of INR18 crores for LEEL.
LEEL was incorporated in 1987 and operates in HVAC segment. It is
engaged in the manufacturing of condenser and evaporator coils
and contract manufacturing for Air Conditioners (ACs) for various
brands. LEEL was also into retailing of ACs and consumer durable
products like LCD/ LED TVs, washing machines, freezers, etc. The
Company, however had sold its Consumer Durable Business
comprising of business of importing, trading, marketing,
exporting, distribution, sale of air conditioners, televisions,
washing machines and other household appliances and assembling of
televisions under the brand "LLOYD" and all of the rights, title,
interest, licensees, contracts, assets, continuing employees,
intellectual property including the brand, logo, trade mark
"LLOYD" as a going concern on slump sale basis to Havells India
Ltd. Pursuant to the transaction, the Company has also changed
its name to 'LEEL Electricals Ltd.' LEEL has six manufacturing/
assembly units located at Rajasthan, Himachal Pradesh, Tamil
Nadu, Haryana and Uttarakhand.
On a consolidated basis, LEEL operates two subsidiaries, namely,
Lloyd Coils Europe s.r.o (LCE) engaged in manufacturing of coils
and finned pack heat exchangers and Noske Kaeser Company (NKC)
which is engaged in engineering, manufacturing and providing
system solutions and components for the transport industry in the
fields of air conditioning, refrigeration, piping, fire-fighting,
CBRN protection and related services.
LITTLE SCHOLAR'S: CRISIL Assigns B+ Rating to INR8.08cr LT Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' to the long-term bank
facilities of Little Scholar's Academy Society (LSAS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 6.73 CRISIL B+/Stable (Assigned)
Overdraft 1.35 CRISIL B+/Stable (Assigned)
The rating reflects the society's long track record of
successfully running a senior secondary school and healthy
operating margin. These strengths are partially offset by modest
scale of operations, geographical concentration, and
susceptibility to intense competition and to regulatory changes.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to government regulations: Since the society has to
comply with specific operational and infrastructure norms set by
regulatory bodies, it needs to regularly invest in workforce and
infrastructure. Any non-compliance might result in withdrawal of
the acquired status, and affiliation to education board.
* Modest scale of operations with limited revenue diversity:
Operating income was small at INR5 crore in fiscal 2018, despite
high occupancy rates. Currently, revenue is dependent on the fees
earned through school, but diversification is expected to take
place as a hospital set up by the society has started operations
in September 2018.
Strengths
* Established position and healthy demand prospects: Business
risk profile benefits from the healthy demand prospects for the
education sector. There is a growing preference for private
schools because of the inefficient public school system and
growing awareness about the importance of quality education.
Established track record of 28 years further supports the
prospects.
* Moderate financial risk profile: Gearing was healthy at 0.80
time as on March 31, 2018. Debt protection metrics were strong,
with net cash accrual to total debt and interest coverage ratios
of 35% and 8 times, respectively, for fiscal 2018. The moderate
financial risk profile aids the society's refinancing ability.
Outlook: Stable
CRISIL believes LSAS will continue to benefit over the medium
term from its established regional presence. The outlook may be
revised to 'Positive' if admission rates improve significantly
leading to better scale of operations. The outlook may be revised
to 'Negative' if decline in admission levels or larger-than-
expected, debt-funded capital expenditure weakens financial risk
profile.
Set up in 1990 by Mr Girish Bansal, LSAS operates a school at
Amroha (UP). A hospital has also been established by LSAS whose
operations have started in September, 2018.
MOTIL DEVI: CRISIL Assigns B Rating to INR6cr Loans
---------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Motil Devi Organic Food Industries Private
Limited (MDOFIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.5 CRISIL B/Stable (Assigned)
Term Loan 3.5 CRISIL B/Stable (Assigned)
The rating reflects the modest scale of MDOFIPL's operations in
the highly fragmented ice cream industry, weak financial risk
profile and susceptibility to fluctuations in raw material
prices. These weaknesses are partially offset by the experience
of the promoters.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operations amid intense competition: Intense
competition, perishable nature of product, and high
transportation costs should continue to limits the ability to
expand significantly into other geographies while constraining
scalability, pricing power, and profitability. Hence, revenue
(around INR8 crore over the four fiscals through 2018) is likely
to remain modest over the medium term.
* Weak financial risk profile: Networth remains modest at INR3.54
crore as on March 31, 2018, with marginal improvement in recent
years due to accretion to reserve. Gearing was high at 3.11 times
owing to heavy reliance on external debt and promoters' funds to
meet working capital requirement and to service maturing debts.
Debt protection metrics are likely to remain average: interest
coverage and net cash accrual to total debt ratios were 2.3 times
and 0.08 time, respectively, in fiscal 2018.
* Susceptibility to fluctuations in raw material prices: Raw
material costs account for over 60% of total cost of sales. Milk
and milk products, dry fruits, fruits, and vegetables are the
main raw materials for manufacturing ice creams. Cost of milk and
other raw materials is susceptible to government policies such as
the minimum support prices for the purchase of milk from farmers.
Exposure to fluctuations in raw material prices should continue
to restrict the business.
Strengths:
* Experience of the promoters: The Wadhwani family has been in
different business sectors since 1991. They have an experience of
over a decade in the steel industry and are well supported by
experienced and qualified managerial and technical staff and
skilled labourers. Benefits from the promoters' extensive
experience, their strong understanding of local market dynamics,
and healthy relations with customers and suppliers should
continue to support the business.
Outlook: Stable
CRISIL believes MDOFIPL will continue to benefit from the
experience of the promoters. The outlook may be revised to
'Positive' if substantial and sustainable increase in revenue and
profitability strengthens financial risk profile. Conversely, the
outlook could be revised to 'Negative' if steep decline in
revenue and profitability or any large, debt-funded capital
expenditure weakens financial risk profile.
MDOFIPL, incorporated in 2013 at Raipur (Chhattisgarh),
manufactures ice-creams under the brand, Mental. Mr Deepak
Wadhwani and Mr Harish Wadhwani are the promoters.
N.S. POLYMER: CARE Assigns B+ Rating to INR6.90cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of N. S.
Polymer, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 6.90 CARE B+; Stable Assigned
Short-term Bank
Facility 0.35 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of N. S. Polymer are
constrained by its partnership nature of constitution, nascent
stage of operation, post project stabilization risk, highly
fragmented and competitive nature of industry with low entry
barriers, volatility in raw material prices and high working
capital intensive nature of business. However, the aforesaid
constraints are partially offset by its experienced partners.
The ability of the entity to achieve the projected scale of
operations and profitability as envisaged in the project scope
and ability to manage working capital requirements effectively
would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced partners
N. S. Polymer has been engaged in manufacturing of plastic
products business. Mr. Nawab Hossain (Partner) along with
other partners Mrs. Sufia Bibi (Partner) and Mr. Imran Hossain
(Partner) are looking after the day to day operation of the
entity who have more than a decade of experienced in similar line
of business.
Key Rating Weaknesses
Partnership nature of constitution: N. S. Polymers, being a
partnership firm, is exposed to inherent risk of the partner's
capital being withdrawn at time of personal contingency and firm
being dissolved upon the death/retirement/insolvency of the
partners. Furthermore, partnership firms have restricted access
to external borrowing as credit worthiness of partners would be
the key factors affecting credit decision for the lenders.
Post project stabilization risk along with nascent stage of
operation: N. S. Polymer has set up a plastic goods manufacturing
unit in Murshidabad (West Bengal). The project was completed and
the entity has started its commercial operation from August 2018.
Hence, the entity has an extremely short track record of
manufacturing operations. Since, the unit is already operational
the project execution risk is mitigated. However, there exists
risk relating to stabilization of operations at the newly
commissioned unit and off-take of its products. The availability
of raw materials and demand of plastic products in the market are
few of the factors on which plastic products manufacturing
business depends. Hence, there is post project stabilization risk
involved with respect to which the ability of revenue generation
of the entity on a sustainable basis as envisaged in the project
scope needs to be seen.
Highly fragmented and competitive nature of industry with low
entry barriers: The demand of plastic products makes the industry
highly fragmented, with numerous players operating in the
unorganized sector with very less product differentiation. There
are several small scale operators which are not into end-to-end
processing of plastic products from raw material, instead they
merely complete a small fraction of processing and disposeoff
semi-processed plastic to other big plastic products manufacturer
for further processing. Furthermore, the entity being new in the
industry is facing stiff competition from the organized as well
as unorganized players.
Volatility in raw material prices: The primary raw material
required by N. S. Polymer is plastic granules such as
polypropylene and crylonitile butadience styrene resins which
would constitute major cost of the total cost of sales, thereby
making profitability sensitive to raw material prices. The major
raw material for the entity is polypropylene granule which is
crude oil derivative and witness frequent price fluctuations.
Therefore, the operating margin of the entity remains susceptible
to any sharp movement in raw material prices.
High working capital intensive nature of business: The operations
of the entity are working capital intensive in nature, the entity
is required to maintain adequate inventory mainly in the form of
raw material to ensure smooth execution process as well as
maintain stock of finished products in order to meet the
immediate demand of customers. Furthermore, the average
utilization of working capital remained at about 60% during the
last month ended August 31, 2018.
N. S. Polymer was established in December 2016 with an objective
to enter into the manufacturing of plastic products (Plastic
chair, table and other plastic household products) business. The
manufacturing unit of the entity is located at Vill: Talai, P.O:
Jarur, PS: Raghunathganj, Dist: Murshidabad, West Bengal: 742235
with an installed capacity of 3264 tons per annum. The entity
started its operation from August 2018. Mr. Nawab Hossain
(Partner) along with other partners Mrs. Sufia Bibi (Partner) and
Mr. Imran Hossain (Partner) are looking after the day to day
operation of the entity who have significant experienced in
similar line of business.
R J TRADELINKS: CARE Migrates C Rating From Not Cooperating
-----------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of R J
Tradelinks (RJT) to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 8.40 CARE C; Stable Revised from
CARE C; Stable; Issuer not
Cooperating
Short term Bank
Facilities 0.10 CARE A4 Revised from CARE A4;
Issuer not cooperating
In the absence of minimum information required for the purpose of
rating, CARE was unable to express an opinion on the rating of
RJT and in line with the extant SEBI guidelines, CARE revised the
rating of bank facilities of the company to 'CARE C; Stable/CARE
A4; Issuer Not Cooperating'. However, the company has now
submitted the requisite information to CARE. CARE has carried out
a full review of the rating and the rating stands at 'CARE C;
Stable/CARE A4'.
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of RJT continues to
remain constrained on account of delays in servicing of interest
resulting in overdrawals in cash credit facility. Further, the
ratings take into account its relatively small scale of
operations with low profit margins due to trading nature of
business, leveraged capital structure and weak debt coverage
indicators. The ratings also continue to be undermined by its
presence in highly fragmented and competitive industry and
constitution of entity as a partnership firm limiting financial
flexibility in times of stress. The above constraints outweigh
the comfort derived from the experience of the promoters, long
track record of operations of entity, diversified revenue stream,
synergistic association from group entities and association with
established brand name.
The ability of the entity to increase its scale of operations
with improvement in profitability and capital structure along
with efficient management of working capital requirement are the
key rating sensitivities.
Detailed Description of the Key Rating Drivers
Key Rating Weaknesses
Relatively modest scale of operations with low profitability
margins: The operations of the entity remained small with
total operating income of INR44.78 crore in FY18 (Audited) and
total capital employed of INR16.30 crore as on March 31,
2018 thus limiting financial flexibility of the entity in times
of stress. Since the entity is into trading business which is
inherently a low value additive and volume driven nature of
business its profit margins remained low.
Leveraged capital structure with weak debt service coverage
indicators: The relatively low net worth base of the entity led
to increased reliance on working capital borrowings to support
its business operations, resulting in leveraged capital structure
as indicated by overall gearing of 3.09x as on March 31, 2018.
Moreover, due to low accruals and high gearing levels, the debt
coverage indicators stood weak. Working capital intensive nature
of operations: Operations of the entity remained working capital
intensive with gross current assets of 117 days during FY18 with
fund majorly blocked in inventory holding and receivables. The
working capital requirements are met by the cash credit facility
availed by the entity, further there are overdrawals in the cash
credit facility for 20-25 days.
Presence in highly fragmented and competitive industry: The
Indian trading industry is highly unorganized & fragmented in
nature. Due to low entry barriers, the trading Industry in the
country is flooded with many unorganized players. This has led to
high level of competition in the industry and players work on
wafer-thin margins. The cost of goods purchased is the major cost
component for the trading industry, accounting for about 92-94%
of the sales. Availability of goods is not an issue for the
industry but procuring these goods at competitive prices poses a
challenge to maintain margins. Demand prospects of the trading
industry continue to be further constrained to a large extent by
the influence of the economic cycle.
Partnership nature of constitution: Being a partnership firm, RJT
is exposed to the risk of withdrawal of capital by partners due
to personal exigencies, dissolution of firm due to retirement or
death of any partner and restricted financial flexibility due to
inability to explore cheaper sources of finance leading to
limited growth potential. This also limits the firm's ability to
meet any financial exigencies.
Key Rating Strengths
Long and established track record of the entity with experienced
partners: RJT has an established track record of around two
decades in the trading of garments, pharmaceutical products and
fabric. The promoters have an average industrial experience of
two and half decades, through associate concerns [Mehadia and
Sons (MS, established in 1997) and Mehadia and Sons C and F
Division (MCF, established in 1981)] engaged in similar line of
business. The entity is likely to be benefited due to wide
experience of the promoters in the same field.
Diversified revenue stream along with association with
established brand name: RJT is engaged in trading of
pharmaceutical products and fabrics and act as clearing and
forwarding agents for "Peter England". The diversified revenue
stream and association with established brand helps entity in
times of stress and fortifies its business profile.
Synergistic association from group entities: RJT derives
synergistic advantage from its association with group concern,
MCF and MS, having common suppliers and customers, which aids in
easy procurement of traded goods and further disbursement of same
through established network.
Established in the year 1999, RJT is a partnership firm promoted
by Mr. Ramshankar Mehadia, Mr. Pradeep Mehadia, Mr. Kamal Motilal
Agrawal, Mr. Vimal Motilal Agrawal and Mrs Kalawati Motilal
Agrawal. RJT belongs to Mehadia Group, which has three entities
including R.J Tradelinks, Mehadia and Sons (MS, established in
1997) and Mehadia and Sons C and F Division (MCF, established in
1981). The entity is engaged in diverse trading business
(distributor for Madura garments and traders for pharmaceutical
medicines and fabrics) whereby it serves wholesalers and dealers
based in Maharashtra. RJT is distributor for Madura Garments, and
trades the garments of brand name "Peter England" from Aditya
Birla Nuvo Limited and supplies it to various retailers in and
around Nagpur.
RAGHUL SPINNING: CRISIL Assigns B+ Rating to INR6cr Loan
--------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' rating to
the bank facilities of Raghul Spinning Mills (RSM).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 1.9 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility .8 CRISIL B+/Stable (Assigned)
Bank Guarantee .3 CRISIL A4 (Assigned)
Cash Credit 6.0 CRISIL B+/Stable (Assigned)
The rating reflects the firm's modest scale of operations in an
intensely competitive textile industry, vulnerability to
fluctuations in raw material prices, and a below-average
financial risk profile. These weaknesses are partially offset by
the experience of the partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition: Intense
competition may continue to constrain scalability, pricing power,
and profitability. Revenue was modest at INR16.6 crore, while the
operating margin was at 10.3% in fiscal 2018.
* Vulnerability to fluctuations in raw material prices: Since
cost of procuring the major raw material (cotton) accounts for
65-70% of the production expense, even a slight variation in
price can drastically impact profitability. Furthermore, cotton
prices are influenced by the demand-supply dynamics, nature of
monsoon, international demand, and government policies.
* Below-average financial risk profile: Gearing is high at 2.12
times and networth was modest at INR3.6 crore as on March 31,
2018. Debt protection metrics were moderate with interest cover
and net cash accrual to total debt of 2.32 times and 0.12 time,
respectively, for fiscal 2018.
Strength
* Experience of partners: Benefits from the partners' experience
of over two decades, their strong understanding of the local
market dynamics, and healthy relations with customers and
suppliers should continue to support the business.
Outlook: Stable
CRISIL believes RSM will continue to benefit from the experience
of the partners. The outlook may be revised to 'Positive' if
substantial and sustainable increase in revenue and profitability
strengthens the financial risk profile. The outlook may be
revised to 'Negative' if lower-than-expected cash accrual or any
large, debt-funded capital expenditure, weakens the financial
risk profile.
RSM, set up in 1992 at Rajapalayam, Tamil Nadu, manufactures
cotton yarn of counts 40s to 60s. Mr Devaraj and his son, Mr
Perumalraja are the partners.
RUSHABH TRADING: CRISIL Assigns B+ Rating to INR7cr Cash Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long
term bank facility of Rushabh Trading Company - Rajkot (RTCR).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Cash
Credit Limit 7 CRISIL B+/Stable (Assigned)
The ratings reflect exposure to risks related to project
implementation, access to funding and volatility in raw material
prices. These rating weaknesses are partly offset by the
extensive experience of the partners, and strategic location of
the plant, ensuring easy availability of raw material and labour.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks related to timely implementation of the
project, and funding: The firm is likely to start processing raw
cumin and sesame seeds from April 2019. Timely implementation and
commensurate ramp-up in sales, in the early stages of the
proposed project are critical, and hence, will be monitored
closely. As the bank limit is yet to be sanctioned, the firm
remains vulnerable to moderate funding risk.
* Susceptibility to volatility in raw material prices and low
bargaining power: The basic raw seeds material itself accounts
for around 90% of the cost of sales. Intense competition among
agro seed processing players further leads to thin operating
margin. Prices of raw seeds are influenced by a host of factors,
including availability of rain, seasonality of raw materials and
the demand-supply scenario.
Strengths
* Extensive experience of the partners: The two-decade-long
experience of the partners, in the agro-commodity industry, will
support the business risk profile in the early stage of
operations.
* Strategic location of the plant: India is the world's largest
producer of sesame and cumin seeds. RTCR has its manufacturing
facility at Rajkot, which is a major belt for growing these
spices in India. Further, the established network of Agriculture
Produce Marketing Committees (APMCs) in the region also provides
easy and regular access to basic raw material.
Outlook: Stable
CRISIL believes RTCR will benefit from the extensive experience
of its partners, and strategic location of its plant in the
Rajkot region. The outlook may be revised to 'Positive' if timely
implementation and stabilisation of the project leads to
anticipated revenue, profitability, and cash accrual during the
early stage of operations. The outlook may be revised to
'Negative' if delay in implementation or stabilisation of the
project leads to lower revenue, cash accrual, or if a stretch in
working capital cycle weakens the financial risk profile,
especially liquidity.
Incorporated in 2016, RTCR is setting up a green field project
for processing cumin and sesame seeds, with each having an
installed capacity of 18,060 metric tonnes per annum. The
facility is expected to begin commercial operations from April
2019. Operations are currently being carried out on trading
basis.
SAPTRISHI REALTORS: CRISIL Moves B+ Rating to Non-Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Saptrishi
Realtors (Saptrishi) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 25 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with Saptrishi for
obtaining information through letters and emails dated October 8,
2018 and October 12, 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 Saptrishi. Which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on
Saptrishi 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 Saptrishi to 'CRISIL B+/Stable Issuer not
cooperating'.
Set up in 2014 as a partnership firm, Saptrishi Realtors
undertakes real estate projects in Mumbai. The partners of the
firm are Mr Amit Parab, Mr Abhay Parab, Mr Prasad Chndarkar, Mr
Anant Talawedekar and Mr Vital Takarao. The company started its
first project in FY2016.
SHAH PACKWELL: CRISIL Migrates D Rating to Non-Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shah
Packwell Industries (SPI) to 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 2.5 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SPI for obtaining
information through letters and emails dated October 8, 2018 and
October 12, 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 SPI. Which restricts CRISIL's
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes information available on SPI 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 SPI to 'CRISIL D Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting
rating surveillance as agreed to in the rating agreement.
Incorporated in 1996 as a partnership firm, SPI manufactures
corrugated boxes using kraft paper. The firm is promoted by Mr.
Kapoor Shah, and his son Mr. Khilin Shah.
CRISIL has migrated the rating on bank facilities of SPI to
'CRISIL D Issuer not cooperating'.
SHREE GANESH: CRISIL Migrates B+ Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shree Ganesh
Automobiles (SGA) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Inventory Funding 7 CRISIL B+/Stable (ISSUER NOT
Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SGA for obtaining
information through letters and emails dated October 5, 2018 and
October 9, 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 SGA. Which restricts CRISIL's
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes information available on SGA 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 SGA to 'CRISIL B+/Stable Issuer not cooperating'.
SGA was incorporated in 2001 as a proprietorship firm by Mr Sudha
Sindhu Panda as an authorised dealer of ALL's CVs. The firm also
sells spares and trades in MRF tyres and Gulf Oil lubricants. It
has 5 showrooms.
SHREEGOPAL GOVIND: CRISIL Migrates B+ Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shreegopal
Govind Sponge Private Limited (SGSPL) to 'CRISIL B+/Stable Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.4 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SGSPL 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 SGSPL. Which restricts
CRISIL's ability to take a forward-looking view on the entity's
credit quality. CRISIL believes information available on SGSPL 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 SGSPL to 'CRISIL B+/Stable Issuer not cooperating'.
SGSPL was established in 2002 by Mr. Ram Kumar Sarda in Raniganj
(West Bengal). It manufactures sponge iron.
SINGH TECHNO: CARE Assigns B+ Rating to INR6.50cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Singh
Techno Infra Private Limited (STI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.50 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of STI is constrained
by its small scale of operations, weak solvency position, working
capital intensive nature of operations and low PAT margin due to
competitive nature of industry. The ratings, however, derive
strength from experienced promoters, moderate order book position
and positive demand outlook.
Going forward, the ability of the company to successfully execute
projects on time and recover contract proceeds and to scale up
its operations while improving its PAT margin and overall
solvency position would remain its key rating sensitivities.
Detailed Description of Key Rating Drivers
Key Rating Weaknesses
Small and fluctuating scale of operations with low PAT margin The
company's scale of operations has remained small marked by total
operating income (TOI) of INR10.98 crore in FY17 (refers to the
period April 1 to March 31). The small scale limits the company's
financial flexibility in times of stress and deprives it from
scale benefits and also restricts the ability of the company to
bid for large orders. Furthermore, the scale of operations of the
company witnessed a fluctuating trend during FY15-FY17 period.
Furthermore, the company has achieved total operating income of
INR6.50 crore in FY18 (Provisional). The PBILDT margin stood
moderate at 11.71% in FY17. However, PAT margin stood low at
0.20% in FY17 as compared to net loss of INR 0.46 crore in FY16.
Weak solvency position
The capital structure of the STI stood leveraged with overall
gearing ratio of 4.82x as on March 31, 2017 mainly on account of
company's high reliance on borrowings to fund various
requirements. Further, the debt coverage indicators of the
company stood weak marked by interest coverage ratio of 1.27x in
FY17 and total debt to GCA of 41.19x for FY17.
Working capital intensive nature of operations: The average
operating cycle of the company stood elongated at 288 days for
FY17. The company receives payment from the client on the
percentage of completion method. Around 95% of the bill amount is
received within 3-4 months, however, delay in realization of
bills from clients due to lengthy verification process followed
by clients resulted in high collection days for FY17 and FY16.
The company procures raw material from suppliers with average
payable period of 3-4 months, however, in FY17, STI received the
goods from its customers only. The Inventory levels for FY18
present the work under way.
Competitive nature of industry albeit positive demand outlook:
The industry is highly fragmented with a large number of small
and mid-sized players. This coupled with tendering process in
order procurement results into intense competition within the
industry. Additionally, continued increase in execution
challenges including elongated working capital cycle due to
longer gestation period of the projects collectively put pressure
on the credit profile of the players. Despite these road blocks
faced by the industry, the sector is expected to grow; the
increase in demand is attributed to implementation of 4G/5G and
Fibre To The Home (FTTH) services. Domestic demand is expected to
be stronger due to various capex plans announced by telecom
service provider, GoI Bharat Broadband project. By virtue of
these demand factors, companies like STI are expected to benefit.
Key Rating Strengths
Experienced promoters: The company is managed by Mr. Rajhans
Hargovind Singh and Mrs. Sunita Singh collectively. Mr. Rajhans
Hargovind Singh has an industry experience of 22 years through
his association with STI and other entities (Singh Techno
Associates). And Mrs. Sunita Singh has an industry experience of
11 years through her association with STI and other group concern
(Manu Enterprises). The promoters have adequate acumen about
various aspects of business which is likely to benefit STI in the
long run.
Moderate order book position: The company has a moderate order
book position with outstanding order book of INR 8.02 crore as on
July 31, 2018, to be executed by November 2018. The current order
book of the company is 0.73x times of the revenue for FY17. The
order book of the company comprises orders in different stages of
execution, which provides sufficient visibility on the medium
term revenue stream.
Singh Techno Infra Private Limited (STI) was incorporated as a
private limited company in May 2007. The company is currently
being managed by Mr. Rajhans Hargovind Singh and Mrs. Sunita
Singh. The company is engaged in civil construction, which
involves foundation work for industrial purposes and laying
optical cables underground. STPL executes contracts for
government organizations as well as for private players. The
orders undertaken by the company are secured through the
competitive bidding process. Furthermore, the company is
registered with telecom sector players. Besides STI, the
directors are also engaged in other group concerns, namely Manu
Enterprises.
SP SUGAR: CRISIL Migrates B Rating to Non-Cooperating Category
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of SP Sugar &
Agro Private Limited (SPSAPL) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Cash 5 CRISIL B/Stable (ISSUER NOT
Credit Limit COOPERATING; Rating Migrated)
Proposed Term 25 CRISIL B/Stable (ISSUER NOT
Loan COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SPSAPL for
obtaining information through letters and emails dated October 8,
2018 and October 12, 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 SPSAPL. Which restricts
CRISIL's ability to take a forward-looking view on the entity's
credit quality. CRISIL believes information available on SPSAPL
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 SPSAPL to 'CRISIL B/Stable Issuer not cooperating'.
Incorporated in 2014, SPSAPL, promoted by Mr Suresh Patil and
family, manufactures jaggery powder and solid jaggery, at its
facility in Osmanabad, Maharashtra. It will commence its
operations from December 2017.
SRI SAI VISHWAS: CRISIL Assigns B+ Rating to INR12.5cr Loans
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Sri Sai Vishwas Industries Private Limited
(SSVIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 3.5 CRISIL B+/Stable (Assigned)
Cash Credit 4 CRISIL B+/Stable (Assigned)
Proposed Term Loan 5 CRISIL B+/Stable (Assigned)
The rating reflects modest scale of operations in the highly
competitive plastic furniture industry, and below-average
financial risk profile because of high gearing and subdued debt
protection metrics. These rating weaknesses are partially offset
by the extensive experience the promoters in the plastic
furniture industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations in the highly competitive plastic
furniture industry: The plastic furniture industry remains highly
competitive, owing to high fragmentation, thereby constraining
scalability as reflected in revenue of INR12.2 crore as on March
31, 2018. The revenue is expected to improve slightly over the
medium term, but, will remain modest.
* Below-average financial risk profile: The financial risk
profile is marked by small networth of INR2.80 crore as on
March 31, 2018, and high gearing of 2.52 times. The debt
protection metrics are also weak with interest coverage ratio of
2.3 times and net cash accrual to total debt (NCATD) ratio of
0.15 time for fiscal 2018.
* Working capital-intensive operations: The operations remain
working capital intensive indicated by gross current assets
(GCAs) of 187 days as on March 31, 2018, driven by high inventory
holding period of 180 days. The GCAs should remain stable over
the medium term.
Strengths:
* Extensive experience the promoters in the plastic furniture
industry: Benefits from Mr. Upendra's extensive experience of
more than two decades in the plastic manufacturing industry has
helped the company stabilize its operations under his
supervision. Operations will improve over the medium term,
supported by strong management relationship.
* Healthy operations margin: The operating margin improved in
fiscal 2018 to 14.70 % against 10.60 % in the previous fiscal,
driven by better product range and quality with installation of
new molds. The margin should further improve over the medium term
as the company is planning to come up with newer molds.
Outlook: Stable
CRISIL believes SSVIPL will continue to benefit from the
extensive industry experience of its promoters and the recently
introduced injection molds. The outlook may be revised to
'Positive' if increase in scale of operations along with
improvement in profitability margin, leads to better-than-
expected cash accrual. The outlook may be revised to 'Negative'
if decline in turnover and lower-than-anticipated cash accrual,
along with larger-than-expected working capital requirement or
large debt-funded capital expenditure, deteriorates the financial
risk profile, particularly liquidity.
Incorporated in 2005 as a partnership firm, Sri Sai Vishwas
Industries was later reconstituted into a private limited company
in 2014 under its current name. The company manufactures plastic
furniture mainly plastic chairs and is promoted by Mr Upendra who
is the Managing Director.
SUKHMAA SONS: CRISIL Lowers Rating on INR10cr Loan to B+
--------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sukhmaa Sons & Associates (SSA) to 'CRISIL B+/Stable' from
'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects weakening of capital structure due to
significant capital withdrawal happened in Fiscal 2018 .Net worth
reduced to INR2.61 cr as on March 2018 from INR5.37 cr a year
earlier resulting into deterioration in gearing & TOL/TNW (total
outside liability to tangible net worth) ratio to 2.92 times &
8.21 times as on March 2018 from 0.59 times & 2.96 times a year
earlier.
The rating reflects client concentration in the firm's revenue
profile and weak capital structure. These rating weaknesses are
partially offset by the extensive experience of the promoters in
the manpower supply services.
Key Rating Drivers & Detailed Description
Weaknesses
* Client concentration in the revenue profile: Honda & Tata are
the major client constituting about 90% of the revenues generated
by SSA. Also, out of the total employees on its payroll, around
90% of the same are outsourced to Honda and Tata combined
together. The firm caters to Honda at its three plants but the
agreement is done at a centralized level only. Thus, the firm's
revenues are concentrated towards its two major customers.
* Weak capital structure: The firm has weak capital structure
with estimated gearing level at 2.92 times as on March 31, 2018.
The TOL/TNW is also high at 8.21 times with net worth being
modest estimated at 2.61 crore. Debt protection metrics is marked
by interest coverage ratio estimated at 3.96 times and net cash
accrual to adjusted debt at -0.36 times for fiscal 2018.
Strengths
* Extensive experience of the promoters in the industry: The
promoters have extensive experience in the manpower supply
services and have other entities also in the similar line of
business. This has led to the firm establishing and maintaining
long term relationships with their clients.
Outlook: Stable
CRISIL believes that SSA will benefit over the medium term from
the extensive experience of the promoters and their established
relationship with its clients thereby enabling improvement in its
operating income. The outlook may be revised to 'Positive' if the
company improves its revenue & profitability thereby improving
its net cash accruals or the equity infusion from promoter
improve its financial risk profile. Conversely, the outlook may
be revised to 'Negative' if the company's financial risk profile
deteriorates on account of decline in its revenue and
profitability or in case of any larger-than-expected, debt-funded
capex programme or in case of stretch in working capital cycle.
SSA is a proprietorship concern managed and operated by Mr. Vijay
Choudhary. The firm is engaged in the provision of manpower
solution services to various entities as an outsourcing
intermediary. The firm was converted from partnership firm to a
proprietorship firm in September 2015. Founded in 1982, it was
earlier managed and operated by Mr. Ram Mehar Singh Chaudhary as
a proprietor and now the firm is managed by his son, Mr. Vijay
Chaudhary. The firm has its registered office in Gurgaon.
SURABI JEWELLERSS: CRISIL Withdraws B+ Rating on INR.7cr Loan
-------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Surabi
Jewellerss (SJ) on the request of the company and after receiving
no objection certificate from the bank. The rating action is in-
line with CRISIL's policy on withdrawal of its rating on bank
loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 0.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawn)
Letter Of Guarantee 5.5 CRISIL A4 (ISSUER NOT
COOPERATING; Migrated from
'CRISIL A4'; Rating Withdrawn)
Proposed Long Term 0.7 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawn)
Term Loan 0.14 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawn)
CRISIL has been consistently following up with SJ for obtaining
information through letters and emails dated September 7, 2018,
October 11, 2018 and October 16, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SJ. This restricts CRISIL's
ability to take a forward looking view on the credit quality of
the entity. CRISIL believes that the information available for SJ
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower. Based on the last available information,
CRISIL has migrated the ratings on the bank facilities of SJ to
'CRISIL B+/Stable/CRISIL A4 Issuer not cooperating'.
CRISIL has withdrawn its rating on the bank facilities of SJ on
the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
SJ is a partnership firm of Mrs K Nagadhurgha and Mrs Subashree
K. The firm, based in Coimbatore, Tamil Nadu, deals in gold
jewellery in the wholesale segment, and commenced operations in
March 2015.
TRIVENI ENTERPRISES: CRISIL Assigns B+ Rating to INR3cr Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Triveni Enterprises - Kota (TEK).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 2 CRISIL B+/Stable (Assigned)
Bank Guarantee 4 CRISIL A4 (Assigned)
Overdraft 3 CRISIL B+/Stable (Assigned)
The rating reflects the modest scale and working capital
intensive nature of operations, and average financial risk
profile because of small networth and moderately high gearing.
These rating weaknesses are partially offset by the extensive
experience of promoters in civil contract work, and diversified
revenue streams.
Analytical Approach
CRISIL has treated unsecured loans from promoters outstanding at
INR1.31 crore from the promoters as on March 31, 2018 as debt
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale and working capital intensive nature of
operations: TEK has modest scale of operations indicated by
operating income of INR8.8 crore in fiscal 2018. The firm's scale
of operations had remained volatile over past three years through
2018 too. The operations are working capital intensive too
reflected in gross current assets of over 190 days as on March
31, 2018, primarily driven by elongated receivables.
* Average financial risk profile: Financial risk profile is
average marked by a modest networth and moderately high gearing.
Networth, which was around INR4.03 crore as on March 31, 2018,
remains constrained by modest accretion to reserves. Gearing was
high around 2.09 times as on same date, with significant portion
of short-term working capital debt and recent term debt taken to
set up its stone crushing unit.
Strengths
* Extensive experience of partners and diversified revenue
streams. The promoters' experience in construction business
along with the newly operational stone crushing unit which
commenced operations in April 2018, established associations with
suppliers and customers is likely to support business operations
over the medium term.
Outlook: Stable
CRISIL expects that TEK will benefit over the medium term backed
by the extensive experience of partners. The outlook may be
revised to 'Positive' in case of significant improvement in scale
of operations and higher cash accruals along with improvement in
capital structure. Conversely, the outlook may be revised to
'Negative', if the firm registers less than expected revenue or
decline in profitability or if its working capital cycle
elongates or it undertakes any large additional debt-funded capex
leading to deterioration in its financial risk profile and
liquidity.
Established in January 2010 TEK is engaged in undertaking civil
contracts construction of bore wells, tube wells, civil works for
laying of pipes and sewage lines and sewerage works. The company
has also set up a stone crushing unit in April 2018. The firm is
promoted and managed by the brothers Mr Hiralal Nagar and Mr.
Balram Nagar.
VTJ SEA: CRISIL Migrates D Rating to Not Cooperating Category
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of VTJ Sea
Foods (VTJ) to 'CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 4 CRISIL D (ISSUER NOT
under Letter of COOPERATING; Rating Migrated)
Credit
Packing Credit 4.25 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 4.25 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with VTJ 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 VTJ. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on VTJ 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 VTJ to 'CRISIL D/CRISIL D Issuer not cooperating'.
Established in 2001 as a proprietorship firm, VTJ is engaged in
processing and exporting of seafood products. Based out of Kochi
(Kerala), the firm is promoted by Mr. Raju J Vayalat.
====================
N E W Z E A L A N D
====================
CBL INSURANCE: Liquidation Inevitable as Directors Retreat
----------------------------------------------------------
Duncan Bridgeman at NZ Herald reports that directors of stricken
insurance company CBL are understood to have withdrawn their
opposition to the Reserve Bank's application to liquidate
subsidiary, CBL Insurance, following significant developments
over the weekend.
A long-awaited High Court hearing was set down for Nov. 10, but
the Herald understands it is now unlikely to go ahead after the
central bank gained the support of two major overseas creditors
for a wind-up proposal.
Liquidation is therefore inevitable with CBL directors Peter
Harris and Alastair Hutchison unable to advance their own stated
restructuring proposal without the support of large European
creditors Elite Insurance and Alpha Insurance, according to the
Herald.
CBL Insurance is the New Zealand supervised arm of NZX-listed
construction risk insurer CBL Corp, which was placed in voluntary
administration in February owing hundreds of millions of dollars
while shareholders face total losses, the report notes.
Gibraltar-based Elite Insurance is CBL Insurance's largest
creditor, accounting for about 68 per cent of CBL Insurance's
claims liabilities, the Herald discloses.
CBL Corporation shares listed on the New Zealand sharemarket in
October 2015 at $1.73 and the stock rose to more than $3 two
years later, valuing the company at nearly $750 million before
the trading halt and its insurance units being forced to wind
down, according to the report.
The Herald says CBL Corp's voluntary administrators, Brendan
Gibson and Neale Jackson of KordaMentha, have put off watershed
meetings, pending the outcome of CBL Insurance's fate.
According to the Herald, CBL's founding directors Harris and
Hutchinson were understood to have cobbled together a deed of
company arrangement, or restructuring proposal, as an alternative
to liquidation, with the aim of providing a solvent outcome for
CBL Insurance and full payment to its New Zealand creditors and
policy holders. However, no details were publicly released.
On Nov. 9, the Reserve Bank gained the support of Elite and
Alpha, effectively scuttling any chance of the director's
proposal gaining any traction and therefore making the
liquidation legal action pointless.
The Reserve Bank had been reviewing the adequacy of CBL's
reserves for its French construction business as far back as July
2017.
Last week, the administrators announced they have reached an
agreement to sell CBL's Australasian subsidiary Assetinsure for
an undisclosed sum to Lombard Australia Holdings Pty Limited, the
Herald recalls.
In September, they announced the sale of the group's UK-based
European Insurance Services Limited business to Phoenix Holdings
Limited, adds the Herald.
About CBL Corp.
Founded in 1973, CBL Corporation Limited (NZE: CBL), together
with its subsidiaries, provides insurance and reinsurance
products and services primarily in New Zealand. It offers
financial risk products, builders' risks, sureties, guarantees,
and contractor bonds primarily in Europe and Scandinavia; deposit
guarantees in Australia; and bonding and fiduciary services to
the Mexican commercial sector. The company also provides a range
of specialty products, such as credit enhancement, surety bonds,
specialized property insurance, aviation, and rural risk in
Australia, as well as distributes construction-sector insurance
products in France through a network of brokers.
CBL Corp. went into voluntary administration in late February
2018, in a move to prevent other regulators from taking action
after the Reserve Bank moved to have its subsidiary CBL Insurance
placed in interim liquidation.
On February 23, 2018, KordaMentha New Zealand partners Brendon
Gibson and Neale Jackson were appointed Voluntary Administrators
by the Board of CBL Corporation Ltd and certain of its
subsidiaries.
The administration relates to New Zealand-domiciled companies.
Messrs. Gibson and Jackson are administrators to these CBL
entities -- CBL Corporation Limited; LBC Holdings New Zealand
Ltd; LBC Holdings Americas Ltd; LBC Holdings UK Ltd; LBC Holdings
Europe Ltd; LBC Holdings Australasia Ltd; LBC Treasury Company
Ltd; Deposit Power Ltd; South British Funding Ltd; and CBL
Corporate Services Ltd.
=====================
P H I L I P P I N E S
=====================
SAN FRANCISCO DEL MONTE: Placed Under PDIC Receivership
-------------------------------------------------------
The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP)
prohibited San Francisco Del Monte Rural Bank, Inc. from doing
business in the Philippines. Under Resolution No. 1819.A dated
November 8, 2018, the MB directed the Philippine Deposit
Insurance Corporation (PDIC) as Receiver to proceed with the
takeover and liquidation of the bank. PDIC took over the bank on
November 9, 2018.
San Francisco Del Monte Rural Bank is a single-unit rural bank
located at #958-964, Del Monte Ave., cor. San Pedro Bautista St.,
Brgy. Damayan, 1st District, Quezon City.
Latest available records show that as of June 30, 2018, San
Francisco Del Monte Rural Bank had 2,043 deposit accounts with
total deposit liabilities of PHP284.03 million. Total insured
deposits amounted to PHP281.58 million equivalent to 99.14% of
total deposits.
PDIC assured depositors that all valid deposits and claims shall
be paid up to the maximum deposit insurance coverage of
PHP500,000. Individual depositors with valid deposit accounts
with balances of PHP100,000 and below shall be eligible for early
payment and need not file deposit insurance claims, provided they
have no outstanding obligations with San Francisco Del Monte
Rural Bank or have not acted as co-makers of these obligations.
These individual depositors must ensure that they have complete
and updated addresses with the bank. They may update their
addresses until November 15, 2018 using the Mailing Address
Update Forms to be distributed by PDIC representatives at the
bank premises.
For business entities and all other depositors who are required
to file claims for deposit insurance, the schedule for filing of
claims will be announced as soon as possible through posters in
the bank premises and in other public places, the PDIC website,
www.pdic.gov.ph, and PDIC's official Facebook account.
PDIC also reminded borrowers to continue paying their loan
obligations with the closed San Francisco Del Monte Rural Bank
and to transact only with designated PDIC representatives at the
bank premises.
For more information on the requirements and procedures for
filing claims for deposit insurance and settlement of loan
obligations, all depositors and borrowers of the bank are
enjoined to attend the Depositors-Borrowers' Forum which will be
held in a venue near the premises of the bank on November 20,
2018. Details will be posted in the bank premises and in other
public places.
Depositors and borrowers may communicate with PDIC Public
Assistance personnel stationed at the bank premises or call the
PDIC Public Assistance Hotlines at (02) 841-4630 to (02) 841-4631
or the Toll Free Hotline at 1-800-1-888-PDIC (7342) for those
outside Metro Manila. Inquiries may also be sent by e-mail to
pad@pdic.gov.ph or via private message to the official PDIC
Facebook account at www.facebook.com/OfficialPDIC
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***