/raid1/www/Hosts/bankrupt/TCRAP_Public/191024.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, October 24, 2019, Vol. 22, No. 213
Headlines
A U S T R A L I A
FOOTPRINT HOSPITALITY: First Creditors' Meeting Set for Nov. 1
GULF ENERGY: First Creditors' Meeting Set for Oct. 31
HOLDINGS (MRS): Parent Gets Non-Binding Offers for Units
IREXCHANGE LTD: Metcash Challenger Goes Into Administration
KHMD PTY: First Creditors' Meeting Set for Oct. 31
OM MAHALAXMII: Worrells Brisbane Appointed as Liquidator
SOAPBOX PTY: First Creditors' Meeting Set for Nov. 1
[*] AUSTRALIA: Ombudsman Launches Insolvency Practices Inquiry
C H I N A
ANTON OILFIELD: Fitch Affirms B LT IDR, Outlook Stable
CBAK ENERGY: 4 Creditors Cancel $5.2MM Debt in Exchange for Equity
CHINA: Shandong Firms Still Reeling from Liquidity Crunch
GUANG YANG: S&P Cuts ICR to 'B' on Elevated Financial Leverage
YINGDE GASES: Fitch Upgrades LT IDR to BB, Outlook Stable
I N D I A
A P GOYAL: Ind-Ra Maintains 'D' Loan Rating in Non-Cooperating
A. R. CHAINS: CRISIL Reaffirms B+ Rating on INR16cr Cash Loan
CAPACITE STRUCTURES: Insolvency Resolution Process Case Summary
D. MANOHARAN: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
GAYATRI SATYA: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
HEAVY ENGINEERING: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
INDIA: Faces Severe Slowdown; World Bank Cuts GDP Forecast
JSW STEEL: Domestic Demand Woes Set to Hit Q2 Earnings
LINERS INDIA: CRISIL Cuts INR12.50cr Loan Rating to 'D', Not Coop.
LINKPOINT INFRASTRUCTURE: Ind-Ra Assigns 'BB+' LT Issuer Rating
M MADHAVARAYA: CRISIL Lowers Rating on INR27cr Loan to B+
MANDEEP INTERNATIONAL: CRISIL Reaffirms B Rating on INR10cr Loan
MANNA INDUSTRIES: CRISIL Lowers Rating on INR22cr Loan to B+
MODERN DISTROPOLIS: CRISIL Reaffirms B Rating on INR17.5cr Loan
MUTHOOT FINNACE: Fitch Rates Proposed US$ Sr. Sec. Bonds BB+(EXP)
NEWTECH LA-PALACIA: Insolvency Resolution Process Case Summary
ORIENT TOURISM: Insolvency Resolution Process Case Summary
P.C. JAIN: CRISIL Reaffirms B+ Rating on INR3.5cr Loan
PALANI ANDAVAR: Ind-Ra Affirms 'BB+' Long Term Issuer Rating
PARASMANI GEMS: CRISIL Reaffirms B+ Rating on INR8cr Cash Loan
PGSD AGRO: CRISIL Reaffirms B+ Rating on INR5cr Cash Loan
PRECISION INFOMATIC: CRISIL Withdraws B+ Rating on INR19cr Loan
PRETTY JEWELLERY: CRISIL Reaffirms D Rating on INR5.3cr Loan
PROGNOSYS MEDICAL: CRISIL Assigns B+ Rating to INR6.5cr Loan
R L AVIATION: CRISIL Reaffirms B+ Rating on INR5cr Loan
RAJARAM AND BROTHERS: CRISIL Reaffirms B+ Rating on INR8cr Loan
RAJEEV K: CRISIL Reaffirms 'B' Rating on INR4cr Proposed Loan
RAPID METRO: Delhi Metro Takes Over Gurugram Operations
ROSEWOOD TREXIM: Insolvency Resolution Process Case Summary
RUSHIPRABHA ENGINEERS: CRISIL Keeps B Rating in Not Cooperating
S.R.K. FABRICS: CRISIL Maintains 'D' Rating in Not Cooperating
SANTOSH TIMBER: CRISIL Reaffirms B+ Rating on INR10.5cr Loan
SHANMUKHA COTTON: CRISIL Maintains 'B' Rating in Not Cooperating
SHIVA PARBOILED: CRISIL Reaffirms B+ Rating on INR8cr Cash Loan
SHIVALI UDYOG: CRISIL Maintains 'B' Rating in Not Cooperating
SHREE SAI: Insolvency Resolution Process Case Summary
SHREE SAINATH: CRISIL Reaffirms B- Rating on INR11cr Cash Loan
SHREEJEE JEWELLERS: CRISIL Cuts Rating on INR11.5cr Loan to B+
SINCHANA EXPORTS: CRISIL Assigns 'B' Rating to INR5cr LT Loan
SP ACCURE: CRISIL Hikes Rating on INR10.0cr Loan to B
SRI BALAJI: CRISIL Raises Rating on INR6cr Loan to B+
SUNCO ENTERPRISES: CRISIL Hikes Rating on INR2cr Loan to B+
TAMIL NAADU: CRISIL Maintains 'B' Rating in Not Cooperating
V R CONSTRUCTIONS: CRISIL Migrates B+ Rating From Not Cooperating
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A U S T R A L I A
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FOOTPRINT HOSPITALITY: First Creditors' Meeting Set for Nov. 1
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Footprint
Hospitality Pty Ltd, trading as The Pacific Club Bondi Beach Bistro
& Beach Club, will be held on Nov. 1, 2019, at 11:00 a.m. at the
offices of HoganSprowles, Level 9, at 60 Pitt Street, in Sydney,
NSW.
Christian Sprowles of Brendan Copeland of HoganSprowles were
appointed as administrators of Footprint Hospitality on Oct. 22,
2019.
GULF ENERGY: First Creditors' Meeting Set for Oct. 31
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Gulf Energy
Limited will be held on Oct. 31, 2019, at 3:00 p.m. at the offices
of Jones Partners, Level 13, at 189 Kent Street, in Sydney, NSW.
Bruce Gleeson and Daniel Robert Soire of Jones Partners were
appointed as administrators of Gulf Energy on Oct. 21, 2019.
HOLDINGS (MRS): Parent Gets Non-Binding Offers for Units
--------------------------------------------------------
Share Magazine reports that plant hire and mining services group
Management Resource Solutions said it had received seven
non-binding offers for five subsidiaries that were last month
placed into administration.
Share Magazine relates that a final deadline for final and best
offers had been set for October 28, with a hope any sale and
contract documentation would be concluded by November 8.
According to the report, Management Resource Solutions said it
would also seek to raise additional funds of around AUD5 million as
part of a deed of company arrangement (DOCA) proposal.
The additional funds would be used for working capital, the report
says.
'The board remains firmly of the view that its refinancing plans,
which are expected to be finalised shortly, and associated DOCA
remain the best option not only for creditors but for stakeholders
in general,' Management Resource Solutions said, the report
relays.
Sule Arnautovic, Bradd William Morelli and Trent Andrew Devine of
Jirsch Sutherland were appointed as administrators of Holdings
(MRS) Pty Ltd, MRS Services Group Pty Ltd, Bachmann Plant Hire Pty
Ltd, MRS Property No 1 Pty Ltd and Management Resource Solutions
Pty Ltd on Sept. 4, 2019.
IREXCHANGE LTD: Metcash Challenger Goes Into Administration
-----------------------------------------------------------
Sue Mitchell at Australian Financial Review reports that Metcash
challenger IRExchange, an online grocery wholesaler, has gone into
administration after being sued by disgruntled investors unhappy
about a proposed recapitalisation.
McGrathNicol partners Rob Smith and Keith Crawford were appointed
voluntary administrators on Oct. 23 after a syndicate of investors
lodged a statement of claim in the Federal Court in NSW on Oct. 11,
AFR relates.
According to the report, the administrators have called for
expressions of interest in a sale of the four-year-old business, or
a recapitalisation through a deed of company arrangement.
It is understood the administrators are hoping several investors
who had agreed to commit more capital and who supported a change in
IRExchange's business model will be interested in bailing it out,
AFR says.
AFR relates that documents lodged with the Australian Securities
and Investments Commission show chief executive Brett Charlton,
non-executive director Ian Hicks and company secretary Anand
Sundaraj resigned on Oct. 22, one day after the company was due to
hold an extraordinary general meeting to finalise the "solvent
recapitalisation" plan.
AFR notes that IRExchange aimed to disrupt the grocery, liquor and
pharmacy wholesaling markets by enabling independent retailers and
pharmacies to order stock directly from suppliers through an online
trading platform, bypassing wholesalers such as Metcash.
According to AFR, the company had been planning an initial public
offering later this year after being forced to pull the plug on a
AUD17 million IPO in March and resolving a AUD1 million legal claim
from convertible noteholder James Baillieu.
A company associated with two IRExchange non-executive directors,
John Ayre and Mr Hicks, and a former chairman, Alan Goodfellow,
agreed to pay more than AUD1.2 million to Mr. Baillieu.
AFR relates that Mr. Baillieu launched legal action in January,
alleging IRExchange made false representations about customer
numbers when he invested AUD1 million in August 2017. He also
alleged it made false claims about active customer numbers in the
prospectus for a proposed AUD17 million initial public offering
which would have valued the business at about AUD74 million.
IRExchange issued a supplementary prospectus after ASIC put an
interim stop order on the original prospectus, but eventually
pulled the plug on the IPO and refunded subscriptions.
In the prospectus, IRExchange claimed it had signed up more than
600 independent retailers--50 per cent of whom were trading on the
platform regularly--and 70 food, grocery and liquor suppliers
including Unilever, Procter & Gamble, Reckitt Benckiser and Carlton
& United Breweries, AFR relays.
The company, which had raised more than AUD30 million from
investors and spent at least AUD20 million on product and
technology development, had also signed a memorandum of
understanding with pharmacy wholesaler Sigma, which had taken an
equity stake in the business, the report adds.
Chaired by former Coca-Cola Amatil and Lion Dairy and Drinks
executive Andrew Reeves, IRExchange aimed to achieve at least AUD4
billion in gross sales as retailers and suppliers shifted to its
online portal to reduce costs, AFR discloses.
AFR, citing last available accounts, discloses that the company
generated sales of AUD13 million in 2018 but lost AUD16.2 million,
taking accumulated losses to AUD43 million.
It is understood Metcash, which has established an online supply
portal known as indieDirect, is not interested in buying
IRExchange, the report notes.
The first meeting of creditors is expected to be held on October 29
or 30, the report discloses.
KHMD PTY: First Creditors' Meeting Set for Oct. 31
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A first meeting of the creditors in the proceedings of KHMD Pty
Ltd, trading as Meraki For Hair, will be held on Oct. 31, 2019, at
11:00 a.m. at the offices of Hamilton Murphy Advisory, Unit 18, at
28 Belmont Avenue, in Rivervale, WA.
Stephen Robert Dixon of Hamilton Murphy Advisory was appointed as
administrator of KHMD Pty on Oct. 21, 2019.
OM MAHALAXMII: Worrells Brisbane Appointed as Liquidator
--------------------------------------------------------
Michael Griffin of Worrells Brisbane was appointed as liquidator to
OM Mahalaxmii Pty Ltd on Sept. 27, 2019. OM Mahalaxmii Pty Ltd
operated two IGA supermarkets at the time of liquidation, which are
independently owned and operated under the IGA brand.
Worrells said it is continuing to deal with relevant stakeholders
regarding the operations of the IGA stores at Goodna, and Boronia
Heights. The IGA Goodna store is being independently operated by a
third party while a buyer is sought. The IGA Boronia Heights store
is no longer being traded by Worrells and is now being traded by an
independently operated third party under a licence agreement.
Offers to buy the IGA Boronia Heights store have been sourced by
Worrells' engaged broker, which are being assessed.
On Oct. 17, the liquidator interviewed the company director, Mr.
Gaurav Bansal, who is assisting the liquidator with all inquiries
into the affairs of the company. At that time, Mr. Bansal provided
the liquidator a Report on Company Activities and Property (ROCAP)
as prescribed by the Corporations Act 2001, together with some
company books and records.
The ROCAP identifies a number of employees with outstanding
entitlements owing. Worrells is contacting those employees as a
priority regarding their entitlements to assist them with lodging
claims under the government's Fair Entitlement Guarantee Scheme.
Mr. Griffin said, "We are continuing to work with all stakeholders
to get the best possible outcome for stakeholders, including the
local communities in which these stores operate and for
employees".
Worrells advises that they expect to issue an advice to creditors
shortly.
SOAPBOX PTY: First Creditors' Meeting Set for Nov. 1
----------------------------------------------------
A first meeting of the creditors in the proceedings of Soapbox Pty
Ltd will be held on Nov. 1, 2019, at 11:00 a.m. at the offices of
SV Partners, Level 7, at 151 Castlereagh Street, in Sydney, NSW.
Jason Porter of SV Partners was appointed as administrator of
Soapbox Pty on Oct. 23, 2019.
[*] AUSTRALIA: Ombudsman Launches Insolvency Practices Inquiry
--------------------------------------------------------------
Print21.com reports that the Australian Small Business and Family
Enterprise Ombudsman, Kate Carnell is launching an inquiry into the
insolvency system, to investigate if current insolvency practices
achieve the best possible outcome for small and family businesses
in financial trouble.
Print21.com relates that the inquiry came as stats show that few
small and family owned businesses successfully come through
external administration. There is also disquiet over the way
mechanisms such as the Deed of Company Arrangement (DOCA) are used,
with print companies a prime example of using the controversial
tactic.
"This inquiry will shine a light on the insolvency system and
uncover if it encourages practitioners, in the first instance, to
restructure the small or family business to turn it around," the
report quotes Ms. Carnell as saying.
According to Print21.com, print business owners often complain
bitterly that the external administration process benefits no-one
but the administrators themselves. Print21.com says the biggest
case in print recently was Picton Press in Perth, whose
administrator Cor Cordis managed a controversial DOCA, which
enraged the ATO and the rest of the Perth print community, then
ended up at loggerheads with the owners Dennis Hague and Gary
Kennedy, before asking creditors to pull the pin, after having
collected a handy AUD612,000 for their troubles, from sales of
AUD3.1m.
Print21.com relates that the DOCA was also at the centre of a storm
involving Sydney signage operator Skope and Clear Skies and
numerous related entities, which effectively enabled Skope to clear
70 per cent of the AUD2.3 million debt accrued by Clear Skies
through not paying the ATO and suppliers, leaving the taxpayer and
the rest of the signage industry to foot the bill.
"Unfortunately the Banking Royal Commission wasn't asked to look at
the role of insolvency practitioners and that was a missed
opportunity," Print21.com quotes Ms. Carnell as saying.
"We know there is a low success rate in restructuring Australian
businesses under external administration and the impact of the
insolvency process is often devastating for the small business
owner.
"Few small businesses that enter formal insolvency administration
are able to navigate their way through the process to reach a
restructuring agreement.
"The latest data reveals more than 8,000 businesses entered
external administration in 2018/19. Of those, small and family
businesses in rural and regional Australia have been among the
hardest hit."
Print21.com says the Insolvency Practices Inquiry will examine the
existing several areas including: the insolvency system through the
experience of small business; the degree of transparency of the
governance, processes and costs of practitioners including legal
advisers, valuers, investigating accountants, administrators,
receivers and liquidators; how the insolvency of a small or family
business may lead to bankruptcy for the owners; and how the
framework impacts the practices and fees of insolvency
practitioners.
As part of the inquiry, the Ombudsman has established a reference
group, chaired by former Senator John Williams, to act as a forum
for input and discussion on the challenges faced by small and
family businesses facing insolvency, Print21.com relates.
Senator Williams took a lead role in the 2010 Senate Inquiry into
the regulation, registration and remuneration of liquidators.
"It is most important that small businesses and farmers who find
themselves in financial difficulty are treated with respect and
fairness," the report quotes Senator Williams as saying. "This
inquiry is essential to see if any systemic improvements can be
made."
Ms. Carnell added, "Our Small Business Loans Inquiry identified a
lack of transparency for the small business owner when a creditor
commenced debt recovery action. The small business owners felt they
had lost control of their business and in cases where the business
was wound up, they felt the process was poorly managed.
"This inquiry will identify areas where practices can be improved
and recommend changes to the system to achieve fairer outcomes for
all parties involved," Print21.com relays.
Small and family businesses that have faced financial difficulties
and restructured or wound up their business can share their stories
by completing this survey, Print21.com says.
An interim report will be released in December with a final report
to be handed down in February 2020, adds Print21.com.
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C H I N A
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ANTON OILFIELD: Fitch Affirms B LT IDR, Outlook Stable
------------------------------------------------------
Fitch Ratings affirmed China-based Anton Oilfield Services Group's
Long-Term Issuer Default Rating at 'B'. The Outlook is Stable.
Fitch has also affirmed Anton's senior unsecured rating and the
rating on the company's USD300 million 9.75% bonds maturing 2020 at
'B' with a Recovery Rating of 'RR4'.
Anton's leverage has declined and Fitch expects its FFO adjusted
net leverage to stay at around 2.5x over 2019-2022, driven by
EBITDA growth from strong new orders and steady contract execution,
and good cash management on working capital and capex. Anton's
rating reflects its relatively high exposure to geopolitically
risky regions including Iraq and other emerging markets, which will
contribute more than 50% of revenue in the forecast period to
2022.
Its rating is also constrained by its inadequate internal liquidity
to redeem its US dollar bonds, which will be due in December 2020,
resulting in refinancing risk. Currently, the company has no
concrete plan for the refinancing, although Fitch thinks the
refinancing risk should be manageable amid an improving sector
outlook and Anton's bond is trading well above par. However,
refinancing is contingent upon market conditions and investor
sentiment.
KEY RATING DRIVERS
Strong Order Inflow: Anton had an order inflow of CNY2.7 billion in
1H19, out of which 61% was from the Chinese market and 28% from
Iraq. Its backlog reached a record high of CNY5.4 billion by
end-1H19. Iraq accounted for 58% of the total backlog due to a
large integrated oilfield-management contract, and China made up
37%. Contract execution is also on target, with a backlog-to-bill
ratio of around 1.5-1.6x. Fitch expects faster order execution from
2H19 as the company has been ramping up its internal and leased
equipment and other resources capabilities.
Robust Growth in Chinese Market: Anton's revenue from the Chinese
market rose 63% yoy in 1H19 after gaining 37% in 2018 and Fitch
expects the strong momentum to be maintained. This is because
China's national oil companies (NOC) have increased their upstream
exploration and production (E&P) activities as the government has
called for an increase in domestic oil and gas production to
enhance energy security. E&P capex from China Petroleum & Chemical
Corporation (Sinopec) (A+/Stable) and PetroChina Company Limited
(A+/Stable) rose by 23% in 2018, and their 2019 budgeted capex is
another 20% increase. Their capex will remain high in the next few
years as China has set a long-term target for oil and gas
production growth.
Exposure to Riskier Regions: Revenue from Iraq (B-/Stable)
accounted for 45% of total revenue, and emerging markets such as
Chad, Pakistan (B-/Stable), Ethiopia (B/Negative) and Kazakhstan
(BBB/Stable) contributed 14% in 1H19. The majority of the
counterparties are NOCs and international oil majors. In Iraq,
lower-rated local and private companies only accounted for around
30% of revenue and 40% of backlog as end-2018. However, the
regions' geo-political risks remain high, although insurance
coverage could help to mitigate some of the risks. Fitch expects
China's strong growth to lead to a drop in revenue from overseas
markets, although they will still account for more than half of
total revenue.
Fitch does not cap Anton's ratings at Iraq's Country Ceiling of
'B-' as the EBITDA generated in China will be more than enough to
cover Anton's interest payments.
Improvement in Cash Management: Anton recorded positive free cash
flow (FCF) after dividends of CNY42 million in 2018, and CNY8
million in 1H19. This is due to the company's control over capex as
it is using more leased equipment. Working capital also improved on
better industry conditions, as well as higher contribution from the
integrated oilfield-management project, which has shorter
receivable days, and lower exposure to private oil companies. Capex
is likely to rise in 2019 as the company needs to pay down
equipment payables, and spend for its new order executions.
Nonetheless, Fitch expects a positive FCF due to higher operating
cash flows from its scale expansion and lower working-capital
outflows.
US Dollar Bond's Approaching Maturity: The USD300 million bond
maturing in December 2020 accounted for 64% of Anton's total debt
as of end-1H19. Management expects the bond to be refinanced by a
new bond although it has not yet started the refinancing process.
Anton had available cash of CNY632 million at end-1H19, and its
bank facilities were all for short-term working capital. The
company is likely to face a liquidity problem should adverse market
conditions lead to a failure to refinance the bond as it does not
have many other options.
Lower Leverage: Anton's FFO adjusted net leverage declined to 2.7x
in 2018, from 3.4x in 2017. Fitch expects the company to generate
positive FCF in the forecast period. This is because its expected
growth in EBITDA will be driven by strong orders, and management's
focus on working capital and capex control. However, after
capitalising operating leases, its lease-adjusted net debt will
rise in the forecast period, though operational flexibility will be
higher and upfront investments will be much lower under the leasing
business model. Fitch forecasts FFO adjusted net leverage of around
2.5x in 2019-2022.
DERIVATION SUMMARY
Anton's market position is much weaker than that of Norway-based
PGS ASA (B-/Stable), a leading global marine seismic company with a
market share of around 35%. However, Anton offers more
comprehensive services covering drilling, well completion and oil
production, while PGS is concentrated in offshore seismic services.
Anton has been pursuing an asset-light business model, but PGS
remains asset heavy as it owns most of the vessels it operates, and
is thus less flexible in industry downturns. The rating difference
mainly reflects PGS's more volatile performance and higher
dependency on crude prices. PGS's leverage of 3.6x at end-2018 is
also higher than that of Anton, although its coverage ratio is on a
par at 3.4x. PGS's liquidity is also better with short-term debt
well covered by cash on hand. It also has a large committed
revolving credit facility.
Anton is much smaller in scale than Precision Drilling Corporation
(B+/Stable). Precision's North American fleet consists of over 257
drilling rigs and 210 service rigs for completion and production.
It has an approximate 25% share of the Canadian market. Precision
also has an international rig fleet (eight working rigs) that
principally operates in the Middle East. Precision's key North
American market faces higher short-term volatility compared with
Anton's China market; however, Precision's geo-political risk is
much lower than that of Anton. Anton's 2018 FFO adjusted net
leverage of 2.7x is lower than Precision's 4.1x, but its FFO
fixed-charge coverage of 3.4x is on a par with Precision's 3.5x.
Fitch expects Precision to be FCF positive with no near-term debt
maturity while Anton has a more pressing maturity schedule,
justifying the one-notch rating difference between the two.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenue to rise by 23.5% in 2019, and 15.0% in 2020
- EBITDA margin of 30%-31% in 2019-2020, with more contribution
from the lower-margin China market, and the integrated
oilfield-management business.
- Working capital outflow to decline from 2018 level.
- Capex of around CNY250 million in 2019, and capex intensity to
increase slightly in the forecast period.
KEY RECOVERY RATING ASSUMPTIONS
- The recovery analysis assumes that Anton would be reorganised
as a going-concern in bankruptcy rather than liquidated.
- Fitch has assumed a 10% administrative claim.
- Anton's EBITDA assumption includes a 30% discount to its 2018
EBITDA of CNY1,011 million. This reflects the cyclical nature of
the oilfield service industry, and crude prices at a cyclical high
in 2018. This also takes in consideration that a large portion of
the EBITDA is generated from regions with high geo-political risks,
which are less stable.
- An enterprise value (EV) multiple of 4x EBITDA is applied to
Anton. This is unchanged from last year, and is lower than peers
such as Hilong Holding Limited's (B+/Stable) and Precision's EV
multiples of 5x to reflect Anton's asset-light business model.
- In calculating the distribution of value, Fitch ranks all debt
other than the USD300 million bond as prior ranking debt in the
waterfall due to offshore structural subordination.
- The allocation of value in the liability waterfall results in
recovery corresponding to 'RR3' for the US dollar bond. However,
the Recovery Rating is capped at 'RR4' as Anton is in China, a
Group D country of creditor friendliness, and instrument ratings of
issuers with assets in this group are subject to a soft cap at the
issuer's IDR.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Demonstration of a sound refinancing plan for its US dollar
bonds maturing in 2020
- Sustained generation of positive FCF
- Higher cash flow contribution from China operations
- FFO adjusted net leverage below 2.5x, and FFO fixed-charge
coverage above 3.5x on a sustained basis
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Failure to make progress towards the refinancing of the US
dollar bond by end-1Q20
- FFO net adjusted leverage sustained above 3.5x, or FFO
fixed-charge coverage dropping below 2.5x
- Higher contribution from lower-quality counterparties,
including local or national oil companies in lower-rated
sovereigns
- Deterioration in trading performance, including shrinkage in
order book, slowdown in project execution or narrowing in margins
LIQUIDITY AND DEBT STRUCTURE
Concentrated Capital Structure, Pressing Maturity: Anton had
short-term debt, including current portion of long-debt debt, of
CNY923 million at end-1H19 against cash on hand of CNY632 million.
The company also has available bank credit facilities of CNY610
million with maturity dates up to April 12, 2020. All the
facilities are for short-term loans. The amount of facilities has
increased from 2018 to support its expanded business scale.
Its long-term debt mainly comprises the USD300 million bond and
CNY249 million in finance leasing and secured bank loan. The
company has no concrete plan for refinancing the US dollar bond,
but is most likely to issue a new bond. Fitch thinks refinancing
risk will be manageable as the outlook for the oilfield-service
industry is improving and the bond is trading well above par
although uncertainties remain. The company had unencumbered fixed
assets of CNY1.7 billion and trade receivables of CNY1.5 billion as
of end-1H19, which could be used to secure new loans.
CBAK ENERGY: 4 Creditors Cancel $5.2MM Debt in Exchange for Equity
------------------------------------------------------------------
CBAK Energy Technology, Inc. entered into a cancellation agreement
with four creditors who loaned an aggregate of approximately $5.16
million to the Company's wholly-owned subsidiary. Pursuant to the
terms of the Cancellation Agreement, the Creditors agreed to cancel
the Debts in exchange for an aggregate of 8,599,717 shares of
common stock of the Company at an exchange price of $0.60 per
share. Upon receipt of the Shares, the creditors will release the
Company from any claims, demands and other obligations relating to
the Debts. The Cancellation Agreement contains customary
representations and warranties of the Company and the creditors.
The creditors do not have registration rights with respect to the
Shares. The closing price of the Company's common stock on Oct. 14,
2019, as reported by the Nasdaq Stock Market, was $0.5595 per
share.
About CBAK Energy
Dalian, China-based CBAK Energy Technology, Inc.,
formerly China BAK Battery, Inc. -- http://www.cbak.com.cn--
is engaged in the business of developing, manufacturing and selling
new energy high power lithium batteries, which are mainly used in
the following applications: electric vehicles; light electric
vehicles; and electric tools, energy storage, uninterruptible power
supply, and other high power applications.
CBAK Energy reported a net loss of $1.95 million for the year ended
Dec. 31, 2018, compared with a net loss of $21.46 million for the
year ended Dec. 31, 2017. As of June 30, 2019, the Company had
$118.34 million in total assets, $112.16 million in total
liabilities, and $6.17 million in total equity.
Centurion ZD CPA & Co., in Hong Kong, China, the Company's auditor
since 2016, issued a "going concern" qualification in its report
dated April 16, 2019, on the Company's consolidated financial
statements for the year ended Dec. 31, 2018, citing that the
Company has a working capital deficiency, accumulated deficit from
recurring net losses and significant short-term debt obligations
maturing in less than one year as of Dec. 31, 2018. All these
factors raise substantial doubt about its ability to continue as a
going concern.
CHINA: Shandong Firms Still Reeling from Liquidity Crunch
---------------------------------------------------------
South China Morning Post reports that private companies in Shandong
province could face more troubles amid a liquidity crunch more than
two years after a major bond default scare rocked the third-largest
regional economy in China, analysts say.
According to the Post, the market's appetite for riskier credit is
also waning amid an economic slowdown, hurting refinancing outlook,
as highlighted by recent debt repayment challenges at two prominent
local firms Shandong Ruyi and the Xiwang Group.
Private companies in the eastern province have defaulted on 28
bonds worth CNY13.6 billion (US$1.9 billion) so far this year, the
Post discloses citing Wind data. Only their peers in neighbouring
Jiangsu have produced more delinquencies among China's 32
provinces, the report notes.
The Post says the continuing losses show liquidity in Shandong's
regional economy has improved little since March 2017, when
aluminium processor Qixing Group defaulted on CNY7 billion of
borrowings. The failure also exposed a web of interlocking credit
guarantees and infected dozens of local enterprises, leading to a
slew of bankruptcies.
"We foresee no immediate relief to Shandong privately-owned
enterprises' liquidity and refinancing challenges given China's
slowing economy," analysts led by Li Chang at S&P Global Ratings
said in a report published on October 20, the Post relays. Their
credit risk remains "significant for the next 12 months."
In addition, Shandong's economy is "skewed toward gritty
smoke-stack industries where companies are typically highly
leveraged," the S&P analysts, as cited by the Post, wrote.
On Oct. 18, a local state-owned investment firm bought a 26% stake
in Shandong Ruyi Technology for CNY3.5 billion and provided credit
guarantees for the fashion group's bonds. The so-called LVMH of
China has CNY1.9 billion of onshore bonds due on Oct. 23.
According to the Post, Moody's Investors Service on October 10
downgraded Shandong Ruyi's corporate family rating by one step to
B3--or five level below investment grade. It is likely to struggle
to repay onshore and offshore bonds totalling CNY4.6 billion due
this year and CNY2.5 billion of domestic bonds in 2020, Moody's
said.
Xiwang Group, a major corn and steel processing company, is also
coming into focus after unveiling a plan to sell CNY450 million of
notes on Oct. 21. With CNY3.5 billion of onshore notes maturing
this quarter, two local rating companies have placed the group
under review for potential downgrade, the Post says.
The credit environment for private firms in China continues to be
stretched after a report showed the economy grew at the slowest
pace in nearly three decades, said Ivan Chung, head of Greater
China credit research and analysis at Moody's, the report adds.
"Money in the market is flowing into state-owned companies, and
many private firms have to issue short-term bonds to support their
long-term investments," the Post quotes Chung as saying. "When the
companies encounter refinancing troubles, they run into liquidity
problems."
As banks typically prefer to lend to state-owned companies, private
firms often have to provide a large amount of collateral or credit
guarantee for other companies to secure financing, the report
states.
The practice of "cross guarantee" among Shandong-based companies is
exacerbating the problem, said Meng Xiangjuan, chief fixed-income
analyst at Shenwan Hongyuan Securities, according to the Post.
Shandong companies have over the years formed a complex web of
chained borrowing, which could "send a company's liquidity issues
reverberating through the credit system", the S&P analysts said in
their report, adds the Post.
GUANG YANG: S&P Cuts ICR to 'B' on Elevated Financial Leverage
--------------------------------------------------------------
On Oct. 22, 2019, S&P Global Ratings lowered its long-term issuer
credit rating on Guang Yang An Tai Holdings Ltd. (GYAT) to 'B' from
'B+'.
S&P lowered the rating on GYAT because it expects its financial
leverage to remain elevated over the next 12 months. Its
debt-to-EBITDA ratio will stay at 3x-4x for 2019-2020 compared with
2.5x in 2018, mainly due to lower EBITDA.
The company's gross profit margin will reduce in 2019-2020 due to
lower profitability from its main business segments of steelmaking
and commodity distribution. S&P said, "We expect its gross profit
margin from the steelmaking business to decline to 6.8% for 2019
and 7.8% for 2020, from 10.9% in 2018, mainly due to lower average
selling prices (ASP) and increased raw material costs. The
company's relatively weak competitive position and low value-added
products make it a price taker and unable to maintain steady
selling prices or pass through increasing costs to end-users. We
factored in a 5%-10% decrease of ASP for its steel products in 2019
and another 3%-5% decline in 2020 to reflect flexible supply in
China's steel market. Although we anticipate the gross profit
margin to improve slightly in 2020 as iron ore prices retreat, we
don't think it would be sufficient for a meaningful improvement in
EBITDA."
The fast expansion of the commodity distribution business will
weigh on the company's financial metrics. S&P expects revenue from
commodity distribution to likely increase by 50% year-on-year in
2019 based on the segment's performance during the first half of
2019 of Chinese renminbi (RMB) 23.6 billion, or 56% of total
revenue for the group. The contribution to consolidated gross
profit will increase to 18%-20% in 2019 and 2020, from 15% in 2018
and less than 10% in 2016-2017. However, because the gross margin
from commodity distribution is relatively low, at 1%-2.5% for the
past few years, the overall gross profit margin will also be
diluted as a result. In addition, working capital usage and
potential counterparty risk will make the company's overall
earnings more volatile.
The company's liquidity position will remain tight over the next 12
months, in S&P's view, owing to lower funds from operations during
that period. The company has maintained stable credit lines from
various banks, indicating a relatively stable banking relationship.
However, its lack of diversified funding resources makes the
company heavily reliant on bank loans and trust loans, which could
be vulnerable under stress market situations.
S&P said, "The company will continue its efforts to reduce its
total cross guarantees to other private-owned enterprises (POE) in
Shandong province, but we do not expect a material reduction over
the next 12 months. The company had external guarantees of RMB3.4
billion as of end-2018, slightly lower from RMB3.5 billion as of
end-2017. It used to provide guarantees of RMB420 million to Qixing
Group, a Shandong-based POE. As Qixing Group's bankruptcy and
restructuring progressed, GYAT released its guarantee on Qixing
Group. Under the intervention from Shandong government, GYAT
reached an agreement with China Cinda Asset Management Co. Ltd. and
is eligible for only 10% of its total guarantee, or about RMB44
million including interest expenses. GYAT has paid RMB27 million
and will pay the next RMB17 million in the next three years. We do
not believe the payment will drastically burden the company's cash
flow.
"We consider that the Shandong government has the intention to
prevent further impact of the cross guarantees between POEs. Having
said that, we do not think the company is fully immune to such
collateral obligations in the future. We have factored in the
external guarantee in the company's total adjusted debt.
"The stable outlook reflects our view that the company's
debt-to-EBITDA ratio will stay above 3x and its profitability will
remain subdued with its EBITDA margin staying at 4%-4.5% over the
next 12 months. We also expect the company to maintain its
relatively stable banking relationships and renew its credit lines
so that its liquidity position will not be in material deficit
during that period.
"We could lower the rating should the company's liquidity position
weaken if it couldn't extend its banking facilities or trust loans.
We could also lower the rating if the company's profitability
further deteriorates such that its debt-to-EBITDA ratio elevates
substantially above 5.0x. That could happen if the company expands
its exposure in the low-margin commodity distribution business or
steel prices decline more substantially than our current forecast.
"We may raise the rating if the company's debt-to-EBITDA ratio
falls sustainably below 3.0x as the company demonstrates strong and
stable operating performance and disciplined capital expenditure."
Founded in 2011, GYAT is a private-owned stainless steel and carbon
steel producer based in Laiwu, Shandong province. It has annual
capacity of about 5.5 million tons per annum. Its main products
include 300 series and 400 series stainless steel, hot rolled coil,
hot rolled wide band, and cold rolled products. It is also involved
in nonferrous metals related to the commodity trading business.
YINGDE GASES: Fitch Upgrades LT IDR to BB, Outlook Stable
---------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Rating of
China-based Yingde Gases Group Company Limited to 'BB' from 'BB-'.
The Outlook is Stable. The agency has also upgraded the senior
unsecured rating of Yingde to 'BB' from 'BB-'.
The upgrade is driven by an accelerating improvement in Yingde's
revenue and business mix combined with better financial metrics
since 2016. Yingde's FFO net leverage decreased from 4.1x in 2016
to 2.1x in 2018 and Fitch forecasts that it will drop to below 2x
starting 2020.
KEY RATING DRIVERS
Coherent Management Strategy: The new senior management team put in
place in 2017 has helped Yingde to improve revenue and cash flows,
contributing to the company's deleveraging. Yingde's largest
customers were previously Chinese steel producers whose business
would be more cyclical. Their contribution dropped to roughly 50%
of total gas sales in 2018 and the company has started to diversify
into onsite industrial gas production for the chemical and refining
industries in China to reduce customer concentration risk and cut
the dependence of the company's revenue on the steel sector.
Diversifying into Merchant Sales: Yingde has also been increasing
its efforts to expand in the merchant-gas segment, which generates
a higher dollar margin per cubic metre than the onsite segment.
This has led to Yingde's merchant sales more than doubling from
CNY955 million in 2016 to CNY2,640 million in 2018. The proportion
of industrial-gas revenue from merchant sales has also risen from
12% in 2016 to 22% in 2018, and Fitch expects this ratio to remain
at over 20%.
The company's 1H19 merchant sales growth slowed to 4.6% yoy due to
a drop in argon prices, but management stated sales volume
increased at a faster pace of more than 10% yoy, indicating
continued robust demand for industrial gases for retail
applications.
Revenue Rises, FCF Positive: Yingde's revenue rose 25% yoy in 2018
from a ramp-up in its production facilities and the increasing
sales contribution from the merchant-gas business. Fitch expects
Yingde's revenue to rise by 7.7% in 2019, mainly due to the
full-year impact from the acquisition of a fertiliser business in
2018, and its EBITDA margin to remain steady at 33% from the
31%-34% in 2014-2018 despite the change in revenue mix. Yingde
continued to generate positive free cash flow (FCF) in 2018, a
trend since 2016, and Fitch forecasts this will continue from
2019-2022.
Further Deleveraging Expected: Fitch forecasts Yingde's leverage
will continue to decline, with FFO adjusted net leverage dropping
to below 2x in 2020-2022 from the 2.1x in 2018 due to increased
revenue, steady EBITDA margins, positive FCF, a stable capex and
dividend payout policy.
DERIVATION SUMMARY
There is no direct comparable industry peer for Yingde. Fitch has
instead compared Yingde with other 'BB' category peers in China
such as China Hongqiao Group Limited (Hongqiao, BB-/Stable) and
Fufeng Group Limited (Fufeng, BB+/Stable).
Fufeng's and Yingde's ratings are similarly constrained by their
lack of product and geographical diversification although supported
by their leading market positions in their respective industries.
Yingde's EBITDA scale is larger than Fufeng's but Fufeng is rated
one notch higher because of its extremely low leverage of less than
1x and higher coverage.
Hongqiao's business scale is substantially larger than that of
Yingde although both companies have similar leverage and coverage
ratios. However, Hongqiao's rating is highly constrained by the
regulatory implications of its unpaid power tariffs or the
potential imposition of power surcharges, which can substantially
alter its financial profile. Hence, Fitch believes rating Yingde
one notch higher than Hongqiao is justified.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Steady EBITDA margin of 31% to 32% from 2019-2022 (2018:
34.8%)
- Annual capex of CNY2.5 billion to CNY3 billion from 2019-2022
(2018: CNY2.6bn)
- Dividend payout ratio of 30% from 2019-2022 (2018: 29%) based
on Fitch's estimate
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Improvement in business profile in terms of business scale and
diversification without deterioration in financial metrics
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Significant decline in revenue and/or operating EBITDA margin
- FFO adjusted net leverage sustained above 2.0x
- Negative FCF on a sustained basis
LIQUIDITY
Adequate Liquidity: Yingde had CNY2.6 billion of short-term debt as
of June 30, 2019 compared with CNY2.3 billion of readily available
cash and CNY4 billion of uncommitted credit facilities. The credit
facilities are uncommitted as committed facilities are uncommon in
the Chinese banking environment. Yingde successfully redeemed its
USD250 million 7.25% senior notes due 2020 in April 2019 with a
syndicated loan.
FULL LIST OF RATING ACTIONS
Yingde Gases Group Company Limited
- Long-Term IDR upgraded to 'BB' from 'BB-'; Outlook Stable;
- Senior unsecured rating upgraded to 'BB' from 'BB-'.
Yingde Gases Investment Limited (wholly owned subsidiary)
- Rating on USD500 million 6.25% senior unsecured notes due 2023
upgraded to 'BB' from 'BB-'
=========
I N D I A
=========
A P GOYAL: Ind-Ra Maintains 'D' Loan Rating in Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained A P Goyal Shimla
University's bank loans' ratings in the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will continue to appear as
'IND D (ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR433.4 mil. Term loans (Long-term) due on May 2021 -
September 2022 maintained in non-cooperating category with
IND D (ISSUER NOT COOPERATING) rating; and
-- INR50 mil. Bank overdraft (Long-term) maintained in non-
cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The rating was last reviewed on
October 17, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the rating.
COMPANY PROFILE
A P Goyal Shimla University is run by A P Goyal Charitable Trust, a
non-profit educational trust established in 2004 by Mr. Pramod
Goyal and Mr. Rajesh Goyal.
A. R. CHAINS: CRISIL Reaffirms B+ Rating on INR16cr Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facility of A. R. Chains (ARC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 16 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average financial
risk profile and exposure to intense competition in the jewellery
industry. These weaknesses are partially offset by its proprietor's
extensive experience in the industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile: Financial risk profile is
constrained by high gearing and subdued debt protection metrics.
Gearing is estimated at 2.39 times as on March 31, 2019, and
interest coverage ratio at 1.14 times in fiscal 2019.
* Exposure to intense competition: The gold jewellery industry in
India is intensely competitive and has a few organized players and
several unorganized players. New designs are introduced frequently
to stay ahead of competition. ARC has large working capital
requirement due to inventory of 60-100 days and credit of 5 to 15
days extended to customers, against limited credit from suppliers.
Strength:
* Proprietor's extensive industry experience
ARC benefits from its proprietor's experience of over two decades
in the gold jewellery segment. The firm is well-equipped, with an
in-house team of goldsmiths and designers who are well aware of
customer preferences. It has established strong relationships with
customers.
Liquidity: Stretched
Average bank limit utilization for the last 12 months ended on
August 2019 is high at around 100%. Net cash accruals is negative
owing to withdrawals however there is no repayment obligations
against the same. Need based unsecured loan from related parties
and moderate cash balance maintained supports liquidity.
Outlook: Stable
CRISIL believes ARC will continue to benefit from the proprietor's
extensive industry experience.
Rating Sensitivity Factor
Upward factor
* Net cash accruals in excess of INR0.35 crores driven by
improvement in operating efficiency
* Efficient working capital management and maintenance of moderate
capital structure
Downward factor
* Reduction in revenue with operating income falling below INR100
crore or further deterioration of operating margin
* Larger than expected working capital requirement or debt funded
capex
ARC was set up in 2013 as a sole proprietorship firm by Ms Rahumath
S. The firm, based in Kollam (Kerala), manufactures gold jewellery.
Mr M Hussain manages daily operations.
CAPACITE STRUCTURES: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: Capacite Structures Limited
Registered office address:
404 & 405, Sabari Samriddhi
Behind Maitri Park ST Stand
Sion Trombay Road, Chembur
Mumbai 400071
Insolvency Commencement Date: October 11, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: April 8, 2020
(180 days from commencement)
Insolvency professional: Mr. Rajender Kumar Girdhar
Interim Resolution
Professional: Mr. Rajender Kumar Girdhar
Oshiwara Mahada Complex
Building No. 5
Aster Coop. Housing Society
Flat No. 205 2nd Floor
New Link Road
Oshiwara Andheri (W)
Mumbai, Maharashtra 400053
E-mail: rkgirdhar1@yahoo.co.in
- and -
Sumedha Management Solutions Private
Limited
C-703, Marathon Innova
Off Ganpatrao Kadam Marg
Opp. Peninsula Corporate Park
Lower Parel (West)
Mumbai 400013
E-mail: csl@sumedhamanagement.com
Last date for
submission of claims: October 25, 2019
D. MANOHARAN: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated D. Manoharan's
Long-Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using
these ratings. The rating will now appear as 'IND B+ (ISSUER NOT
COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR85 mil. Fund-based working capital facility migrated to
non-cooperating category with IND B+ (ISSUER NOT COOPERATING)
/ IND A4 (ISSUER NOT COOPERATING) rating;
-- INR15 mil. Non-fund-based working capital facility migrated to
non-cooperating category with IND A4 (ISSUER NOT COOPERATING)
rating;
-- INR55 mil. Proposed fund-based working capital facility
migrated to non-cooperating category with Provisional IND B+
(ISSUER NOT COOPERATING) / Provisional IND A4 (ISSUER NOT
COOPERATING) rating; and
-- INR5 mil. Proposed non-fund-based working capital facility
migrated to non-cooperating category with Provisional IND A4
(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
October 24, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
D Manoharan is a sole proprietorship firm which commenced its
business during 2003. It is engaged in engineering construction for
both public and private companies.
GAYATRI SATYA: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Gayatri Satya
Infraworks India Private Limited's Long-Term Issuer rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR4.0 mil. Fund-based working capital limit migrated to 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
October 9, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2014, Gayatri Satya Infraworks India is engaged in
civil construction work for oil and gas, power generation and
transmission, civil and infrastructure, and hospitality sectors.
HEAVY ENGINEERING: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Heavy Engineering
Corporation Limited's (HECL) to the non-cooperating category. The
issuer did not participate in the surveillance 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 now appear as 'IND BB
(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR2.0 bil. Fund-based limits migrated to non-cooperating
category with IND BB (ISSUER NOT COOPERATING) rating; and
-- INR1.88 bil. Non-fund based limits migrated to non-cooperating
category with IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
October 1, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
HECL was set up in 1958 in Ranchi under the Ministry of Heavy
Industries, government of India.
INDIA: Faces Severe Slowdown; World Bank Cuts GDP Forecast
----------------------------------------------------------
Swansy Afonso at Bloomberg News reports that the World Bank cut
India's economic growth forecast by the most among South Asian
nations on Oct. 13, below the outlook pegged by the nation's
central bank for this year, mainly because of a deceleration in
domestic demand.
India's gross domestic product growth is projected at 6% in the
fiscal year started on April 1, compared with 7.5% forecast in
April and 6.8% recorded a year earlier, the bank said in its latest
South Asia Economic Focus report, Bloomberg relays. Growth is
expected to gradually recover to 6.9% in 2020-21 and to 7.2% in the
following year, it said.
India's economic growth has cooled for a fifth straight quarter
"India's cyclical slowdown is severe," the report, as cited by
Bloomberg, said. The weakness is mostly due to a deceleration in
local demand, according to the bank. "In such a weak economic
environment, structural issues surface and the weak financial
sector is becoming a drag on growth."
Earlier this month, the Reserve Bank of India downgraded its
economic growth projection by the biggest cut in its forecast in at
least five years to 6.1% this year, Bloomberg recalls. GDP growth
cooled for a fifth straight quarter to 5% in the three months ended
June, at the slowest pace since March 2013.
Bloomberg relates that the critical situation demands decisive
policy actions, and initial government steps point in the right
direction, with the RBI embarking on an easing cycle and the
government announcing a stimulus package recently, the World Bank
report said. "All these measures will help to contain the downturn,
but also raise concerns about fiscal space."
"The main policy challenge is to address the sources of softening
private consumption and the structural factors behind weak
investment," according to the report cited by Bloomberg.
The main sources of risk include external shocks that result in
tighter global financing conditions, and new defaults by
non-banking financial companies triggering a fresh round of
financial sector stress, the report said. To mitigate these risks,
the authorities will need to ensure that there is adequate
liquidity in the financial system, while strengthening the
regulatory framework for NBFCs, it said.
Bloomberg adds that the World Bank expects the South Asian economy
to grow at 5.9% this year, lower by 1.1 percentage points from its
April estimates. It also cut growth forecasts for Sri Lanka,
Maldives and Bhutan, while raising those for Nepal and Bangladesh.
JSW STEEL: Domestic Demand Woes Set to Hit Q2 Earnings
------------------------------------------------------
Tanya Thomas at Livemint.com reports that JSW Steel is likely to
report a steep fall in its September quarter earnings largely
because of poor domestic demand. A Bloomberg poll of 12 analysts
has estimated the company's consolidated net profit for Q2 at
INR517.8 crore, down nearly 75% year-on-year, while consolidated
revenue is seen falling 17% to INR17,881.2 crore, the report
relates.
In the corresponding period a year ago, the company had reported a
net profit of INR2,087 crore, and consolidated revenue of INR21,608
crore.
The steel maker was scheduled to announce its earnings on Oct. 23.
According to Livemint.com, the domestic steel industry has been
battered by a slump in demand, pulling down prices to a 34-month
low in October. Declining input cost, such as that of coking coal,
has failed to boost margins for firms. In the second week of
October, prices of domestic hot-rolled coil (HRC) fell to INR34,250
per tonne--below the threshold of INR34,719 per tonne ($489 per
tonne), the price which invites anti-dumping duty on steel
imports.
Livemint.com says foreign brokerage firm Jefferies has placed an
'underperform' call on the three large domestic steelmakers,
including JSW Steel. In an October 21 report, it said "Domestic
steel demand was flat year-on-year in September (5% year-to-date in
FY20), Livemint.com relays. Exports surged 2 times to about 1
million tonnes in September, helping mills clear inventories, but
at 50 day, this still appears elevated. Seasonally demand improves
after monsoon, but with two key end-use sectors autos (about 10% of
demand) and property (about 40%) likely to stay weak (cyclical auto
slowdown, real estate stress), seasonal restock and demand pick up
could disappoint."
Livemint.com notes that the difference between domestic and
imported HRC prices has widened in recent months, with domestic
prices trading at a discount of 13% to landed prices. China's
export HRC prices were hovering at $420 per tonne at the time of
imposition of the anti-dumping duty, a level slightly lower than
the current Chinese HRC price of about $430.
With the widening of the gap between domestic and landed steel
prices in recent months, Indian steelmakers have been focussing
more on export markets, and steel exports have consequently risen
in the last two months. "However, a 12% fall in Chinese export HRC
prices since August 2019 could act as a fresh challenge for
domestic steelmakers looking to augment exports amidst depressed
domestic demand conditions," Livemint.com quotes Jayanta Roy,
senior vice-president & group head, Corporate Sector Ratings, ICRA,
as saying.
JSW Steel Limited is one of the largest producers of steel products
in India, with an installed steelmaking capacity of 18 million tons
per annum (mtpa). JSW's international operations comprise: (1) 1.2
million net tonnes plates and pipes mills in Texas; (2) a 1.5 mtpa
hot rolling mill and a 3.0 mtpa electric arc furnace at Ohio; and
(3) a 1.32 mtpa long steel production facility in Piombino, Italy.
As reported in the Troubled Company Reporter-Asia Pacific on Oct.
2, 2019, Fitch Ratings has assigned a 'BB' final rating to
India-based JSW Steel Limited's (JSWS, BB/Stable) USD400 million
5.375% senior unsecured notes maturing in April 2025. The proceeds
will be used for capex or any other purpose in accordance with
regulations. The final rating is in line with the expected rating
assigned on September 23, 2019, and follows the receipt of final
documents conforming to earlier information.
JSWS's ratings continue to be underpinned by its competitive
conversion costs and position as one of the largest steel producers
in India, which is one of the fastest-growing steel markets
globally. Its leverage in terms of total adjusted debt to EBITDAR
stood at 3.1x in the financial year ended March 2019 (FY19),
supported by high industry-wide margins. However, Fitch expects
leverage to increase to 4x in FY20 due to a moderation in margins
and an increase in capex. Fitch also expects a pick-up in domestic
demand growth from 2HFY20 after relative weakness in 1QFY20. There
is limited rating headroom and demand that is weaker than its
expectations could result in further margin erosion and lower sales
volumes. This could increase JSWS's leverage further and therefore
have rating implications.
LINERS INDIA: CRISIL Cuts INR12.50cr Loan Rating to 'D', Not Coop.
------------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Liners
India Limited (LIL) to 'CRISIL D/CRISIL D' from 'CRISIL
B-/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .75 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL A4 ISSUER
NOT COOPERATING')
Cash Credit 12.50 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL B-/Stable
ISSUER NOT COOPERATING')
Foreign Bill
Discounting 1.00 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL B-/Stable
ISSUER NOT COOPERATING')
Import Letter of
Credit Limit 6.50 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL A4 ISSUER
NOT COOPERATING')
Proposed Long Term
Bank Loan Facility .75 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL B-/Stable
ISSUER NOT COOPERATING')
Proposed Non
Fund based limits 4.50 CRISIL D (ISSUER NOT
COOPERATING; Downgraded
from 'CRISIL A4 ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with LIL for obtaining
information through letters and emails dated September 7, 2018,
October 30, 2018 and August 31, 2019 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 has
not received any information on either the financial performance or
strategic intent of LIL. This restricts CRISIL's ability to take a
forward-looking view on the credit quality of the entity. CRISIL
has downgraded its ratings on the bank facilities of LIL to 'CRISIL
D/CRISIL D' from 'CRISIL B-/Stable/CRISIL A4'.
The downgrade in the rating reflects delays in debt servicing by
the company for more than 30 days owing to its stretched liquidity.
Additionally, currently the company is under the liquidation
process.
LIL was incorporated in 1974, as a partnership firma and in 1994 it
was converted to a public limited company (closely held).The Entity
is involved in manufacture of automobile cylinder liners.
LINKPOINT INFRASTRUCTURE: Ind-Ra Assigns 'BB+' LT Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Linkpoint
Infrastructure Private Limited (LIPL) a Long-Term Issuer Rating of
'IND BB+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR0.5 mil. Fund-based working capital limits assigned with
IND BB+/Stable/IND A4+ rating; and
-- INR190 mil. Non-fund-based working capital limits assigned
with IND A4+ rating.
Analytical Approach: Ind-Ra has taken a consolidated view of Link
Group which consists of LIPL, Link Autotech Private Limited (LAPL)
and Link Utsav HSRP Private Limited (LUHPL) while arriving at the
ratings, given the strong legal and operational linkages among
them. All the companies operate in a similar line of business and
have common management.
KEY RATING DRIVERS
The ratings reflect Link Group's small scale of operations, as
reflected by revenue of INR701.36 million in FY19 (FY18: INR593.33
million) owing to increased demand for cars. The group's entire
revenue is generated by the sale of high security registration
plates (HSRPs), thereby making the group highly dependent on the
auto sector. FY19 numbers are provisional in nature.
The ratings also factor in the group turning profitable in FY19,
with average EBITDA margin of 13.2% in FY19 (FY18: negative 0.40%)
due to decline in administrative cost. Its return on capital
employed was 13.19% in FY19 (FY18: negative 2.74%).
Liquidity Indicator- Adequate: The group's fund-based limits
remained unutilized for the 12 months ended August 2019. The
non-fund based limits, however, remain fully utilized over the same
timeframe. The cash flow from operations and free cash flows turned
negative in FY19 to INR23.01 million (FY18: INR195.72 million) and
negative INR195.72 million (INR188.89 million) respectively, due to
change in working capital requirement as inventory days decreased
to 270 days in FY19 (FY18: 341 days). The group had cash and cash
equivalents of INR22.21 million at FYE19 (FYE18: INR30.22 million).
Further, the group has no capex plan in medium term.
The ratings also factor in Link Group's comfortable credit metrics.
Gross interest coverage (operating EBITDA/gross interest expense)
stood at 9.01x in FY19 driven by an increase in operating EBITDA to
INR92.56 million (FY18: EBITDA loss).
The ratings, however, are supported by the promoters' over a
decade-long experience in the high security registration plates
industry. Further, due to a slowdown in the auto sector, the
company's performance might get impacted.
On a standalone basis, LIPL's revenue stood at INR9.9 million in
FY19 (FY18: INR6.8 million) and continued making EBITDA loss of
INR8.5 million (INR59.3 million).
RATING SENSITIVITIES
Negative: A substantial decline in the revenue and EBITDA margins
leading to deterioration in the overall credit metrics or
deterioration in the overall liquidity profile, could lead to a
negative rating action.
Positive: A substantial growth in the revenue and EBITDA margin,
while maintaining the current credit metrics and liquidity profile,
on a sustained basis, could be positive for the ratings.
COMPANY PROFILE
Linkpoint Infrastructure Private Limited (LIPL) was originally
incorporated as Taral Vincom Private Limited. The name was changed
in 2009. In the past, LIPL was engaged in the execution of civil
contracts. However, recently, it has only focused on manufacture,
supply and affixing of HSRPs on vehicles as per Motor Vehicle Act,
1988.
M MADHAVARAYA: CRISIL Lowers Rating on INR27cr Loan to B+
---------------------------------------------------------
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated the rating on the
long-term bank facility M Madhavaraya Prabhu (MMP) to 'CRISIL
BB-/Stable Issuer Not Cooperating'. However, management has
subsequently started sharing information necessary for carrying out
comprehensive review of the rating. Consequently, CRISIL is
migrating the rating on the company's long-term facility from
'CRISIL BB-/Stable Issuer Not Cooperating' to 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 27 CRISIL B+/Stable (Migrated
from 'CRISIL BB-/Stable
ISSUER NOT COOPERATING')
The ratings reflect the weak financial risk profile because of weak
capital structure and susceptibility of profitability to volatility
in raw material prices. These weaknesses are partially offset by
extensive industry experience of the proprietor.
Key Rating Drivers & Detailed Description
Weakness
* Weak Financial Risk Profile
Capital structure is weak as reflected in high gearing of 4.28
times and modest networth of INR6.52 crores as on March 31, 2019.
The high gearing is mainly on account of significant reliance on
working capital debt. Debt protection metrics are weak, marked by
weak interest coverage ratio and net cash accruals to adjusted debt
(NCA/AD) ratio.
* Susceptibility of profitability to volatility in raw material
prices
MMP's operating margin is constrained by the commodity nature of
its products, and was low, at 0.4-4.2% in the four fiscals through
2019. The low margin limits the firm's ability to absorb
unanticipated adverse price movements. Presence in a segment with
limited value addition and negligible differentiation in products
of different players also constrains the margin.
Strengths
* Extensive industry experience of proprietor, and established
customer relationships
MMP's proprietor, Mr Tukaram Prabhu, has experience of over 15
years in the cashew processing industry, which has helped the firm
establish a strong distribution network and market its product in
several states across India. It has also helped the firm survive
adverse business conditions and build relationships with major
customers and suppliers, resulting in consistent order flow and raw
material supply at favorable prices.
Liquidity: Poor
MMP has poor liquidity marked by marginal cash and cash equivalents
of INR0.1 crore as on March 31, 2019 and tightly matched accruals
to term debt obligations of INR0.25 crores over FY20 as well as
FY21. The firm has access to fund based limits of INR27 crores,
which are almost fully utilized over the 12 months ended July 2019.
The ability of the entity to meet its repayments depends on an
increase in accruals or access to incremental fund based limits.
Outlook: Stable
CRISIL believes MMP will continue to benefit from its strong track
record in the cashew industry.
Rating Sensitivity Factors:
Upward Factors
* Revenue growth of over 25% in fiscal 2020 and recovery in
operating margins to over 1.5%, leading to improvement in cash
accruals
* Improvement in capital structure leading to improvement in
financial risk profile
Downward Factors
* Capital withdrawal of over INR1.5 crores in fiscal 2020 leading
to weakening of networth and capital structure
* Decline in revenue and deterioration in operating margins leading
to weak accruals.
MMP, a proprietorship firm set up in 1983, processes raw cashew
nuts of various grades into cashew kernels. The firm also trades in
raw cashew nuts and cashew kernels. Its processing unit is in
Muduperar village in Dakshina Kannada, Karnataka, and has installed
capacity of 12 tonne per day. The firm is managed by Mr Tukaram
Prabhu.
MANDEEP INTERNATIONAL: CRISIL Reaffirms B Rating on INR10cr Loan
----------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long-term
bank facility of Mandeep International Private Limited (MIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect a modest scale of operations in the
intensely competitive agro commodities trading segment, and a
below-average financial risk profile. These weaknesses are
partially offset by the industry experience of the promoters.
Analytical Approach
CRISIL has treated unsecured loans extended by the promoters as
neither debt nor equity as the loans are interest free and are
likely to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition
Revenue was modest at around INR46 crore in fiscal 2019, a decline
from INR56 crore in fiscal 2018. Intense competition may continue
to constrain scalability, pricing power, and profitability.
* Below-average financial risk profile
The networth is estimated to have been low at INR2.8 crore, with
the gearing and total outstanding liabilities to tangible networth
ratio high at 3.47 times and 5.24 times, respectively, as on March
31, 2019.
Strength
* Experience of the promoters
Benefits from the promoters' experience of four decades, their
strong understanding of local market dynamics, and healthy
relationship with customers and suppliers should continue to
support the business.
Liquidity: Poor
Liquidity is likely to remain poor over the medium term. Cash
accrual is projected at INR0.3-0.4 crore per fiscal in fiscals 2020
and 2021, against nil repayment obligation. The bank limit of INR10
crore was utilised at an average of 97% during the 13 months
through August 2019. The promoters and their relatives have
provided support through unsecured loans, the balance of which was
INR4.1 crore.as on March 31, 2019.
Outlook: Stable
CRISIL believes MIPL will continue to benefit from the experience
of the promoters.
Rating sensitivity factor
Upward factor
* Significant increase in the scale of operations along with an
improved operating margin, leading to cash accrual of more than
INR0.50 crore per fiscal
* Significant improvement in the working capital cycle
Downward factor
* Deterioration in liquidity due to continuous over-utilisation of
the bank limit for more than 30 days
* Large, debt-funded capital expenditure, leading to further
weakening of the financial risk profile
MIPL, incorporated in April 2013 at Gujarat, is promoted by Mr
Ashish Talaviya and Mr Kishor Vaishnani. The company trades in
de-oiled cakes made of rapeseed and groundnut, and other
agro-products such as maize.
MANNA INDUSTRIES: CRISIL Lowers Rating on INR22cr Loan to B+
------------------------------------------------------------
CRISIL has downgraded its rating on long term facilities of Manna
Industries Limited (MIL) to 'CRISIL B+/Stable' from 'CRISIL
BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 7.5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Secured Overdraft
Facility 22 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade factors in MIL's stretched working capital cycle in
fiscal 2019 due to higher receivables and inventory levels. Gross
current assets (GCAs) increased to around 568 days as on March 31,
2019, from 456 days as on March 31, 2017, owing to delayed payments
from various parties and high inventory days of 293 days. Hence,
bank limit was utilized at an average of 100% ending July 2019.
Also, MIL has reported revenue decline of about 18 per cent during
fiscal 2019 due to lower orders executed by the company.
The ratings on the bank facilities of MIL continue to reflect the
modest financial risk profile and modest scale of operations. These
weaknesses are partially offset by the extensive entrepreneurial
experience of the promoter.
Key Rating Drivers & Detailed Description
Weakness
* Modest financial risk profile
MIL has modest financial risk profile because of modest debt
protection metrics. Interest coverage ratio and net cash accruals
to total debt were 1.15 times and 2 percent respectively for the
Fiscal 2019. Debt protection metrics is supported by no term debt
obligation. Financial risk profile is supported by moderate
gearing.
* Modest scale of operations
MIL's business risk profile is constrained by its modest scale of
operations in the intensely competitive granite industry. Modest
scale of operations restricts company's ability to take advantages
associated with economies of scale that other big players in the
industry are able to leverage upon. MIL's scale of operations is
expected to increase over the medium term.
Strength
* Extensive entrepreneurial experience of the promoters
MIL benefits from the extensive industry experience of its
promoters in the mining industry. The company is promoted and
managed by Mr.U Kondal Rao, who has more than a decade of
experience in mining. This has aided the company in establishing
strong client and supplier relationships. CRISIL believes that MIL
will continue to benefit from the extensive industry experience of
promoters over the medium term.
Liquidity: Stretched
Liquidity is stretched with high bank limit utilisation of 100 %.
However , the cash accruals are sufficient against nil term debt
obligations
Outlook: Stable
CRISIL believes MIL will continue to benefit over the medium term
from its long term mining lease agreements aided by the extensive
industry experience of its promoter.
Rating Sensitivity Factor
Upward factor
* Improvement in working capital cycle with GCA below 400 days
* Improvement in liquidity with lower limit utilization
Downward factor
* Further stretch in working capital cycle resulting in GCA days
above 500 days
* Decline in profitability
Incorporated in 2011 and based in Hyderabad (Telangana), MIL is
engaged in granite and laterite mining. The Company is promoted and
managed by Mr. U Kondal Rao and family.
MODERN DISTROPOLIS: CRISIL Reaffirms B Rating on INR17.5cr Loan
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Modern Distropolis Limited (MDL) at 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 17.5 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.0 CRISIL B/Stable (Reaffirmed)
Term Loan 2.5 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect below-average financial risk
profile marked by weak debt protection metrics, and large working
capital requirement. These rating weaknesses are partially offset
by the extensive experience of the promoters in the steel products
trading industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: MDL's financial risk
profile continues to remain below average. Modest net worth of
around INR6.01 crore in FY 2019 along with high working capital
borrowings has resulted in gearing of more than 8 times. Debt
protection metrics is weak with interest coverage and net cash
accruals to debt of 1.46 times and 1% respectively.
* Working capital-intensive operations: The large working capital
requirement is driven by high inventory levels. Minimal credit from
suppliers increases the working capital intensity. Gross current
assets are estimated at 126 days as on March 31, 2019. The same has
led to high bank limit utilization.
Strength
* Extensive industry experience of the promoters: The promoters
have over two decades of experience in the steel products trading
industry and have established a strong relationship with the
principals. Furthermore, the firm has a large customer base,
primarily traders, and a chain of retailers throughout Kerala.
Liquidity: Stretched
Average bank limit utilization for the last twelve months ended on
August, 2019 is high at almost full utilization. Net cash accruals
is expected to be sufficient against repayment obligations.
Moreover, moderate cash balance maintained supports liquidity.
Current ratio is moderate at around 1 times.
Outlook: Stable
CRISIL believes MDL will continue to benefit from the extensive
industry experience of its promoters and its established
relationship with suppliers and customers.
Rating Sensitivity Factor:
Upward factor
* Improved capital structure with increased net worth or gearing at
less than 5 times
* Efficient working capital management marked by GCA days of less
than 100 days with improvement in average BLU
Downward factor
* Major debt funded capex or further increase in working capital
borrowings
* Further increase in GCA days
MDL was set up in 1993 as a partnership firm that was reconstituted
as a closely held public limited company in 2013. Operations are
managed by Mr K V Anvar and his family. The company is an
authorised dealer for Tata Steel Ltd and Tata BlueScope Steel Ltd
for various building materials, including galvanised iron wires,
galvanised corrugated sheets, and colour-coated sheets.
MUTHOOT FINNACE: Fitch Rates Proposed US$ Sr. Sec. Bonds BB+(EXP)
------------------------------------------------------------------
Fitch Ratings assigned Muthoot Finance Limited's (MFL, BB+/Stable)
proposed US dollar-denominated senior secured notes an expected
rating of 'BB+(EXP)'.
The proposed bonds will carry a fixed-rate coupon payable
semi-annually with maturities of three to five years. The proposed
notes will be secured by collateral, which includes all
receivables, but excludes all lien marked fixed deposits, of the
issuer. The proposed notes are also subject to maintenance
covenants that require MFL to meet regulatory capital requirements,
and ensure its security coverage ratio is equal to or greater than
1x at all times.
The proposed US dollar-denominated notes will be issued in the
international market by the company under the Reserve Bank of
India's New External Commercial Borrowings (ECB) framework issued
in January 2019.
KEY RATING DRIVERS
MFL's proposed bonds are rated at the same level as the company's
Long-Term Foreign-Currency Issuer Default Rating, in accordance
with Fitch's rating criteria.
Fitch regards the secured notes as an obligation whose non-payment
would best reflect uncured default as most of MFL's debt is
secured. The company can issue unsecured debt in the overseas
market, but such debt is likely to constitute a small portion of
its funding and thus cannot be viewed as its primary financial
obligation.
RATING SENSITIVITIES
The rating on the proposed bond will move in tandem with MFL's
Long-Term Foreign-Currency IDR. MFL's IDR is sensitive to rising
leverage (if debt/equity approaches 4x). Post issue of the proposed
notes, MFL's leverage is not expected by Fitch to increase
materially from current levels (2.7x at end-March 2019) with the
issue size being below the annual maximum USD750 million under RBI
regulations.
NEWTECH LA-PALACIA: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: Newtech La-Palacia Private Limited
Registered office:
Unit-219, S/F
Vasundhara Enclave Plot No. 1
Vardhman Sunrise Plaza LSC
Delhi East, Delhi 110096
Principal office:
Plot No. 9/A, Techzone IV
Greater Noida West
Noida, UP 201308
Insolvency Commencement Date: September 30, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: March 29, 2020
(180 days from commencement)
Insolvency professional: Mr. Shashi Bhusan Prasad
Interim Resolution
Professional: Mr. Shashi Bhusan Prasad
G-4/9, 1st Floor
Near Krishna Mandir
Malviya Nagar
New Delhi 110017
E-mail: shashibpd@gmail.com
shashi@stresscredit.com
- and -
E-43, Basement
Panchsheel Park
New Delhi 110017
E-mail: cirp.newtech@gmail.com
admin@stresscredit.com
Classes of creditors: Allotees under Real Estate Project
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Rajkumar Vinod Vachher
Mr. Ankit Kishore Sinha
Mr. Arvind Mittal
Last date for
submission of claims: October 26, 2019
ORIENT TOURISM: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Orient Tourism Private Limited
Shop No. 8 Arenja Corner
Sector 17, Vashi Thane
MH 400703
IN
Insolvency Commencement Date: September 17, 2019
Court: National Company Law Tribunal, Navi Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 15, 2020
(180 days from commencement)
Insolvency professional: Anurag Jain
Interim Resolution
Professional: Anurag Jain
1401 Oriental Heights
Sector-44, Plot-158
Seawoods West, Navi Mumbai
Maharashtra 400706
E-mail: jainkpooja@gmail.com
- and -
Office No. 502
G Square Business Park
Opp. Sanpada Station
Vashi, Navi Mumbai 400703
E-mail: orient.cirp@gmail.com
Last date for
submission of claims: October 25, 2019
P.C. JAIN: CRISIL Reaffirms B+ Rating on INR3.5cr Loan
------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank loan facilities of P.C. Jain and Company (PCJC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6.5 CRISIL A4 (Reaffirmed)
Overdraft 3.5 CRISIL B+/Stable (Reaffirmed)
Proposed Bank
Guarantee 2 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3 CRISIL B+/Stable (Reaffirmed)
Proposed Overdraft
Facility 1 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's small scale of
operations and geographical concentration in revenue. These
weaknesses are partially offset by the extensive experience of the
proprietor.
Analytical Approach
Unsecured loans of INR1.95 crore that PCJC has received from the
proprietor as on March 31, 2019, have been treated as neither debt
nor equity as these are to be retained in the business and will be
subordinate to bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations:
Scale of operations may remain small owing to the tender-based
nature of operations and limited orders received.
* Geographical concentration in revenue:
The firm bids for road projects only in Banswara district of
Rajasthan.
Strength
* Extensive experience of the proprietor:
The proprietor, Mr P C Jain, has been in the civil construction
industry for over three decades. His healthy relationships with
customers and suppliers and sound understanding of the business
environment in Rajasthan should continue to support the firm's
operations.
Liquidity: Stretched
Liquidity is stretched. Net cash accrual, expected around INR0.95
crore in fiscal 2020, will be just about sufficient to cover the
maturing debt'of INR0.85 crore for the fiscal. Bank limit
utilisation was high at 95% in the 9 months through September 2019.
Liquidity is supported by unsecured loans of INR1.95 crore as on
March 31, 2019.
Outlook: Stable
CRISIL believes PCJC will continue to benefit from the extensive
experience of the proprietor.
Rating sensitivity factor
Upward factor
* Substantial increase in revenue, with net cash accrual exceeding
INR1.50 crore
* Successful bidding in tenders
Downward factor
* Operating margin reduces to under 8.5%
* Gross current exceed 170 days, adding to pressure on working
capital
PCJC was established as a proprietorship firm in 1975 in Rajasthan
by Mr P C Jain. The firm provides turnkey construction services,
mainly for civil works relating to roads for authorities such as
the Public Works Department, Rajasthan.
PALANI ANDAVAR: Ind-Ra Affirms 'BB+' Long Term Issuer Rating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed The Palani Andavar
Mills Limited's (TPAML) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR31.70 mil. Term loan due on March 2027 affirmed with
IND BB+/Stable rating;
-- INR22.84 mil. Term loan due on March 2024 assigned with IND
BB+/Stable rating;
-- INR55 mil. Fund-based facilities affirmed with IND BB+ /
Stable / IND A4+ rating;
-- INR15 mil. Fund-based facilities assigned with IND BB+ /
Stable /I ND A4+ rating; and
-- INR16 mil. Non-fund-based facilities affirmed with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects TPAML's continued small scale of
operations despite marginal growth in revenue by 3.84% yoy to
INR459 million in FY19. The increase in revenue was primarily
driven by increase in capacity to 33,872 spindles and increase in
realization to INR443 million in FY19 from INR426 million in FY18.
The company achieved INR203 million revenue over April-August
2019.
The ratings factor in the company's moderate credit metrics. In
FY19, the net leverage (adjusted net debt/operating EBITDA)
deteriorated to 2.4x (FY18: 1.7x) on account of increase in the
total debt to INR122 million towards the modernization and capacity
expansion. However, the interest coverage (operating EBITDA/gross
interest expense) improved and stood at 8.4x in FY19 (FY18: 6.6x)
on account of improvement in operating EBITDA to INR51.8 million
(INR48.2 million) coupled with reduction in interest expenses.
The ratings are also constrained by TPAML's average margins, which
increased to 11.3% in FY19 (FY18: 10.9%) aided by the company's
presence in manufacturing of high-margin finer count yarn. The
return on capital employed was 14% in FY19 (FY18: 15%).
Liquidity Indicator – Stretched: The company's average use of its
working capital limits was 53% during the 12 months ended August
2019. In FYE19, its cash and cash equivalents stood at INR0.27
million, against total outstanding debt of INR122 million. Its cash
flow from operations (CFO) remained positive over the last two
years (FY19: INR6 million FY18: INR24 million). Ind-Ra expects the
CFO to remain positive over the medium term, backed by increase in
operating EBITDA and better management of working capital cycle.
The company has repayment obligations of INR14.35 million for FY20
and FY21, respectively, which is likely to be paid out of the
company's cash flows. The company's free cash flow remained
negative at INR39 million in FY19 (FY18: INR12 million) due to the
capex incurred towards modernization and capacity expansion.
The ratings, however, continue to derive support by the company's
long operational track record, promoters' experience of four
decades and availability of captive power.
RATING SENSITIVITIES
Positive: Any substantial growth in the revenue, while maintaining
EBITDA margin at the current level, leading to net leverage below
2x could be positive for the ratings.
Negative: Any decline in the revenue and EBITDA margin leading to
deterioration in net leverage over 3x could be negative for the
ratings.
COMPANY PROFILE
TPAML was incorporated on April 25, 1933 and the company is engaged
in manufacturing of cotton yarn. Its manufacturing unit is located
in Udumalpet, Tamil Nadu with an installed capacity of 33,872
spindles with 87% capacity utilization. The day-to-day activities
of the company are managed by the Managing Director, Ms. Girija
Parthasarathy along with the Joint Managing Director, Mr. R
Mahendran.
PARASMANI GEMS: CRISIL Reaffirms B+ Rating on INR8cr Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facility of Parasmani Gems Private Limited (PGPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the company's modest scale of
operations in the intensely competitive jewellery industry,
exposure to geographic concentration, and weak financial risk
profile. These weaknesses are partially offset by the extensive
experience of the promoters.
Analytical Approach
Unsecured loans (outstanding at around INR3.8 crore as on March 31,
2019) extended to PGPL by the promoters and their relatives have
been treated as neither debt nor equity as these are expected to
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations in the intensely competitive jewellery
industry and exposure to geographic concentration
Intense competition continues to constrain scalability: topline was
INR42.5 crore in fiscal 2019. Furthermore, revenue is majorly
derived mainly from Ahmedabad, leading to geographic concentration
risk in revenue.
* Weak financial risk profile
Financial risk profile is weak and should remain so over the medium
term because of modest profitability (5% in fiscal 2019). Gearing
was high at 2.5 times as on March 31, 2019. Debt protection metrics
were average, with interest coverage and net cash accrual to total
debt ratios of about 1.4 times and 0.04 time, respectively, in
fiscal 2019.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' experience of 30 years, and their healthy relationships
with customers, especially in Ahmedabad, should continue to support
business risk profile.
Liquidity: Poor
Liquidity is likely to remain under pressure over the medium term.
Cash accrual - expected at INR0.5-0.7 crore each in fiscals 2020
and 2021 - should be sufficient to cover yearly debt obligation of
INR0.3 crore; accrual may, however, remain modest over the medium
term. Utilization of bank lines of INR8 crore averaged 98% in the
13 months through August 2019. Financial assistance may be expected
from the promoters whenever necessary, as in the past.
Outlook: Stable
CRISIL believes PGPL will continue to benefit from the extensive
experience of its promoters.
Rating sensitivity factor
Upward factor
* Significant increase in revenue and improvement in operating
margin thereby strengthening net cash accrual (to more than INR0.80
crore)
* Substantial improvement in working capital cycle
Downward factor
* Overutilization of bank lines and the ratio of accrual to
repayments declining to less than 1.1 time
* Large debt-funded capital expenditure weakening financial risk
profile
PGPL, incorporated in 2005, is promoted by Mr Daxesh Soni and his
family. It manufactures and retails gold, silver, diamond, and
platinum jewellery, and precious stones. The showroom is in
Ahmedabad.
PGSD AGRO: CRISIL Reaffirms B+ Rating on INR5cr Cash Loan
---------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the long
term bank facilities of Pgsd Agro Industries Private Limited
(PAIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
Proposed Working
Capital Facility 5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the company's modest scale of
operations, susceptibility to volatility in raw material prices and
its availability, and moderate financial risk profile. These
weaknesses are partially offset by promoter's extensive experience
in the rice milling business.
Analytical Approach
USL of INR24 lakhs have been treated as debt as they are not
subordinated to bank debt.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operations: PAIPL's scale of operations is modest
with reported revenue of INR19.55 crores during fiscal 2019. The
revenue has remained in the range of INR18 crore to INR26 crore
over the past three years through 2019.
* Susceptibility to volatile raw material prices: PAIPL's operating
margin has been volatile in the range of 4.8% to 7.8% in last three
years through 2019 due to volatility in prices and availability of
paddy. Changes in climatic conditions, uneven monsoon can lead to
variation in paddy production.
* Moderate financial risk profile: Gearing is moderately high at
1.90 times as on March 31, 2019, owing to modest networth of
INR3.90 crore and sizable working capital debt of INR6.5 cr.
Interest coverage and net cash accrual to adjusted debt ratios
remained average and were estimated at 2.28 times and 0.12 time,
respectively, for fiscal 2019.
Strength:
* Promoter's extensive industry experience: Promoters of PAIPL have
an experience of over a decade in rice milling business which has
enabled the firm to maintain established relationship with its
customer and suppliers.
Liquidity: Stretched
Cash accrual are expected to be over INR99 lakhs which are
sufficient against term debt obligation of INR20-50 lakhs over the
medium term. In addition, it will be act as cushion to the
liquidity of the company. Bank limits are almost fully utilised for
the last 12 months ended March 31, 2019.
Outlook: Stable
CRISIL believes that PAIPL will continue to benefit over the medium
term from its promoters' extensive industry experience.
Rating sensitivity factor
Upward factor
* Improvement in working capital managment with GCA days below 200
days
* Improvement in scale of operations, while sustaining
profitability
Downward factor
* Drop in revenue below 15% leading to deterioration of cash
accruals
* Sustained increase in the working capital cycle from current
levels
PAIPL was incorporated in the year 2014 by Mr. Sharvan Kumar. It is
based at Gorakhpur, Uttar Pradesh and is into milling of rice.
PRECISION INFOMATIC: CRISIL Withdraws B+ Rating on INR19cr Loan
---------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Precision
Infomatic (Madras) Private Limited (PIPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL's policy on withdrawal of
its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (ISSUER NOT
COOPERATING; Rating
Withdrawn)
Cash Credit 19 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating
Withdrawn)
CRISIL has been consistently following up with PIPL for obtaining
information through letters and emails dated January 23, 2019 and
May 28, 2019 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 PIPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has continues the rating on bank
facilities of PIPL to 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
Further, CRISIL has withdrawn its rating on the bank facilities of
PIPL on the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
Incorporated in 1996, PIPL is a Chennai-based company. The company
operates in three segments: biometric solutions, technology
infrastructure, and system-integration services. It also provides
annual maintenance contract services to its clients. PIPL's
operations are managed by Mr T G Ramesh.
PRETTY JEWELLERY: CRISIL Reaffirms D Rating on INR5.3cr Loan
------------------------------------------------------------
CRISIL has reaffirmed its short term ratings on the bank facilities
of Pretty Jewellery Private Limited (PJPL, Part of Araska Group
(AG)) at 'CRISIL D'. The rating continues to reflect overdue in the
company's post shipment limit for more than 30 days.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Foreign Documentary
Bills Purchase 5 CRISIL D (Reaffirmed)
Packing Credit 5 CRISIL D (Reaffirmed)
Proposed Short Term
Bank Loan Facility 5.3 CRISIL D (Reaffirmed)
PJPL has large working capital requirement and a subdued financial
risk profile. However, it benefits from its established presence in
the diamond industry, supported by its promoters' extensive
experience and established customer relationships.
Analytical Approach
CRISIL has consolidated the business and financial risk profile of
ADPL and Pretty Jewellery Private Limited (PJPL). PJPL is a wholly
owned subsidiary of ADPL. Additionally, both the companies are
engaged in a similar line of business and have operational and
financial linkages amongst them and henceforth will be referred to
as AG.
Key Rating Drivers & Detailed Description
Weakness
* Large working capital requirements
AG's operations are working capital intensive as reflected by the
high estimated gross current assets of 365 days as on March 31,
2019, on account of high receivables and inventory.
* Subdued financial risk profile
The financial risk was marked by high estimated total outside
liabilities to tangible networth of 7.95 times as on March 31,
2019, and an interest coverage ratio of 1.31 times for fiscal
2019.
Strengths
* Established presence in diamond industry supported by partners'
extensive experience and established relations with Customers
The key promoter, Mr. Shailesh Mehta has a long-standing experience
of over 3 decades in diamond industry. Established relationship
with major suppliers and customers further strengthen the market
position.
Liquidity: Poor
AG has poor liquidity with modest cash accrual of around INR90
lakhs and minimal unencumbered cash and cash equivalent of INR18
lakhs against no repayment obligation. The banks lines have been
almost fully utilised. The liquidity is further adversely affected
as it also has to support PJPL which faces delays in realisation of
bills of more than 30 days.
Rating sensitivity factor
Upward factor
* Track record of over one quarter without any delays in servicing
of credit extended under the post shipment facility for PJPL.
* Improvement in net cash accruals to over INR1 crore backed by
increase in revenues and margins.
Incorporated in 2007, ADPL is engaged in trading of polished
diamonds mainly exports. The company derives around 90% of its
revenues through export trading of polished diamonds while diamond
studded jewellery contribute 10% of the revenues. It was
established as a proprietorship firm in 1976 under the name of S.
R. Diamond.
Incorporated in 2002, PJPL is engaged in manufacturing and
exporting of gold and diamond studded jewellery. The company
derives 100% of its revenues from exports. The firm has its
manufacturing facility in Seepz, Mumbai with a total strength of
120-125 artisans.
PROGNOSYS MEDICAL: CRISIL Assigns B+ Rating to INR6.5cr Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings on the
bank Prognosys Medical Systems Private Limited (PMSPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Letter of Credit 1.5 CRISIL A4 (Assigned)
Bank Guarantee 11 CRISIL A4 (Assigned)
Cash Credit 6.5 CRISIL B+/Stable (Assigned)
The ratings reflect presence in a highly fragmented industry with
limited size, exposure to intense competition, working capital
intensive operations and weak operating efficiencies. These
weakness are partially offset by extensive industry experience of
the promoters and healthy capital structure.
Key Rating Drivers & Detailed Description
Weaknesses:
* Presence in a highly fragmented industry: The industry is highly
fragmented and competitive, with a large number of unorganised
players in the market. Such high fragmentation limits the pricing
flexibility and bargaining power of the players.
* Exposure to intense competition: Due to presence of large number
of organised & unorganized players in the segment driven by low
capital requirement, the industry is exposed to intense
competition. Therefore, scale of operations determines the
negotiating power with suppliers and customers, and ability to
withstand business downturns.
* Working capital intensive operations: Gross current assets were
at 494 - 765 days over the three fiscals ended March 31, 2019. Its
intensive working capital management is reflected in its gross
current assets (GCA) of 494 days as on March 31, 2019.
* Weak operating efficiencies: PMSPL has weak operating
efficiencies, marked by low return on capital employed (RoCE).
Driven by high working capital requirements and low profitability.
Strengths:
* Extensive industry experience of the promoters: The promoters
have an experience of over more than two decades in health
equipment industry. This has given them an understanding of the
dynamics of the market, and enabled them to establish relationships
with suppliers and customers.
* Healthy capital structure: PMSPL's capital structure have been at
healthy level due to lower reliance on external funds yielding low
total outside liabilities to tangible net worth (TOL/TNW) for last
three year ending on 31st March 2019.
Liquidity: Stretched
The company is expected to generate cash accruals of INR0.2 ' 0.4
crore against which it does not have any repayment obligations.
Liquidity is expectd to be supported by the promoters' unsecured
loans. The current ratio was at a healthy 2.85 times as on 31st
march 2019. The bank lines were utlized on an avregae of 77% in the
past 11 months ending August 2019.
Outlook: Stable
CRISIL believes that Sinchana will benefit over the medium term
from its promoter extensive industry experience.
Rating sensitivity factor
Upward factor
* Sustained improvement in scale of operation by 20% and sustenance
of operating margin, leading to higher cash accruals
* Improvement in working capital cycle
Downward factor
* Decline in profitability or stretch in working capital cycle or
* Decline in operating profitability by over 100 basis points on a
sustainable basis
* Decline in net cash accruals below INR0.1 crore on account of
decline in revenue or operating profits.
* Large debt-funded capital expenditure weakens capital structure
* Witnesses a substantial increase in its working capital
requirements thus weakening its liquidity & financial profile.
PMSPL was established in 2003, it is located in Bangalore
(Karnataka). It is owned & managed by Mr.V. KrishnaPrasad,
Mr.Kesava and Mr. Sunil Monga. PMSPL is engaged in designing,
manufacturing, integrating and installing products related to
digital radiology equipment. The company is also engaged in
manufacturing other related accessories, providing endto -end
solutions in the healthcare industry through the integrated
delivery of medical devices, communication equipment, computers,
servers, software supply, installation and maintenance of the same
on a turnkey basis under the brand name of ProRad.
R L AVIATION: CRISIL Reaffirms B+ Rating on INR5cr Loan
-------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of R L Aviation Services Private Limited
(RLPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.5 CRISIL A4 (Reaffirmed)
Drop Line
Overdraft Facility 5 CRISIL B+/Stable (Reaffirmed)
Overdraft 2 CRISIL B+/Stable (Reaffirmed)
Proposed Fund-Based
Bank Limits 2.5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect RLPL's large working capital
requirement and modest scale of operations. These weaknesses are
partially offset by the extensive experience of the promoter.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement
Operations are working capital-intensive: gross current assets were
500-600 days over the three years FY18 mainly because of loans
extended to Nikunj Agro Trading Co, for which RLPL receives an
interest of 12% annually. The advances are free of any charge and
recoverable at the will of the management. However, the quantum of
advances is more than RLPL's networth. Therefore, recoverability
and increase in these advances will remain key rating sensitivity
factors.
* Modest scale of operations
Scale of operations is modest: revenue stood at INR10-12 crore over
the three years through fiscal 2019. Intense competition may
continue to constrain scalability, pricing power, and
profitability.
Strengths
* Extensive experience of the promoter
Benefits from the decade-long experience of the promoter, his
strong understanding of the local market dynamics, and healthy
relations with customers and suppliers should continue to support
the business.
Liquidity: Adequate
Liquidity is likely to remain adequate. Cash accrual - projected at
around INR1.60 crore for FY20 should comfortably meet the yearly
maturing debt of around INR0.71 crore; the surplus cash will be
used as working capital. Bank limit utilisation averaged 82% during
the 12 months through April 2019.
Outlook: Stable
CRISIL believes RLPL will continue to benefit from the promoter's
experience and its strong association with airlines.
Rating sensitivity factors
Upward factor
* Significant growth in revenue, with net cash accrual above
INR2.00 crore
* Reduction in other loans and advances leading to improvement in
liquidity
Downward factor
* Further increase in gross current assets
* Operating margin declining to below 15%
Incorporated in 2008, Delhi-based RLPL is an authorised general
sales agent for Oman Air and Asiana Airlines for passenger tickets
and cargo in India. Mr Chetan Gupta is the promoter.
RAJARAM AND BROTHERS: CRISIL Reaffirms B+ Rating on INR8cr Loan
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank loan
facility of Rajaram and Brothers (RB) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect a below-average financial risk
profile and a low operating margin. These weaknesses are partially
offset by the extensive experience of the partners in the maize
processing industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile
The total outside liabilities to tangible networth ratio was high
at 3.92 times and the networth small at INR5.75 crore, as on March
31, 2019. Debt protection metrics were below average, with interest
coverage and net cash accrual to total debt ratios at 1.43 times
and 0.04 time, respectively, in fiscal 2019.
* Low operating margin
The margin was around 1.3% in fiscal 2019, driven by stagnant
demand and intense competition. The margin is likely to increase
but remain at 2-3% over the medium term.
Strength:
* Extensive industry experience of the partners
The partners have been in the maize processing industry for over 50
years. This has helped to establish a strong clientele and supplier
base resulting in a continuous scaling-up of revenue. Benefit from
the extensive experience should continue.
Liquidity: Stretched
Cash accrual (Rs 0.56 crore in fiscal 2019) is projected at
INR1.2-1.5 crore per fiscal against nil debt repayment over the
medium term. Bank limit utilisation was moderate, at an average of
76% during the 12 months through July 2019. Need-based financial
assistance may be expected from the partners, as in the past.
Outlook: Stable
CRISIL believes RB will continue to benefit from the extensive
industry experience of the partners.
Rating sensitivity factors
Upward factor
* Steady revenue growth and sustenance of operating profitability
at over 2%.
* Improvement in the working capital cycle
Downward factor
* Deterioration in the business risk profile, with a decline in
revenue by 15%
* A stretch in the working capital cycle
RB was established as a partnership firm in 1966 by Mr Rajaram
Gupta and his family members in Mandsaur, Madhya Pradesh. The firm
manufactures maize derivatives, which include starch, glucose,
dextrose monohydrate, hydrol, sorbitol, maltose corn syrup, gluten,
maize oil, and maize oil cake. These products find applications in
different industries such as food, pharmaceuticals, paper,
textiles, adhesives, inks, and paints. The manufacturing facility
at Mandsaur has a capacity of 1,700 quintal per day and operates in
three shifts.
RAJEEV K: CRISIL Reaffirms 'B' Rating on INR4cr Proposed Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on
the bank facilities of Rajeev K (RK).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 4 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4 CRISIL B/Stable (Reaffirmed)
The ratings reflect RK's modest scale of operations and
susceptibility of operating performance to intense competition in
the industry. These rating weaknesses have been partially offset by
extensive experience of promoters in the civil construction
industry
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and susceptibility of operating
performance to intense competition
RK is exposed to intense competition in the civil construction
industry which is highly fragmented with the presence of large
organized players and several unorganized players. The same is
reflected by the estimated modest turnover of INR2.4 crores as on
March 31, 2019, lower than previous fiscal due to lower orders
during the year.
Strength
* Experience of promoters in the civil construction industry
RK benefits from the extensive experience of its promoter in the
civil construction industry. The firm is promoted by Mr. Rajeev who
has been associated with the civil construction industry for the
past 2 decades.
Liquidity: Stretched
The firm has moderately utilized the BLU as indicated by an average
utilization of around 80% in the last 10 months ending March 2019.
The net cash accruals are expected to be sufficient against the
repayment obligations in the medium term. Further, the current
ratio stood at 1.17 times in 2019.
Outlook: Stable
CRISIL believes that RK will continue to benefit over the medium
term from the experience of its promoters in civil construction
industry.
Rating Sensitivity Factor
Upward Factor
* Improvement in the revenue, and net cash accruals of more than
INR2 crores.
* Improvement in the working capital requirements.
Downward Factor
* Decline in the topline, and net cash accruals of less than INR0.5
crores.
* Stretch in the working capital requirements.
Set up in 2007, RK is a proprietorship firm involved in civil
construction works like construction of roads, bridges and
construction and maintenance for irrigation facilities in Kerala.
The firm is being managed by Mr Rajeev.
RAPID METRO: Delhi Metro Takes Over Gurugram Operations
-------------------------------------------------------
Livemint.com reports that the Delhi Metro Rail Corporation (DMRC)
has taken over the operations of the Rapid Metro Link, Gurugram
from Oct. 22. Services on the 11.6 km corridor, developed by Rapid
Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon
South Limited (RMGSL), will continue to operate as per the normal
time table as earlier. "The Delhi Metro Rail Corporation will take
over the operations and maintenance of the Rapid Metro Link at
Gurugram from tonight, 22 October 2019," DMRC tweeted, Livemint.com
relays.
According to Livemint.com, the earlier concessionaire RMGL had
expressed its inability to run the metro in Gurugram due to low
footfall and high expenditure.
Livemint.com relates that the DMRC has provided adequate staff to
ensure that the commuters are not affected and the services
continue smoothly.
DMRC is committed to providing the best possible services.
Therefore, adequate staff have already been deployed to maintain a
smooth and trouble-free transition of service, a press release by
the DMRC read.
With this move, the operational metro network has now become 389
kilometres with 285 stations in total. "With the takeover of
operations of Rapid Metro, the total operational metro network
Delhi and NCR has now become 389 KM with 285 stations which
includes the NOIDA-Greater NOIDA corridor," DMRC, as cited by
Livemint.com, tweeted.
After the takeover of Gurugram Rapid Metro link by Delhi Metro, the
stations which will now come under the DMRC include, Sector 55-56,
Sector 54 Chowk, Sector 53-54, Sector 42-43, Phase -1, Sikanderpur,
Phase-2, Phase-3, Moulsari Avenue, IndusInd Bank Cybercity,
Vodafone Velvedere Towers, the report says.
The train services on the corridor start at 6 a.m. from Sector
55-56 and Sikenderpur stations with a frequency of 4.30 minutes
during morning peak hours and 5.15 minutes during evening peak
hours. The last revenue train service departs at 10 p.m. from
Sector 55-56.
The rapid metro was constructed by IL&FS Infrastructure in two
phases. In the first phase, the company built 5.1 km elevated
track, connecting National Highway No 8 at Shankar Chowk to
Sikandarpur DMRC station, covering 6 stations.
Built in three years at a cost of INR1,450 crore, the service was
opened for public in November 2013, the report notes.
ROSEWOOD TREXIM: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Rosewood Trexim Private Limited
Registered address:
C-110B, Ground Floor
Kalkaji New Delhi DL 110019
Insolvency Commencement Date: October 11, 2019
Court: National Company Law Tribunal, Principal Bench, New Delhi
Estimated date of closure of
insolvency resolution process: April 8, 2020
(180 days from commencement)
Insolvency professional: Shailendra Singh
Interim Resolution
Professional: Shailendra Singh
H-29, 1st Floor
Jangpura Extension
New Delhi 110014
E-mail: shailendralaw@gmail.com
rosewoodcirp@gmail.com
Last date for
submission of claims: October 25, 2019
RUSHIPRABHA ENGINEERS: CRISIL Keeps B Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Rushiprabha Engineers
Private Limited (REPL) continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.75 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with REPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 REPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on REPL 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 ratings on bank
facilities of REPL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
REPL, based in Pune, Maharashtra, was set up by Mr Pratap Karve in
1985 as a proprietary firm, and was reconstituted as a
private-limited company in 2007. It manufactures industrial
fasteners, and nuts and bolts for use in industries such as
infrastructure, cement, chemicals, and heavy engineering.
S.R.K. FABRICS: CRISIL Maintains 'D' Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of S.R.K. Fabrics (SRK)
continue to be 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 3.3 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 3.2 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SRK for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 SRK, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SRK 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 ratings on bank
facilities of SRK continues to be 'CRISIL D Issuer not
cooperating'.
Established in 2008 and based in Ludhiana (Punjab), SRK
manufactures knitted fabrics. The firm has a manufacturing unit in
Ludhiana with a capacity of around 5 tonnes per day, and is owned
and managed by Mr. Sachin Kaushal.
SANTOSH TIMBER: CRISIL Reaffirms B+ Rating on INR10.5cr Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of Santosh
Timber Trading Company Limited (STTCL) at 'CRISIL B+/Stable/CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Letter of Credit 14.5 CRISIL A4 (Reaffirmed)
Overdraft 10.5 CRISIL B+/Stable (Reaffirmed)
The ratings reflect the company's small scale of operations in the
highly fragmented timber trading industry, and its below-average
financial risk profile because of high total outside liabilities to
adjusted networth ratio and weak debt protection metrics. The
ratings also factor in large working capital requirement, and
susceptibility of operating margin to volatility in raw material
prices and foreign exchange rates. These weaknesses are partially
offset by extensive experience of its promoter in the timber
trading business.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations: Operations remain working
capital intensive as reflected in its gross current assets of 253
days as on March 31, 2019, due to stretched debtor realizations
i.e. wholesalers because of which debtor stood high at 149 days.
Company maintains an inventory of around 90 days on an average
owing to transit time (including unloading period) of 30-45 days.
Although 70% of inventory is order backed it still will remain
exposed to price fluctuations of imported timber. Operations will
remain working capital intensive over the medium term.
* Modest scale of operations: STTCL trades and processes timber
mainly hard wood and pine wood, which is used in manufacturing of
furniture and interiors. The company has modest scale of
operations, reflected in top line of INR29 crore in fiscal 2019.
The timber industry has low entry barriers as the capital
requirements are small, resulting in the presence of many
unorganised players. These players primarily cater to regional
demand to reduce high transportation costs, as price is the main
differentiating factor in the plywood and timber industries. The
intense market competition restrains the company from widening its
reach and profitability. Therefore, operations are expected to
remain modest in the near to medium term.
* Average financial risk profile: Financial risk profile remains
average because of modest net worth (Rs 5.72 crore as on March 31,
2019), moderate gearing (1.9 times) and weak debt protection
metrics (interest coverage and net cash accrual to debt ratios were
1.3 times and 0.04 time, respectively, in fiscal 2019). The profile
is expected to remain average over the medium term.
Strengths
* Promoters' extensive experience in the timber trading industry:
The promoters have over three decades' experience in the timber
business. They entered this industry through other family
businesses; namely Shankar Timber and Sharda Timber, which are also
into trading of timber. The company has been able to leverage on
established relationships with suppliers based at Malaysia and New
Zealand and other locations, and has got timely supply and
favourable trade terms. The company has maintained its diversified
customer base of 100-150 customers, thereby reducing customer
concentration risk. The promoters' experience will help maintain
stable growth in the near to medium term.
Liquidity: Stretched
Bank limit utilisation is high around 96 percent for the past
twelve months ended Aug 31, 2019. Debtors greater than 6 months
stood at 1.13 times the modest networth of INR5.7 crore as on March
31, 2019, though INR4 crore out of this amount was corresponding to
one of the group companies. Cash accrual are expected to be over
INR60 lakh which should be sufficient against term debt obligation
of INR10-20 lakh over the medium term. In addition, it will be act
as cushion to the liquidity of the company.
Outlook: Stable
CRISIL believes MGT will continue to benefit over the medium term
from its promoters' experience.
Rating Sensitivity Factors
Upward Factor
*Decrease in debtors greater than 6 months to networth ratio to 20%
or below
*Improvement in revenue with sustenance of profitability
Downward Factor
*Decline in turnover resulting in low accruals and weak liquidity.
*Operating margin becoming less than 4.5% over the medium term.
*Increase in debtor greater than 6 months as a proportion of
networth.
STTCL incorporated in 1982, as a proprietorship firm by Delhi based
Aggarwal family prior to that in 1996 converted into closely held
Limited company. STTCL engaged in imports and trading of medium
density fire board (MDF), Acrylic Solid Surface (ASS), Doorskin and
timber. The company has a sawing unit in Gandhidham, Gujrat and
having head office in New Delhi.
SHANMUKHA COTTON: CRISIL Maintains 'B' Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Shanmukha Cotton
Products (SCP) continue to be 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Cash 1.25 CRISIL B/Stable (ISSUER NOT
Credit Limit COOPERATING)
SME Credit .25 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SCP for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 SCP, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SCP 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 ratings on bank
facilities of SCP continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Established in 2000, SCP is engaged in ginning and pressing of raw
cotton into cotton bales. The firm is based out of Guntur in Andhra
Pradesh and promoted by Mrs. Mannava Padma and her family. The day
to day operations of the firm are managed by Mr. Raja Rao.
SHIVA PARBOILED: CRISIL Reaffirms B+ Rating on INR8cr Cash Loan
---------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating to the bank
facility of Shiva Parboiled Industries (SPI).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
Ratings continue to reflect the company's modest scale and working
capital intensive operations in a highly fragmented rice processing
industry and average financial risk profile. These weaknesses are
partially offset by the extensive industry experience of its
partners.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale and working capital intensive operations in a
fragmented industry:
With revenue of INR31 crore in fiscal 2019, the firm's scale
remains small in the intensely competitive rice industry. The gross
current asset (GCA) days stood at 113.8 days as on March 2019,
reflecting working capital intensity in operations.
* Average financial risk profile:
The Company has low net worth of around INR5.37 Cr as on March 31,
2019 and gearing stood at around 1.39 times as on March 31, 2019
NCATD and interest coverage ratio stood at 0.12 and 2.13 times for
fiscal 2019.
Strength:
* Extensive industry experience of the promoters:
The promoters have an experience of more than 25 years in the rice
industry. Over the period, the promoters have developed a healthy
relationship with customers and suppliers which ensures steady
supply of raw material and repeat orders and have a strong
understanding of the industry.
Liquidity: Stretched
Liquidity is stretched with high BLU of 90%. However, cash accruals
are sufficient against nil term debt obligations.
Outlook: Stable
CRISIL believes SPI will continue to benefit over the medium term
from the industry experience of promoter.
Rating Sensitivity Factors
Upward factor
* Improvement in scale of operation by 20% with sustained operating
margin.
* Improvement in its working capital requirement.
Downward factor
* Decline in profitability below 4%
* Stretch in its working capital requirement.
SPI was established in 1991 as a partnership firm and is promoted
by Mr M Ravindra and Mr G Nagendra with 50% shareholding each. SPI
processes non-basmati rice at its plant capacity of 8 metric tonne
per hour at Nalgonda, Telangana.
SHIVALI UDYOG: CRISIL Maintains 'B' Rating in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Shivali Udyog India
Limited (SUIL) continue to be 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.15 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 21.23 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Working Capital 7.20 CRISIL B/Stable (ISSUER NOT
Demand Loan COOPERATING)
CRISIL has been consistently following up with SUIL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 SUIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SUIL 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 ratings on bank
facilities of SUIL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
SUIL, based in Raipur (Chhattisgarh), was acquired by its current
promoters, Mr. Vinod Agrawal and Mr. Ashok Agrawal, in March 2002.
The promoters have experience of more than three decades in the
iron and steel industry. The company produces mild steel (MS) wire
rods, MS rounds, thermo-mechanically treated bars, and hard bright
(HB) wires. Its facilities have capacity of 41,000 tonnes per annum
(tpa) for HB wires and rolling capacity of 100,000 tpa.
SHREE SAI: Insolvency Resolution Process Case Summary
-----------------------------------------------------
Debtor: Shree Sai Steel Industries India Private Limited
8, Ganga Vihar
Rokada Lane
Borivali West
Mumbai 400092
Insolvency Commencement Date: September 26, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 23, 2020
Insolvency professional: Mr. Bhaskar Gopal Shetty
Interim Resolution
Professional: Mr. Bhaskar Gopal Shetty
C-77, Shanti Shopping Centre
Mira Road East 401107
Thane District
Maharashtra
E-mail: cabgshetty@gmail.com
shreesai.cirp@gmail.com
Last date for
submission of claims: October 28, 2019
SHREE SAINATH: CRISIL Reaffirms B- Rating on INR11cr Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank loan facilities of
Shree Sainath Textiles Private Limited (SSTPL) at 'CRISIL
B-/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .5 CRISIL A4 (Reaffirmed)
Cash Credit 11.0 CRISIL B-/Stable (Reaffirmed)
Proposed Fund-
Based Bank Limits 3.7 CRISIL B-/Stable (Reaffirmed)
The ratings continue to reflect a weak financial risk profile, a
modest scale of operations, and vulnerability to volatility in
cotton prices and changes in government policy. There rating
weaknesses are partially offset by the experience of the promoters
in the textile industry and their funding support.
Analytical Approach
Unsecured loans of INR18.27 crore (outstanding as on March 31,
2019) have been treated as neither debt nor equity as these loans
are non-interest bearing, subordinated to bank debt, and expected
to be maintained in business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Weak financial risk profile:
The networth was a negative INR1.98 crore as on March 31, 2019. The
debt protection metrics were subdued, as reflected in the interest
coverage ratio of 0.51 time in fiscal 2019. While the gearing is
expected to gradually improve due to steady accretion to reserves,
the financial risk profile is likely to remain constrained because
of continued high reliance on external bank debt.
* Modest scale of operations:
Revenue was modest at around INR109 crore in fiscal 2019. The
cotton ginning industry is largely unorganised with the presence of
several small players. The business risk profile is likely to
remain constrained due to the modest scale of operations.
* Vulnerability to volatility in cotton prices and changes in
government policies:
Due to fragmentation and intense competition in the industry,
players have limited pricing power and are market followers for
pricing, leading to a low and volatile operating margin. The margin
of the company is expected to remain at 1.8'2.0%, thereby
constraining the overall business risk profile.
Strength:
* Industry experience of the promoters and their funding support:
The promoters have been in the cotton industry for more than 13
years. They have thus been able to develop a good insight into the
industry, understand the dynamics of the local market, and
establish relationships with various suppliers, farmers, and
customers. Benefits from the extensive industry experience should
continue.
Liquidity: Poor
Cash accrual is likely to be low at INR0.5-1 crore, against
repayment obligation of around 1.4 crore, per fiscal over the
medium term. Bank limit utilisation were moderate at an average of
around 83% during the 12 months through August 2019, thus providing
cushion to liquidity. Need-based financial assistance may be
expected from the promoters, as in the past.
Outlook: Stable
CRISIL believes SSTPL will continue to benefit from the extensive
industry experience of the promoters.
Rating sensitivity factors
Upward factor
Steady revenue growth with operating profitability margin of above
3%
Improvement in the working capital cycle
Downward factor
Decline in revenue by over 10% and in the margin to below 1%
Stretched working capital cycle
SSTPL, based in Nagpur, Maharashtra, was set up by Mr Sayaji Jadhao
and Mr Manish Vaidya and their family members. The company gins and
presses cotton. It also set up a unit to convert single yarn into
double yarn, which started operations in fiscal 2017.
SHREEJEE JEWELLERS: CRISIL Cuts Rating on INR11.5cr Loan to B+
--------------------------------------------------------------
CRISIL has revised the ratings on bank facilities of Shreejee
Jewellers Private Limited (SJPL) to 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB-/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 11.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with SJPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 SJPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SJPL 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 ratings on bank
facilities of SJPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB-/Stable Issuer not cooperating'.
SJPL, incorporated in 1998 in Kolkata, is promoted by brothers Mr.
Sunil Poddar, Mr. Sushil Poddar, and Mr. Sanjeev Poddar. The
company manufactures diamond-studded jewellery, and specialises in
hand-made jewellery. It derives most of its revenue from the
wholesale segment, and is present in the retail segment through its
showroom in Kolkata.
SINCHANA EXPORTS: CRISIL Assigns 'B' Rating to INR5cr LT Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating on the bank
facilities Sinchana Exports and Readymade Garments (Sinchana).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 5 CRISIL B/Stable (Assigned)
The rating reflects exposure to risks related to ongoing project
and its expected leveraged capital structure. These weakness are
partially offset by extensive industry experience of promoters.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to risks related to ongoing project:
Sinchana will commence its operation in September, 2020. Demand
risk is also expected to be moderate as the industry is highly
fragmented marked by low entry barriers with small capital and
technological requirements though it it partly mitigated by
confirmed orders from clients. Sinchana will be exposed to intense
competition from other players in the segment. Timely completion
and successful stabilization of its operations at the new unit will
remain a key rating sensitivity factor.
* Expected leveraged capital structure:
Sinchana is expected to have an average financial risk profile with
high gearing and moderate debt protection metrics. The project is
aggressively funded through a debt-equity ratio 2.5 times.
Strength:
* Promoters' extensive experience in the readymade garment
industry:
The propereitor of Sinchana, Mr. Narasappa has been in the textile
business for more than two decades. His extensive experience has
enabled the firm to acquire tentative orders from customers. CRISIL
expects the firm to benefit from the promoter's extensive
experience.
Liquidity: Stretched
The firm does not have any sanctioned workingcapital lines yet.
Expected net cash accrual is expected at INR0.5 - 0.7 cr annually
against which be tightly matched with term debt obligations of
INR0.5 cr over the medium term. Liquidity is expectd to be
supported by the promoters' unsecured loan which will be infused on
a need basis.
Outlook: Stable
CRISIL believes that Sinchana will benefit over the medium term
from its promoter extensive industry experience.
Rating sensitivity factor
Upward factor
* Stabilizes operations at its proposed plant in time and in the
specified cost parameters
* Timely ramp up of operations leading to increased utilization
levels and revenue of INR10 cr in FY 2020
Downward factor
* Considerable delay in the commencement of its operations and cost
of over INR9 cr
* Generates significantly low cash accruals during its initial
phase of operations
* Witnesses a substantial increase in its working capital
requirements thus weakening its liquidity & financial profile.
SERG was established as proprietorship firm in 2018. It is setting
up manufacturing facility of readymade garments at industrial area
of Doddaballapur - Karnataka. The project is being undertaken by
Mr. Narasappa - proprietor of the firm and expected to commence
from October 2020.
SP ACCURE: CRISIL Hikes Rating on INR10.0cr Loan to B
-----------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of SP
Accure Labs Private limited (SPALPL) to 'CRISIL B/Stable' from
'CRISIL B-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Long Term Loan 10 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The upgrade reflects steady improvement in the company's business
risk profile, as reflected in the increase in its revenue and
operating margin to INR70.5 crore and 16.5%, respectively, in
fiscal 2019, from INR65.5 crore and 10.5%, respectively, in fiscal
2018. As a result, net cash accrual rose to INR7.18 crore from
INR3.15 crore.
The ratings reflect the company's large working capital requirement
and the susceptibility of its operating margin to volatility in raw
material prices. These weaknesses are partially offset by the
extensive experience of the promoter in the pharmaceuticals
industry leading to established customer relationships.
Analytical Approach
Unsecured loans from promoters of about INR16 crore has been
treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement
SPALPL's large working capital requirement is reflected in gross
current assets of 122 days as on March 31, 2019, driven by sizeable
receivables of 81 days and inventory of 36 days.
* Susceptibility of the operating margin to volatility in raw
material prices
Limited bargaining power with key customers and exposure to intense
competition in the fragmented pharmaceuticals industry constrain
the company's ability to pass on increase in raw material prices
entirely to customers. Hence, its profitability is susceptible to
any sharp increase in raw material prices. Competition from major
players, as well as many local and small, unorganized players, also
constrains profitability.
Strength
* Promoter's extensive industry experience
The management has extensive experience in manufacturing bulk
drugs. The promoter Mr K Vijay Prakash has experience of more than
two decades in manufacturing oncology products.
Liquidity: Stretched
Liquidity is stretched, as indicated by fully utilized bank limits
over the 12 months through August 2019, but is supported by the
cushion between cash accrual and debt obligation and by
interest-free unsecured loans from the promoter.
Outlook: Stable
CRISIL believes SPALPL will continue to benefit from the extensive
experience of the promoter.
Rating sensitivity factors
Upward factor
* Substantial and sustainable increase in revenue and
profitability, leading to cash accrual rising more than 10%
* Prudent working capital management
Downward factor
* Drop in interest coverage ratio to below 2.5 times
* Steep decline in revenue and profitability, leading to decrease
in cash accrual
* Stretch in the working capital cycle
Incorporated in 2013 and based in Hyderabad, SPALPL is promoted by
Mr K Vijay Prakash. The company sells and distributes
pharmaceutical formulations, mainly oral solids and injectables,
with specialisation in the oncology segment.
SRI BALAJI: CRISIL Raises Rating on INR6cr Loan to B+
-----------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Sri Balaji Ginning And Pressing Factory - Yavatmal (SGPF) to
'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects improvement in SGPF's business and financial
risk profiles. Revenues increased to INR27.8 crore in fiscal 2019,
from INR25.19 crore in fiscal 2018, while operating margin improved
to 3.09% from 1.31% during the same time period. Equity infusion of
INR1.23 crores in fiscal 2019 has improved the capital structure;
Total Outstanding Liabilities to Adjusted Networth improved to 4.8
times as on March 31, 2019, from 29.3 times a year ago.
The rating continues to reflect modest scale of operations in the
highly competitive cotton ginning industry, weak financial risk
profile and susceptibility to volatility in cotton prices and to
government regulations. These weaknesses are mitigated by the
extensive experience of the promoters and their funding support.
Analytical Approach
Unsecured loans have been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Limited capacity and the initial
stage of operation, has led to a modest scale of INR27.8 crore in
fiscal 2019. Low entry barriers, little value addition, and limited
differentiation in products has led to intense competition and low
pricing power; and may constrain scalability.
* Weak financial risk profile: As on March 31, 2019, networth was
small at INR1.66 crore, and capital structure aggressive as
reflected in gearing of 3.6 times and total outside liabilities to
adjusted networth (TOLANW) of 4.8 times. Debt protection metrics is
weak with interest coverage of 1.25 times and Net Cash Accrual to
Total Debt of 0.03 times in fiscal 2019. The same is likely to
improve, but remain weak over the medium term.
* Susceptibility to volatility in cotton prices and to regulatory
framework: Cotton being an agricultural commodity, its availability
depends on monsoon. Moreover, government interventions and
fluctuations in global cotton output have resulted in sharp
fluctuations in cotton prices, which impacts the profitability of
ginners such as SGPF.
Strength:
* Extensive experience of the promoters: Benefits from the
promoters' experience of 25 years, their understanding of the
dynamics of the local market and healthy relations with farmers and
suppliers should continue to support the business. Moreover,
need-based funding support from the promoters in the form of
unsecured loans is expected to continue.
Liquidity: Stretched
SGPF has stretched liquidity marked by expected cash accruals of
INR0.18-0.2 crores annually in fiscal 2020 and fiscal 2021, against
long term repayment obligations of INR0.0.12 crores annually. Cash
and cash equivalents were INR0.12 crore as on March 31, 2019.
SGPF's fund based limits have been utilized to the tune of 70% on
an average over the 12 months ended August 2019. Fund support from
promoters further supports liquidity.
Outlook: Stable
CRISIL believes that SGPF will continue to benefit over the medium
term from the extensive experience of the promoters.
Rating sensitivity factor
Upward factor
* Increase in revenues to above INR35 crore and sustenance of
operating profitability, leading to higher accruals
* Substantial improvement in financial risk profile
Downward factor
* Deterioration of financial risk profile and liquidity due to
inefficient working capital management.
* Decline in revenues and profitability, or cash accruals less than
INR0.1 crore
Setup in 2003, Yavatmal (Maharashtra)-based SGPF, promoted by Mr
Murli Manohar Malpani, and Mr Manish Malpani, is engaged in ginning
and pressing of cotton. The manufacturing unit is at Yavatmal,
Maharashtra.
SUNCO ENTERPRISES: CRISIL Hikes Rating on INR2cr Loan to B+
-----------------------------------------------------------
CRISIL has upgraded its rating on the long term bank facility of
Sunco Enterprises (SE) to 'CRISIL B+/Stable' from 'CRISIL D'. The
upgrade factors timely realization of bills in the past 6 months.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 2 CRISIL B+/Stable (Upgraded
from 'CRISIL D')
Proposed Long Term 1 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
Post Shipment Credit 2 CRISIL B+/Stable (Upgraded
from 'CRISIL D')
Packing Credit 2 CRISIL B+/Stable (Upgraded
from 'CRISIL D')
The rating also factors SE's modest scale of operations in a highly
competitive industry, large working capital requirement. These
weaknesses are partially offset by the extensive experience of
promoters and moderate capital structure.
Analytical Approach
Unsecured loans of INR0.13 cr as on March 31, 20119 has been
treated as debt on account track record of withdrawal.
Key Rating Drivers & Detailed Description
Strengths:
* Modest scale of operations in a highly competitive industry:
Scale of operations has been modest, with turnover of INR10.04
crore in fiscal 2019, due to intense competition.
* Large working capital requirement: Gross current assets are
estimated at 318 days as on March 31, 2019, due to debtors of 232
days and inventory of 47 days. However this is partially offset by
the flexibility which the firm enjoys in payment to its suppliers.
Strength
* Extensive experience of promoters: The firm is managed by Singh
family. The promoters have been in automobile spare parts trading
business for about 49 years. Aided by their experience, SE has been
able to establish strong relations with key stakeholders in the
industry.
* Moderate capital structure: Networth and Total outside
Liabilities Adjusted Networth (TOL/ANW) (Rs 6.04 crore and 1 time
respectively as on March 31, 20119) represent moderate capital
structure.
Liquidity: Poor
SE has poor liquidity marked by marginal net cash accrual of around
INR0.93- 1.08 crore for fiscal 2020 and fiscal 2021 against debt
repayment obligations of INR0.02 cr per annum. The working capital
limits have utilized at around 76% over the last twelve months
through August 2019. The firm had marginal cash and bank balance of
INR0.04 cr as on March 31, 2019.
Outlook: Stable
CRISIL believes SE will continue to benefit over the medium term
from the extensive experience of the promoters.
Rating Sensitivity Factors
Upward factor
* Improvement in turnover, while sustaining profitability at 8-9
percent over the medium term
* Strengthening of financial risk profile, with improved TOL/ANW
and accrual
Downward factor
* Sharp decline in operating performance with revenue below INR10
cr
* Elongation in working capital cycle, resulting in further stretch
on liquidity
SE, set up in 1970s, is a Mumbai based partnership firm engaged in
exporting of various spare parts of 2 wheelers, 3 wheelers and 4
wheelers. The firm trades for TATA Leyland, Mercedes, Bajaj, TVS
and etc.
TAMIL NAADU: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Tamil Naadu Edible
Oils Private Limited (TNEOPL) continue to be 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 20 CRISIL A4 (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with TNEOPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 2019 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 TNEOPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on TNEOPL 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 ratings on bank
facilities of TNEOPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
TNEOPL, incorporated in 1989, refines edible sunflower oil. The
company is promoted by Mr. Mahavir P Gupta and his family members.
V R CONSTRUCTIONS: CRISIL Migrates B+ Rating From Not Cooperating
-----------------------------------------------------------------
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated its ratings on the
bank facilities of V R Constructions - Nellore (VRC) to 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating'. However, VRC has
subsequently begun sharing information necessary for a
comprehensive rating review. CRISIL is, therefore, migrating the
ratings from 'CRISIL B+/Stable/CRISIL A4 Issuer Not Cooperating' to
'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 10 CRISIL A4 (Migrated from
'CRISIL A4/ISSUER NOT
COOPERATING')
Cash Credit 4.75 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Proposed Long Term
Bank Loan Facility .25 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
The rating continues to reflect a small scale of operations,
below-average financial risk profile and moderate working capital
intensive operations. These weaknesses are partially offset by the
extensive experience of the promoters in the construction
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: The small scale of operations is
reflected in net sales of INR12.5 crore in fiscal 2019. The segment
is highly fragmented and has numerous small-scale unorganised
players catering to local demand, which may restrict significant
improvement in scale and also profitability margin.
* Below-average financial risk profile: As on March 31, 2019,
networth was small at INR2.39 crore and total outside liabilities
to tangible networth (TOLTNW) at 7.01 times. Debt protection
metrics were average with interest coverage and net cash accrual to
total debt (NCATD) of 1.59 and 0.00 times, respectively, on account
of low operating margin.
* Moderately working capital intensive operations: Operations are
working capital intensive as evident from gross current asset (GCA)
days of 371 as on March 31, 2019, due to high debtors of 280 days
and various deposits required to be maintained with customers.
Strength
* Extensive experience of partners and their fund support: The
partners' experience of more than a decade in the construction
industry, established associations with suppliers and customers
should support business risk profile. The partner have supported
the liquidity through unsecured loans of INR2.50 crore as on March
31, 2019.
Liquidity: Poor
Liquidity is Poor. Net cash accrual, estimated at over INR0.42
crore should tightly match maturing debt of INR0.20 crore in fiscal
2020. Though bank limit utilisation averaged 80.7% over the 12
months through July 2019, Debtors days were 280 days as on
31.03.2019.
Outlook: Stable
CRISIL believes VRC will continue to benefit from the extensive
experience of the partners and there funding support.
Rating sensitivity factors
Upward factor
* Increase in scale of operations and operating margin of more than
7%
* Prudent working capital management
Downward factor
* Weakening of business risk profile owing to steep decline in
revenue by 10-15% and operating losses, leading to weaker cash
accruals.
* Further stretch in liquidity.
VRC, established in 2000, is a partnership firm of G Raja Sekhar
Rao, G Lakshmi Rajyam, G Rambabu, M Ravi Kumar and P Srihari Naidu.
VRC, based in Nellore, Andhra Pradesh, undertakes civil
construction for road, irrigation and electrical segments.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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