/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/190114.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, January 14, 2019, Vol. 22, No. 009 Headlines A U S T R A L I A CONNOISSEUR EXPORTS: Second Creditors' Meeting Set for Jan. 22 MARTIN BUILDING: Goes Into Liquidation; Owes Almost AUD10MM MEDICAL SERVICES: First Creditors' Meeting Set for Jan. 23 NATIONAL RMBS 2018-1: Moody's Ups Rating on Class E Notes to Ba1 R & O COMMUNICATIONS: First Creditors' Meeting Set for Jan. 21 RHI INDUSTRIES: Second Creditors' Meeting Set for Jan. 22 S & N INTERNATIONAL: First Creditors' Meeting Set for Jan. 21 WOLF MINERALS: Second Creditors' Meeting Set for Jan. 21 C H I N A CHINA SCE: Moody's Rates Sr. Unsec. Notes 'B2', Outlook Stable ENN ECOLOGICAL: Fitch Assigns BB(EXP) to New Sr. Unsec. Notes ENN ECOLOGICAL: Moody's Rates Unsec. Notes Ba2, Outlook Stable HYDOO INTERNATIONAL: Fitch Affirms B- LT IDR, Outlook Stable SUNAC CHINA: Moody's Assigns B2 Rating to Proposed USD Notes SUNAC CHINA: Fitch Assigns BB-(EXP) to Proposed USD Sr. Notes H O N G K O N G HMV DIGITAL: Chairman Reveals Firm's US$38MM Losses in Hong Kong I N D I A ALAMDAR COLD: CRISIL Lowers Ratings on INR28cr Loans to D ANAMIKA CONDUCTORS: CARE Lowers Rating on INR41.63cr Loan to D BANSAL BROTHERS: CRISIL Reaffirms B+ Rating on INR8.17cr Loan BATASINGARAM FARMER'S: CARE Assigns B Rating to INR15cr Loan D D ENTERPRISE: CRISIL Assigns B+ Rating to INR4cr Cash Loan ELICO LTD: CRISIL Migrates D Rating From Not Cooperating Category ELA EDUCATIONAL: CRISIL Assigns B Rating to INR12cr Term Loan GRAND PRIX: Ind-Ra Maintains BB+ Issuer Rating in Non-Cooperating HMT MACHINE: CARE Reaffirms C Rating on INR49.82cr LT Loan HOLISTIC REMEDIES: CARE Moves B Rating From Not Cooperating JANANI FOODTEK: Ind-Ra Rates INR85MM Term Loan 'BB-' KERALA ELECTRICAL: CRISIL Reaffirms B Rating on INR17.35cr Loan LUNAWAT MILK: CARE Reaffirms B-/A4 Ratings on INR6.76c Loan M V OMNI: Ind-Ra Lowers Long Term Issuer Rating to 'D' MERGE STONES: CARE Assigns B+ Rating to INR23cr LT Loan NV DISTILLERIES: CARE Raises Rating on INR238.27cr Loan to B+ PRANAVAM AEROSPACE: CRISIL Moves B Ratings to Not Cooperating REALCADE LIFESCIENCE: CARE Hikes Rating on INR24.91cr Loan to BB- RECMET ALLOYS: CRISIL Lowers Rating on INR12cr Loans to B+ SANGAMESHWAR DALL: CRISIL Lowers Rating on INR7cr Cash Loan to B SHREE NATH: CRISIL Reaffirms B+ Rating on INR12.5cr Loan SWASHTHIK INDUSTRIEES: CRISIL Withdraws B+ on INR5.25cr Loan T. ABDUL: CRISIL Reaffirms B+ Rating on INR2.4cr Proposed LT Loan TECHNE INFRA: CRISIL Reaffirms B+ Rating on INR3.5cr Loan UTTAM INDUSTRIAL: Ind-Ra Raises Long Term Issuer Rating to 'B+' VIJAYALAKSHMI AGRO: CARE Hikes Rating on INR12cr Loan to BB- VIKRAM TRADERS: CARE Cuts Rating on INR11cr LT Loan to B+ I N D O N E S I A ALAM SUTERA: S&P Puts 'B' LT Issuer Credit Rating on Watch Neg. TOBA BARA: Moody's Withdraws B3 CFR for Business Reasons P H I L I P P I N E S HANJIN HEAVY: Philippine Unit Owes US$412MM to Local Banks - - - - - ================= A U S T R A L I A ================= CONNOISSEUR EXPORTS: Second Creditors' Meeting Set for Jan. 22 -------------------------------------------------------------- A second meeting of creditors in the proceedings of Connoisseur Exports Pty. Limited has been set for Jan. 22, 2019, at 11:00 a.m. at the offices of MaC Insolvency, at Level 7, 91 Phillip St, in Parramatta, NSW. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Jan. 21, 2019, at 9:00 a.m. Trent McMillen of MaC Insolvency were appointed as administrators of Connoisseur Exports on Dec. 19, 2018. MARTIN BUILDING: Goes Into Liquidation; Owes Almost AUD10MM ----------------------------------------------------------- Donna Page at The Maitland Mercury reports that one of the Hunter's best-known homegrown builders, Martin Building Services, has folded with debts of almost AUD10 million. The company, which began in Maitland almost 20 years ago, was placed in the hands of insolvency experts in December 2018 at the request of director and owner Denis Martin, the report says. James Shaw, a partner of Shaw Gidley Insolvency Reconstruction, was appointed liquidator on December 14, the Maitland Mercury discloses. According to the report, Mr. Shaw said early investigations indicated employees would be paid and the remaining assets would go to the company's banker, which has security over the remaining assets. "It is unlikely that there will be anything for creditors," the report quotes Mr. Shaw as saying. The report says the Australian Securities and Investment Commission documents reveal the company has unsecured debts of AUD4.9 million and owes AUD4.2 million to the bank. Assets total AUD3.9 million, including land, debtors and loans owed to the company. The shortfall is estimated to be AUD5.5 million, the report notes. The Maitland Mercury relates that a creditor, who asked not to be named, said there were a "host of small Hunter businesses" who would be badly hurt in the collapse. "It was a good locally owned and grown company that always paid on time, but the flow on from this will be difficult for the little husband-and-wife creditors to carry," he said. The largest unsecured debt is AUD402,255 owed to HD Projects in Sydney, followed by AUD220,197 owed to Hunter-based Jeffkins Group, the report discloses. Martin Project Homes continues to trade, the report notes. MEDICAL SERVICES: First Creditors' Meeting Set for Jan. 23 ---------------------------------------------------------- A first meeting of the creditors in the proceedings of Medical Services Perth Pty Ltd and Dial A Doctor Cairns Pty Ltd will be held on Jan. 23, 2019, at 2:00 p.m. at 22 Market St, in Brisbane, Queensland. Terry Grant Van der Velde and Adam Peter Kersey of SV Partners were appointed as administrators of Medical Services on Jan. 11, 2019. NATIONAL RMBS 2018-1: Moody's Ups Rating on Class E Notes to Ba1 ---------------------------------------------------------------- Moody's Investors Service has upgraded the ratings on four classes of notes issued by National RMBS Trust 2018-1. The affected ratings are as follows: Class B Notes, Upgraded to Aa1 (sf); previously on Feb 15, 2018 Definitive Rating Assigned Aa2 (sf) Class C Notes, Upgraded to A1 (sf); previously on Feb 15, 2018 Definitive Rating Assigned A2 (sf) Class D Notes, Upgraded to Baa1 (sf); previously on Feb 15, 2018 Definitive Rating Assigned Baa2 (sf) Class E Notes, Upgraded to Ba1 (sf); previously on Feb 15, 2018 Definitive Rating Assigned Ba2 (sf) RATINGS RATIONALE The upgrade was prompted by an increase in credit enhancement from note subordination and the Loss Allocation Reserve Account available for the affected notes. Sequential amortization of the notes since closing starting from the Class A1 Notes (pro-rata between the Class A1-A and Class A1-G Notes) has led to an increase in note subordination. Following the December 2018 payout, the note subordination available for the Class B, Class C, Class D and Class E Notes has increased to 2.8%, 1.8%, 0.9% and 0.4%, respectively, from 2.2%, 1.4%, 0.7% and 0.3% at closing. The Loss Allocation Reserve Account has accumulated AUD500,000 (0.03% of the current total note balance) from excess spread. The reserve can be used to cover losses to the extent they are not covered by excess spread. The performance of the transaction has been within expectations since closing. Both scheduled and indexed loan to value ratios have decreased. As of the end of November 2018, 0.7% of the outstanding pool was 30-plus day delinquent, and 0.2% was 90-plus day delinquent. The deal has incurred no losses to date. Based on the observed performance and outlook, Moody's expected loss assumption on the outstanding pool is 0.4%. And taking into account the current portfolio characteristics, Moody's MILAN CE remains at 4.0%. The MILAN CE and expected loss assumption are the two key parameters used by Moody's to calibrate the loss distribution curve, which is one of the inputs into the cash-flow model. The transaction is an Australian prime RMBS originated and serviced by National Australia Bank Limited (Aa3/P-1/Aa2(cr)/P- 1(cr)). Factors that would lead to an upgrade or downgrade of the ratings: Factors that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expectations, and (2) deleveraging of the capital structure. Factors that could lead to a downgrade of the ratings include (1) performance of the underlying collateral that is worse than Moody's expectations, (2) decrease in the notes' available credit enhancement, and (3) deterioration in the credit quality of the transaction counterparties. R & O COMMUNICATIONS: First Creditors' Meeting Set for Jan. 21 -------------------------------------------------------------- A first meeting of the creditors in the proceedings of R & O Communications Pty Ltd will be held on Jan. 21, 2019, at 11:00 a.m. at Rogers Room, Highfields Cultural Centre, 27 OBrien Road, in Highfields, Queensland. David Iannuzzi and Vincent Pirina of Veritas Advisory were appointed as administrators of R & O Communications on Jan. 9, 2019. RHI INDUSTRIES: Second Creditors' Meeting Set for Jan. 22 --------------------------------------------------------- A second meeting of creditors in the proceedings of RHI Industries Pty Ltd has been set for Jan. 22, 2019, at 3:00 p.m. at Level 7, 61-73 Sturt Street, in Townsville, 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 Jan. 21, 2019, at 5:00 p.m. Dennis Offermans and Michael Brennan of Offermans Partners were appointed as administrators of RHI Industries on Dec. 6, 2018. S & N INTERNATIONAL: First Creditors' Meeting Set for Jan. 21 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of S & N International Pty Ltd, trading as Huss Australia, will be held on Jan. 21, 2019, at 10:30 a.m. at the offices of Robson Cotter Insolvency Group, at Unit 1, 78 Logan Rd, in Woolloongabba, Queensland. Bill Cotter of Robson Cotter Insolvency Group was appointed as administrator of S & N International on Jan. 9, 2019. WOLF MINERALS: Second Creditors' Meeting Set for Jan. 21 -------------------------------------------------------- A second meeting of creditors in the proceedings of Wolf Minerals Limited has been set for Jan. 21, 2019, at 11:00 a.m. at the offices of Level 28, 108 St Georges Terrace, in Perth, WA. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Jan. 18, 2019, at 4:00 p.m. Martin Bruce Jones and Ryan Eagle of Ferrier Hodgson were appointed as administrators of Wolf Minerals on Oct. 10, 2018. ========= C H I N A ========= CHINA SCE: Moody's Rates Sr. Unsec. Notes 'B2', Outlook Stable -------------------------------------------------------------- Moody's Investors Service has assigned a B2 senior unsecured rating to the proposed USD notes to be issued by China SCE Group Holdings Limited (B1 stable). The rating outlook is stable. The proceeds from the proposed issuance will be used mainly to refinance offshore existing debt. RATINGS RATIONALE "The proposed notes will improve China SCE's liquidity profile and lengthen its debt maturity profile," says Danny Chan, a Moody's Analyst, and also the Lead Analyst for China SCE. Furthermore, the proposed notes will have a limited impact on the company's leverage, because the majority of the proceeds will be used to refinance offshore existing debt. China SCE's B1 corporate family rating reflects its track record and strong market position in Quanzhou in Fujian Province, growing operating scale, good liquidity position, and stable profit margins after its expansion in Tier 1 and 2 cities outside Fujian. On the other hand, the corporate family rating is constrained by China SCE's moderate debt leverage and the execution risks associated with its expansion. Moody's expects that China SCE's interest coverage - as measured by adjusted EBIT/interest - will remain around 3.5x over the next 12-18 months, largely unchanged from 3.4x for the 12 months ended June 2018. On the other hand, its debt leverage - as measured by revenue/adjusted debt - will likely improve to around 70% from 54% during the same period, supported by increased revenue recognition from strong contracted sales growth over the past two years as well as its prudent land acquisition strategy. These credit metrics support its B1 corporate family rating. Moody's expects China SCE will continue to exercise prudence in its land acquisitions and debt management. Specifically, Moody's assumes that the company will limit its land acquisitions to no more than 50% of its total contracted sales, and keep debt growth within 30%-40% year-on-year over the next 12-18 months. Moody's expects China SCE's contracted sales, including contributions from its joint ventures and associates, to register meaningful growth in 2019. China SCE achieved contracted sales of RMB46.5 billion in the first 11 months of 2018, representing year-on-year growth of 63%. In 2017, the company's contracted sales also grew 41% year-on-year to RMB33 billion. China SCE's liquidity is adequate. At the end of June 2018, its cash balance of RMB17.1 billion was sufficient to cover its short-term debt of RMB10.3 billion and committed land payments over the next 12-18 months. The B2 senior unsecured debt rating is one notch lower than the corporate family rating due to structural subordination risk. This risk reflects the fact that the majority of claims are at the operating subsidiaries and have priority over China SCE's senior unsecured claims in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. The stable outlook on China SCE's B1 corporate family rating reflects Moody's expectation that the company will maintain its leverage ratio in the range of 65%-75% over the next 12-18 months, supported by sustained revenue growth, stable gross profit margins, as well as prudent land acquisitions and debt management over the next 12-18 months. China SCE's ratings could come under upward rating pressure if the company: (1) demonstrates stable sales growth and increases its scale; (2) maintains its prudent approach to land acquisitions; and (3) maintains EBIT/interest coverage in excess of 3.0x and adjusted revenue/gross debt in excess of 75%-80% on a sustained basis. On the other hand, the company's ratings could come under downward pressure if China SCE: (1) generates weak contracted sales; (2) records a material decline in its profit margins; (3) experiences an impairment of its liquidity position, such that cash/short-term debt falls below 1.0x; and/or (4) materially increases its debt leverage. Credit metrics indicative of a ratings downgrade include EBIT/interest coverage below 2.0x and/or adjusted revenue/debt below 65% on a sustained basis. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. ENN ECOLOGICAL: Fitch Assigns BB(EXP) to New Sr. Unsec. Notes ------------------------------------------------------------- Fitch Ratings has assigned an expected rating of 'BB(EXP)' to China-based ENN Ecological Holdings Co., Ltd.'s (ENN EC, BB/Stable) proposed senior unsecured notes. The proposed US dollar notes will be issued by ENN Clean Energy International Investment Limited, which is wholly owned by Xinneng (Hong Kong) Energy Investment Limited, which is in turn a wholly owned subsidiary of ENN EC. The proposed notes will be guaranteed by ENN EC and will be the company's senior unsecured obligations and rank pari passu with all its other unsecured, unsubordinated obligations. Net proceeds will be used for general corporate purposes, including but not limited to the repayment of existing indebtedness. The final rating on the proposed notes is contingent upon the receipt of final documents conforming to information already received. The 'BB' rating reflects ENN EC's moderate financial profile and diversified, yet evolving, business profile, with operating leverage realised from its controlling shareholder's other businesses, including ENN Energy Holdings Limited (BBB/Stable), which in aggregate, are referred to as ENN Group. A significant proportion of ENN EC's operating profit will come from commodity- related sectors, which have high earnings volatility - including coal mining, chemical production and trading as well as liquefied natural gas (LNG) processing and trading - if the company completes its proposed acquisition of Toshiba America LNG Corporation (TAL) and the disposal of its biopharmaceutical business. Fitch expects the energy-engineering segment to increase its order book from the continued gas-related infrastructure buildout by ENN Group. ENN EC's financial leverage, measured by FFO adjusted net leverage, increased sharply to nearly 7.0x in 2016, from less than 2.0x in 2015, following the acquisition of a 10.07% stake in Australia-based Santos Limited. ENN EC has been deleveraging since 2016 due to steady operating cash flow generation and an equity placement; Fitch estimates net leverage fell to around 4.0x by end-2018 with headroom for further declines supported by free cash flow (FCF) generation after 2018. Fitch sees ENN EC's stake in Santos as liquid since it is a publicly traded company, allowing it to be partly monetised quickly to increase financial flexibility and help in deleveraging, if needed. The potential TAL acquisition would significantly lower ENN EC's net leverage to around 1.5x in 2019 due to the upfront compensation paid by the seller, but this would be offset by the higher business risk of the acquired LNG operation and the uncertainty over the use of the proceeds by the company. The Stable Outlook reflects its expectation that ENN EC will maintain a prudent financial policy in executing its growth strategy by keeping FFO adjusted net leverage below 3.5x over the medium term. KEY RATING DRIVERS Diversified, Evolving Business Model: ENN EC's coal, LNG and chemical segments are highly exposed to commodity-price volatility. However, its business diversification provides some profit stability, with an EBITDA margin of 21%-29% between 2014- 2017. Some natural hedging exists between its coal and methanol businesses, as coal is a key input cost for methanol production. A shift in the business mix upon the proposed TAL acquisition would see the EBITDA margin fall to around 15% in the medium term, but this would be offset by a larger EBITDA scale. The potential disposal of ENN EC's stable biopharmaceutical business may increase business risk, but Fitch considers the impact on the company's overall credit profile to be limited due to the segment's moderate profit contribution. Potential Acquisition: The proposed TAL acquisition, which is scheduled to be completed by end-1Q19, will allow ENN EC to secure LNG from the US to meet rising gas demand in China by utilising ENN Group's midstream and downstream infrastructure. ENN EC will receive an upfront net payment of USD806 million from the seller as compensation for the higher-than-market processing fee on TAL's four LNG take-or-pay contracts for the next 20 years. These contracts include a pipeline-transportation agreement, butane-injection, tugboat and LNG contracts with 2.2 million tonnes of processing capacity signed with Freeport LNG Expansion, L.P., which Fitch expects to begin operations from 2H20. Fitch considers the LNG supply and construction risk of the processing facility to be low. However, ENN EC will be exposed to global LNG-price volatility and could suffer losses if the differential on the selling price of its imported LNG and the procurement price is insufficient to cover the processing fee and other related costs. This risk is partly mitigated by China's strong demand for natural gas over the medium term, which could provide some support for imported LNG prices. Connected Transactions: ENN EC, as part of ENN Group's gas value chain, focuses on upstream operations, while Mr. Wang Yusuo and his wife Mrs. Zhao Baoju, the controlling shareholders with a 48.43% direct and indirect stake in the company, also own the Zhoushan LNG Terminal and downstream city-gas distribution assets via ENN Energy. ENN EC's sales to related parties accounted for 22% of total sales in 2017, including 80% of the energy engineering revenue from ENN Energy and the Zhoushan LNG Terminal. The percentage of related-party transactions will increase further upon completion of the proposed TAL acquisition, as ENN Energy will be the potential main buyer of LNG. Fitch thinks the benefits of the relationship with ENN Group so far outweigh the risks. ENN Energy has an investment-grade credit profile and its continuing expansion of the city-gas business will support ENN EC's engineering order book and LNG demand; the Zhoushan LNG Terminal in eastern China has secured all necessary funding. Fitch expects collaboration between ENN EC and ENN Group to continue on an arms-length basis; however, any evidence of significant corporate governance weaknesses or a deterioration of ENN Group's financial position may be negative for ENN EC's rating. Moderate Financial Profile: Fitch expects ENN EC's FFO adjusted net leverage to decline to around 1.5x-1.8x in 2019-2021 (2017: 4.9x) due to the upfront compensation received if the TAL acquisition goes through. The cash deployment of the compensation remains unclear, but Fitch expects the company to continue looking for investment opportunities, especially in the LNG sector. However, Fitch expects capex to decline from 2019 after the company completes its expansion in domestic LNG processing capacity, therefore, generating FCF. ENN EC's financial leverage will be 2.2x-3.2x in 2019-2021 if the acquisition fails, which remains commensurate with its 'BB' rating. No Downward Notching on Bond: Fitch estimates ENN EC's ratio of priority-ranking debt to EBITDA fell to around 2.5x in 2018 due to improving earnings from 3.8x in 2017. Fitch has also carried out bespoke recovery analysis for the senior unsecured debt at the holding company level, based on a going-concern EBITDA of CNY1.8 billion (applying a 30% discount to estimated 2018 EBITDA of CNY2.5 billion), an enterprise value multiple of 4.5x, and a 50% discount to the market value of its 10.07% stake in Santos. Assuming repayment of the existing CNY1.7 billion domestic bond in February 2019, its recovery analysis resulted in average recovery prospects for the proposed US dollar bond and therefore Fitch has not notched the bond rating below that of the company. DERIVATION SUMMARY ENN EC's rating is supported by its business diversification, with operating leverage realised from being part of the ENN Group, and a moderate financial profile. The rating is constrained by the company's evolving business profile and a potential increase of profit generation from cyclical sectors with higher business risks. its rating case has factored in the potential TAL acquisition, which would lower financial leverage sharply due to the seller's compensation. Fitch expects ENN EC's net leverage to remain moderate, at below 3.5x, over the medium term if the acquisition fails. ENN EC and Indonesia-based PT ABM Investama Tbk (BB-/Negative) have comparable business profiles, with moderate segment diversification and exposure to cyclical sectors. ENN EC is rated one notch higher than ABM due to a larger operating scale and stronger financial flexibility. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer - Fitch's thermal coal price deck of USD88.0/tonne in 2018, USD79.0/tonne in 2019, USD77.0/tonne in 2020 and USD75.0/tonne thereafter - Fitch's brent crude oil price of USD72.5/barrel in 2018, USD65.0/barrel in 2019, USD62.5/barrel in 2020, USD60.0/barrel in 2021 and USD57.5/barrel thereafter - Fitch's UK natural gas price deck of USD8.3/million cubic feet (mcf) in 2018, USD7.0/mcf in 2019, USD6.8/mcf in 2020, USD6.8/mcf in 2021 and USD6.5/mcf thereafter - EBITDA margin to decline to 15% by 2021 due to potential TAL acquisition - Capex of around CNY1.8 billion in 2018, and falling to around CNY300 million by 2020 - Acquisitions of CNY2 billion per year in 2020 and 2021 RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - No positive rating action is envisaged in the medium term until the company's business profile reaches a steady stage while maintaining a prudent financial strategy. Developments That May, Individually or Collectively, Lead to Negative Rating Action - FFO adjusted net leverage above 3.5x for a sustained period - Sustained EBITDA margin below 15% over the next three years - Evidence of deterioration of the financing/liquidity position of the controlling shareholders and their related businesses LIQUIDITY Sufficient Liquidity: The company's liquidity can cover short- term debt maturities of around CNY2.8 billion as of end-3Q18, with cash and cash equivalents on hand of around CNY1.8 billion and unutilised credit facilities of around CNY1.5 billion. Fitch expects the company to generate positive FCF from 2019 on lower capex. The company's holdings in Santos, with a market value of over USD5 billion as of now, also enhances its financial flexibility. ENN ECOLOGICAL: Moody's Rates Unsec. Notes Ba2, Outlook Stable -------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to the proposed USD senior unsecured notes to be issued by ENN Clean Energy International Investment Limited - a wholly owned subsidiary of ENN Ecological Holdings Co., Ltd (ENN Ecological, Ba2 stable) - and unconditionally and irrevocably guaranteed by ENN Ecological. The rating outlook is stable. The bond rating reflects Moody's expectation that ENN Ecological will complete the note issuance upon satisfactory terms and conditions, including proper registrations with the State Administration of Foreign Exchange in China (A1 stable). The proceeds from the proposed notes will be used for ENN Ecological's general business development, including onshore and offshore project investments. RATINGS RATIONALE "The proposed notes will have no impact on ENN Ecological's rating, given the proceeds will be mainly used for deleveraging and there will be no change to its expectation of improved debt leverage through the reduction in debt and the growth in earnings," says Chenyi Lu, a Moody's Vice President and Senior Credit Officer. "The proposed notes will improve ENN Ecological's liquidity position and debt maturity profile," adds Lu who is the Lead Analyst for ENN Ecological. Moody's expects ENN Ecological's adjusted debt to fall from RMB9.6 billion at the end of June 2018 because the company will repay existing debt from internally generated free cash flow. This free cash flow will be driven by lower capital spending requirements and improving cash flow from operations because of better profitability. Moody's also expects ENN Ecological's adjusted debt/EBITDA to improve to 2.5x-3.0x in the next 12-18 months from 4.1x for the 12 months ended June 2018 and 5.3x in 2017, driven by higher earnings from strong revenue growth and lower debt. This level of leverage is in line with its Ba2 rating and will provide it with a financial buffer against market volatility and the execution risk associated with its investments and businesses. Moody's projects the company's revenue to grow 25% in 2018 and 18% 2019, mainly driven by (1) growing demand for natural gas infrastructure construction, which should support growth in its energy construction business; and (2) its new methanol and LNG production capacity which commenced operations in 4Q 2018. Moody's also projects the company's adjusted EBITDA margin to improve slightly to around 20%-21% over the next 12-18 months from 19.3% for the 12 months ended June 2018, mainly owing to increasing revenue contributions from methanol production -- with better gross margins -- improving gross margins for its energy construction segment, and continued cost and expense controls. The company's liquidity position is adequate. At the end of September 2018, it had cash, including restricted cash, of RMB1.8 billion. These cash resources and the company's expected operating cash flow of around RMB2.7 billion are sufficient to cover its short-term debt of RMB2.9 billion, bills payable of RMB136 million and estimated capital expenditure of RMB1.1 billion over the next 12 months. ENN Ecological's Ba2 corporate family rating (CFR) reflects (1) favorable industry trends for its methanol production and clean energy-related businesses; (2) its long track record, especially in the energy construction and biopharmaceutical segments; (3) its diversified business portfolio, which partially reduces margin volatility; and (4) its improving financial profile and adequate liquidity. On the other hand, ENN Ecological's CFR is constrained by (1) its modest operating scale and exposure to commodity price volatility; (2) China's evolving policies and regulations; and (3) its proposed acquisition of a liquefied natural gas (LNG) business with an output of 3.25 billion cubic meters in the US, which raises execution risk. The Ba2 senior unsecured bond rating is not affected by subordination to claims at the operating company level. This is because creditors at ENN Ecological will benefit from the company's diversified business profile and the holding company owns non-core equity investments, which will likely support any expected recovery of the holding company's debt. The stable outlook reflects Moody's expectation that ENN Ecological will generate steady revenue and earnings growth, remain prudent in its investments and acquisitions, continue to lower its debt leverage, and maintain its adequate liquidity position to buffer against potential business volatility. The rating could be upgraded if ENN Ecological (1) increases its operating scale with a diversified business portfolio, while maintaining its profit margins through organic growth or acquisition; (2) demonstrates conservative financial and investment policies, as evidenced by solid liquidity and positive free cash flow on a sustained basis; and (3) improves its debt leverage, such that adjusted debt/EBITDA falls below 1.5x on a sustained basis, providing it with a solid financial buffer against potential business volatility. On the other hand, the rating could be downgraded if (1) ENN Ecological's revenue growth slows or its profit margin narrows, due to high commodity price volatility or adverse changes in the government's policies and regulations; (2) aggressive debt-funded acquisitions or investments weaken its credit or business profile; or (3) adjusted debt/EBITDA fails to stay below 3.0x- 3.5x on a sustained basis as its business grows over time. HYDOO INTERNATIONAL: Fitch Affirms B- LT IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed China-based homebuilder Hydoo International Holding Limited's (Hydoo) Long-Term Foreign- Currency Issuer Default Rating (IDR) at 'B-' with a Stable Outlook. Fitch has also affirmed Hydoo's senior unsecured rating and the rating on its outstanding US dollar senior unsecured notes at 'B-' with a Recovery Rating of 'RR4'. Hydoo's ratings are supported by sustained low leverage with adequate liquidity on controlled construction and land acquisitions, but are constrained by its weak business profile due to its small business scale, low non-development income and sluggish trade-centre demand. The increasing proportion of residential property sales and healthy gross profit margins may mitigate its weak business profile. KEY RATING DRIVERS Trade Centre Performance Stabilising: Hydoo is focused on trade- centre development, where demand has been weak as SMEs remained cautious about new investments. There was also high destocking pressure for commercial properties. Hydoo's contracted sales dropped 40% yoy to CNY624 million in 1H18. Fitch expects 2H18 contracted sales to improve due to new launches in the fourth quarter and increased proportion of residential property sales, which would result in stable full-year sales of about CNY2.8 billion. The proportion of residential property sales may further increase in 2019, given better demand for residential property than trade centres. EBITDA Margin Recovering: Hydoo's 1H18 EBITDA margin recovered to 15%, after dropping to 8% in 2017 (2016: 27%). The margin drop in 2017 was due to a delay in recognising revenue from its Liuzhou Trade Center project, which resulted in revenue being insufficient to support the company's selling and administrative expenses. Gross profit margin remained healthy at 37% in 2017 and 35% in 1H18. EBITDA margin remained weak in 1H18 due to the recognition of sales of old inventory, but Fitch expects 2H18 margin to improve with as sales of newer properties with higher selling prices are booked. Fitch forecasts the EBITDA margin (after adding back capitalised interest) for 2018 at about 20%. Low Leverage: Hydoo has maintained leverage, as measured by net debt/adjusted inventory, at below 35% since 2014. Fitch expects Hydoo's leverage to remain at 10%-20%, assuming disciplined capex plans for 2018-2019. Leverage improved to 14.6% by end-June 2018, from 21.9% at end-2017, as the company slowed its pace of land acquisitions. Hydoo's large land bank of 9.3 million sq m at end- June 2018 is sufficient for over 15 years of development, providing the company with flexibility to cut land purchases, if necessary, to lower leverage. Low Non-Development Income: Hydoo's rating is constrained by its trade-centre development focus and lack of significant non- development income. Income from property management services and rentals contributed only around 5% of total revenue in 1H18. The lack of diversification weakens cash flow quality and raises operational risk during industry downturns. Continued weakness in trade-centre demand may lead Hydoo to cut its average selling price and narrow its margin to speed up sales, which may substantially lower operational cash flow. Recurring EBITDA/gross interest paid is likely to remain at 0.1x. Higher-Risk, Lower-Tier Cities: Hydoo's trade centres are mainly located across 10-12 Tier 3 and 4 cities to tap relocation and urbanisation demand. Fitch believes sales are more volatile in these cities than in more developed ones and demand may reach saturation faster due to the economies' smaller populations and GDP. Sales for the subsequent phases of Hydoo's large-scale integrated trade-centre projects (400,000 sq m or larger) hinge on continued urbanisation, but lower-tier cities will face intense competition for financial and human resources from other developing cities. DERIVATION SUMMARY Fitch has compared Hydoo with another trade-centre developer, China South City Holdings Limited (CSC, B/Stable). Hydoo's project location and asset quality, contracted sales scale, margin and business diversification in non-development income are weaker than those of CSC. However, Hydoo does have lower leverage (net debt/adjusted inventory) than CSC. The two companies' businesses rely heavily on contracted sales of trade centres, and are more susceptible to industry cycles. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: - Contracted sales of CNY2 billion-3 billion per year in 2018-2020 - EBITDA margin of 19%-20% over 2018-2020 No changes to recovery rating assumptions. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action - Positive rating action will not be considered unless Hydoo can boost its scale substantially by expanding its geographical coverage beyond lower-tier cities and sustain sales in subsequent phases of its existing projects, while at the same time not compromising its financial metrics. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action - Deterioration in refinancing prospects that has significant adverse impact on its liquidity profile - Sustained decline in trade centre contracted sales - Net debt/ adjusted inventory sustained above 40% - EBITDA margin sustained below 15% (after adding back capitalised interest) LIQUIDITY Sufficient Liquidity: At end-June 2018, Hydoo had available cash of CNY1.045 billion (excluding restricted cash of CNY312 million, which is pledged for certain mortgage facilities and bills payable) with short-term debt of CNY1.18 billion. Hydoo issued a further USD27 million of its 12.00% senior notes due 2020 in August 2018, following the initial issuance of USD130 million in May 2018. The company on December 17, 2018 redeemed the USD61.6 million of outstanding senior notes due in that month. SUNAC CHINA: Moody's Assigns B2 Rating to Proposed USD Notes ------------------------------------------------------------ Moody's Investors Service has assigned a B2 senior unsecured rating to Sunac China Holdings Limited's (B1 positive) proposed USD notes. The company plans to use the proceeds from the issuance to refinance existing debt. RATINGS RATIONALE "The proposed notes will have a limited impact on the company's leverage, because the proceeds will be used to refinance its existing debt," says Danny Chan, a Moody's analyst and the Lead Analyst for Sunac. Sunac's B1 CFR reflects the company's (1) large scale, strong sales execution and well-located land bank; (2) likely improvement in land spending, debt management, revenue recognition, and gross profit margins, which will in turn improve its credit metrics; and (3) adequate liquidity. On the other hand, the B1 rating is constrained by the company's investments in non-core businesses and the increase in investments in joint ventures. Moody's expects that Sunac's debt leverage - as measured by revenue/adjusted debt (including adjustments for its shares in joint ventures and associates) - will trend toward 60%-70% over the next 12-18 months from around 50% for the 12 months ended June 30, 2018, supported by increased revenue recognition from strong contracted sales growth over the past two years as well as by controlled spending on land over the next 12-18 months. Meanwhile, its interest coverage - as measured by adjusted EBIT/interest - will likely improve to 2.3x-2.6x from around 1.9x during the same period. Moody's projects Sunac's contracted sales to reach RMB500-RMB550 billion in 2019, supported by its strong track record of sales execution. The company registered 27% year-on-year growth in contracted sales to RMB461 billion in 2018, following robust 141% year-on-year growth in 2017. The B2 senior unsecured debt rating is one notch lower than the corporate family rating due to structural subordination risk. This risk reflects the fact that the majority of claims are at the operating subsidiaries and have priority over Sunac's senior unsecured claims in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. The positive outlook on Sunac's B1 corporate family rating reflects Moody's expectation that the company will improve its profitability, exercise prudence in its financial management and control its investment in non-property businesses. Upward ratings pressure could emerge if Sunac: (1) demonstrates its ability to exercise restraint on its non-core business investments; (2) maintains its solid liquidity position; and (3) improves its credit metrics, such that adjusted revenue/debt rises above 75%-80% and adjusted EBIT/interest rises above 2.5x- 3.0x on a sustained basis. On the other hand, Moody's could revise the ratings outlook to stable from positive, if the company's performance and credit metrics are unlikely to fall within the parameters required for a ratings upgrade over the next 12-18 months. The principal methodology used in these ratings was Homebuilding and Property Development Industry published in January 2018. SUNAC CHINA: Fitch Assigns BB-(EXP) to Proposed USD Sr. Notes ------------------------------------------------------------- Fitch Ratings has assigned Sunac China Holdings Limited's (BB- /Stable) proposed US dollar senior notes a 'BB-(EXP)' expected rating. The notes are rated at the same level as Sunac's senior unsecured rating because they constitute its direct and senior unsecured obligations. The final rating is subject to the receipt of final documentation conforming to information already received. Sunac's rating reflects Fitch's estimate that the China-based homebuilder's leverage likely stayed below 50% at end-2018. Sunac's management has publicly made a commitment to deleverage and Fitch believes there is no pressure for the company to continue adding to its land bank aggressively as it has more than 100 million sq m of saleable gross floor area (GFA) on an attributable basis, an ample supply that will last for over five years of development. Sunac has not been making material land acquisitions after it bought the Wanda City cultural and tourism assets more than a year ago. KEY RATING DRIVERS Improving Leverage: Sunac's leverage, measured by net debt/adjusted inventory with proportionate consolidation of joint ventures and associates, fell to 47.3% by end-2017 and 46.2% in 1H18 from 63.4% before the 1H17 Wanda City project acquisition. The significant deleveraging was due to strong contracted sales and minimal additions to its land bank. Sunac's attributable contracted sales increased by 23% to CNY326 billion in 2018 while its total contracted sales reached CNY461 billion, above its full-year sales target of CNY450 billion. Greater Geographical Diversification: Sunac's concentration in the pan-Bohai Rim, Yangtze River Delta and Chengdu-Chongqing regions dropped to 70% in 2017, from 90% in 2015, especially after the Wanda City acquisition, as only five (Hefei, Wuxi, Jinan, Chengdu and Chongqing) of the 13 projects are located in these markets. Geographical diversification has become increasingly important as each local government implements home- purchase restriction policies differently. Sunac also benefitted from low land acquisition costs in 2018, with average cost of CNY3,620 per sq m up to 8M18. Strong Contracted Sales: The geographical diversification helped Sunac report robust contracted sales in 2018, comparable with other large Chinese homebuilders - China Vanke Co., Ltd. (BBB+/Stable), Country Garden Holdings Co. Ltd. (BBB-/Stable) and China Evergrande Group (B+/Positive) - while maintaining average selling price at around CNY14,000-15,000 per sq m. Sunac has the flexibility to generate sales from a greater geographical and product spread, making it more likely that the company can improve operational cash flow for deleveraging. Its EBITDA margin, including the proportional share of EBITDA from joint ventures and associates, was around 23% as of 1H18, or 32% if valuation gains from acquired projects were removed. Execution Risk in Non-Property Business: Sunac is increasing its presence in the cultural and tourism business after the acquisition of the Wanda City projects, which include hotels, theme parks and shopping malls. There are inherent execution risks in ramping up large-scale projects but these are mitigated by Sunac's acquisition and retention of the Wanda City projects' operational and management team, while the sale of properties near these projects are in line with the company's expectations. Once fully operational, the Wanda City projects may bring in meaningful income from the non-property development segment. DERIVATION SUMMARY Sunac's homebuilding business scale, geographical diversification, project execution track record, and churn rates are comparable with 'BBB-' rated homebuilders like Country Garden, and comparable with or superior to 'BB' rated homebuilders such as Beijing Capital Development Holding (Group) Co., Ltd. (BBB-/Negative, standalone BB), and Guangzhou R&F Properties Co. Ltd. (BB-/Negative). However, Sunac has had a more volatile financial profile than these peers, and is more comparable with lower-rated issuers like Greenland Holding Group Company Limited (BB-/Stable, standalone BB-) and China Evergrande, even though its 1H18 leverage is lower than Greenland's and similar to that of China Evergrande. No Country- Ceiling, parent-subsidiary or operating-environment aspects have an impact on the rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Replenishment of land bank to maintain land bank life of 4.5 years - Capex at CNY7.5 billion in 2018 and CNY3.5 billion from 2019, mainly for Wanda City projects - Contracted GFA to grow at 30% in 2018 and 5%-10% thereafter - Contracted average selling price of CNY14,000-14,500 per sq m between 2018 and 2020 RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Net debt/adjusted inventory sustained below 40% (1H18: 46.2%) - Attributable contracted sales/gross debt above 1.2x (1H18: 1.0x) Developments that May, Individually or Collectively, Lead to Negative Rating Action - Net debt/adjusted inventory sustained above 50% - Attributable contracted sales/adjusted inventory sustained below 0.8x (1H18: 0.8x) - EBITDA margin, excluding the effect of revaluation of acquisitions, sustained below 18% LIQUIDITY Sufficient Liquidity: Fitch expects Sunac to maintain sufficient liquidity for its operations and debt repayment, as contracted sales in 2018 has reached CNY326 billion on an attributable basis. Sunac had a cash balance of CNY87 billion, including restricted cash of CNY25 billion, at 1H18, sufficient to cover short-term debt of CNY75 billion. ================ H O N G K O N G ================ HMV DIGITAL: Chairman Reveals Firm's US$38MM Losses in Hong Kong ---------------------------------------------------------------- Enoch Yiu at South China Morning Post reports that HMV Digital China chairman Stephen Shiu Jr fought back tears as he apologised to creditors and staff in Hong Kong for having to close down the 25-year old music retailer at a meeting on Jan. 10. According to the Post, the emotional tycoon revealed that the local unit of the iconic brand had suffered losses of HK$300 million (US$38.3 million) in just two years as it caved under the pressure of the digital downloads age. He also confirmed there were plans for a possible liquidation sale of the company's remaining stock of CDs and DVDs lasting between one and three days at a location to be decided, the report relates. "I am deeply sorry to wind up HMV, which has led to substantial losses for all the creditors, suppliers and staff. I want to say I am very, very sorry to you all," Mr. Shiu said, tears welling in his eyes, at the beginning of a meeting in Admiralty attended by about 150 creditors and employees, SCMP relays. "The parent company has invested and lost about HK$300 million (US$38.3 million) since the purchase of HMV in 2016. The business has declined very badly in recent months and we could no longer keep HMV retail going." It was the first time he has spoken publicly since the GEM-listed company HMV Digital China voluntarily wound up its retail unit, HMV, on December 18, caving under the pressure of the digital download era, the report notes. The company also has film production and artist management businesses which are not affected. After delivering the opening speech, Mr. Shiu told the South China Morning Post he would find a way to sell the remaining stock at a good price to recoup combined losses expect to be close to HK$40 million. "If approved [by creditors], we will have a liquidation sale lasting for one to three days to sell the remaining stock of CDs, DVDs, ear phones and so on to try to recoup as much as possible for the creditors. We will find a location," the report quotes Mr. Shiu as saying. Wong Sun-keung and Janice Tsui Mei-yuk Janice, both of Vision A.S. Ltd, have been appointed as the joint provisional liquidators of HMV Retail to handle the assets, negotiate with the creditors and seek buyers, the Post discloses. Mr. Wong will spend one month trying to find a white knight, he told the Post after the creditors' meeting. "If we cannot find any white knight in about a month, we will arrange a liquidation sale by tender or find an ideal location for it," he said. He said the book value at cost of HMV's assets including all CDs and DVDs stood at HK$9 million but since it will need to sell them at discount, a liquidation sale may only receive about HK$500,000 to HK$1 million, the Post relates. "I have already been approached by some people who want to buy the vinyl records and the iconic HMV dog statues displayed at the shop. The HMV brand still has value. I am optimistic of recouping assets for the creditors," the Post quotes Mr. Wong as saying. At the meeting, it was revealed that there are 66 creditors claiming about HK$27 million. These included landlords, suppliers and design companies. Wong said there were an additional 300 creditors with outstanding debts of about HK$13 million. The biggest creditors are Ever Light and Pridemax, both part of New World Development, which are claiming HK$10.14 million for unpaid rent at HMV's two flagship stores in Causeway Bay and Central. New World Development declined to comment when contacted by the Post. ========= I N D I A ========= ALAMDAR COLD: CRISIL Lowers Ratings on INR28cr Loans to D --------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Alamdar Cold Store (ACS) to 'CRISIL D' from 'CRISIL B/Stable'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 3 CRISIL D (Downgraded from 'CRISIL B/Stable') Long Term Loan 24.14 CRISIL D (Downgraded from 'CRISIL B/Stable') Proposed Long Term Bank Loan Facility .86 CRISIL D (Downgraded from 'CRISIL B/Stable') The downgrade reflects the firm's delay in servicing of its term loan because of weak liquidity. The firm has a small scale of operations. However, it benefits from the extensive experience of the partners in the horticulture industry and their funding support. Key Rating Drivers & Detailed Description * Delay in debt servicing: ACS has delayed the servicing of its term loan because of weak liquidity. Weakness * Modest expected scale due to start-up phase of operations: The firm's small scale is reflected in revenue of INR13.56 crore in fiscal 2018. Strengths * Extensive experience of the partners in the horticulture industry: The partners, Mr Fayaz Ahmad, Mr Aashaq Ahmad, and Mr Aazad Ahmad, and their family members, have experience of around two decades in the horticulture business, and have built healthy relationships with customers over the years. * Funding support from the partners: The partners infused equity of INR10.37 crore till March 31, 2018, and will continue to offer need-based support. Liquidity Liquidity is weak, leading to delay in servicing of term loan. ACS was set up as a partnership firm in 2016 by Mr Fayaz Ahmad and his family members. The firm operates a cold storage facility with capacity of 7500 tonne in Pulwama (Jammu & Kashmir), mainly to store fruits. ANAMIKA CONDUCTORS: CARE Lowers Rating on INR41.63cr Loan to D -------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Anamika Conductors Private Limited (ACPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- 35.00 CARE D/CARE D; Issuer not term Bank cooperating; Revised from Facilities "CARE BB+/ CARE A4+; Issuer Not Cooperating Long term bank 41.63 CARE D; Issuer not cooperating; Facilities Revised from "CARE BB+; Issuer Not Cooperating on the basis Of best available information" Short term bank 44.00 CARE D; Issuer not cooperating; Facilities Revised from "CARE A4+; Issuer Not Cooperating; on the basis Of best available information" Detailed Rationale & Key Rating Drivers CARE has been seeking information from ACPL to monitor the ratings vide e-mail communications/letters dated May 14, 2018 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Further, ACPL has not paid the surveillance fees for the rating exercise as agreed to in its Rating Agreement. The ratings on ACPL's bank facilities will now be denoted as CARE D/CARE D; ISSUER NOT COOPERATING. Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. The revision in the ratings of ACPL takes into account ongoing delays in servicing of debt obligations. Detailed description of the key rating drivers Key Rating Weakness Irregularity in debt servicing. As per interaction with the banker, there are ongoing delays in debt servicing by the company. Anamika Conductors Pvt. Ltd (ACPL) was incorporated as Anamika Conductors Pvt Ltd on December 15, 1988 at Jaipur, Rajasthan by Mr. Sharad Bakliwal. Subsequently, it was converted into a public limited company on April 19, 1996 and has been converted back to private limited company in June 2015. ACPL is in the business of manufacturing of aluminum cables & conductors (used in transmission lines for electricity supply up to 400 kv) with an installed capacity of 18,000 KM p.a. as on March 31, 2016. ACL also has 5 wind mills having aggregate power generation capacity of 3.75 MW as on March 31, 2016. ACPL's products are used in electricity transmission & distribution as per specification required by Bureau of Indian Standards (BIS). ACPL's products are approved by all major state electricity transmission and distribution entities of India. BANSAL BROTHERS: CRISIL Reaffirms B+ Rating on INR8.17cr Loan ------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the long- term bank facilities of Bansal Brothers Private Limited (BBPL) and reassigned its 'CRISIL A4' rating to the company's short-term bank facility. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee .25 CRISIL A4 (Reassigned) Cash Credit 8.17 CRISIL B+/Stable (Reaffirmed) Proposed Fund- Based Bank Limits 1.58 CRISIL B+/Stable (Reaffirmed) The ratings reflect the company's exposure to risks relating to strict regulations and intense competition in the cold storage industry of West Bengal, and weak financial risk profile. These weaknesses are partially offset by the extensive experience of the promoters. Key Rating Drivers & Detailed Description Weaknesses: * Exposure to risks related to strict regulations and intense competition in the cold storage industry: The potato cold storage industry in West Bengal is regulated by the West Bengal Cold Storage Association, and rental rates are fixed by the state's Department of Agricultural Marketing. The fixed rentals will continue to limit players' ability to earn profits based on their respective strengths and geographical advantages. Pressure to offer discounts to ensure healthy utilisation of storage capacity, especially given the intense competition, will constrain profitability. * Weak financial risk profile: Networth was modest at INR2.45 crore as on March 31, 2018, despite marginal improvement in recent years due to low accretion to reserve. Gearing was high at 3 times because of loans extended to farmers, especially at the end of the fiscal. Debt protection metrics remained modest, reflected in interest coverage and net cash accrual to total debt ratios of 1.4 times and 0.05 time, respectively, in fiscal 2018. Strength * Extensive experience of the promoters: The business risk profile is augmented by the promoters' experience of over three decades in the cold storage business, which ensures healthy utilisation of storage capacity. Outlook: Stable CRISIL believes BBPL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if a sustained and substantial increase in cash accrual, and better working capital management, strengthen the financial risk profile. The outlook may be revised to 'Negative' if there is pressure on liquidity due to delays in loan repayment by farmers, considerably low cash accrual, or significant debt- funded capex. Liquidity Liquidity should remain adequate over the medium term. The company has a cash credit facility and working capital limit of INR7.17 crore and INR1 crore, respectively, and the bank limits are almost fully utilised during peak season (March and April). Cash accrual was INR34 lakh in fiscal 2018 against nil debt obligation. Though the cash accrual is expected to be modest over the medium term, it will remain adequate against nil debt obligation in the absence of any debt-funded capital expenditure. BBPL was incorporated in 1989 by the Bansal family. The West Bengal-based company provides a cold storage facility for potatoes, and has capacity of 2.7 lakh tonne per annum. The company also trades in potatoes, though the share of revenue from the business is small. BATASINGARAM FARMER'S: CARE Assigns B Rating to INR15cr Loan ------------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of The Batasingaram Farmer's Service Co-op Society Limited (BFSCSL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 15.00 CARE B; Stable Assigned Facilities Detailed Rationale & Key Rating Drivers The rating assigned to the Bank facilities of BFSCSL is constrained by relatively small scale of operation, high geographic concentration of business, concentrated loan portfolio, leveraged capital structure, weak asset quality, inadequate MIS system and safety mechanisms and competition from various small unorganized players in the financing segment. The rating is, however, underpinned by experienced management team, long track record of operation, minimum regulatory restrictions leading to ease of business expansion, improved operating income during FY15-FY18 (refers to the period April 1 to March 31) and moderate growth in loan portfolio. The ability of the society to diversify the portfolio mix with subsequent expansion of the scale of operation and improvement in the asset quality are the key rating sensitivities. Detailed description of the key rating drivers Key rating Weaknesses Relatively small scale of operation: BFSCSL was founded on January 4, 1978 and despite the long existence and improved scale of operation; the society remains relatively small in size with an outstanding loan portfolio of INR29.21 crore as on March 31, 2018. Concentrated loan portfolio: The loan portfolio of BFSCSL is diversified into crop loans, gold loans, agricultural loans, nonagricultural loans and loans against fixed deposits to its members. However, the loan portfolio has been concentrated to the agriculture loan constituting about 45%-80% during the period FY15-FY18. Apart from concentrated loan portfolio, the society also has regional concentration in Ranga Reddy District, Telangana with total three operational branches. Leveraged capital structure: The overall gearing of the society has been on the higher side as March 31, 2018 mainly due to high deposit received from the members along with increase in the bank borrowings. The society has total debt of INR28.30 crore as on March 31, 2018 as against a small networth base of INR6.55 crore as on March 31, 2018. The capitalization level has been low in the past with a moderate capital adequacy ratio 13.49% as on March 31, 2017. However, the same witnessed improvement to 18.61% as on March 31, 2018. The Net NPA to networth remains high at 43.91% as on March 31, 2018. Weak asset quality: The society has weak asset quality with high NPA ratio reported in the last three years ending March 31, 2018. The GNPA ratio, although has been improving from 30.59% in FY15 to 11.53% in FY18; the same remains on the higher side. Inadequate MIS system and safety mechanisms: The society has evolved with time and has adopted computerized system which records the data and retrieves whenever required. However, the society is still not fully integrated with the other branches and still requires maintaining and recording of data manually. The society has surveillance system installed at its branches and other properties which is a major safety measure adopted in the last few years. Increasingly rural focused and competitive sector: The operations of the co-operative societies are similar to that of Non-Banking Financial Companies (NBFC) which have rapidly emerged as an important segment of the Indian financial system. Moreover, NBFCs assume significance in the small business segment as they primarily cater to the credit requirements of the unorganized sector such as wholesale & retail traders, small-scale industries and small borrowers at the local level. The sector is also characterized by intense competition and fragmentation due to the presence of large number of unorganized money lenders, NBFCs and other players attributable to low entry barriers. Similarly, the emerging new age small finance banks have further increased the competition in the sector. Key Rating Strengths Experienced management team and long track record of operation: The Batasingaram Farmer's Service Co-op Society Limited (BFSCSL) was founded by a group of farmers on January 4, 1978 with an objective to help small and marginal farmers, rural artisans and agriculture labourers. BFSCSL has long track record of operation and since 4 decades it has been engaged in lending money to its members. At present, Mr. Vithal Reddy is the president of BFSCSL who joined the society in the year 2013. He has an industry experience of more than two decades and is also the director of a cooperative bank in Ranga Reddy district. He is also supported by qualified management team in day to day business activities. Minimum regulatory restrictions: BFSCSL is registered under Andhra Pradesh Co-operative Societies Act of 1964 where each society is governed by its own set of bye-laws. There is no intervention from any government regulatory bodies. However, the society has NPA provisioning norms for loans overdue for more than 180 days which is similar to NBFCs. Improved operating income during FY15-FY18: The total operating income of the society increased at a CAGR of 31.43% from INR2.33 crore in FY15 to INR4.70 crore in FY18 on account of increase in the addition of number of members along with increased ticket size of loan. Similarly, the PAT margin and the Return on Total Assets (ROTA) witnessed significant growth during the Period FY15-FY18. Moderate growth in loan portfolio: The society registered significant growth in loan portfolio at CAGR of about 45% during FY15-FY17. However, the loan portfolio growth has been relatively moderate in FY18 with growth of about 8% registered during the year. The resource profile of the society has been satisfactory with major portion of funding done through deposit from members. However, despite the growth, the size and scale of operation remains small. The Batasingaram Farmer's Service Co-op Society Limited (BFSCSL) was founded on January 04, 1978, with an objective to help farmers particularly small and marginal farmers, rural artisans and agriculture labourers. BFSCSL is registered under Andhra Pradesh Co-operative Societies Act of 1964. It is engaged in lending money to its registered members from the corpus formed by taking deposits from its members and loans from banks. BFSCSL also procures and supply agricultural inputs like fertilizers, seeds, manures, cattle feeds, pesticides etc. The society runs by its own bye-laws, which are framed conforming to the principles laid down in the Act and it is governed by the co-operative registrar. The loan portfolio of BFSCSL is diversified into crop loan, gold loan, agricultural loan, non-agricultural loan and loan against fixed deposits. Any member who needs financial assistance should have 10% of the loan value as Share Capital. D D ENTERPRISE: CRISIL Assigns B+ Rating to INR4cr Cash Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of D D Enterprise - Guwahati (DDE). Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Proposed Short Term Bank Loan Facility 2 CRISIL A4 (Assigned) Proposed Long Term Bank Loan Facility 3 CRISIL B+/Stable (Assigned) Bank Guarantee 2 CRISIL A4 (Assigned) Cash Credit 4 CRISIL B+/Stable (Assigned) The ratings reflect the firm's modest scale of operations and risk related to tender-based business. These weaknesses are partially offset by the extensive experience of its proprietor in the civil construction and railway scrap trading segments. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations: The firm's scale of operations was modest over the three fiscals through 2018, as reflected in revenue of INR10.8 crore in fiscal 2018, and is expected to remain moderate over the medium term on account of unexecuted order book of around INR41 crore as of December 2018, to be executed in the next 12-15 months. * Exposure to risk related to tender-based business: Geographical concentration and tender-driven business has led to a small scale of operations. The civil construction industry is intensely competitive. Furthermore, DDE's operations are largely restricted to the Northeast, which restricts ability to scale up operations, thereby affecting operating margin. Strengths * Proprietor's longstanding presence: Mr. Dipak Das has experience of around two decades in the civil construction and railway scrap trading businesses. The proprietor's extensive experience is expected to provide stability in the business risk profile of the firm. Outlook: Stable CRISIL believes DDE will continue to benefit from the experience of its proprietor. The outlook may be revised to 'Positive' if there is a substantial increase in scale of operations while maintaining profitability, and if working capital management is prudent. The outlook may be revised to 'Negative' if stretched working capital cycle, substantially low accrual due to steep decline in revenue and profitability, or any large, debt-funded capital expenditure weakens financial risk profile. Liquidity Cash accrual was INR33 lakh against debt obligation of around INR15 lakh in fiscal 2018. Accrual is expected to remain sufficient to repay debt over the medium term. Cash credit limit of INR4 crore was utilised by 93% over the 12 months ended December 2018, while bank guarantee of INR2 crore was fully utilised. The firm has applied for enhancement in cash credit limit to INR7 crore and in bank guarantee limit to INR2 crore, which is expected to augment liquidity over the medium term. Current ratio was moderate at 1.06 times as on March 31, 2018. Established in 1998 as a proprietorship firm by Mr Dipak Das, DDE is engaged in civil construction mainly for Public Works Department and also trades in railway scraps. ELICO LTD: CRISIL Migrates D Rating From Not Cooperating Category ----------------------------------------------------------------- Due to inadequate information, CRISIL, in line with Securities and Exchange Board of India guidelines, had migrated its ratings on the bank facilities of Elico Ltd (ELL; part of the Elico group) to 'CRISIL BB-/Stable/CRISIL A4+ Issuer Not Cooperating'. However, the company's management has subsequently started sharing requisite information necessary for carrying out a comprehensive review of the ratings. Consequently, CRISIL is migrating its rating from 'CRISIL BB-/Stable/CRISIL A4+ Issuer Not Cooperating' to 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 2.5 CRISIL A4 (Migrated from 'CRISIL A4+ ISSUER NOT COOPERATING') Cash Credit 13.0 CRISIL B+/Stable (Migrated from 'CRISIL BB-/Stable ISSUER NOT COOPERATING') Letter of Credit 1.5 CRISIL A4 (Migrated from 'CRISIL A4+ ISSUER NOT COOPERATING') The ratings reflect the Elico group's below-average financial risk profile because of high gearing and subdued debt protection metrics, modest scale of operations, and exposure to risk related to tender-based business. These weaknesses are partially offset by the extensive experience of its promoter and established customer relationship. Analytical Approach For arriving at the ratings, CRISIL has combined the business and financial risk profiles of ELL, Elico Healthcare Services Pvt Ltd (EHSPL), and Eliscription Pvt Ltd (EPL). This is because these companies, together referred to as the Elico group, have a common promoter and financial links. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of and tender-based operations: With revenue of INR58 crore for fiscal 2018, scale remains small. This limits ability to take advantages associated with economies of scale. Despite expected improvement, scale is likely to remain subdued. Furthermore, since orders are predominantly tender-based, income depends on ability to bid successfully. * Below-average financial risk profile: Gearing was high at 2.78 times as on March 31, 2018, due to erosion in networth and debt contracted to fund capital expenditure (capex). Also, debt protection metrics were average, with net cash accrual to total debt and interest coverage ratios of 0.007 time and 0.73 time, respectively, for fiscal 2018. Strengths * Extensive experience of promoter and established customer relationship: Presence of more than six decades in the analytical electronic instruments segment has enabled the promoter to establish healthy relationship with customers and suppliers. Furthermore, the group has strong research and development (R&D) facilities recognised by the Department of Science and Industry Research, Government of India. The group has won several awards for its R&D work. Operations are ISO 9001:2000, ISO 14001, and ISO 27001 certified. Outlook: Stable CRISIL believes the Elico group will continue to benefit from its promoter's extensive experience. The outlook may be revised to 'Positive' if financial risk profile, particularly liquidity, improves with higher cash accrual or sizeable equity infusion by promoter, while improving capital structure. The outlook may be revised to 'Negative' in case of a steep decline in revenue or profitability margins, or if capital structure deteriorates because of stretch in working capital cycle or sizeable, debt- funded capex. Liquidity Liquidity is weak, driven by just adequate accruals against repayment obligations and high bank limit utilisation. Cash accrual is expected at INR3.90-4.80 crore in fiscals 2020 and 2021 against repayment obligation of around INR3.60-4.00 crore, per fiscal over the said period. The group does has access to fund based working capital limits of INR13.4 (INR13 crore for ELL and INR0.4 crore for EHSPL) crore which was utilised at an average of 99 percent over the 12 months ended September 2018. However, liquidity is supported by the unsecured loans extended by the promoters outstanding of which stood at INR11.85 crore as on March 31, 2018. The Elico group was set up in 1960 in Hyderabad by Late Mr.D V S Raju and is currently headed by Mr Ramesh Datla, a second generation entrepreneur. It manufactures a wide range of electrochemistry, spectroscopy, and chromatography analytical electronic instruments used in diverse industries such as agriculture and engineering, and research laboratories. The group also provides software services and back office support to international clients in the healthcare industry. These services include medical transcription, coding, billing, and account receivables. ELA EDUCATIONAL: CRISIL Assigns B Rating to INR12cr Term Loan ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facilities of ELA Educational Trust (ELA). Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Term Loan 12 CRISIL B/Stable (Assigned) The rating reflect ELA's exposure to risks related to initial phase of operations, geographical concentration in revenue and below-average financial risk profile. These weaknesses are partially offset by the experience of the trustees in the educational sector and healthy growth prospects for schools offering International Baccalaureate (IB) curriculum in Chennai. Key Rating Drivers & Detailed Description Weaknesses * Exposure to risks related to initial phase of operations: The academic year 2018-19 was the first full year of operations for ELA. Occupancy is expected at 35-40% for academic year 2019-20 and revenue is expected to be moderate in fiscal 2020. Occupancy and revenue should gradually improve with stabilisation of operations, supported by limited competition. * Below-average financial risk profile: Gearing is expected to be high at 1.99 times as on March 31, 2019, as against 1.04 time as of March 31, 2018, and is expected to remain moderate over the medium term owing to the recently concluded large debt-funded capital expenditure (capex). Adjusted debt service coverage (DSCR) ratio is projected to be low at 0.66 time for fiscal 2019 in the absence of accruals in the initial phase of operations. However, timely, need-based financial support is expected from the trustees. Besides, DSCR is expected to gradually improve over the medium term as the school ramps up operations. Return on capital employed, albeit remaining moderate is expected to improve gradually to over 7% for the medium term as ELA already has the necessary infrastructure which will be monetised over the next few years with higher intake of students. * Geographical concentration in revenue: ELA operates a single school in Chennai. This leads to a geographic concentration in revenue. Demand for IB curriculum in Chennai is moderate currently, however, will improve gradually given the success of IB in other cities such as Delhi, Mumbai and Hyderabad. Although there are few schools offering the IB course in Chennai, supply will also gradually increase with more schools offering IB courses which may lead to higher competition in the long term Strength * Experience of the trustees: The trustees have over three decades of experience in the education industry with prior experience as professors at the Madras University. The trustee's experience will enable a competitive curriculum leading to healthy traction amongst prospective students and help the institution scale up to above 400 students over the medium term. Outlook: Stable CRISIL believes ELA will continue to benefit from the experience of the trustees leading to scaling up of operations. The outlook may be revised to 'Positive' if ELA increases scale of operations and profitability substantially by increasing student enrollments and in turn improving liquidity and capital structure. Conversely, the outlook may be revised to 'Negative' if financial risk profile, particularly liquidity weakens because of lower- than-expected student enrollments, and larger-than-expected debt- funded capex leading to deterioration in cash flow management. Liquidity: Weak ELA has weak liquidity marked by marginal cash and cash equivalents of INR86 lakhs as on March 31, 2018. The trust has term loans of INR12 crores which is currently under moratorium with repayment obligations commencing in fiscal 2020. Accruals in fiscal 2020 are expected to be sufficient to service term debt obligations of INR48 lakhs. The firm does not avail of any fund based limits. The liquidity risk is mitigated by funding support from promoters in the form of unsecured loans which stood at INR31 lakhs as on March 31, 2018. ELA, a non-profit association set up in 2017, operates a school in Maraimalia Nagar, Chennai. The school provides education under a Geneva based curriculum and has grades spanning from preschool, elementary, middle, and high school levels. Ms M Samhita (managing trustee), Mr Madanagobalane and Ms G Vijayalakshmi, all of whom are professors at the Madras University, are the trustees. GRAND PRIX: Ind-Ra Maintains BB+ Issuer Rating in Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Grand Prix Engineering Private Limited's Long-Term Issuer Rating in the non- cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will continue to appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR100 mil. Fund-based working capital facilities maintained in Non-Cooperating Category with IND BB+ (ISSUER NOT COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating; and -- INR215 mil. Non-fund-based working capital facilities maintained in Non-Cooperating Category with IND BB+ (ISSUER NOT COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating. NOTE: ISSUER NOT COOPERATING: The ratings were last reviewed on February 13, 2015. Ind-Ra is unable to provide an update as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 1989, Grand Prix Engineering manufactures filters, strainers, pressure vessels, gas conditioning skids and others. The company was awarded the U and U2 certificates of authorization by The American Society of Mechanical Engineers in 2003 and 2006, respectively. Moreover, the company is certified by the National Board of Boiler and Pressure vessel inspectors. HMT MACHINE: CARE Reaffirms C Rating on INR49.82cr LT Loan ---------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of HMT Machine Tools Limited (HMT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 49.82 CARE C; Stable Reaffirmed Short term Facilities 72.90 CARE A4 Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of HMT continues to be constrained by its weak financial profile with continuing losses and negative networth in addition to deferring its dues on long- term loans extended by Government of India (GOI). The rating is also constrained by instances of LC devolvements and continuing overdrawals in cash credit account though the same is being regularized within a month. These rating weaknesses are partially offset by its parentage, experienced management team and funding support from GOI. Going forward, company's ability to turn operations profitably while effectively utilizing its WC limits would be key rating sensitivities. Detailed description of the key rating drivers Key rating Weaknesses Weak liquidity and financial risk profile: The company continues to post losses during FY18 with company incurring net loss of INR129.2 crore during the year (FY17: Loss of INR127.6 crore). Low capacity utilization, ageing machineries, rising overhead expenses, employee costs and ballooning capital charge is behind the company's losses. As on March 2018, the company's accumulated losses were at INR1491 crore. There have been instances of CC overdrawals and LC devolvement but the same is regularized within a month. Key Rating Strengths Support from GOI: Being a part of HMT Ltd, a central Government entity, HMTML has received support from GoI. During FY18, the company received INR 59.3 crore from GOI. During FY17 also, company has received INR64.6 cr from GOI as a working capital loan to help address the company's acute working capital shortage. Long track record of operation and experienced management: HMT Machine Tools is a part of HMT group and is operating similar line of business for more than six decades. Over the years, the company has established itself in the industry. and experienced professionals. HMT Ltd (HMT) (parent of HMT Machine Tools Ltd) was incorporated in 1953 by the Government of India (GOI) as a Hindustan Machine Tools Pvt Ltd, subsequently renamed as HMT Limited on August 31, 1978. HMTMTL is engaged in manufacturing of turning, grinding, gear cutting, special purpose machines, die casting machines and plastic injection molding machines, presses and press brakes, printing machines, CNC control systems and precision components. Its manufacturing plants are located at Bangalore, Pinjore (Haryana), Hyderabad (Andhra Pradesh), Ajmer, and Kalamassery (Kerala). HOLISTIC REMEDIES: CARE Moves B Rating From Not Cooperating ----------------------------------------------------------- CARE Ratings has migrated the rating on bank facility of Holistic Remedies Private Limited (HRPL) to Issuer Not Cooperating category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 5.92 CARE B; Stable Revised from Facilities CARE B; Stable; ISSUER NOT (Cash Credit) COOPERATING Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of HRPL is constrained on account of modest scale of operations, weak profitability, highly leveraged capital structure coupled with weak debt coverage indicators. The rating is further constrained by working capital intensive nature of operations and presence in highly competitive and fragmented industry. The above weaknesses are partially offset by long track record of operation and experience of promoters. The ability of HRPL to increase its scale of operations and improvement in profit margins and capital structure along with efficient management of working capital requirement are the key rating sensitivities. Detailed description of Key rating drivers Key rating Weakness Modest scale of operations coupled with low profitability: HRPL's total operating income has grown steadily at a CAGR of 5.42% to INR21.88 crore in FY17, however the same declined to INR20.53 crore in FY18 owing to slower demand from the end user market. Further, with a small net-worth base of INR1.37 crore as on March 31, 2018; its scale of operations remains relatively modest restricting its financial flexibility. Further, due to stiff competition faced from local organized and unorganized sector manufacturers, as well as reliance on high cost external borrowings to fund working capital, HRPL's profitability has remained thin. Highly leveraged capital structure coupled with weak debt coverage indicators: HRPLs higher reliance on external borrowings to fund its working capital requirements led to leveraged capital structure. The aforementioned, coupled with low profitability led to HRPL's weak debt protection metrics. Working capital intensive nature of operations with weak liquidity position: HRPL's operations are working capital intensive in nature with funds largely being blocked in receivables and inventory. The company has long standing business relations with its clientele and offers credit of 70-110 days to them. Furthermore, due to low profitability, it relies heavily on bank borrowings to fund working capital requirements leading to full utilization of cash credit facilities. Presence in highly competitive and fragmented industry: HRPL operates in the niche market of Homeopathic remedial products which largely constitutes of manufacturers in unorganized segment and clinics formulating their own pills with Homeopathic liquids being imported from European manufacturers such as Germany. The industry is categorized as a highly competitive and fragmented industry facing stiff competition from conventional medicine as well as Ayurveda. Key rating Strengths Experienced promoters: HRPL is promoted by Dr. Nalini Batra who is a practitioner in the field of Homeopathy for nearly 3 decades. Her medical expertise helps the company to develop and update its products as well as help gain customers such as the reputed Homeopathic clinic chain of Dr. Batra's. She is further support by her son Mr. Pranav Batra who has been involved with the company since its inception. Liquidity Analysis The liquidity position of HRPL stood weak with elongated operating cycle thereby leading to full utilization of cash credit facilities. The current ratio and quick ratio stood low at 1.14 times and 0.77 times respectively as on March 31, 2018 (vis-Ö-vis 1.15 times and 0.75 times respectively as on March 31, 2017), whereas the cash & bank balance stood at INR0.67 crore as on March 31, 2018 (vis-Ö-vis INR0.37 crore as on March 31, 2017). The net cash flow from operating activities stood positive at INR0.49 crore in FY18 (vis-Ö-vis positive at INR0.51 crore in FY17). Incorporated in the year 1986 by Dr. Pranav Batra and Dr. Nalini Batra, Holistic Remedies Private Limited (HRPL) is engaged into manufacturing of Homeopathic medicines in collaboration with Bioforce AG (a Switzerland based company) at its facility in Kundhan Village, Thane which is spread over 52040 sq. ft. Its products are marketed under the brand name 'Bioforce' and 'Blooume' across India. The company supplies Homeopathic products to Dr. Batra's Positive Health Clinic Private Limited. JANANI FOODTEK: Ind-Ra Rates INR85MM Term Loan 'BB-' ---------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Janani Foodtek (I) Private Limited (JFPL) a Long-Term Issuer Rating of 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR85 mil. Term loan due on April 2025 assigned with IND BB- /Stable rating; and -- INR60 mil. Fund-based limits assigned with IND BB-/Stable rating. KEY RATING DRIVERS The ratings reflect JFPL's small scale of operations and lack of operating experience as it began operations in November 2018. The company set up a flour milling unit in Vadodara (Gujarat) with an annual installed capacity of 105,000 metric tons. It incurred a total project cost of INR118 million, of which INR85 million was funded through a term loan and the remainder through unsecured loans from the promoters. Ind-Ra expects the company to book revenue of around INR500 million in FY19. FY20 will be the first full year of operations; stabilization of operations is a key rating sensitivity. The agency expects JFPL to achieve modest operating EBITDA margins of around 3% in FY19-FY20 and return on capital employed of less than 10%. Consequently, the credit metrics will also be modest. The ratings factor in the company's modest liquidity position as indicated by 93% average utilization of its working capital limits during the 10 months ended December 2018. Its debt repayments were scheduled to commence from December 2018 but were deferred to May 2019 due to a four-month delay in the commencement of the project. JFPL has scheduled debt repayments of INR11.7 million in FY20, which will be met through internal accruals. However, the ratings benefit from the company's promoters' four decades of experience in the flour milling business through it associate companies Janani Industries Pvt Ltd, Pashupatinath Flour Mills Pvt Ltd and Kohinoor Flour Mills Pvt Ltd. RATING SENSITIVITIES Negative: Lower-than-expected revenue and/or EBITDA margins resulting in weaker-than-expected credit metrics could be negative for the ratings. Positive: An improvement in the revenue and EBITDA margins, leading to an improvement in the overall credit metrics, all on a sustained basis, could be positive for the ratings. COMPANY PROFILE JFPL is engaged in the milling of flour. The company was setup on July 18, 1995 by Gupta family to trade wheat and wheat products. KERALA ELECTRICAL: CRISIL Reaffirms B Rating on INR17.35cr Loan --------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Kerala Electrical and Allied Engg. Co. Limited (KEL) at 'CRISIL B/Stable/CRISIL A4'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 8.1 CRISIL A4 (Reaffirmed) Bill Purchase 0.3 CRISIL A4 (Reaffirmed) Cash Credit 17.35 CRISIL B/Stable (Reaffirmed) Letter of Credit 6 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility .25 CRISIL B/Stable (Reaffirmed) The ratings reflect the below-average financial risk profile due to cash losses, and large working capital requirements. These rating weaknesses are partially offset by established market position, and constant funding support extended by the Government of Kerala (GoK). Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: Financial risk profile is constrained by a weak capital structure and subdued debt protection metrics Owing to cash losses incurred over past few years, accretions to reserve, have been negative. This has led to erosion of networth, while debt levels have remained high at INR 58 crores as on March 31, 2018. * Large working capital requirements: Operations are working capital intensive, with gross current assets (GCA) of 246 days as on March 31, 2018, primarily driven by high debtors of 146 days and inventory of around 60-70 days. With cash losses, working capital has been primarily funded by credit of around 238 days extended by suppliers. . Strength * Established market position and continuous funding support from GoK: KEL's longstanding presence of around five decades in the transformer segment, and the strong tie-up with key customer, the Kerala State Electricity Board (KSEB), will continue to support the business risk profile. Though the transformer segment accounts for over 65% of revenue, the company also manufactures steel structures used for construction of dams, alternators for railways, and switchgears for KSEB. Continuous funding support from GoK helps meet operational and capex requirement. Outlook: Stable CRISIL believes KEL will continue to receive funding support from GoK for its operations and timely debt servicing. The outlook may be revised to 'Positive' if significant improvement in revenue and operating margin, leads to sizeable cash accruals. The outlook may be revised to 'Negative' if significant cash losses, or delay in fund support from GoK, weakens the financial risk profile further. Liquidity KEL has weak liquidity marked by cash losses and marginal cash and cash equivalents of INR2.5 crores as on March 31, 2018. The company has annual term debt obligations of INR 15 crores in fiscal 2019 and fiscal 2020. The firm has access to fund based limits of INR17.5 crores, which is 55% utilized over the 12 months ended October 31, 2018. The liquidity risk is mitigated by funding support from GoK on need basis. KEL, set up at Kochi (Kerala) in 1964, manufactures transformers and other electrical products, and steel structures. The company is wholly-owned by GoK and its nominees. Daily operations are managed by Mr Beemapally Rasheed. The company has three manufacturing units at Mamala, Kundara, and Palakkad (all in Kerala). LUNAWAT MILK: CARE Reaffirms B-/A4 Ratings on INR6.76c Loan ----------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Lunawat Milk and Agro Private Limited (LMAPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term/Short 6.76 CARE B-; Stable/CARE A4 term Bank Reaffirmed Facilities Detailed Rationale & Key rating Drivers The rating assigned to the bank facility of LMAPL continues to remain constrained on account of no operations in FY18 (FY refers to the period from April 1 to March 31) with leveraged capital structure and stressed liquidity position. The rating, further, continues to remain constrained on account of highly fragmented and government regulated agro commodities industry and seasonality associated with agro commodities. The rating, however, continues to derive comfort from longstanding experience of the promoters along with established presence of group in the industry. LMAPL's ability to improve its scale of operations with an improvement in overall financial risk profile marked by improvement in profit margins and better management of working capital would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness No operations in FY18: LMAPL has commenced operation from November 2014 and FY16 was the first full year of operation of LMAPL. However, the company remained dormant during FY18 mainly on account of demonetization. During 8MFY19, LMAPL has achieved TOI of INR 10.10 crore. Leverage capital structure with weak debt protection metrics Capital structure of LMAPL deteriorated and remained leveraged marked by an overall gearing of 4.14 times as on March 31, 2018 however, improved from 5.46 times as on March 31, 2017 mainly on account of comparative lower utilization of working capital bank borrowings as on balance sheet date. Debt coverage indicators stood weak with higher total debt to GCA ratio, however, interest coverage stood at 0.02 times in FY18. Working capital intensive nature of operations: Operations of LMAPL continue to be working capital intensive with 80-85% utilisation of working capital bank borrowings during past 12 months ended November, 2018. However, cash flow from operating activity has improved from negative cash flow of INR3.38 crore in FY17 to positive cash flow of INR2.07 crore during FY18. The current and quick ratio stood moderate at 1.22 times as on March 31, 2018. The cash and bank balance stood at INR0.62 crore as on March 31, 2018. Key Rating Strengths Experience of its promoters coupled with established presence of group in the industry: Mr Sanjay Lunawat, Mr Girish Gadgil and Mr Deepakkumar Jain and Mr Prakash Sagari are the key promoters of the company and all the promoters possess long experience in the industry. The promoters are also engaged into management of its other associate concerns, which are engaged into various industries i.e. warehousing, trading, hospitality, land development and print media and publication. Indore (Madhya Pradesh) based Lunawat Milk & Agro Private Limited (LMAPL) was incorporated in July 26, 2012 as a private limited company by Mr. Sanjay Lunawat, Mr. Girish Gadgil, Mr. Deepak Kumar Jain, Mr. Prakash Sagari. LMAPL is engaged into the business of trading of various agro based product like Chana, Makka, Mungdal, Soyabin, Udaddal, Wheat etc. LMAPL started its trading activity from November, 2014. M V OMNI: Ind-Ra Lowers Long Term Issuer Rating to 'D' ------------------------------------------------------ India Ratings and Research (Ind-Ra) has downgraded M V Omni Projects (India) Ltd.'s (MVOPIL) Long-Term Issuer Rating to 'IND 'D' from 'IND BBB-'. The Outlook was Negative. The instrument-wise rating actions are: -- INR1.20 bil. Fund-based working capital limits (long-term) downgraded with IND D rating; -- INR1.90 bil. Non-fund-based working capital limits (short- term) downgraded with IND D rating; -- INR10 mil. Forward contract limits (short-term) downgraded with IND D rating; and -- INR120 mil. Proposed corporate loan* (long-term) downgraded with Provisional IND D rating. * The rating is provisional and shall be confirmed upon the sanction and execution of the loan documents for the above facility by MVOPIL to the satisfaction of Ind-Ra. KEY RATING DRIVERS The downgrade reflects delays in debt servicing by MVOPIL during three months ended January 3, 2019 owing to a tight liquidity position due to an elongated net working capital cycle of 100-110 days (FY17: 111 days; FY16: 110 days) and slow execution of orders in hand. The company overdrew fund-based working capital limits, devolved its letter of credit and invoked bank guarantees for more than 30 days until January 3, 2019. RATING SENSITIVITIES Positive: Timely debt servicing for at least three consecutive months would be positive for the ratings. COMPANY PROFILE MVOPIL started operations as a proprietorship firm, M V Omni Enterprise, in 1994 and was incorporated as a limited company in 2002. The company is engaged in civil construction activities, with a major focus on the construction of residential and commercial buildings for government and public sector entities. It is also engaged in irrigation works and construction of roads. In addition, MVOPIL is engaged in the setup of signaling and telecommunication networks, other civil infrastructure for the railways, and gas distribution infrastructure for gas distribution companies. Mr. MC Pandey is the promoter of the company. MERGE STONES: CARE Assigns B+ Rating to INR23cr LT Loan ------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Merge Stones (MS) as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 23.00 CARE B+; Stable Assigned Short-term Bank Facilities 4.00 CARE A4 Assigned Detailed Rationale& Key Rating Drivers The ratings assigned to the bank facilities of MS are tempered by short track record and small scale of operations with low net worth base, moderate capital structure and weak debt coverage indicators, working capital intensive nature of operations, highly fragmented industry with intense competition from large number of players and constitution of the entity as a partnership firm with inherent risk of withdrawal of capital. However, the ratings are underpinned by experience of the promoters in marble and granite industry, growth in total operating income and satisfactory profitability margins and stable outlook for marble industry. Going forward, the ability of the firm to increase its scale of operations and improve its profitability margins in competitive environment, to improve the capital structure and debt coverage indicators and to manage working capital requirements efficiently shall remain key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Short track record and small scale of operations with low net worth base: The firm started its commercial operations from August 2018 and FY19 was the first year of operations. However, the firm was engaged in trading of granite slabs from February 2018. The firm has small scale of operations. The total operating income (TOI) of the firm remained small at INR0.33 crore in FY18 with a low net worth base of INR6.34 crore as on March 31, 2018 as compared to other peers in the industry. Furthermore, the firm generated the sales of INR9.67 crore in 8M FY19 (Prov.). Moderate capital structure and weak debt coverage indicators: The capital structure of the firm stood moderate as on March 31, 2018 marked by debt equity and overall gearing ratio of 1.75x. The debt equity ratio has improved to 1.21x as on November 30, 2018 (Prov.) due to infusion of capital by the partners. However, the overall gearing ratio deteriorated to 2.00x as on November 30, 2018 due to the cash credit facility borrowed in 8MFY19 (Prov.). Furthermore, the firm has an interest coverage ratio of 3.17x and total debt to GCA at 107.84x in FY18. Working capital intensive nature of operations: The firm maintains high inventory in order to meet the demand of the market. The firm receives the payment from its customers within 1-60 days from the date of invoice. Further, the firm makes the payment to its suppliers within 1-30 days from the date of invoice. The average utilization of CC facility was 90% for the last 6 months ended November 30, 2018. Highly fragmented industry with intense competition from large number of players: The firm is engaged in the processing of marbles which is a highly fragmented industry due to presence of large number of organized and unorganized players in the industry the firm faces huge competition. Constitution of the entity as a partnership firm with inherent risk of withdrawal of capital: MS, 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. Moreover, partnership firm business has restricted avenues to raise capital which could prove a hindrance to its growth. The partners have infused capital to the tune of INR4.49 crore in 8MFY19 (Prov.). Key Rating Strengths Experience of the promoters in marble and granite industry Merge Stones (MS) is a Telangana based firm, which was established in December 2016 and promoted by Mr.S.Hanumantha Rao, Mr.M.Sharat Babu, Mr.S.V.N.Satya Bharat and Mr.M.V.Rama Krishna as a partnership firm. Mr.S.Hanumantha Rao is a graduate and has 25 years of experience in marble and granite processing industry. Mr.M.Sharat Babu is a graduate by has 5 years of experience in marble and granite processing industry and also has 25 years of experience in tobacco and spinning mills businesses. Mr.S.V.N.Satya Bharat is a graduate and has 10 years of experience in marble and granite processing industry. Mr.M.V.Rama Krishna is a graduate and has 5 years of experience in marble and granite processing industry. Through their experience in the marble and granite products business, they have established healthy relationship with key suppliers, customers and dealers facilitating the business within the state. Growth in total operating income and satisfactory profitability margins: The firm has achieved a turnover of INR0.33 crore in 2 months of operations in FY18 through trading of granite slabs. The total operating income of the firm increased to INR9.67 crore in 8MFY19 (Prov.) since the firm started processing and selling of marbles coupled with increased orders of granite slabs from existing and new clients. In FY18, the profitability margins stood satisfactory marked by PBILDT margin and PAT margin of 7.84% and 5.22% respectively. The PBILDT margin increased to 39.19% in 8MFY19 (Prov.) since the firm started processing and sale of marble whose profit margins are high as compared to trading of granite slabs. The PAT margin has also increased to 6.72% in 8MFY19 (Prov.) due to increase in PBILDT levels in absolute terms. Liquidity Analysis The current ratio of the firm stood comfortable at 1.57x as on March 31, 2018. The current loans and advances were relatively higher than sundry creditors and other current liabilities as on March 31, 2018. The cash balances stood at Rs.0.07 crore as on March 31, 2018. The unutilized working capital limits stood at 10% as on December 29, 2018. Stable outlook for marble industry: The white marble market is relatively large, as the demand of white marble is increasing in the whole world. And the global output of white marble remained a relatively high growth during the last few years, especially in the Chinese market; the white marble market is up to a double- digit growth, mainly due to the fast development of construction industry. The worldwide market for White Marble is expected to grow at a CAGR of roughly 11.5% over the next five years, will reach 21000 million US$ in 2023, from 12200 million US$ in 2019. Merge Stones (MS) is a Telangana based firm, which was established in December 2016 and promoted by Mr.S.Hanumantha Rao, Mr.M.Sharat Babu, Mr.S.V.N.Satya Bharat and Mr.M.V.Rama Krishna as a partnership firm. The firm is engaged in processing of marble stones and also trading of granite slabs. The construction of the factory was started in July 2017 and the same was completed in July 2018. The operations of the firm commenced in August 2018. However the firm has started trading of granite slabs from February 2018. The firm imports rough marble blocks from countries like Italy, Turkey etc. The firm processes the rough marble stones at its factory located at Farooqnagar, Hyderabad. The firm sells the marble stones and granite slabs to construction companies like Aqua Space Develepors Private Limited, My Home Constructions Private Limited, Divija Commercial Properties Private Limited etc. Presently, the firm is dealing in variety of marble stones like Botticino, Grey William, Thundra Grey and granite slab models like Black Galaxy, Cosmic Grey, Flash Green etc. NV DISTILLERIES: CARE Raises Rating on INR238.27cr Loan to B+ ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of NV Distilleries and Breweries Private Limited (NVDBL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term Bank 238.27 CARE B+; Stable Revised from Facilities CARE B-; Stable Long/Short Term 2.00 CARE B+; Stable/CARE A4 Bank Facilities Revised from CARE B-; Stable/CARE A4 Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities of NVDBL take into account the turnaround in operational performance of the company backed by growth in total operating income with expansion in profitability margins resulting in better financial risk profile reflected in improvement in gearing and debt coverage metrics. The ratings continue to derive strength from the experienced promoters and management with long presence of group companies in related business, strategic location with a large nearby market, abundant availability of grain and protective environment for existing players due to restrictive licensing acting as high entry barriers. The rating continues to be constrained by the working capital intensive nature of operations with stretched liquidity position, susceptibility to availability and volatility in raw material prices and highly regulated industry. Going forward, the ability of NVDBL to sustain growth in the total operating income and profit margins and effectively manage its working capital requirements will be key ratings sensitivities. Detailed description of the key rating drivers Key Rating Strengths Turnaround in operational performance: The total operating income increased to INR419.57 cr in FY18 (PY: INR351.49 cr) (refers to period April 1 to March 31) due to increase in sales of IMFL. PBILDT margin of the company also improved to 14.06% in FY18 (PY: 7.67%) due to decrease in cost of raw material. As a result, it reported PAT of INR0.98 crore in FY18 (PY: loss of INR28.99 crore). During H1FY19 (refers to period April 1 to September 30), it has reported total income of INR248.13 cr with PBILDT and PAT of INR34.54 cr and INR2.45 cr respectively. Experienced promoters, management & group companies in related business: NVDBL was incorporated in year 1994 by Mr. Ashok Jain (Chairman) and Mr. Sameer Goyal (Managing Director). Its group companies (NV Distilleries Private Limited and NV International Private Limited) are engaged in similar line of operations thereby enabling NVDBL to leverage on past experience in executing similar projects and operations. The promoters are well supported by an experienced and professional management team. Strategic location with a large market and abundant availability of grain in vicinity of the plant: NVDBL has set up grain-based distillery in Rajpura (Punjab), which provides locational advantage in terms of availability of raw material (grains) in the state of Punjab and nearby states, viz. Haryana and Uttar Pradesh. Moreover, the company distributes country liquor and IMFL in nearby states which are some of the biggest consumers of liquor in northern region. Protective environment for existing players due to restrictive licensing acting as a high entry barrier: Liquor policies governing its production and sale are entirely controlled by respective State governments. With all the alcohol consuming States/Union Territories having their own regulations and entry- exit restrictions, it is very difficult for new entrants to get licenses thus providing a competitive advantage to existing players like NVDBL. Key Rating Weaknesses Susceptibility of profitability margins to volatility in raw material prices: The margins of the company are highly susceptible to the volatility in the prices of the raw materials. The main raw material for NVDBL is grain and comprises the major cost of production. The prices of these raw materials are governed by various factors including the supply of the same which is in turn is dependent upon farm yield, government regulations, etc. Highly regulated industry: Liquor industry is highly regulated in India with each state controlling the production, sales and duty structure independently. As a result, there are difficulties in transfer of production from one state to another along with huge burden of duties and taxes. The state controls the licenses for production, distributorship and retailing also. Weak financial risk profile: The overall gearing improved but remained high at 2.05x as on March 31, 2018 (PY: 2.46x). The improvement was backed by repayment of debt. The interest coverage ratio improved to 2.02x in FY18 (PY: 0.86x) due to decrease in interest and higher PBILDT margin. However, total debt to GCA stood high at 8.14x as on March 31, 2018 (PY: cash losses). Stretched liquidity profile: NVDBL's current ratio stood at 1.25x as on March 31, 2018 (PY: 1.21x). NVDBL avails working capital bank borrowings in the form of cash credit to the tune of INR 97.50 crore which remained highly utilized. Operating cycle improved during FY18 to 125 days (PY: 141 days) on account of decrease in inventory days to 123 days on March 31, 2018 (PY: 147 days). Industry Prospects: India's alcohol industry is the third largest in the world with a value of $35 billion. The industry is divided into three categories: Indian Manufactured Foreign Liquor (IMFL), beer, and homemade liquor. The market is expected to grow annually by 7.9% (CAGR 2018-2021). With rising disposable income, urbanization, greater availability of alcohol and changing consumer preferences, demand in spirits industry is likely to grow. NV Distilleries and Breweries Private Limited (NVDBL) is a part of NV group. NVDBL promoted by Mr. Ashok Jain and Mr. Sameer Goyal, was incorporated in 1994. The company is operating a grain-based distillation cum bottling plant in Rajpura, Punjab, with an installed capacity of 144 KLPD of Extra Neutral Alcohol (ENA), 48 lakh cases per annum each of Indian made foreign liquor (IMFL) and Country liquor along with a power generation plant (11MW). The plant was fully commissioned from August 2011. PRANAVAM AEROSPACE: CRISIL Moves B Ratings to Not Cooperating ------------------------------------------------------------- CRISIL has migrated the rating on bank facilities of Pranavam Aerospace Private Limited (PAPL) to 'CRISIL B/Stable Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Proposed Cash 2 CRISIL B/Stable (ISSUER NOT Credit Limit COOPERATING) Proposed Long Term 15 CRISIL B/Stable (ISSUER NOT Bank Loan Facility COOPERATING) CRISIL has been consistently following up with PAPL for obtaining information through letters and emails dated June 29, 2018, September 3, 2018 and September 10, 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 PAPL. Which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on PAPL is consistent with 'Scenario 2' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB' rating category or lower'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL has migrated the rating on bank facilities of PAPL to 'CRISIL B/Stable Issuer not cooperating'. Furthermore, the company has not paid the fee for conducting rating surveillance as agreed to in the rating agreement. Incorporated in September 2016, PAPL is setting up a facility for manufacturing of high precision engineering components for aerospace industry. The unit is expected to commence operations from September 2017. REALCADE LIFESCIENCE: CARE Hikes Rating on INR24.91cr Loan to BB- ----------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Realcade Lifescience Private Limited (RLPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 24.91 CARE BB-; Stable Revised Facilities from CARE B+; Stable Short term Bank 0.60 CARE A4 Reaffirmed Facilities Long term/Short 3.00 CARE BB-; Stable/CARE A4 term Bank Revised from CARE B+; Facilities Stable/CARE A4 Detailed Rationale & Key Rating Drivers The revision in the long-term rating assigned to the bank facilities of RLPL is primarily on account of an increase in its scale of operations during FY18 (refers to the period April 1 to March 31). The ratings, further, continue to derive strength from experienced promoters in the pharmaceutical industry. The ratings also take into cognizance the successful completion of its debt- funded capex for capacity expansion and commencement of operations from the same during Q1FY19. The above mentioned strengths are partially offset by the moderately leveraged capital structure and moderate debt coverage indicators coupled with modest liquidity during FY18. The ratings, further, continue to remain constrained on account of susceptibility of profit margins to volatility in raw material prices along with presence in the highly fragmented, competitive and regulated pharmaceutical industry. The ability of RLPL to further increase its scale of operations and improve its profitability, capital structure and debt coverage indicators along with efficient management of its working capital are the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Moderately leveraged capital structure and moderate debt coverage indicators: The capital structure of RLPL continued to remain moderately leveraged marked by overall gearing of 2.16 times as on March 31, 2018 as against 2.10 times as on March 31, 2017 owing to an increase in the total debt level which was partially cushioned by an increase in the tangible net worth level, led by infusion of equity capital by promoters. Debt coverage indicators of the company also continued to remain moderate marked by total debt to GCA of 7.30 years as on March 31, 2018 and interest coverage of 2.27 times during FY18. Modest liquidity position: The liquidity position of RLPL remained modest marked by current ratio of 1.10 times, and operating cycle of 69 days during FY18. Average utilization of working capital borrowings remained high at 85% during past 12 months ended November, 2018. The cash and bank balance stood at INR0.34 crore, while the net cash flow from operation stood comfortable at INR7.63 crore as on March 31, 2018. Susceptibility of profit margins to volatility in raw material prices along with presence in the highly fragmented, competitive and regulated pharmaceutical industry: The main raw material for manufacturing Intravenous Fluids is Dextrose and Sodium Chloride, prices of which remain highly fluctuating in nature. Furthermore, Indian pharmaceutical industry is highly fragmented in nature with presence of few and large-scale organized pharmaceutical companies and large number of small unorganized companies which leads to intense competition among the players. Besides, there is a price regulation on essential drugs as per Drugs Price Control Order (DPCO) in the domestic market which restricts the prices for essential bulk drugs and their formulations. Key Rating Strengths Increase in scale operations during FY18: RLPL commenced its manufacturing operations during October 2016; hence FY18 is the first full year of operations. RLPL achieved a moderate total operating income (TOI) of INR39.50 crore during FY18 as against INR7.11 crore for its six months of operations during FY17. The company reported PBILDT of INR7.64 crore (19.35%) during FY18 as against INR2.90 crore for its six months of operations during FY17. PAT stood low at INR0.02 crore during FY18 as against net loss of INR3.11 during FY17 owing to higher depreciation and interest cost in the initial year of operations. Successful completion of its debt-funded capex for capacity expansion and commencement of operations from the same during Q1FY19: During FY18, RLPL completed its project for expansion of its production capacity by setting up new machinery for manufacturing Intravenous fluids at its existing location, with an installed capacity of around 190 lakh bottles of 100 ml capacity. The project was completed within envisaged cost parameters, however there was a time-over run of around two-three months and the project got commercialized in April, 2018. Experienced promoters in the pharmaceutical industry: RLPL is incorporated by five promoters led by Mr. Vinodkumar Patel and Mr. Bharatkumar Vihol. The key promoter, Mr Bharatkumar Vihol has a total experience of around 20 years in pharmaceutical industry through serving in various pharmaceutical companies and looks after the overall functions of the company. Incorporated in the year 2012, RLPL is promoted by five promoters led by Mr Vinodkumar Patel and Mr Bharatkumar Vihol. RLPL is into manufacturing of Intravenous Fluid and operates with an annual installed capacity of 2,16,00,000 bottles of 500 ML and 3,96,00,000 bottles of 100 ML from its manufacturing facilities located at Mehsana-Gujarat. It commenced its commercial operations from October, 2016 onwards, wherein it primarily manufactures Dextrose and Sodium Chloride based Intravenous fluid solution. RECMET ALLOYS: CRISIL Lowers Rating on INR12cr Loans to B+ ---------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Recmet Alloys Private Limited (RAPL) to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 4.8 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Proposed Long Term 3.95 CRISIL B+/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') Term Loan 3.25 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') The downgrade reflects pressure on RAPL's business risk profile on account of dip in revenue and profitability in fiscal 2019, leading to decline in networth and insufficient cash accrual to service maturing term debt. The rating continues to reflect modest scale of operations and vulnerability to raw material price fluctuation. These weaknesses are partially offset by the extensive experience of the promoters. Analytical Approach Unsecured loans of INR2.9 crore as on March 31, 2018 have been treated as neither debt nor equity as these are subordinated to bank debt and expected to remain in the business. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: Scale of operations is small, as reflected in revenue of INR22.8 crore in fiscal 2018, declining from INR24.8 crore the previous year. Revenue in fiscal 2019 will consist of job work income only, as against material sales value earlier and hence, while the volume of lead processed will increase, revenue is expected to remain low. * Vulnerability to raw material price fluctuation: As selling prices of lead are linked to the prevailing London Metal Exchange prices, operating margin remains susceptible to changes in lead prices. Furthermore, the lead recycling industry is highly competitive and fragmented, constraining the bargaining power of small players. RAPL reported operating margin of 1.1% and after tax loss of INR2.2 crore in fiscal 2018. Strengths * Extensive experience of the promoters: An experience of over 15 years in the lead industry has helped the promoters gain expertise in the lead purifying process, maintain the required industry standards, and forge established relationships with customers. In a short period, they have added reputed and large original equipment manufacturers of batteries to the customer base. They also supported operations by extending unsecured loans whenever necessary. Outlook: Stable CRISIL believes RAPL will continue to benefit from the extensive experience of its promoters and their funding support. The outlook may be revised to 'Positive' in case of improvement in the financial risk profile driven by sizeable cash accrual with higher than expected ramp up in operations and operating margins or capital infusion. The outlook may be revised to 'Negative' if liquidity weakens due to low cash accrual, a stretched working capital cycle, or large, debt-funded capital expenditure. Liquidity * Low bank limit utilization: The company has a cash credit limit of INR4.8 crore which was utilised at an average of 38% over the 12 months through November 2018. * Insufficient cash accrual to meet term debt obligation: In fiscal 2018, term debt repayment of INR1.1 crore was met through infusion of unsecured loan in the business. Cash accrual over the medium term is expected to remain tightly matched against the maturing term debt. * Low current ratio: Current ratio was 0.8 times as on March 31, 2018. RAPL was incorporated in 2010 and has its registered office in New Delhi but all operations are carried out from its Vadodara, Gujarat, office as this is near its plant in Jambusar, Bharuch district, Gujarat. The company refines and smelts lead to manufacture lead ingots and alloys. SANGAMESHWAR DALL: CRISIL Lowers Rating on INR7cr Cash Loan to B ---------------------------------------------------------------- CRISIL has downgraded its rating on the bank loan facilities of Sangameshwar Dall Mill (SDM) to 'CRISIL B/Stable' from 'CRISIL B+/Stable'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 7 CRISIL B/Stable (Downgraded from 'CRISIL B+/Stable') The downgrade reflects further weakening in business risk profile as well as financial risk profile of the firm. There has been a substantial decline (around 45%) in operating income from INR 55.6 crore in fiscal 2017 to INR 30.7 crore in fiscal 2018. On back of decline in prices of pulses and fixed costs remaining largely constant the firm reported operating losses in fiscal 2018 thereby leading to significant deterioration in the firm's financial risk profile, with complete erosion of the networth and debt protection metrics. The operations were however supported through unsecured loans by partners and related parties. Rating continues to small scale of operations amidst intense competition and weak financial risk profile. These weakness are partially offset by experience of partners in the industry. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations amidst intense competition: The pulse processing business is highly fragmented, with numerous small- scale unorganised players catering to local demands. The fragmented nature of the business and SDM's small scale of operations limit the firm's ability to bargain with its suppliers and customers, leading to significant pressure on its profit margin. * Weak financial risk profile: The firm had a complete erosion in networth in fiscal 2018 on back of cash losses. The networth was negative at INR0.83 crore. Accordingly debt protection metrics also deteriorated. The business operations and debt servicing was however supported by unsecured loans by partners and related parties, which were at INR 1.8 crores as on March 31, 2018. Strength * Extensive experience of partners: Set up in 1991 as a partnership firm, SDM is managed by Mr. Jagdishprasad Shah and his family members. The partners have established relationships with customers in Gujarat, Maharashtra, Karnataka, and Pondicherry. Outlook: Stable CRISIL believes SDM will continue to benefit over the medium term from the longstanding experience of its partners. The outlook may be revised to 'Positive' in case of substantially higher-than- expected growth in revenue and consequently profitability resulting in an improved capital structure and debt protection metrics. Conversely, the outlook may be revised to 'Negative' if lower-than-anticipated cash accrual or an increased working capital requirement or considerable debt-funded capital expenditure puts further pressure on liquidity. Liquidity: Stretched SDM is expected to continue to have negative to insignificant cash accruals in fiscal 2019 and fiscal 2020. However, the firm does not have any secured term debt and hence, no term debt repayment obligations in the corresponding years. Furthermore, the firm has no debt-funded capex plans over the medium term. Bank limit utilization was moderate at around 73 percent of the sanctioned limits of INR7 crores, on account of decreased scale of operations. CRISIL believes that while liquidity scenario will remain stretched, the liquidity would be managed by the support extended in the form of unsecured loans as seen in the past by partners and related parties, to meet timely debt servicing and also partially fund the working capital requirements. Current ratio of the firm was moderate at 1.10x as on March 31, 2018. Established in 1991 as a partnership between Mr Jagdishprasad Shah and his family, SDM processes pigeon pea at its facility in Vasad, Gujarat, with installed capacity of 300 tonne per day. SHREE NATH: CRISIL Reaffirms B+ Rating on INR12.5cr Loan -------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Shree Nath Ji Enterprises - Nissing (SNJE) at 'CRISIL B+/Stable'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 6.5 CRISIL B+/Stable (Reaffirmed) Long Term Loan 2.5 CRISIL B+/Stable (Reaffirmed) Warehouse Receipts 3.5 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect the extensive experience of the partners and healthy growth prospects for the basmati rice industry. These strengths are partially offset by the firm's modest scale of operations in the highly fragmented rice industry, and its small networth and high leverage. Analytical Approach Unsecured loans of INR3.1 crore as on March 31, 2018, from the partners have been treated as neither debt nor equity as they are subordinated to bank debt and are expected to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in a highly fragmented rice industry: SNJE has modest scale of operations, reflected in revenue of INR57 crore in fiscal 2018, as the firm operates in the highly fragmented rice industry which has low capital requirement and limited value addition, resulting in low entry barriers and weak bargaining power. CRISIL believes the scale of operations will increase, but remain modest, over the medium term. * Modest networth and high leverage: Networth was INR2.96 crore as on March 31, 2018, on account of modest accretion to reserves. Total outside liabilities to adjusted networth ratio over the three fiscals ended March 31, 2018, was 1-2 times. Strengths * Extensive experience of the partners: Experience of over two decades in the rice-processing business has helped the partners gain a sound understanding of the market dynamics and establish relationships with customers and suppliers. * Healthy growth prospects: India is the largest producer of basmati rice, accounting for 70% of the world's production. The Indian basmati rice industry is expected to grow substantially over the medium term, driven by steady demand from the overseas and domestic markets. As per industry players, demand for basmati rice is expected to grow 20% per annum, driven by increased demand from the Gulf countries and higher domestic consumption, supported by increasing spending power of the middle-income group. Outlook: Stable CRISIL believes SNJE will continue to benefit from its partners' extensive industry experience. The outlook may be revised to 'Positive' if financial risk profile improves because of capital infusion or a substantial increase in cash accrual due to significant revenue growth and sustained profitability. The outlook may be revised to 'Negative' if the financial risk profile weakens because of low cash accrual; large, debt-funded capital expenditure; or significant increase in inventory and bank borrowings. Liquidity * Net cash accrual adequate to meet term debt obligation: The firm is likely to generate cash accrual of INR7.3 million in fiscal 2019 against debt obligation of INR6 million. * Partners' support: To support the business, the partners have extended support in the form of unsecured loan, which stood at INR30 million as on March 31, 2018. The loan has been treated as neither debt nor equity as it is subordinated to bank debt and is expected to remain in the business over the medium term. * Limited financial flexibility: Modest networth of INR2.96 crore as on March 31, 2018, restricts the firm's ability to raise funds in case of any exigency. * Moderate bank limit utilisation: Over the 12 months through November 2018, bank limit utilisation averaged 80%. SNJE was established in 2013 as a partnership firm by Mr Gaurav Garg, Mr Mukesh Garg, Mr Dharampal Garg, Ms Suman Garg, and Mr Ankush Garg. The firm processes and mills rice at its plant at Karnal. SWASHTHIK INDUSTRIEES: CRISIL Withdraws B+ on INR5.25cr Loan ------------------------------------------------------------ CRISIL has been consistently following up with Swashthik Industriees (SI; part of Swashthik Group) 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. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 0.95 CRISIL A4 (ISSUER NOT COOPERATING; Rating Withdrawn) Cash Credit 5.25 CRISIL B+ (ISSUER NOT COOPERATING; Rating Withdrawn) Letter of Credit 1.50 CRISIL A4 (ISSUER NOT COOPERATING; Rating Withdrawn) Long Term Loan .80 CRISIL B+/Stable (ISSUER NOT COOPERATING; Rating Withdrawn) '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 SI. This restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on SI is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB rating category or lower. Based on the last available information, the rating on bank facilities of SI continues to be 'CRISIL B+/Stable/CRISIL A4 Issuer Not Cooperating'. CRISIL has withdrawn its ratings on the bank facilities of SI on the request of the company and receipt of a no dues certificate from its bank. The rating action is in line with CRISIL's policy on withdrawal of its ratings on bank loans. Analytical Approach For arriving at the ratings, CRISIL has consolidated the business and financial risk profiles of SI and its group entities, Swashthik Preforms Private Limited (SPPL) and Swashthik Caps Private Limited (SCPL), collectively known as the Swashthik Group, as all the entities are in the same line of business, have common promoters and have operational linkages. About the Group Established in 2007 as a partnership entity, SCPL was reconstituted as a private limited company in 2011. SCPL is engaged in the manufacture of three product lines: single stage bottles, caps and preforms. SCPL has an installed capacity to manufacture 9 tonnes of packaging material per day. Established in 2007 as a partnership entity, SPPL was reconstituted as a private limited company in June 2011. SPPL is engaged in the manufacture of pre-forms used primarily in the mineral water industry, jars for the confectionery industry etc. SPPL has an installed capacity to manufacture 12 tonnes of preforms per day. Established in 2011, SI is engaged in the manufacture of pre- forms, containers, bottles and jars. SI has a capacity to manufacture 15 tonnes of packaging material per day. T. ABDUL: CRISIL Reaffirms B+ Rating on INR2.4cr Proposed LT Loan ----------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of T. Abdul Wahid and Co (TAWC) at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Export Packing Credit 25 CRISIL A4 (Reaffirmed) Letter of Credit 25 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility 2.4 CRISIL B+/Stable (Reaffirmed) Standby Letter of Credit 5 CRISIL A4 (Reaffirmed) Term Loan 0.6 CRISIL B+/Stable (Reaffirmed) The ratings reflect the firm's below-average financial risk profile, with high gearing and modest debt protection metrics, and susceptibility to intense competition in the leather industry. These weaknesses are partially offset by the promoters' extensive experience in the leather industry. Key Rating Drivers & Detailed Description Weakness * Below-average financial risk profile: The firm's financial risk profile was below average marked by high gearing of around 2.58 times due to large working capital debt. Networth however was moderate at around INR15.26 Cr during the same period. Debt protection metrics is modest with interest coverage at around 1.25 times in fiscal 2018, the same is expected to remain at similar levels over the medium term due to low profitability. * Susceptibility to intense competition in the leather industry: TAWC predominantly exports finished leather and leather footwear, mainly to the US and Europe. The firm faces intense pricing competition from leather footwear manufacturers from Bangladesh where labor is cheap. Further the leather industry is also highly fragmented marked by presence of large number of unorganized players. Strengths * Promoters' extensive experience in leather industry: TAWC's promoters have experience of more than four decades in the leather industry. The firm specializes in leather footwear, which accounts for more than 85 per cent of its revenue. The firm has maintained its established relationships with key customers in the overseas market, with whom they have been dealing for more than a decade resulting in steady orders. Outlook: Stable CRISIL believes TAWC will continue to benefit over the medium term from the extensive experience of promoters. The outlook may be revised to 'Positive' in case of substantial improvement in the financial risk profile, most likely because of healthy cash accrual leading to a stronger capital structure, and efficient working capital management. Conversely, the outlook may be revised to 'Negative' if there is significant decline in operating performance or the liquidity weakens, most likely because of low cash accrual or significant working capital requirement or sizeable capital withdrawals, or large, debt- funded capital expenditure. Liquidity Profile * High limit utilization: Bank limit utilization is high at around 99.7% percent for the past twelve months, till October 31 2018. CRISIL believes that bank limit utilization will remain high on account of large working capital requirement, over the medium term. * Cash accrual sufficient/insufficient to meet debt obligation Cash accrual in FY 2018is at around INR135 lakh which is sufficient against term debt obligation of INR10 lakh. Extra cushion from accruals is expected to support liquidity over the medium term. Incorporated in 1949, TAWC is an integrated player, with an in- house tannery, and shoes and shoe-upper manufacturing unit. The operations are managed by Mr. T Faizan Ahmed. TECHNE INFRA: CRISIL Reaffirms B+ Rating on INR3.5cr Loan --------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Techne Infra India Private Limited (TIIPL) at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 2.5 CRISIL A4 (Reaffirmed) Cash Credit 3.5 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect the modest scale of operations, large working capital requirements and below-average financial risk profile and subdued debt protection metrics. These weaknesses are partially offset by the extensive experience of its promoters in the civil construction industry. Analytical Approach Unsecured loans from promoters of INR1.66 crore have been treated as neither debt nor equity in fiscal 2018 as it is interest free and expected to remain in business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: Scale of operations is modest with revenue of INR8.67 crore in fiscal 2018. Intense competition and tender-based operations may continue to restrict the scalability of operations and limit the pricing power with suppliers and customers, thereby constraining profitability. * Working capital intensive operations: Operations are expected to remain working capital intensive over the medium term - gross current assets were 673 days as on March 31, 2018, on account of high debtors of 390 days and inventory of 188 days. * Below-average financial risk profile: As on March 31, 2018, networth was small at INR2.89 crore and total outside liabilities to adjusted networth was high at 4.4 times. Debt protection metrics were also subdued with net cash accrual to total debt at 0.05 time and interest coverage of 1.64 times for fiscal 2018. Strength * Extensive experience of the promoters: Benefits from the promoters' three decade-long experience in the industry should support business as reflected in its long-standing relations with suppliers and customer. Outlook: Stable CRISIL believes TIIPL will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if growth in revenue and profitability, while working capital cycle improves, leads to better financial profile. The outlook may be revised to 'Negative' if stretch in working capital cycle, low cash accruals, or any large, debt-funded capital expenditure further weakens financial profile and liquidity. Liquidity TIIPL has stretched liquidity marked by marginal cash and cash equivalents of INR0.44 crores as on March 31, 2018 and expected cash accruals of around INR0.4-0.5 crore per annum in fiscal 2019 and fiscal 2020. TIPL has access to fund based limits of INR3.9 crores, which are 95% utilized over the 12 months ended September 2018. The company has debt repayment obligations around INR0.19 crore over the medium term, sufficient against the expected internal accruals. Promoters have infused unsecured loans of INR1.66 crores, which supports liquidity. TIIPL, incorporated in 2010 and promoted by Mr Dimitrius John D'Mello, Mr Suneel Vashdev Alreja, and Mr Hemant Bidaiah Lychettira, is a Mumbai-based civil contractor undertaking civil work for dams, real estate project and infrastructure facilities for a township. UTTAM INDUSTRIAL: Ind-Ra Raises Long Term Issuer Rating to 'B+' --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Uttam Industrial Engineering Private Limited's (UIEPL) Long-Term Issuer Rating to 'IND B+' from 'IND B- (ISSUER NOT COOPERATING)'. The Outlook is Stable. The instrument-wise rating actions are: -- INR11.3 mil. Long-term loan due on March 2028 upgraded with IND B+/Stable rating; -- INR5 mil. Fund-based limits upgraded with IND B+/Stable rating; and -- INR328.7 mil. Non-fund-based limits affirmed with IND A4 rating. KEY RATING DRIVERS The upgrade reflects UIEPL's higher-than-expected revenue in FY18, despite a decline, along with improved profitability, which led to stable credit metrics. However, the scale of operations remains small and the margin and credit metrics modest due to cyclicality in the sugar industry. Although the revenue fell 52.8% yoy in FY18 to INR868 million, it was higher than Ind-Ra's expectation of INR700 million-800 million. The fall in revenue was due to a low order book position for FY18. The EBITDA margin improved to 12.6% in FY18, after declining to 6.3% in FY17 (FY16: 13.9%), because the company mostly executed fabrication orders, which fetches higher margins than engineering of machinery. Return on capital employed was 10% in FY18. Gross interest coverage improved to 4.5x in FY18 (FY17: 4.3x) because interest expenses reduced. However, the leverage excluding corporate guarantees extended to group company Uttam Sugar Mills Limited (USML; debt without corporate guarantee/ operating EBITDA) increased to 1.0x (FY17: 0.8x) and the leverage including corporate guarantee increased to 48.2x (44x) owing to an increase in debt and a fall in EBITDA because of the revenue decline. USML's interest coverage deteriorated to 1.6x in FY18 (FY17: 3.0x) and leverage deteriorated to 6.1x (3.3x) due to a decline in its EBITDA. The ratings are constrained by the declining order book of UIEPL over FY16-FY18. The order book totalled INR1,049 million as on 30 November 2018 (June 2017: INR1,778 million, May 2016: INR2,644 million) which are to be executed over FY19-FY20 predominantly. Furthermore, the company faces customer concentration with the top five orders contributing to nearly the entire current order book. The ratings also factor in UIEPL's modest liquidity position, as indicated by 96.4% average maximum utilization of the working capital limits for the 12 months ended November 2018. UIEPL's working capital requirements are met by the customer advances which results in a negative working capital cycle of 125 days in FY18 (FY17: negative 74 days). Also, the cash flow from operations of UIEPL declined to INR13 million in FY18 (FY17: INR87 million) due to increased working capital requirements. At FYE18, it had an available cash balance of just INR0.7 million (FYE17: INR20 million). RATING SENSITIVITIES Positive: A sustained improvement in the liquidity, revenue and credit metrics along with a decline in the amount of the corporate guarantees extended will be positive for the ratings. Negative: Sustained deterioration in the revenue, credit metrics and liquidity of UIEPL or sustained deterioration in credit profile of USML will be negative for the ratings. COMPANY PROFILE UIEPL is a privately held company, primarily engaged in the engineering of equipment and machinery and execution of turnkey projects for the sugar industry. VIJAYALAKSHMI AGRO: CARE Hikes Rating on INR12cr Loan to BB- ------------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of Vijayalakshmi Agro Food Industries (VAFI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 12.00 CARE BB-; Stable Revised from Facilities CARE B+, Stable; ISSUER NOT COOPERATING Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of VAFI factor in increase in total operating income and fluctuating profit margins, and improvement of capital structure during FY18 (refers to the period April 1 to March 31). However, the ratings continue to be tempered by weak debt coverage indicators and highly fragmented and competitive advertising industry. The ratings, however, continue to derive strength from experienced partners with established track record, growing operating income, location advantage and healthy demand outlook for rice. The ability of the firm to improve its profitability margins, capital structure and debt coverage indicators with efficient working capital management would remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations with fluctuating profit margins: The total operating income of the firm stood at INR65.01 crore in FY18 as compared to INR 61.61 crore and INR52.54 crore in FY17 and FY16 respectively on With increase in scale of operations, the power and fuel expenses and other manufacturing expenses have been increasing year on year resulting in fluctuations in the profit margins of the firm. The PBILDT margin stood at 2.57% in FY18 as compared to 2.47% and 2.68% in FY 17 and FY16 respectively. In line with PBILDT margin, PAT margin also fluctuated and stood at 0.49% in FY18 as compared to 0.38% and 0.48% in FY17 and FY16 respectively. Financial risk profile marked by moderate capital structure and weak debt coverage indicators: The capital structure of the firm marked by overall gearing stood at 1.98x as on March 31, 2018. Despite increase in total debt due to increase in working capital utlisations the capital structure remained moderate. With accretion of profits and infusion of capital by the partners, the net worth of the firm has been improving year on year. The debt coverage indicators marked by TD/GCA and interest coverage ratios, remained weak during FY18 due increase in working capital utilisations and low gross cash accruals. They stood at 21.47x and 1.65x respectively during FY18 as compared to 21.08x and 1.57x respectively in FY17. The TD/CFO stood at -12.84x in FY18 due to increase in raw material and finished goods inventory. Increase in working capital cycle days: The average raw material inventory period increased during FY18 in order maintain stock to meet the increased demand from the customers. While the average collection period stood around 30 days during FY18, the creditor period stood at 22 days in FY18. Thus, the operating cycle of the firm increased and stood at 85 days in FY18 as compared to 75 days in FY17. Constitution of the entity as a partnership firm with inherent risk of withdrawal of capital: VAFI, 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. Moreover, partnership firm business has restricted avenues to raise capital which could prove a hindrance to its growth. Seasonal nature of availability of paddy resulting in working capital intensive nature of operations: Paddy in India is harvested mainly at the end of two major agricultural seasons Kharif (June to September) and Rabi (November to April). The millers have to stock enough paddy by the end of the each season as the price and quality of paddy is better during the harvesting season. During this time, the working capital requirements of the rice millers are generally on the higher side. Majority of the firm's funds of the firm are blocked in inventory and with customers. Key Rating Strengths Experience of promoter for two decades in rice business: Vijayalakshmi Agro Food Industries (VAFI) was established in 2008 as a partnership firm and promoted by Mr. CH Nageshwara Rao, Mr. CH Radha Krishna, Mr. Jasti Ram Prasad and Mrs. K Geetha Vani. Mr. CH Nageshwara Rao and Mr. CH Radha Krishna are having around 10 years of experience in rice milling business. Through their experience in the rice milling business, they have established healthy relationship with key suppliers, customers, local farmers, dealers and also with the brokers facilitating the rice business within the state. Growth in total operating income during review period: The total operating income of the firm has been increasing year on year standing at INR65.01 crore in FY18 as compared to INR 61.61 crore and INR52.54 crore in FY17 and FY16 respectively on back of increase in demand from existing customers and addition of new customers along with increase in sales realization. Locational advantage with presence in cluster and easy availability of paddy: The rice milling unit of VAFI is located at Koppal district which is the top district for producing rice in Karnataka. The manufacturing unit is located near the rice producing region, which ensures easy raw material access and smooth supply of raw materials at competitive prices and lower logistic expenditure. Healthy demand outlook of rice: Rice is consumed in large quantity in India which provides favorable opportunity for the rice millers and thus the demand is expected to remain healthy over medium to long term. India is the second largest producer of rice in the world after China and the largest producer and exporter of basmati rice in the world. The rice industry in India is broadly divided into two segments - basmati (drier and long grained) and non-basmati (sticky and short grained). Demand of Indian basmati rice has traditionally been export oriented where the South India caters about one-fourth share of India's exports. However, with a growing consumer class and increasing disposable incomes, demand for premium rice products is on the rise in the domestic market. Demand for non-basmati segment is primarily domestic market driven in India. Initiatives taken by government to increase paddy acreage and better monsoon conditions will be the key factors which will boost the supply of rice to the rice processing units. Rice being the staple food for almost 65% of the population in India has a stable domestic demand outlook. On the export front, global demand and supply of rice, government regulations on export and buffer stock to be maintained by government will determine the outlook for rice exports. Liquidity Analysis: The current ratio of the firm stood at 1.30x as on March 31, 2018. It stood moderate mainly on account of high inventory and debtors on the closing date of balance sheet. The cash and bank balances as on March 31, 2018 stood at INR0.80 crore while unutilised working capital balance stood around 5%. The firm has liquid investments of about INR0.09 crore. Vijayalakshmi Agro Food Industries (VAFI) was established in 2008 as a partnership firm and promoted by Mr. CH Nageshwara Rao, Mr. CH Radha Krishna, Mr. Jasti Ram Prasad and Mrs. K Geetha Vani. VAFI is engaged in milling and processing of rice. Apart from rice processing, the firm is also engaged in selling by-products such as broken rice, husk and bran. The main raw material, paddy, is directly procured from local farmers located in and around Koppal District and the firm sells rice and other by-products mainly to customers in the open markets of Karnataka. VIKRAM TRADERS: CARE Cuts Rating on INR11cr LT Loan to B+ --------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Vikram Traders (VT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 11.00 CARE B+; Stable, Issuer Not Facilities Cooperating; Revised from CARE BB- (on the basis of best available information) Detailed Rationale & Key Rating Drivers CARE has been seeking information from VT to monitor the rating vide e-mail communications dated December 14, 2018, December 11, 2018, December 6, 2018, July 3, 2018 and July 20, 2018, and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the rating. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of best available information which however, in CARE's opinion is not sufficient to arrive at fair rating. The rating on Vikram Traders's bank facilities will now be denoted as CARE B+; Stable; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating October 5, 2017 the following were the rating strengths and weaknesses: Key Rating Weakness Small scale of operation with low networth base: Despite long track record of business, the firm's scale of operations remained small and fluctuating during the past four years. The total operating income declined from INR 50.21 crore in FY16 (A) to INR27.77 crore in FY17 (Provisional) due to a decline in orders received at the back of demonetization and introduction of Goods and Service Tax (GST) causing disruption in the textile industry. Also, the firm had a low net worth base of INR9.45 crore as on March 31st2017. The small scale of operations limits the firm's financial flexibility in times of stress and deprives it from scale benefits. The firm achieved a total operating income of INR 24 crore in 5MFY18. Low profitability margins: The PBILDT margin remained low though it improved from 5.98% in FY16 (A) to 9.22% in FY17 (Provisional) on account better realisations on the fabrics traded during FY17. The firm's average selling price of fabric increased from INR 224 per metre in FY16 to INR 275 per metre in FY17. Weak debt coverage indicators: The debt coverage indicators marked by the total debt/GCA and interest coverage ratio saw a marginal improvement from 27.66x and 1.25x respectively, in FY16 (A) to 25.96x and 1.29x in FY17 (Provisional) respectively, at the back of withdrawal of unsecured loans from promoters and decrease in interest costs. However, they continued to remain weak.The firm's long term debt profile consisted of only unsecured loans from promoters. Working capital intensive nature of operations: The working capital cycle of the firm increased from 74 days to 137 days during FY16 (A)- FY17 (Provisional) as majority of the firm's funds were blocked by debtors and inventory. The average collection period increased from 113 days in FY16 (A) to 230 days in FY17 (Provisional) as the firm had delayed debt realization from one of its key customers on a regular basis throughout FY17. The inventory holding period too increased from 31 days to 38 days on account of sluggish demand in an already fragmented textile market. The firm made an average cash credit utilization of 90-100% for the 12 month period ended August 31, 2017, in order to meet its working capital needs. Highly competitive and fragmented industry along with partnership nature of business: The firm operates in highly fragmented and competitive industry wherein the presence of large number of entities in the unorganised sector and established players in the organised sector limits the bargaining power with the customers. Furthermore, the firm is also exposed to competitive pressures from domestic players as well as from players situated in China and Bangladesh. Vikram Traders constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partner's capital at the time of personal contingency and firm being dissolved upon the death/ retirement/ insolvency of the partners. Moreover, partnership firms have restricted access to external borrowings as credit worthiness of partners would be the key factors affecting credit decisions of the lenders. Key Rating Strengths Long experience of promoters: VT is a family owned business which commenced operational in 1984 and is currently managed by three partners viz. Mr. Meetesh Bhandari, Mr. Vikram Bhandari and Mr. Sumeet Bhandari. All the three partners have an extensive experience of more than a decade and looks after the overall management of the firm. Furthermore, the partners are supported by a team of qualified managerial personnel having long standing experience in the industry. Moderate solvency position: Due to the absence of long term debt, the debt equity ratio of the firm stood nil. However, the overall gearing ratio remained moderate at 1.22x as on March 31, 2017 (Provisional) at the back of higher utilization of working capital facilities. Established relationships with suppliers and customers: Though the client base of VT is restricted, the firm has established relationship with the customers for more than 6 years now. Moreover, the firm gets repeat orders from these clients on year on year basis. Its major customers included Unitex Apparels Private Limited, Prateek Apparels Private Limited and Famous Fashion. Bangalore based, Vikram Traders (VT) was established in the year 1984 by Mr. Mangilal Gupta along with six other partners. However, in the year 2013, the firm was reconstituted with three new partners' viz. Mr. Meetesh Bhandari, Mr. Vikram Bhandari and Mr. Sumeet Bhandari sharing profits and losses equally. The firm is engaged in trading of fabrics with major product being rolled denim fabric. The firm sells its products tovarious wholesalers located in Bangalore and Maharashtra region. Its major customers included Unitex Apparels Private Limited, Prateek Apparels Private Limited and Famous Fashion. The fabric is mainly procured from the suppliers based out in Maharashtra and Rajasthan like Raymond Uco Denim Pvt Ltd, RSWM Limited, and Century Denim. ================= I N D O N E S I A ================= ALAM SUTERA: S&P Puts 'B' LT Issuer Credit Rating on Watch Neg. --------------------------------------------------------------- S&P Global Ratings said it has placed its 'B' long-term issuer credit rating and issue rating on PT Alam Sutera Realty Tbk. (Alam) on CreditWatch with negative implications. The CreditWatch placement reflects refinancing and liquidity risk Alam faces related to its US$235 million guaranteed senior unsecured notes due in March 2020. In S&P's view, the company's liquidity and capital structure could significantly weaken as the maturity draws closer. S&P said, "We believe Alam would depend on financial markets and banking relationships to meet its refinancing needs. We do not expect the company to have enough internally generated cash flow to repay the notes, even if it significantly scales back capital spending. Land sales to China Fortune Land Development (CFLD), which we estimate to have a transaction value of Indonesian rupiah (IDR) 1.3 trillion-IDR1.5 trillion, are insufficient to mitigate Alam's refinancing risk because cash collection from land sales will be in phases over six to 12 months. We also do not expect the planned sale of The Tower, an office building, to occur in the next few weeks, as negotiations with potential buyers are ongoing and there is no certainty over the timeframe. "In our opinion, refinancing options could become increasingly limited for Alam with 14 months remaining before the March 2020 maturity. We understand that the company is continuing efforts to refinance the notes. However, the success of a notes placement will increasingly depend on favorable market conditions as the maturity draws closer. "Nevertheless, Alam's core operations remain steady and the company has a solid EBITDA interest coverage ratio. We project property sales of IDR4.1 trillion-IDR4.3 trillion in 2019. This includes land sales of IDR1.3 trillion-IDR1.5 trillion to CFLD. In addition, the high property sales of over IDR4 trillion achieved in 2018 will support revenue recognition and cash collection over the next two years. We forecast the company's EBITDA interest coverage to be 2.7x-2.9x in 2019 and 2.6x-2.8x in 2020. "Alam has an established brand name in western Jakarta and a large low-cost land bank. As of Sept. 30, 2018, the company had a land bank of 2,250 hectares, which is sufficient for at least 10 years' development, in our view. "The CreditWatch placement indicates a one-in-two likelihood that we could downgrade Alam in the next four to eight weeks unless the company makes substantial progress in addressing the refinancing of its March 2020 notes. In resolving the CreditWatch we will assess Alam's progress in refinancing its debt maturities and the extent to which this alleviates pressure on its liquidity and weakness in its capital structure. "Alternatively, we could affirm the rating at the current level if the company refinances a majority of its 2020 notes in the next four to eight weeks with long-term debt. An affirmation would also entail steady property sales and cash collection, prudent investments, sufficient liquidity, and an EBITDA interest cover of sustainably above 2.0x." TOBA BARA: Moody's Withdraws B3 CFR for Business Reasons -------------------------------------------------------- Moody's Investors Service has withdrawn Toba Bara Sejahtra Tbk's B3 corporate family rating and the stable outlook on the rating. RATINGS RATIONALE Moody's has decided to withdraw the rating for its own business reasons. Toba Bara Sejahtra Tbk, through its majority ownership in three coal subsidiaries, is an Indonesian thermal coal producer with three adjacent coal mines with combined production volume of around 5.4 million tons for the 12 months ended September 30, 2018. As of September 30, 2018, the company was 61.91% owned by Highland Strategic Holding Pte. Ltd, a Singapore-based passive private investment trust comprised of institutional and high net- worth investors. ===================== P H I L I P P I N E S ===================== HANJIN HEAVY: Philippine Unit Owes US$412MM to Local Banks --------------------------------------------------------- Inquirer.net reports that five of the Philippines' largest banks are rushing to cover a combined loan exposure of $412 million, most of it lent without the benefit of collateral protection, after the local shipbuilding unit of Korean conglomerate Hanjin declared bankruptcy earlier last week -- the biggest corporate default in Philippine history. More importantly, however, the involved financial institutions - Rizal Commercial Banking Corp.; Land Bank of the Philippines; Metropolitan Bank and Trust Co.; Bank of the Philippine Islands, and Banco de Oro Universal Bank - have decided to move as one to take control of Hanjin Heavy Industries and Construction Philippines' $1.6-billion shipyard in Subic Bay, Zambales, which employs about 23,000 workers, the Inquirer says. "We agreed to work together to protect the interests not only of the banking industry but of the Philippine economy, as well, given a large number of people Hanjin employs in Subic," the president of one of the creditor banks told the Inquirer in an interview. Speaking on condition of anonymity, the bank president said his peers from other creditor banks had agreed that "no one will jump the gun" to seize collateral ahead of other creditors, an act that would trigger a free-for-all on Hanjin's Philippine assets and jeopardize the rehabilitation plan that had been filed in the local courts, the Inquirer relates. Eventually, the provisional agreement among members of the loose consortium of Philippine banks may call for the forced sale of the Hanjin shipyard to a strategic investor as a way for the creditors to recoup their loans, according to the report. "The Philippine assets are worth a lot more than the loans," the bank chief told the Inquirer. "If those are sold, even at a discounted value, they will still be able to cover all the loans (extended) by the local banks." The Inquirer learned that RCBC has a loan exposure of $140 million to Hanjin. It was followed by Land Bank with an estimated $80 million; Metrobank, $72 million; BPI, about $60 million and BDO, $60 million. RCBC president Gil Buenaventura told the Inquirer in a separate interview that there was a long history of successful creditor- led loan restructuring or corporate rehabilitation programs in the country where lenders were able to recoup their initial loan losses a few years later. These include the reorganization of National Steel Corp. in the 1990s and the restructuring of the debts of Skyway building Citra MMTC after the collapse of its Indonesian parent firm in the way of the 1997 East Asian financial crisis. At the same time, however, there have been instances where one creditor moved ahead of others to seize collateral unilaterally causing the rehabilitation plan to collapse, most notably in the case of Victorias Milling Corp.'s bankruptcy two decades ago, the report states. "This is not the first time this has happened and our banks have experience in this," RCBC president Gil Buenaventura said in an interview with the Inquirer. "I'm very confident that no one will jump the gun in this case." In a statement, Subic Bay Metropolitan Authority chair Wilma Eisma said that apart from domestic lenders, Hanjin Heavy Industries owes some $900 million to lenders in South Korea, the Inquirer relays. The local banks' exposure to Hanjin is more significant than the $386 million in Lehman Brothers-related losses they had to declare in the wake of the 2008 global financial crisis, which was previously the biggest that the Philippine financial system had to absorb, the report states. Metrobank president Fabian Dee told the Inquirer that the country's second-largest financial institution's exposure had already been reduced substantially and that the impact on the bank would be minimal, thanks to protective measures taken early on in its dealings with Hanjin. "The banking system is working together on this to protect the interests of the country," the report quotes Mr. Dee as saying. Hanjin is the largest investor in the Subic Bay Freeport Zone through the Subic Shipyard, which employs thousands of Filipino workers. Hanjin Heavy Industries developed the 227-hectare site, which includes a steel structure plant, from 2006 to 2016. On Jan. 8 this year, it filed a petition to enter corporate rehabilitation. ********* 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 2019. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. *** End of Transmission ***