/raid1/www/Hosts/bankrupt/TCRAP_Public/191104.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, November 4, 2019, Vol. 22, No. 220
Headlines
A U S T R A L I A
AGB TRAINING: Students, Teachers Left Out of Pocket After Closure
AUSSIE OFF: First Creditors' Meeting Set for November 13
BIOMETRIC IDENTITY: Second Creditors' Meeting Set for Nov. 7
CHELLINGTON PTY: Second Creditors' Meeting Set for Nov. 7
CLARKE FOODS: First Creditors' Meeting Set for Nov. 11
GLOBAL STRESS: First Creditors' Meeting Set for Nov. 11
GROCON PTY: Puts Two Units Into Administration Over AUD28M Spat
INTERSTATE INVESTMENTS: First Creditors' Meeting Set for Nov. 11
JETA HOLDINGS: First Creditors' Meeting Set for Nov. 11
KELJON NSW: Second Creditors' Meeting Set for Nov. 7
THINK TANK 2019-1: S&P Assigns BB+ Rating to AUD4.9MM Cl. E Notes
C H I N A
FOSUN INTERNATIONAL: S&P Rates New Sr. Unsecured Euro Notes 'BB'
POWERLONG REAL: S&P Alters Outlook to Stable & Affirms 'B+' ICR
I N D I A
APCO AUTOMOBILES: CRISIL Lowers Rating on INR25cr Loans to B-
BRIGHTSTAR HEALTHCARE: CRISIL Rates INR25cr Term Loan 'B'
CHANDAN TRADING: CRISIL Migrates B+ Rating to Not Cooperating
COCHIN FROZEN: CRISIL Migrates 'B' Rating to Not Cooperating
COSMO FERRITES: CRISIL Lowers Rating on INR13.24cr Loan to B-
DHARAMPAL PIPE: CRISIL Moves 'B' Rating to Not Cooperating
EVEREADY INDUSTRIES: Ind-Ra Lowers LongTerm Issuer Rating to 'BB'
HEMA ABODES: CRISIL Moves INR19cr Loan Rating From BB-/Not Coop.
IDBI BANK: S&P Affirms 'BB/B' Issuer Credit Ratings, Outlook Neg.
K.B. GEMS: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
KUNAL COTTON: CRISIL Maintains 'B-' Rating in Not Cooperating
NOBLE EDUCATIONAL: Ind-Ra Affirms 'BB' Loan Ratings
PERFEKTION (ASIA): CRISIL Moves 'B' Rating to Not Cooperating
RANSAN PACKAGING: CRISIL Raises Rating on INR4.5cr Loan to B+
SAFE & SECURE: Ind-Ra Migrates 'BB+' LT Rating to Non-Cooperating
SAGHAN KSHETRA: CRISIL Assigns B+ Rating to INR5cr New LT Loan
SAI POINT: CRISIL Hikes Rating on INR12.5cr Loan to 'C'
SHAKAMBARI RICE: CRISIL Migrates B+ Rating to Not Cooperating
SHOREWALA ROLLER: CRISIL Withdraws B+ Rating on INR9cr Loans
SHREE BALAJI: CRISIL Migrates 'B+' Rating to Not Cooperating
SHREE SHYAM: CRISIL Migrates 'B' Rating to Not Cooperating
SIDDARTH AND GAUTAM PRIVATE: CRISIL Rates INR9cr Loan 'B'
SIDHARTH AND GAUTAM: CRISIL Assigns B+ Rating to INR8cr Cash Loan
SIMPEX GRANITO: CRISIL Migrates B+ Rating to Not Cooperating
SRI PARANTHAMAN: CRISIL Migrates 'D' Rating to Not Cooperating
STEEL AND METAL: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Neg
SUBHA SOUMYA: CRISIL Hikes Rating on INR6.40cr Cash Loan to B
SUBRAHMANYESWARA SWAMY: CRISIL Keeps B- Rating in Not Cooperating
SUSHEE INFRA: Ind-Ra Affirms 'D' LT Issuer Rating
WESTERN HEAT: CRISIL Withdraws B+/Not Coop. Rating on INR34cr Loan
N E W Z E A L A N D
CBL CORPORATION: Investors Want Maximum Compensation for Losses
TARATAHI AGRICULTURAL: UCOL Proposes to Offer Training at Farm
S R I L A N K A
BANK OF CEYLON: Moody's Affirms B2 Issuer Rating, Outlook Stable
T H A I L A N D
THAI AIRWAYS: Chairman Quits as Carrier Struggles to Stem Losses
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A U S T R A L I A
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AGB TRAINING: Students, Teachers Left Out of Pocket After Closure
-----------------------------------------------------------------
Rob McLennan at Bay93.9.com reports that students and teachers at
Geelong training provider AGB Training have been left hundreds of
thousands of dollars out of pocket after the company closed its
doors.
Bay93.9.com relates that devastated staff were called to a
hastily-arranged meeting on Oct. 29 to be told they no longer had
jobs, and that it could be February next year before they receive
any entitlements under a government superannuation guarantee
scheme.
But there was no such courtesy extended to the business' hundreds
of students, many of whom paid up to AUD10,000 up front for their
courses, the report says.
According to Bay93.9.com, staff gathered at AGB's Barwon Terrace
offices on Oct. 30, where a large 'closed' sign had been attached
to the doors.
Bay93.9.com relates that staff members, who asked not to be
identified, said they received an email from the company's CEO at
2:00 p.m. on Oct. 29, advising them to attend a mandatory meeting
at 3:30 p.m.
"He just said, "I'm shutting the doors, AGB is no longer, leave
your keys and off you go," the teacher told Geelong Broadcasters,
Bay93.9.com relays. "There was no notice and no explanation. It's
a mystery to us, it's all been very quiet and not much
consultation."
Another staffer said he felt more sorry for the students, many of
whom had paid money in advance for courses that would not be
delivered, according to the report.
"We've received nothing in writing and the administrators weren't
here, so we've got no direction on what we're meant to be doing."
AGB had more than 300 students on its books, with approximately two
thirds of them from overseas, according to Bay93.9.com.
They now face the possiblility of having their student visas
cancelled, the report notes.
Geelong Advertiser, meanwhile, reports that the CEO of AGB Training
is remaining silent as the national education regulator launches an
investigation into the organisation after a spate of student
complaints.
AUSSIE OFF: First Creditors' Meeting Set for November 13
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Aussie Off
Grid Solar Energy Pty Ltd will be held on Nov. 13, 2019, at 10:00
a.m. at the offices of Morgan Conley, Level 6, at 239 George
Street, in Brisbane, Queensland.
Daniel Moore of BCR Advisory was appointed as administrator of
Aussie Off on Nov. 1, 2019.
BIOMETRIC IDENTITY: Second Creditors' Meeting Set for Nov. 7
------------------------------------------------------------
A second meeting of creditors in the proceedings of Biometric
Identity Systems Pty Ltd has been set for Nov. 7, 2019, at 11:00
a.m. at the offices of Deloitte Financial Advisory Pty Ltd
Riverside Centre, at Level 23, 123 Eagle Street, in Brisbane City,
Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 6, 2019, at 4:00 p.m.
Michael Billingsley and David Mansfield of Deloitte Financial
Advisory were appointed as administrators of Biometric Identity on
Aug. 8, 2019.
CHELLINGTON PTY: Second Creditors' Meeting Set for Nov. 7
---------------------------------------------------------
A second meeting of creditors in the proceedings of Chellington Pty
Ltd, formerly trading as "Concert and Corporate Productions", has
been set for Nov. 7, 2019, at 12:00 p.m. at Gumala Room,Ground
Floor, at 197 St Georges Terrace, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 6, 2019, at 4:00 p.m.
Domenico Alessandro Calabretta and Grahame Ward of Mackay Goodwin
were appointed as administrators of Chellington Pty on Oct. 3,
2019.
CLARKE FOODS: First Creditors' Meeting Set for Nov. 11
------------------------------------------------------
A first meeting of the creditors in the proceedings of Clarke Foods
Pty Limited and Clarke Foodservice Pty Limited will be held on Nov.
11, 2019, at 11:30 a.m. at the offices of PKF, at 755 Hunter
Street, in Newcastle, West NSW.
Simon Thorn of PKF was appointed as administrator of Clarke Foods
on Oct. 31, 2019.
GLOBAL STRESS: First Creditors' Meeting Set for Nov. 11
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Global
Stress Index Pty Ltd will be held on Nov. 11, 2019, at 10:00 a.m.
at the offices of Woodgate & Co., Level 8, at 6-10 O'Connell
Street, in Sydney, NSW.
Giles Geoffrey Woodgate of Woodgate & Co was appointed as
administrator of Global Stress on Oct. 30, 2019.
GROCON PTY: Puts Two Units Into Administration Over AUD28M Spat
---------------------------------------------------------------
Michael Bleby at The Australian Financial Review reports that a
dispute between two of Australia's best-known property companies
has boiled over into public after builder Grocon put two
subsidiaries into voluntary administration in the middle of a court
battle with Dexus over a AUD28 million lease claim against it by
the country's largest office landlord.
According to the report, Grocon executive Daniel Grollo on Oct. 25
called the decision to put the two units into adminstration
regrettable but said he was forced to do it after Dexus, whose
attitude he called "unreasonable and disappointing", escalated its
demands for payment even though a court process was continuing.
AFR says a Grocon spokeswoman declined to give more detail about
the demands the company said Dexus had made.
"I don't think we want to go in to specifics on that," she said,
notes the report.
AFR relates that the dispute arises out of unpaid lease obligations
stretching over three years Grocon had to Dexus over commercial
space it occupied at 480 Queen Street. Dexus said it and Grocon
entered had an agreement to restructure and extend the payment
terms, but that Grocon had not complied with the agreement, AFR
relays.
Dexus took Grocon to the Federal Court in Victoria in February and
the two parties were due to go to the Federal Court of Appeal next
month, according to the report. Dexus, which says it expected
judgment to be handed soon after the November 22 hearing, accused
Grocon of avoiding judgment by putting the two entities, Grocon
Constructors (Qld) Pty Ltd and Grocon Constructors (Vic) Pty Ltd,
into administration, AFR says.
AFR adds that Dexus' general counsel and company secretary Brett
Cameron said Grocon "appears to be seeking to avoid the court
hearing by winding up these entities."
Grocon also developed the office tower, which it sold to Dexus and
the Dexus Wholesale Property Fund. In a matter unrelated to the
AUD28 million spat, The Australian Financial Review's Street Talk
column last year reported that Grocon was pressured by rental
guarantee obligations it had relating to the "lease tails" of
tenants it drew out of other buildings to 480 Queen Street.
Grocon suffered a AUD27.5 million loss in the 2017 year, prompting
auditor PwC to report that "material uncertainty" cast doubt on its
ability to continue as a going concern, AFR recalls.
According to AFR, the privately owned builder on Oct. 25 said it
had appointed John Park of FTI Consulting in Brisbane, as joint and
several voluntary administrator of two subsidiaries.
AFR relates that Grocon said it both subsidiaries were dormant and
had no employees. Their administration would not affect the
builder's other projects, including The Ribbon in Sydney and
Northumberland in Melbourne, it said.
"Grocon has developed and constructed billions of dollars of real
estate for Dexus over the years and its attitude to this matter is
both unreasonable and disappointing," the report quotes Mr. Grollo
as saying. "Unfortunately, Dexus' reluctance to wait until the
Court matter is concluded, means that Grocon has been left with no
choice. The voluntary administration process will ultimately
resolve the situation."
The Australian Financial Review in 2017 reported that a
steel-fixing subcontractor filed for bankruptcy after Grocon failed
to the AUD600,000 it owed E&S Reinforcements over the construction
of 480 Queen Street. The Construction, Forestry, Mining and Energy
Union said Grocon had not paid several groups of sub-contractors in
Queensland for six to eight months, adds AFR.
Grocon Pty Ltd is a development, construction and funds management
company.
INTERSTATE INVESTMENTS: First Creditors' Meeting Set for Nov. 11
----------------------------------------------------------------
A first meeting of the creditors in the proceedings of Interstate
Investments Pty. Ltd. will be held on Nov. 11, 2019, at 2:00 p.m.
at the offices of Cor Cordis, Mezzanine Level, at 28 The Esplanade,
in Perth, WA.
Clifford Stuart Rocke and Jeremy Joseph Nipps of Cor Cordis were
appointed as administrators of Interstate Investments on Oct. 30,
2019.
JETA HOLDINGS: First Creditors' Meeting Set for Nov. 11
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Jeta
Holdings Pty Ltd, trading as Stow Smash Repairs, will be held on
Nov. 11, 2019, at 11:00 a.m. at McGrath Executive Suites, Level 5,
at 115 Pitt Street, in Sydney, NSW.
Anthony Elkerton and Cameron Gray of DW Advisory were appointed as
administrators of Jeta Holdings on Oct. 30, 2019.
KELJON NSW: Second Creditors' Meeting Set for Nov. 7
----------------------------------------------------
A second meeting of creditors in the proceedings of Keljon (NSW)
Pty Ltd, trading as Commercial Hotel Young, has been set for Nov.
7, 2019, at 11:00 a.m. at the offices of Veritas Advisory, Level 5,
at 123 Pitt Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 6, 2019, at 4:00 p.m.
Vincent Pirina and Steve Naidenov of Veritas Advisory were
appointed as administrators of Keljon (NSW) on Oct. 2, 2019.
THINK TANK 2019-1: S&P Assigns BB+ Rating to AUD4.9MM Cl. E Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its ratings to six of the nine classes
of small-ticket commercial mortgage-backed, floating rate,
pass-through notes issued by BNY Trust Co. of Australia Ltd. as
trustee of Think Tank Series 2019-1 Trust.
Think Tank Series 2019-1 Trust is a securitization of loans to
commercial borrowers, secured by first-registered mortgages over
Australian commercial or residential properties originated by Think
Tank Group Pty Ltd. (Think Tank).
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including the fact that this is a closed portfolio,
which means no further loans will be assigned to the trust after
the closing date.
-- S&P's view that the credit support is sufficient to withstand
the stresses it applies. This credit support comprises note
subordination for each class of rated note.
-- That the transaction's cash flows can meet timely payment of
interest and ultimate payment of principal to the noteholders under
the rating stresses. Key factors are the level of subordination
provided, the condition that a minimum margin will be maintained on
the assets, an amortizing liquidity facility sized at 3.0% of the
outstanding balance of the rated notes, and the principal draw
function.
-- The extraordinary expense reserve of A$250,000, funded from day
one by Think Tank, available to meet extraordinary expenses. The
reserve will be topped up via excess spread if drawn.
-- The legal structure of the trust, which has been established as
a special-purpose entity and meets our criteria for insolvency
remoteness.
-- The fixed- to floating-rate interest-rate swap provided by
Commonwealth Bank of Australia to hedge the mismatch between
receipts from fixed-rate mortgage loans and the floating-rate
obligations of the trust.
RATINGS ASSIGNED
Think Tank Series 2019-1 Trust
Class Rating Amount (mil. A$)
A1 AAA (sf) 210.00
A2 AAA (sf) 48.30
B AA (sf) 21.70
C A (sf) 29.40
D BBB (sf) 18.20
E BB+ (sf) 4.90
F NR 11.55
G NR 2.45
H NR 3.50
N.R.--Not rated
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C H I N A
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FOSUN INTERNATIONAL: S&P Rates New Sr. Unsecured Euro Notes 'BB'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term issue rating to the
proposed euro-denominated senior unsecured notes that Fosun
International Ltd. will unconditionally and irrevocably guarantee.
Fortune Star (BVI) Ltd., a special purpose entity, will issue the
notes. The rating is subject to our review of the final issuance
documentation.
The rating on the notes is the same as the issuer credit rating on
Fosun (BB/Positive/--) because of credit substitution under the
guarantee. As an investment holding company, Fosun's secured debt
at the parent level is less than 50% of the total debt at the
parent level. Therefore, S&P does not notch down the issue rating
for structural subordination risk.
Fosun will use the proceeds from the proposed notes for
refinancing, working capital, and other general corporate
purposes.
The positive rating outlook on Fosun reflects S&P's view that the
company's portfolio liquidity is likely to improve. This could
result from an appreciation in the value of existing listed assets
or from IPOs of unlisted portfolio companies. The outlook also
reflects Fosun's track record of focused investment strategy and
value creation.
POWERLONG REAL: S&P Alters Outlook to Stable & Affirms 'B+' ICR
---------------------------------------------------------------
On Oct. 31, 2019, S&P Global Ratings revised its outlook on
Powerlong Real Estate Holdings Ltd. to stable from negative.
S&P said, "At the same time, we affirmed our 'B+' long-term issuer
credit rating on the China-based developer, and the 'B' long-term
issue rating on the company's senior unsecured notes.
"We revised the outlook on Powerlong to stable to reflect our view
that the company has shown a commitment to financial prudence. We
therefore believe Powerlong is likely to maintain its reduced
leverage over the next two years. We also expect the company's
recurring rental income to continue to grow.
"In our view, Powerlong's control over debt growth and the
company's strong operating performance over the past six months
have increased the likelihood of continued deleveraging. We expect
Powerlong's ratio of consolidated debt to EBITDA to be close to
6.0x in 2019, compared with 7.0x in the past two years. On a
see-through basis (with joint ventures [JVs] proportionally
consolidated), the company's leverage would likely be largely
similar. As of June 30, 2019, Powerlong's gross debt level was
below Chinese renminbi (RMB) 50 billion, from RMB49 billion as of
end-2018. We estimate a modest growth in debt to RMB54 billion by
end-2019.
"Apart from stabilizing debt growth, we believe Powerlong's growing
revenue recognition will help enhance its credit profile. The
debt-to-EBITDA ratio improved to 5.8x in the first six months of
2019, from 7.0x in 2018. Revenue for the period increased 32%,
supported by booking of projects sold over the past two years. We
expect annual revenue growth of 30%-35% in 2019, and 22%-27% in
2020 and 2021, helping lower the leverage.
"We believe Powerlong will remain prudent in expanding its business
scale. The company's land acquisitions have picked up since the
second quarter of 2019 and its attributable spending is about RMB12
billion in the first nine months of 2019, higher than our initial
forecast. However, sales and cash collection were also stronger
than our expectation."
Powerlong may outperform its revised contracted sales target given
its strong project launch pipeline and well positioned footprint in
the Yangtze River Delta region. The company achieved contracted
sales of RMB45.1 billion in the first three quarters, representing
90% of its original target of RMB50 billion and 82% of its revised
targets of RMB55 billion. It also has sufficient saleable resources
that we estimate at RMB35 billion-RMB40 billion in the last quarter
of 2019. S&P also expects the company's strong sales momentum to
continue into 2020 and 2021, driving contracted sales up by 25%-30%
annually. Powerlong's contracted sales in 2018 were RMB41 billion.
S&P said, "We forecast Powerlong's rental interest coverage will
stay at 35%-40% in the coming two years. This ratio is low compared
to that of peers with sizable investment property portfolios. In
2018, the company's rental income (excluding management fees)
covered 36.5% of its interest expenses. We expect growth in
Powerlong's rental income to largely offset higher interest
expenses from greater debt. The company's rental interest coverage
will be 50%-60% if we include recurring property management fees
that form part of the commercial lease contract. Powerlong's ratio
is still below the 80%-130% for peers such as Longfor Group
Holdings Ltd. and China Resources Land Ltd., but higher than the
average for peers in the 'B' rating category.
"We view the recent new share placement by Powerlong as credit
positive. However, the immediate impact on the company's credit
profile would be limited due to the size of the placement.
Powerlong issued 146.6 million new shares and raised new capital of
RMB700 million in October 2019.
"The stable outlook on Powerlong reflects our view that the company
will maintain its improved debt leverage while delivering steady
sales and revenue growth with stable margins over the next 12
months. We also expect Powerlong's recurring rental income to
continue to grow and cover the current proportion of interest
expenses.
"We may downgrade Powerlong if the company fails to maintain its
leverage during its expansion. A consolidated debt-to-EBITDA ratio
weakening to above 6.0x over the next 12 months without signs of
improving could indicate this weakening. This could happen if the
company is more aggressive in debt-funded land replenishment or
property investments.
"Powerlong's rental income growing slower than our base case could
also cause us to lower the rating.
"We may upgrade Powerlong if the company improves its debt leverage
such that its debt-to-EBITDA stays below 5.0x on a sustainable
basis. This could happen if Powerlong demonstrates commitment to
stronger debt control while delivering revenue growth substantially
beyond our expectations."
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I N D I A
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APCO AUTOMOBILES: CRISIL Lowers Rating on INR25cr Loans to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Apco Automobiles Private Limited (AAPL) from 'CRISIL B/Stable'
to 'CRISIL B-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Inventory Funding 21 CRISIL B-/Stable (Downgraded
Facility from 'CRISIL B/Stable')
The rating downgrade reflects continued deterioration in business
risk profile marked by negative operating margin of (4.07) % in FY
2019. Besides the financial risk profile remains below average with
gearing at (3.75) times also debt protection metrics is weak.
Liquidity is stretched with average BLU for the last 12 months at
more than 90%. Net cash accruals is negative against repayment
obligations. However, the same is supported by unsecured loans from
the promoters.
The rating continues to reflect AAPL's modest scale of operations
in the competitive industry and below-average financial risk
profile. These weaknesses are partially offset by experience of
promoters.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations in the competitive industry: The
company has modest scale of operations as indicated by the revenue
of INR86.55 crores in fiscal 2019. Further, the revenue is expected
to gradually improve in the medium term; however, it will remain
modest considering the competitive automobile industry.
* Below-average financial risk profile: The financial risk profile
has been below average due to weak capital structure and moderate
debt protection metrics. The net worth was negative due to losses
incurred in the previous fiscal. Further debt protection metrics is
weak with interest coverage and net cash accruals to total debt was
(1.08) times and (6) % respectively in 2019.
Strength:
* Experience of promoters: Benefits derived from the promoters'
experience of over 10 years and healthy relations with suppliers
and customers should continue to support the business in the medium
term.
Liquidity: Stretched
Average bank limit utilization for the past 12 months ended on
August, 2019 is modest at around 91%. Net cash accruals is low,
however with need based unsecured loan support from related
parties, the same is expected to be sufficient against repayment
obligations. Current ratio is modest at around 0.91 times.
Outlook: Stable
CRISIL believes AAPL will continue to benefit over the medium term
from the established market position in North Kerala, and
promoters' experience.
Rating Sensitivity Factor:
Upward factor
* Net cash accruals in excess of INR1 crores driven by improvement
in operating margin
* Efficient working capital management and maintenance of moderate
capital structure
Downgrade factor
* Further reduction in Operating margin to less than (5) per cent
* Larger than expected working capital requirement or debt funded
capex
Kozhikode-based AAPL, incorporated in 2007, is an authorised dealer
for Tata Motors Ltd's small commercial vehicles in five districts
of Kerala. The company also sells light and intermediate commercial
vehicles. Mr A P Abdul Kareem and his family are the promoters.
BRIGHTSTAR HEALTHCARE: CRISIL Rates INR25cr Term Loan 'B'
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the bank
facility of Brightstar Healthcare Private Limited (BHPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 25 CRISIL B/Stable (Assigned)
The ratings reflect the company's exposure to risks related to
timely completion and ramp-up of ongoing hospital project; and
average financial risk profile. These weaknesses are partially
offset by the extensive experience of its promoters in the
healthcare industry in Moradabad, Uttar Pradesh.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks related to timely completion and ramp-up of
ongoing project
The hospital is in the advance stages of construction, and
completion as per schedule would depend on timely fund infusion by
promoters. Furthermore, ramp-up in operations post-commencement
will be closely monitored.
* Average financial risk profile
Networth was small at INR2.48 crore as on March 31, 2019, while
gearing was high at 9.36 times. Financial risk profile is likely to
remain weak over the medium term.
Strength
* Extensive experience of promoters
Benefits from promoters' experience of 15 years, their strong
understanding of local market dynamics, and healthy relationship
with customers and suppliers should continue to support business.
Liquidity: Stretched
Expected cash accrual of INR0.36 crore will be insufficient to meet
debt repayment of INR1.45 crore in fiscal 2020. However, unsecured
loans and equity infusion from promoters should support liquidity.
Outlook: Stable
CRISIL believes BHPL will continue to benefit from the extensive
experience of its promoters.
Rating sensitivity factors
Upward factor
* Sizeable cash accrual of more than INR4.5 crore due to completion
of ongoing project within budgeted cost and time
* Timely and need-based funding support from promoters
Downward factor
* Lower-than-expected cash accrual (less than INR4 crore) or delay
in project execution
* Delay in funding from promoters
Incorporated in November 2012 and promoted by a group of doctors,
BHPL is setting up a 150-bed multi-speciality hospital in
Moradabad, Uttar Pradesh, which is likely to start operations from
March 2020. The company's promoters have had private practice of
over a decade each.
CHANDAN TRADING: CRISIL Migrates B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Chandan
Trading Company Private Limited (CTCPL) to 'CRISIL B+/Stable/CRISIL
A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 11 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with CTCPL for obtaining
information through letters and emails dated
September 23, 2019 and September 27, 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 CTCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on CTCPL is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BBB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of CTCPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
CTCPL was established as a proprietorship (Chandan Trading Company)
in 1982 by Mr Chandan Somani, and reconstituted as a private
limited company in 2011 with the present name. It primarily trades
in chickpea, tamarind, maize, and mango powder. Operations are
currently managed by Mr Vijay Kumar Somani and Mr Dinesh Kumar
Somani. The registered office is in Jagdalpur, Chhattisgarh.
COCHIN FROZEN: CRISIL Migrates 'B' Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Cochin Frozen
Foods (CFF) to 'CRISIL B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 3.5 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Packing Credit 4.5 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with CFF for obtaining
information through letters and emails dated September 23, 2019 and
September 27, 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 CFF, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on CFF is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of CFF to 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
CFF, set up in 2000, processes and exports seafood. It is based in
Kochi, Kerala, and its daily operations are being managed by the
proprietor Mr K Prabhakaran.
COSMO FERRITES: CRISIL Lowers Rating on INR13.24cr Loan to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Cosmo Ferrites Limited (CFL) to 'CRISIL B-/Stable' from 'CRISIL
B/Stable', while reaffirming the short-term rating at 'CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.5 CRISIL A4 (Reaffirmed)
Bill Discounting 2.0 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Cash Credit 12.0 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Export Packing 5.0 CRISIL B-/Stable (Downgraded
Credit from 'CRISIL B/Stable')
Letter of Credit 10.0 CRISIL A4 (Reaffirmed)
Proposed Long Term 4.26 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B/Stable')
Standby Line 2.00 CRISIL B-/Stable (Downgraded
of Credit from 'CRISIL B/Stable')
Term Loan 13.24 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects the deterioration in financial risk profile
and stretched liquidity, marked by weaker performance in fiscal
2019 and the first quarter of fiscal 2020, and decline in net
margin to -10% in fiscal 2019, from -2.96% in the previous year on
account of closer of LED business. Insufficient cash accrual
against the large maturing debt in fiscal 2019, and subdued
profitability along with instances of cash losses, weakened
liquidity. Pressure on liquidity is, however, mitigated by strong
and constant support via inter-corporate deposits from
promoter-owned companies.
The ratings continue to reflect the small scale of CFL's
operations, and the weak financial risk profile. These weakness are
partially offset by the company's established presence in the soft
ferrites industry and its longstanding client associations.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations
Revenue of INR80 crore reported in fiscal 2019, reflects the small
scale of operations, mainly constrained by competition from China.
Establishment of the coils unit will support revenue growth, going
forward.
* Weak financial risk profile
Financial risk profile is constrained by weak debt protection
metrics, stemming from a subdued margin of 3.6% in fiscal 2019.
Interest coverage and net cash accrual to total debt ratios were
0.56 time and (0.15) time, respectively, in fiscal 2019. Gearing
was high at 3 times as on March 31. 2019.
Strengths
* Established market presence and longstanding client associations
Benefits from the promoters' three decade-long experience in the
soft ferrite industry, and CFL's established position in overseas
markets, will continue. The export market is dominated by reputed
players such as EPCOS AG and TDK Ferrites Corporation, besides
Chinese manufacturers. The company has strategically chosen to
manufacture soft ferrites, used by manufacturers of low-volume,
high-value products such as transformers, bulbs, mobile phones, and
solar equipment. Strong clientele, comprising over 200 customers,
and diversification into exports and other end-user industries,
partially offset the risk of downturn in any particular industry.
Liquidity: Stretched
Liquidity is stretched. Expected cash accrual of INR-0.77 crore and
INR-0.15 crore, in fiscals 2020 and 2021, will be insufficient to
cover the maturing debt of around INR3.3 crore and INR2.2 crore in
the corresponding period. Bank limit utilisation averaged 86% over
the 12 months through June 2019. Current ratio stood at 0.53 time
as on March 31, 2019.
Outlook: Stable
CRISIL believes CFL will continue to benefit from an established
market position and healthy client relationships.
Rating sensitivity factors
Upward factor
* Improvement in operating income by over 10%, and margin by 300
basis points
* Sufficient cash accrual against the maturing debt
Downward factor
* Delay in extension of unsecured loans against the maturing debt
* Drop in operating income by more than 15%, in comparison to
fiscal 2019.
CFL, set up by Mr. Ashok Jaipuria in 1986, manufactures soft
ferrites and coils at its facility near Shimla, and caters to a
wide customer base, comprising manufacturers of transformers,
compact fluorescent lights, mobile phones, wireless chargers, and
inductive heaters. Mr Jaipuria is also the founder-promoter of
Cosmo Films Ltd, which manufactures bi-axially-oriented
polypropylene films.
The operations are now managed by Mr. Ambrish Jaipuria.
DHARAMPAL PIPE: CRISIL Moves 'B' Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Dharampal Pipe
and Tubes Private Limited (DPTPL) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with DPTPL for obtaining
information through letters and emails dated
September 23, 2019 and September 27, 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 DPTPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DPTPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of DPTPL to 'CRISIL B/Stable Issuer not cooperating'.
DPTPL, incorporated on February 14, 2013, commenced operations from
April 1, 2013. The company, promoted by Mr Ajay Kumar Singhal, Ms
Rinky Singhal, and Surge Exim Pvt Ltd, trades in round steel tubes,
mild steel pipes, and galvanised iron pipes.
EVEREADY INDUSTRIES: Ind-Ra Lowers LongTerm Issuer Rating to 'BB'
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Eveready
Industries India Limited's (EIIL) Long-Term Issuer Rating to 'IND
BB' from 'IND BBB-' while resolving the Rating Watch Negative
(RWN). The Outlook is Negative.
The instrument-wise rating actions are:
-- INR3,010.4 bil. Term loans due on FY24 downgraded; Outlook
Negative; Off RWN with IND BB/Negative rating;
-- INR1.60 bil. Fund-based limits downgraded; Outlook Negative;
Off RWN with IND BB/ Negative /IND A4+ rating; and
-- INR1.20 bil. Non-fund-based limits downgraded; Outlook
Negative; Off RWN with IND BB/ Negative /IND A4+ rating.
The downgrade and RWN resolution reflect the further delay in
EIIL's deleveraging plans amid legal restrictions imposed on the
sale of assets. This development would have a negative impact on
EIIL's liquidity situation and financial flexibility while reducing
the likelihood of any improvement in its credit metrics or
liquidity over the short term.
While Ind-Ra had concerns regarding the company's high debts levels
and substantial exposure to stressed group companies, the agency
had earlier derived some comfort from the planned asset
monetization. However, with the latest development, there is high
uncertainty regarding the timely progress of such plans. Hence, the
Outlook is Negative.
KEY RATING DRIVERS
Deleveraging to be Delayed Further: EIIL's plans to deleverage
through asset monetization will be further delayed post restriction
placed by the high court on asset sales. In reference to a matter
filed by Infrastructure Leasing and Financial Services (IL&FS)
against some promoters of the company, the Calcutta High Court
passed an interim order of injunction, restraining the Williamson
Magor group companies, including EIIL, from transferring,
alienating or encumbering any of its tangible and intangible
assets, until the case filed against the group by IL&FS is
disposed. In September 2019, EIIL had finalized the sale of its
land parcel in Hyderabad for INR1000 million (as part of its
planned asset monetization of around INR2,000 million-2,250
million); however, it is now restricted from transferring any
assets.
As per EIIL, it is in the process of filing an appeal against the
interim order as it is not a party to the said loan agreement with
IL&FS. However, the appeal process and subsequent hearing are
likely to take time. Although IL&FS has not lent directly to EIIL,
the court order will delay the company's deleveraging plans,
thereby exerting further stress on its liquidity and credit
metrics.
In absence of the planned deleveraging, EIIL's debt levels are
likely to remain elevated in FY20. In FY19, including the
contingent liabilities, EIIL's adjusted debt and net adjusted
leverage increased to INR6,679 million (FY18: INR2,874 million) and
5.4x (2.7x), respectively, because of the support extended to group
companies during the year. The company's leverage likely stays
above 5x at the end of FY20, which is not commensurate with the
earlier rating level. In 1QFY20, EIIL's EBITDA declined by 29% YoY
to INR247 million (FY19: INR1,228 million; FY18: INR1,054 million)
and its EBITDA margin fell to 7.7% (8.4%; 7.2%) due to weak
consumer demand, and a decline in the profitability of the lighting
and appliances segments. This along with an increase in interest
cost by 63% YoY to INR159 million caused the interest coverage to
deteriorate to 1.6x (1QFY18: 3.6x; FY19: 2.3x, FY18: 3.7x)
Ind-Ra will monitor progress on the said court order. The agency
will also continue to keep a close watch on EIIL's liquidity
position, any further developments in the planned deleveraging, and
the impact of the stress at the group companies on EIIL.
Liquidity Indicator – Poor: EIIL was able to secure new loans
amounting to around INR2000 million during 1HFY20. This along with
the proceeds from the sale of the land parcel in Chennai supported
the company's liquidity position during the same period. During
July 2019-March 2020, EIIL has scheduled debt repayment around
INR1,000 million and outstanding contingent liabilities of INR1,340
million, which may materialize in the remaining part of FY20 in
view of the stressed group situation.
Earlier, Ind-Ra had derived comfort from the management's claim
that the monetization of real estate assets as well as
business/stake sale was in the advanced stages and could be
completed in the near term. However, with the likely delay in these
plans amid legal restrictions, Ind-Ra believes the company's
liquidity condition has worsened compared to the agency's earlier
expectations. Also, stress within the overall group and the high
number of pledged shares have hampered the company's access to
external funding.
EIIL's fund-based limits of INR1600 million were utilized to the
extent of around 84% at the end of September 2019. It reported a
negative free cash flow of INR741 million in FY19. Ind-Ra believes
the company will require refinancing of contingent liabilities
during the second half of FY20.
High Exposure to Stressed Group, Leading to Weak Financial
Flexibility: Mcleod Russel India Ltd and Mcnally Bharat Engineering
Company Ltd – part of the Williamson Magor Group, owned by common
promoters, have defaulted on their loan obligations. Furthermore,
IL&FS has filed a case against the promoters for non-payment of
dues. Also, a significant proportion of promoter shares in the
group operating companies have been pledged, and a portion of the
same has been invoked by some lenders. These events indicate weak
liquidity within the group. Thus, the agency does not expect EIIL
to receive financial support from the holding company or
promoters.
At end-March 2019, EIIL's exposure to group companies remained high
at INR5,759 million, including the loans/advances and contingent
liabilities (guarantees and post-dates cheques). The weak liquidity
of its group companies increases the likelihood of EIIL absorbing
the contingent liabilities as and when they materialize. This could
result in further strain on the company's liquidity position in the
absence of timely refinancing.
Ind-Ra believes EIIL's financial flexibility has been impacted by
the ongoing stress within the group, which has also led to a
substantial decline in EIIL's share price. Ind-Ra believes the
deterioration in financial flexibility has increased the company's
refinancing risks and its dependence on less-liquid options such as
asset or business sale to shore-up the liquidity.
Penalty by Competition Commission of India Remains a Monitorable:
In April 2018, the Competition Commission of India (CCI) imposed a
total fine of INR2,146 million on three leading Indian zinc-carbon
dry cell battery manufacturers, including a fine of INR1,715.5
million on EIIL, for allegedly forming a cartel to control the
distribution and price of zinc-carbon dry cell batteries in India
over 2008-2016. In May 2018, EIIL received a stay from the National
Company Law Appellate Tribunal on the penalty order, subject to a
deposit of 10.0% of the penalty amount. The company has not made
any provision for the penalty. Ind-Ra would continue to closely
monitor further developments in this case. If EIIL is ordered to
make the full payment, its liquidity and credit metrics will be
affected.
Revenue Diversification Ongoing: Given the subdued growth prospects
in the dry cell battery industry, EIIL has forayed into non-battery
segments such as lighting, appliances, and confectioneries. The
company reported total revenue of INR14,577 million in FY19 (FY18:
INR14,564 million), towards which these three segments collectively
contributed about 32.1% (FY18: 31.0%, FY17: 25.0%, FY16: 20.0%,
FY15: 15.0%).
However, these new segments are yet to make any meaningful
contribution to profits. In 1HFY20, EIIL sold its loss-making
packet tea business for INR60 million; this will partly support the
company's overall profitability, as the tea segment had generated
an EBITDA loss of INR113 million in FY19.
Dominant Market Share in Batteries & Flashlights: EIIL's battery
and flashlight businesses continue to be its cash cow for the
company, contributing 72.7% of revenues in FY19 and likely more
than 90% of EBITDA. EIIL continues to hold a strong market position
in batteries and flashlights with a dominant market share of around
50% and 75%, respectively, in the organized market as per the
management. Ind-Ra expects the company to continue to report
positive EBITDA in FY19, supported mainly by these segments.
RATING SENSITIVITIES
Negative: Further deterioration in liquidity or credit metrics,
emanating from deterioration in operating performance or spill-over
of stress from group companies or restricted access to external
funding, could lead to a downgrade.
Positive: Successful implementation of the planned deleveraging
through asset monetization, leading to the DSCR sustaining above
1.2x, could lead to a revision of the Outlook.
COMPANY PROFILE
EIIL, a part of the Williamson Magor Group, offers a range of
products such as batteries, flashlights, lighting solutions, home
appliances, and packet tea.
HEMA ABODES: CRISIL Moves INR19cr Loan Rating From BB-/Not Coop.
----------------------------------------------------------------
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated its rating on the
long-term bank facility of Hema Abodes Private Limited (HAPL) to
'CRISIL BB-/Stable Issuer Not Cooperating'. However, the management
has now shared the requisite information for a comprehensive review
of the rating. Consequently, CRISIL is migrating the rating to
'CRISIL B+/Stable' from 'CRISIL BB-/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 19 CRISIL B+/Stable (Migrated from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
The migration reflects slower than expected flow of bookings for
residential as well as commercial properties which led to lower
customer advances in FY19 impacting cash flow and liquidity.
The ratings reflects exposure to risks inherent in the real estate
industry and project and geographical concentration in revenue
profile, these weaknesses are mitigated by industry experience and
resourcefulness of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility to inherent cyclicality in industry:
HAPL is susceptible to risks pertaining to the real estate sector
such as long gestation period of projects. Any time or cost overrun
or delay in obtaining necessary approvals could affect the
realizations and profitability of its projects. The demand for
commercial projects is affected by the level of interest rates and
overall level of economic activity. Lower-than-expected customer
interest in the company's ongoing projects, or any delays in
implementation of these projects, could constrain the credit risk
profile.
* High geographic and project concentration:
HAPL faces geographical concentration risks as all it has only two
concrete ongoing projects and the same are located in
Vishakhapatnam, exposing the company to fluctuations in the
region's real estate market. The other projects of the firm are yet
to finalized and get a concrete shape. The demand for projects is
dependent on the level of economic activity in the Vishakhapatnam
market. Any slowdown in the real estate market in Vishakhapatnam
region will impact the demand for the firm's projects. Further the
firm also remains exposed to project concentration risk as well
since any adverse happening in the marketing or construction of the
above projects can significantly impede the business risk profile.
Strength
* Considerable industry experience and resourcefulness of the
promoters:
The company is promoted by Mr. Suresh Kumar Botcha, who has been
actively involved in construction business for more than a decade.
Mr. Suresh Kumar, started construction projects through his
proprietorship concern, M/s Hema Construction in 2000 and have
successfully executed many projects for Government in Andra Pradesh
and have also constructed many residential and commercial complex.
The firm was also awarded best contractor award in 2009 by Roads
Authority and in 2010 by Malawi Institute of Engineer. Later in
fiscal 2005 M/s HAPL was formed with family member, Mrs. Vijaya
Lakshmi Bothcha being the joint director in the company. His
extensive experience has enabled HAPL to successfully execute more
than thirty projects as on date and his enriched industry
experience would continue to support the business operations of the
company.
Liquidity: Stretched
Liquidity is stretched as cash flow expected from new customer
inflow is low. Timely infusion of funds in the form of partners'
capital and unsecured loan from related parties coupled with
customer advances is expected to support overall liquidity of the
firm.
Outlook: Stable
CRISIL believes that HAPL will continue to benefit over the medium
term from its healthy booking progress and advantageous location of
projects.
Risk sensitivity factors:
Upward factor
* Faster-than-expected booking progress leading to sales of around
25-30% units in fiscal 2020
* Higher-than-anticipated realization from the project
Downward factor
* Delay in completion of its ongoing projects, leading to
deterioration in financial risk profile majorly cash buffer below
1.2 times.
* Significant slowdown in construction progress, leading to
elevated demand risk.
Incorporated in fiscal 2005, HAPL is engaged in real estate
construction and currently is constructing a residential and
commercial complex in VisaKhapatnam, Andra Pradesh. The company has
successfully developed more than thirty residential and commercial
complex in Vishakhapatnam. Presently the company is executing
project in the name of HAPL.
IDBI BANK: S&P Affirms 'BB/B' Issuer Credit Ratings, Outlook Neg.
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term and 'B' short-term
foreign currency issuer credit ratings on IDBI Bank Ltd. with
negative outlook. S&P also affirmed its 'BB' long-term issue rating
on the senior unsecured notes issued by the Dubai branch of the
India-based bank. S&P removed the ratings from CreditWatch, where
they were placed with negative implications on Aug. 27, 2019.
S&P said, "We affirmed the ratings because we expect IDBI Bank to
meet the regulatory capital requirement following a capital
infusion by Life Insurance Corp. of India (LIC) and the government
of India in the ratio of 51:49. We believe this capital will help
the bank plug the regulatory breach and make provisions against new
nonperforming loans (NPLs)." However, the delay in resolution of
legacy NPLs will continue to pressure the bank's earnings in the
next few quarters, challenging the sustenance of its capital
ratios.
IDBI Bank has announced that it received fresh capital amounting to
Indian rupee (INR) 93 billion from LIC and the government. Such a
large capital infusion supports our view of a very high likelihood
of support for the bank from the government (and government-owned
entities such as LIC).
S&P said, "We expect IDBI Bank to use part of this capital to
accelerate write-offs and make sufficient provisions against
stressed assets, in line with the bank's target to reduce net NPLs
to below 6% of total loans in the coming quarters. IDBI Bank has
already provided for a significant part of its problem loans, as
reflected in its high coverage ratio of 88% as of June 30, 2019.
Coverage for large accounts undergoing insolvency proceedings under
the National Company Law Tribunal (NCLT) is higher, at 97%. The
bank's net NPLs have reduced drastically to 8% as of June 2019 from
18.8% a year ago.
"While we believe IDBI Bank has reasonably provided for its
existing NPLs, incremental slippages will keep provisioning costs
elevated for the next few quarters. Our view is based on recent
corporate defaults in India and the lingering stress in non-bank
finance companies and real estate developers. IDBI Bank's exposure
to Dewan Housing Finance Ltd. (DHFL), which defaulted in 2019, and
its few unrecognized weak power sector loans could weigh on its
asset quality.
"We expect IDBI Bank's earnings to gradually improve as the bank
recovers its NPLs. As the bank completes recognition of weak loans
over the next few quarters, the resolution of NCLT cases (48% of
IDBI Bank's NPLs are in the Reserve Bank of India's first and
second list of such cases) could potentially offset the
deterioration in IDBI Bank's asset quality. However, we note that
the timing of the recovery remains uncertain. Some stakeholders are
challenging the resolution process in court, delaying the outcome.
"We understand IDBI Bank plans to sell non-core assets over the
next few quarters to bolster its capital position. However, the
timing of such deals is uncertain and is dependent on valuations.
In our opinion, the delay in resolution will weigh on the bank's
profitability." This combined with uncertainty about raising
capital from sale of non-core assets could erode the bank's capital
buffers in coming quarters.
IDBI Bank has a weak stand-alone credit profile (SACP) of 'b-' and
has been subject to the central bank's "prompt corrective action"
(PCA) since May 2017. Due to a string of losses brought about by
substantial problem loans and associated high provisioning costs,
the bank's financial performance has weakened in the past few
years. Its ratio of NPLs to total outstanding loans as of June 30,
2019, is 29%, the highest among the Indian banks S&P rates. IDBI
Bank reported a loss (consolidated) of about INR38.2 billion in the
first quarter of fiscal 2020 (year ended March 31, 2020) and a loss
of INR150 billion in fiscal 2019.
The bank has taken steps to reduce its loan concentration and
de-risk its balance sheet by increasing exposure to the more
granular retail and micro, small and midsize enterprise segments.
IDBI Bank's loan portfolio has shrunk over the past couple of years
due to negative growth in the corporate book owing to de-risking
initiatives as well as the bank being under PCA.
S&P said, "We believe the government remains committed to support
IDBI Bank. Our issuer credit rating on the bank is four notches
higher than the SACP, reflecting a very high likelihood of
government support.
"The negative outlook on IDBI Bank reflects our view that there is
a one-in-three chance that we will lower the rating by two notches
over the next 12 months.
"We will lower our rating on IDBI Bank by two notches if the bank's
capitalization erodes, possibly due to weak earnings and an
inability to raise capital, bringing it close to breaching
regulatory minimum requirements for the third time in the past two
years. We could also downgrade IDBI Bank if we believe government
support to the bank has weakened. That could happen if the
government (or LIC) considers privatizing the bank by lowering its
stake through a strategic sale. However, we view this as unlikely
over the next 12 months.
"We could change the outlook to stable if the bank's operating
performance improves. This could be due to: (a) removal of the bank
from PCA and lifting of associated restrictions on growth and
expansion; (b) higher recoveries from legacy NPLs and lower credit
costs leading to the bank reporting profits on a sustained basis;
and (c) raising capital through sale of non-core assets.
"Our base case is that we would revise the rating outlook to stable
within 12 months. For that, we would look for signs that IDBI
Bank's capital will not again be at risk of breaching minimum
capital requirements. This will most likely occur if the bank's
capital reverts to a prudent buffer above minimum regulatory
guidelines, and we are confident that this buffer can be retained
on a permanent ongoing basis."
K.B. GEMS: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded K.B. Gems' (KBG)
Long-Term Issuer Rating to 'IND BB' from 'IND BB+ (ISSUER NOT
COOPERATING)'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR240 mil. Fund-based cash credit Long-term downgraded,
Short-term affirmed with IND BB/Stable/IND A4+ rating.
KEY RATING DRIVERS
The downgrade reflects a sharp deterioration in KBG's net financial
leverage (adjusted net debt/operating EBITDA) to 5.8x, according to
the provisional financials of FY19 (FY18: 3.3x). The leverage
deteriorated due to an increase in the total debt to INR276.6
million in FY19 from INR232.2 million in FY18, coupled with a fall
in the absolute EBITDA to INR45.2 million in FY19 (FY18: INR51.4
million). However, gross interest coverage (operating EBITDAR/gross
interest expense) remained almost unchanged year-on-year at 2.34x
in FY19 due to reduced interest cost of INR19.3 million (INR21.9
million).
Revenue fell to INR923.5 million in FY19 (FY18: INR1,084.5 million)
on the lower sales volume of gold and diamond jewelry. EBITDA
margins remained modest at 4.9% in FY19 (FY18: 4.7%), due to the
stable cost of the goods sold. KBG's return on capital employed was
8% in FY19 (FY18: 10%). The ratings are also constrained by the
firm's partnership nature of business.
Liquidity Indicator – Stretched: KBG's average use of its working
capital limits was 86% during the 12 months ended September 2019.
The cash flow from operations turned negative to INR58.9 million in
FY19 from INR4 million in FY18. The net working capital days
elongated to 204 in FY19 (FY18: 146) on account of higher
receivable and inventory days.
However, the ratings are supported by KBG's partner's experience of
more than two decades in the diamond jewelry business.
RATING SENSITIVITIES
Positive: An improvement in the revenue and EBITDA margins,
resulting in gross interest coverage improving to above 3.0x and an
improvement in the liquidity position, all on a sustained basis,
will be positive for the ratings.
Negative: Any further decline in the revenue or EBITDA margins,
resulting in the net leverage remaining above 5.5x on a sustained
basis will be negative for the ratings.
COMPANY PROFILE
KBG was established in 1988 by Kiran Shah as a proprietorship
concern and was incorporated as a partnership firm in 1994. It is a
Mumbai-based company, engaged in the processing and export of cut
and polished diamonds. It is a family-owned business.
KUNAL COTTON: CRISIL Maintains 'B-' Rating in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Kunal Cotton
Industries (KCI) continue to be 'CRISIL B-/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 0.7 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 0.3 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with KCI for obtaining
information through letters and emails dated March 30, 2019 and
September 23, 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 KCI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KCI is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of KCI continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
KCI was established as a partnership firm in 2011. The firm gins
and presses raw cotton, and has a ginning unit in Bhainsa district
(Telangana). Mr. M.Jagdish, Mrs. M.Kunda Jagdish, and Mr. M.Kunal
Jagdish are the partners.
NOBLE EDUCATIONAL: Ind-Ra Affirms 'BB' Loan Ratings
---------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Noble Educational
Trust's (NET) bank facilities' ratings as follows:
-- INR69.28 mil. (reduced from INR74.62 mil.) Term loans due on
March 31, 2025, affirmed with IND BB/Stable rating; and
-- INR2.50 mil. Fund-based working capital affirmed with IND
BB/Stable rating.
KEY RATING DRIVERS
The affirmation reflects NET's continued small scale of operations,
with total revenue of INR122.50 million in FY19 (FY18: INR128.20
million). The revenue declined because enrolments in the trust's
school fell by 6.56% YoY in the academic year 2018-19. Ind-Ra
expects the revenue to grow over FY20-FY21, driven by an increase
in student headcount to 2,318 from 1,995 in the academic year
2019-20.
Liquidity Indicator – Stretched: NET's cash and unrestricted
investments declined to INR1.64 million in FY19 from INR4.39
million in FY18. The available funds (cash and unrestricted
investments) declined to INR1.64 million in FY19 from INR4.39
million in FY18, thereby providing a weak financial cushion to debt
(FY19: 1.78%; FY18: 4.70%) and operating expenditure (FY19: 1.84%;
FY18: 5.23%). However, the absence of a collection period and
average working capital utilization of 38.82% during October
2018-September 2019 provides cushion to the liquidity position. For
FY20, NET's debt service commitments stood at INR30.52 million, for
which it had funds amounting to INR37.51 million.
The ratings also reflect the increase in the trust's debt burden
(debt/current balance before interest and depreciation (CBBID)) to
2.78x in FY19 (FY18: 2.10x) due to 25.12% YoY fall in CBBID to
INR33.23 million. Ind-Ra expects debt burden to reduce over the
near-to-medium term on account of the absence of any CAPEX plans
and the likely growth in CBBID.
The ratings continue to be constrained by NET's volatile operating
margins during FY14-FY19. The margins decreased to 27.03% in FY19
(FY18: 34.54%, FY17: 31.02%), as operating expenditure rose by
6.51% YoY while operating income fell by 4.46% YoY. Ind-Ra expects
the margins to improve in FY20 owing to the likely improvement in
student headcount
The ratings however are supported by growth in NET's student's
headcount by 16.19% YoY to 2,318 in the academic year 2019-20 from
1,995 in the academic year 2018-19 (the academic year 2017-18:
2,135) on the back of increased enrolments in the trust's school
(118) and college (83).
The ratings are also supported by the trust's comfortable coverage
ratios. The debt service coverage ratio declined to 1.12x in FY19
(FY18: 2.51x) due to an increase of 68.45% YoY in debt servicing
and a fall of 25.12% YoY in CBBID. The interest coverage ratio fell
to 3.29x in FY19 (FY18: 5.88x) because the interest cost rose by
33.90% YoY to INR10.10 million.
RATING SENSITIVITIES
Positive: Events that may, individually or collectively, lead to a
positive rating action are:
a) Operating margins increasing above 35% on a sustained
basis
b) Debt burden-reducing below 2x
c) DSCR rising above 1.7x in the medium term
Negative: Events that may, individually or collectively, lead to a
negative rating action are:
a. Fall in student headcount below 1,700
b. Operating margin reducing below 20%
c. Debt burden rising above 3x on a sustained basis
COMPANY PROFILE
NET was established as Public Charitable Trust in 2002 by Dr. A S A
Jerald Gnanarathinam. The trust manages Noble Matriculation Higher
Secondary School (NMHSS) in Aruppukottai, Tamil Nadu, which
provides education to K-12 students. The school is affiliated to
the Directorate of Matriculation Schools, Tamil Nadu, which has a
unique curriculum until grade X and follows the Tamil Nadu State
Board curriculum for grades XI and XII. The campus is spread across
8.33 acres in Aruppukottai, Tamil Nadu.
PERFEKTION (ASIA): CRISIL Moves 'B' Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Perfektion
(Asia) Private Limited (PAPL) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 10 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with PAPL for obtaining
information through letters and emails dated July 17, 2019 and
August 19, 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 PAPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PAPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of PAPL to 'CRISIL B/Stable Issuer not cooperating'.
PAPL was established in July 2017 by Mr Ramdas Kamthe, Mr Prakash
Kamthe, Mr Narayan Kamthe, and Ms Suvarna Kamthe. The company is
setting up an integrated manufacturing facility in Pune for
automotive and white goods components, furniture, small appliances,
and electrical assembly. It is likely to start operations in fiscal
2020.
RANSAN PACKAGING: CRISIL Raises Rating on INR4.5cr Loan to B+
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Ransan Packaging Private Limited (RPPL) to 'CRISIL B+/Stable' from
'CRISIL B/Stable' and reaffirmed the short-term rating at 'CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Letter of Credit 2.5 CRISIL A4 (Reaffirmed)
Long Term Loan 3.0 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects sustaining of improvement in business risk
profile over the medium term. Stability in revenue, improved
profitability of 12.7% in fiscal 2019, and established relationship
with customers led to accrual of about INR0.8 crore. Though
financial risk profile is weak, with gearing of over 14 times as on
March 31, 2019, unsecured loans of INR5.61 crore (as on March 31,
2019) from promoters support liquidity. Unsecured loans are likely
to be sustained at INR4.2 crore for the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in competitive segment:
With revenue of INR20.05 crore in fiscal 2019, scale remained
small. This is compounded by intense competition in the industrial
packaging and printing industry, which constrains business risk
profile.
* Weak financial risk profile
Gearing was significantly high at 20 times as on March 31, 2019,
owing to large term loans and a small networth. Debt protection
metrics were muted, with interest coverage and net cash accrual to
adjusted debt ratios of 1.55 times and 0.05 time, respectively, for
fiscal 2019.
Strengths
* Promoters' extensive experience
Presence of more than 40 years in the printing and packaging
industry has enabled the promoters to develop a strong insight into
market dynamics and establish healthy relationship with customers
and suppliers.
Liquidity: Stretched
The liquidity is stretched marked by modest accruals expected in
the range of INR1.0-1.2 crore against which it has a repayment
obligation of INR0.9 crore. The company has access to fund based
limits of INR3.50 crore which has been utilized at an average of
96.5 percent for the last 12 months ended September 2019.
Outlook: Stable
CRISIL believes RPPL will benefit from the extensive experience of
its promoters.
Rating sensitivity factors
Upward Factor
*Improvement in revenue by more than 20%, while sustaining
operating margins at the current level
*Better financial risk profile with improvement in gearing
Downward Factor
*Decline in revenue by more than 30% or fall in operating margin by
over 300 basis points
*Deterioration in financial risk profile, especially debt
protection metrics.
Incorporated in 2013 and promoted by Mr VA Prabhakaran and Mr A
Srenivasan, Chennai-based RPPL manufactures and prints mono-cartons
and corrugated boxed used in the packaging industry.
SAFE & SECURE: Ind-Ra Migrates 'BB+' LT Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Safe & Secure
Logistics Pvt Ltd.'s (SSLPL) 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:
-- INR190 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING) /
IND A4+ (ISSUER NOT COOPERATING) rating; and
-- INR5 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4+ (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 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 1994, SSLPL is a Mumbai-based third-party logistics
provider, promoted by Mr. Rambilas Agarwal.
SAGHAN KSHETRA: CRISIL Assigns B+ Rating to INR5cr New LT Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of Saghan Kshetra Vikas Samiti (SKVS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 5 CRISIL B+/Stable (Assigned)
The rating reflects the trust's small scale of operations and weak
financial risk profile. These weaknesses are partially offset by
extensive experience of the trustees, in implementation of mid-day
meal schemes and other social initiatives.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations
Revenue stood at INR4.39 crore in fiscal 2019, and may remain low
over the medium term, constrained by the small scale of
operations.
* Weak financial risk profile:
Financial risk profile was marked by a small networth of INR98 lakh
as on March 31, 2019, however against no debt.
Strength:
* Longstanding presence of the trust
The trust has been running mid-day meal schemes in different states
of India for the past 13 years. It also manufactures and retails
cotton, woolen and poly variants of the khadi fabric.
Liquidity: Poor
Cash accrual of INR9 lakh per fiscal, though low, will provide a
liquidity buffer, in the absence of any maturing debt over the
medium term. Current ratio was healthy at 8.01 times as on March
31, 2019. The board members have provided donations to support
various activities undertaken by the society.
Outlook: Stable
CRISIL believe SKVS will continue to benefit from the extensive
experience of its trustees, and established relationships with the
government authorities.
Rating sensitivity factors
Upward factor
* Sustained and significant growth in revenue, and stable operating
margin of over 2%
* Substantial increase in networth, strengthening financial risk
profile.
Downward factor
* Any major debt-funded capital expenditure, causing gearing to
exceed 3 times
* Weakening of operating efficiency, either due to decline in
margin or stretch in working capital cycle
SKVS was established as a non-governmental organisation in 2016, at
the Sambhal district of Uttar Pradesh. The trust owned and managed
by Mr Kuldeep Singh Chahal. It provides mid-day meal services in
three states, and also manufactures and retails cotton, woolen and
poly variants of khadi.
SAI POINT: CRISIL Hikes Rating on INR12.5cr Loan to 'C'
-------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Sai Point
Cars Private Limited (SPCPL) to 'CRISIL C/CRISIL A4' from 'CRISIL
D/CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 1.5 CRISIL C (Upgraded from
'CRISIL D')
Inventory Funding 12.5 CRISIL C (Upgraded from
Facility 'CRISIL D')
Rating upgrade reflects timely debt servicing by the company in the
past four months. However, its liquidity will remain constrained by
insufficient accrual to meet debt obligation over the medium term.
CRISIL will continue to monitor SPCPL's debt servicing, financial
risk profile, and liquidity.
The ratings continue to reflect the company's below-average
financial risk profile and modest scale of operations. These
weaknesses are partially offset by the extensive experience of the
promoter in the automobile dealership industry.
Analytical Approach
Unsecured loans of INR6.05 crore as on March 31, 2019, have been
treated as 75% equity and 25% debt as there has been no withdrawal
in the past five years and the loans are expected to remain in the
business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile: Small networth and high
total outside liabilities to adjusted networth ratio (INR2.88 and
9.63 times, respectively, as on March 31, 2019) along with weak
interest coverage of 0.72 time for fiscal 2019 represent below
average financial risk profile of the company.
* Modest scale of operations and exposure to intense competition:
Revenue comes from sale of vehicles and spare parts and from the
service station business. On account of localised operations and
intense competition, turnover was modest at INR71.09 crore in
fiscal 2019. Also, revenue depends primarily on the prospects and
growth plans of the principal supplier.
Strength:
* Extensive industry experience of the promoter: The promoter has
been in the automobile dealership industry for about a decade
through a group company. Over the years, SPCPL has built a strong
relationship with its principal supplier, Maruti Suzuki India Ltd
(MSIL; 'CRISIL AAA/Stable/CRISIL A1+'), India's largest car
manufacturer. SPCPL has two showrooms.
Liquidity: Poor
The company is likely to generate accrual of INR0.09-0.14 crore per
fiscal over the medium, which will not be adequate to meet debt
obligation of INR0.7-1.7 crore per fiscal. However the promoter has
been infusing funds and brought in INR0.76 crore in fiscal 2019.
Unsecured loans stood from the promoter were at INR6.05 crore as on
March 31, 2019. The promoter is likely to bring in INR2-3 crore
over the medium term to support operations and meet financial
obligations. The cash credit limit was fully utilised in the 12
months through June 2019 and there were instances of the limit
being overdrawn and regularised in 2-3 days. Inventory funding
limit was utilised 93% on an average over the 12 months ended June
30, 2019, despite enhancement in limit by INR6 crore in November
2018. The liquidity is expected to remain poor over the medium term
and timely fund infusion by the promoter will be a major rating
sensitivity factor.
Rating sensitivity factors
Upward factor
* Sustained increase in revenue and profitability, leading to
adequate accrual of INR1-2 crore to meet debt obligation
* Significant rise in accrual or equity infusion, strengthening the
financial risk profile because of an improved TOLANW ratio
Downward factor
* Stretch in working capital cycle or decline in profitability
* Inability of the promoter to extend unsecured loans on time,
weakening the liquidity and leading to delay in meeting debt
obligation
SPCPL was set up in 2008 by Mr Dilip Patil and commenced commercial
operations in fiscal 2011. The company is an authorised dealer for
MSIL in Salcette, Goa. It also deals in spare parts and provides
workshop facilities for MSIL's vehicles.
SHAKAMBARI RICE: CRISIL Migrates B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shakambari
Rice Mill Private Limited (SRMPL) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 9 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 0.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SRMPL for obtaining
information through letters and emails dated July 29, 2019,
September 23, 2019 and September 27, 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 SRMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SRMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SRMPL to 'CRISIL B+/Stable Issuer not cooperating'.
SRMPL, incorporated in fiscal 2015, commenced its rice
manufacturing unit in Maladah (West Bengal) in March 2017. Mr S
Somani manages the business. Total cost of establishing the rice
mill was INR15 crore (INR9 crore term debt and remaining through
equity infusion).
SHOREWALA ROLLER: CRISIL Withdraws B+ Rating on INR9cr Loans
------------------------------------------------------------
CRISIL said the rating on bank facilities of Shorewala Roller Flour
Mills Private Limited (SRFMPL; part of the Shorewala group)
continues to be 'CRISIL B+/Stable Issuer Not Cooperating' and has
simultaneously withdrawn facilities amounting to INR1.5Cr from
IndusInd Bank on basis on No objection certificate.
CRISIL has also migrated its rating to 'CRISIL B+/Stable' and
simultaneously withdrawn the bank facilities amounting to INR0.5 Cr
of Proposed Long Term Bank Loan Facility and INR7 Cr from Canara
Bank on basis of No dues certificate and the request of the
company. The rating action is in line with CRISIL's policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Cash 1.5 CRISIL B+/Stable (ISSUER NOT
Credit Limit COOPERATING; Rating Withdrawn)
Proposed Long Term 0.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with SRFMPL for obtaining
information through letters and emails dated February 26, 2019 and
August 16, 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 they are arrived at without any management
interaction and are based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SRFMPL. This restricts CRISIL's
ability to take a forward SRFMPL is consistent with 'Scenario 1'
outlined in the 'Framework for Assessing Consistency of Information
with CRISIL BB rating category or lower.
The Shorewala group was started in 1987 by the Shorewala family of
Kaithal, Haryana. Initially, it only milled wheat. Over the years,
it has diversified into cotton seed oil extraction.
Incorporated in 1987, SRFMPL has a wheat flour mill and
manufactures wheat flour, maida, and bran.
Incorporated in 2006, SSOGM has an edible oil expeller unit and
manufactures cotton seed oil and de-oiled cake.
Established in 2012, NCOR refines edible oils such as soya, rice
bran oil, cotton seed oil, and palm oil.
SHREE BALAJI: CRISIL Migrates 'B+' Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shree Balaji
Steel Enterprises (SBSE; part of the Shree Balaji group) to 'CRISIL
B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Electronic Dealer 19 CRISIL B+/Stable (ISSUER NOT
Financing Scheme COOPERATING; Rating Migrated)
(e-DFS)
CRISIL has been consistently following up with SBSE for obtaining
information through letters and emails dated July 9, 2019,
September 23, 2019 and September 27, 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 SBSE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SBSE is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SBSE to 'CRISIL B+/Stable Issuer not cooperating'.
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of SBSE and Shree Balaji Steel and Tubes
(SBST). That's because both the firms, together referred to as the
Shree Balaji group, are in the same business and have common
promoters. Also, the entities are expected to be merged over the
medium term.
Set up in 2009 as a partnership firm, SBSE trades in steel products
such as angles, beams, channels, plates, pipes, and bars. It is an
authorised distributor for Jindal Steel and Power Ltd and Steel
Authority of India Ltd. It has also commenced dealership for JSW
Steel Ltd in fiscal 2018. Operations are managed by Mr Deepak
Agarwal.
SBST, established in 1986, trades in steel products such as angles,
beams, channels, and sheets.
SHREE SHYAM: CRISIL Migrates 'B' Rating to Not Cooperating
----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shree Shyam
Guwar Gum Industries (SSGGI) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Rupee Term Loan 1 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Warehouse Receipts 15 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SSGGI for obtaining
information through letters and emails dated
September 23, 2019 and September 27, 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 SSGGI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SSGGI is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SSGGI to 'CRISIL B/Stable Issuer not cooperating'.
SSGGI, set up in 2015 at Sri Ganganagar-Rajasthan, by Mr Naveen
Kumar and Mr Nitin Kumar, processes guar gum seed. The firm also
trades in agricultural commodities such as coriander and cotton.
SIDDARTH AND GAUTAM PRIVATE: CRISIL Rates INR9cr Loan 'B'
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings on the
bank facilities of Siddarth And Gautam Engineers Private Limited
(SGEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B/Stable (Assigned)
Inland/Import
Letter of Credit 4 CRISIL A4 (Assigned)
The ratings reflect a modest scale, and working capital-intensive
nature, of operations, a weak financial risk profile, and exposure
to intense competition. These weaknesses are partially offset by
the extensive experience of the promoters in the pipe and pipe
fittings industry and their funding support.
Analytical Approach
Unsecured loans of INR11.90 crores as on March 31, 2019, are
treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operation: Revenue was modest at around INR33.71
crore in fiscal 2019 in the intensely competitive pipes and pipe
fittings industry. Further, the operating profitability margin was
negative in fiscal 2019.
* Working capital-intensive operations: Gross current assets were
high at 530 days, driven by debtors of around 300 days and
inventory of 190 days, as on March 31, 2019.
* Weak financial risk profile: The networth was modest at INR12
crore and the total outside liabilities to tangible neworth ratio
high at 4 times, as on March 31, 2019. The debt protection metrics
were weak, with a negative interest coverage ratio and a low net
cash accrual to adjusted debt ratio in fiscal 2019.
* Exposure to intense competition: Intense competition in the pipes
and fittings industry, low product differentiation, and high price
sensitivity prevent the prompt pass-through of any increase in
input costs to customers.
Strength
* Extensive industry experience of the promoters and their funding
suport: The promoters have an experience of around four decades in
the pipes and pipe fittings industry. This has given them an
understanding of the dynamics of the market, and enabled them to
establish relationships with suppliers and customers. Further, they
have been supporting the business through unsecured loans, the
balance of which was INR11.90 crore as on March 31, 2019.
Liquidity: Stretched
Net cash accrual is expected at around INR16 lakh, against
repayment obligation of around INR3 lakh, per fiscal over the
medium term. Liquidity is supported by unsecured loans from the
promoters (around INR11.90 crore as on March31, 2019). Bank limit
utilisation was moderate at around 68.64% during the 12 months
through September 2019.
Outlook: Stable
CRISIL believe SGEPL will continue to benefit from the extensive
industry experience of the promoters and established relationship
with clients.
Rating sensitivity factor
Upward factor
* Sustained improvement in revenue along with an increase in the
operating margin to 7%, leading to higher cash accrual.
* Improvement in the financial risk profile
Downward factor
* Decline in the margin by more than 200 basis points, leading to
lower-than-expected net cash accrual
* A stretch in the working capital cycle, leading to weakening of
liquidity
SGEPL (previously, S&G Engineers Private Limited) was incorporated
in 1985, promoted by Mr R K Makkar and Mr Sidharth Makkar. The
company manufactures high-pressure pipe fittings, hollow forgings,
and pipe fabrication, which are used for power, refineries,
petrochemicals, and oil and gas processing plants. The
manufacturing facility is in Faridabad, Haryana.
SIDHARTH AND GAUTAM: CRISIL Assigns B+ Rating to INR8cr Cash Loan
-----------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the long-term
bank facilities of Sidharth and Gautam Engineers (SGE) and has
assigned its 'CRISIL B+/Stable' rating to the facilities. CRISIL
had suspended the rating on January 21, 2015, on account of
non-cooperation with CRISIL for a review of the rating. The firm
has now shared the requisite information enabling CRISIL to assign
a rating.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Fund- 5 CRISIL B+/Stable (Assigned;
Based Bank Limits Suspension Revoked)
The rating reflects a modest scale, and working capital-intensive
nature, of operations, and a weak financial risk profile. These
weakness are partially offset by the extensive experience of the
partners in the pipes and pipe fittings industry.
Analytical Approach
Unsecured loans of INR9.46 crore as on March 31, 2019, are treated
as debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operation: Revenue was modest at INR32.88 crore
in fiscal 2019. This should continue to limit operating
flexibility.
* Weak financial risk profile: The networth was low at of INR6.07
crore and the total outside liabilities to tangible networth ratio
high at of 6.19 times, as n March 31, 2019. The debt protection
metrics were weak with low interest coverage and net cash accrual
to adjusted debt ratios.
* Working capital-intensive operations: Gross current assets were
high at 464 days driven by debtors of around 250 days and inventory
of around 180 days, as on March 31, 2019. A long credit period has
to be extended to customers, while the business entails large
work-in-process and inventory.
* Exposure to intense competition: Competition in the pipes and
fittings industry, low product differentiation, and high price
sensitivity prevent the prompt pass-through of any increase in
input costs to customers.
Strength
* Extensive industry experience of the partners and their funding
support: The partners have an experience of around four decades in
the pipes and pipe fittings industry. This has given them an
understanding of the dynamics of the market, and enabled them to
establish relationships with suppliers and customers. Further, they
support the business through unsecured loans (Rs 9.46 crore as on
March 31, 2019).
Liquidity: Stretched
Expected net cash accrual at INR70 lakh per fiscal, though low,
should be sufficient in the absence of repayment obligation over
the medium term. Liquidity is supported by unsecured loans from the
partners. Bank limit utilisation was moderate at around 82.27%
during the 12 months through August 2019.
Outlook: Stable
CRISIL believe SGE will continue to benefit from the extensive
industry experience of its partners and their established
relationship with clients.
Rating sensitivity factor
Upward factor
* Improvement in the operating profitability margin to more than 8%
along with an increase in revenue
* Better working capital management
Downward factor
* Decline in revenue by more than 20% per fiscal or in the
operating profitability margin
* Further stretch in the working capital cycle, leading to
weakening of the capital structure
SGE was established in 1981 by Mr R K Makkar as a proprietorship
firm. Later, in 2002, Mr Sidharth Makkar was added as a partner and
it was reconstituted as a partnership firm. The firm manufactures
seamless pipe fittings for power, refineries, petrochemicals, oil
and gas processing plants, fire-fighting, and heavy engineering
sectors. The manufacturing facility is in Faridabad, Haryana.
SIMPEX GRANITO: CRISIL Migrates B+ Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Simpex Granito
Private Limited (SGPL) to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.6 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 7.0 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 6.33 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SGPL for obtaining
information through letters and emails dated September 23, 2019 and
September 27, 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 SGPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SGPL is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BBB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SGPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Incorporated in 2010, SGPL is owned and managed by Bhalodia family.
It manufactures floor tiles at its facility in Morbi (Gujarat), the
installed capacity of which is 10,000 boxes a day.
SRI PARANTHAMAN: CRISIL Migrates 'D' Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Sri
Paranthaman Textiles Private Limited (SPTPL) to 'CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Secured Overdraft 5.5 CRISIL D (ISSUER NOT
Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SPTPL for obtaining
information through letters and emails dated July 9, 2019,
September 23, 2019 and September 27, 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 SPTPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SPTPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SPTPL to 'CRISIL D Issuer not cooperating'.
SPTPL, was incorporated in 2000 in Chennai (Tamil Nadu) and is
engaged in the manufacture of cotton yarn, primarily 60s and 80s
count. The day to day operations are overseen by Mrs Prema
Paranthaman and Mr Pramod Paranthaman.
STEEL AND METAL: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Neg
-------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has revised Steel and Metal
Tubes (India) Private Limited's (SMT) Outlook to Negative from
Stable while affirming its Long-Term Issuer Rating at 'IND BB+'.
The instrument-wise rating actions are:
-- INR110 mil. Fund-based working capital limit rating affirmed;
Outlook revised to Negative from Stable with IND BB+ /
Negative / IND A4+ rating; and
-- INR180 mil. Non-fund-based working capital limit affirmed with
IND A4+ rating.
The Outlook revision reflects an increased risk of bad debt and
working capital requirements in the short term due to a significant
increase in receivables.
KEY RATING DRIVERS
The affirmation reflects SMT's continued medium scale of operations
as indicated by revenue of INR1,610.64 million in FY19 (FY18:
INR1,130.63 million). The increase in revenue was driven by the
implementation of Goods and Services Tax which led to uniformity in
taxation along with an increase in steel prices.
SMT's return on capital employed was 7% in FY19 (FY18: 5%) and
EBITDA margin remained modest, despite marginal improvement to
1.84% in FY19 (FY18: 1.65%). The increase in margin was due to a
decline in administrative expenses.
The ratings continue to factor in SMT's modest credit metrics as
indicated by interest coverage (operating EBITDA/gross interest
expense) of 2.12x in FY19 (FY18: 2.38x) and net leverage (total
adjusted net debt/operating EBITDAR) of 6.34x (4.22x). The
deterioration in the credit metrics was on account of an increase
in debt and the consequent rise in interest expense.
Liquidity Indicator- Poor: SMT's average use of its fund-based
limits was 83.56% for the 12 months ended August 2019. Its cash
flow from operations remained negative and declined further to
INR28.62 million in FY19 (FY18: INR1.59 million) on account of an
increase in receivables to INR203.43 million (INR107.48 million).
The ratings, however, remain supported by the promoters'
three-decade-long experience in the iron and steel industry.
RATING SENSITIVITIES
Negative: A significant decline in the scale of operations, leading
to a further deterioration in credit metrics with the interest
coverage declining below 2x will be negative for the ratings.
Positive: A substantial growth in the scale of operations, leading
to an improvement in the credit metrics along with an improvement
in receivables will lead to the revision of Outlook to back to
Stable.
COMPANY PROFILE
Incorporated in 1971 as a private limited company, SMT was
reconstituted as a deemed limited company in July 1984. The company
manufactures electric resistance welded pipes and tubes. It has a
50,000-tonne per annum manufacturing plant in Ghaziabad, Uttar
Pradesh.
SUBHA SOUMYA: CRISIL Hikes Rating on INR6.40cr Cash Loan to B
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Subha Soumya Cold Storage Private Limited (SSCPL) to 'CRISIL
B/Stable' from 'CRISIL B-/Stable'. The short-term rating has been
reaffirmed at 'CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.15 CRISIL A4 (Reaffirmed)
Cash Credit 6.40 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Long Term Loan 2.13 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Proposed Long Term 4.88 CRISIL B/Stable (Upgraded
Bank Loan Facility from 'CRISIL B-/Stable')
Working Capital 1.44 CRISIL B/Stable (Upgraded
Loan from 'CRISIL B-/Stable')
The upgrade reflects SSCPL's improving liquidity in the intensely
competitive and highly regulated cold storage industry. This is
further supported by the extensive experience of the promoter.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile: Financial risk profile
remained constrained by estimated low networth and high gearing of
INR2.83 crore and 3.17 times, respectively, as on March 31, 2019 as
compared to INR2.66 crore and 3.51 times, respectively, a year ago.
Debt protection metrics remained weak with estimated interest
coverage and net cash accrual to total debt ratios of 1.13 times
and 0.06 time, respectively, in fiscal 2019, primarily on account
of modest profitability.
* Weak liquidity: Cash accrual, expected at INR50 lakh is tightly
matched against debt obligation of INR35 lakh. Moreover, bank lines
too are highly utilised.
Strength:
* Extensive experience of the promoter: Benefits from the
promoter's experience of over two decades in potato trading, his
sound understanding of industry dynamics and healthy relations with
traders and farmers should continue to support the business.
Liquidity: Stretched
Cash accrual, expected at INR5 million will cover debt obligation
of INR3.5 million over the medium ter. Bank limit utilisation was
high at 90-95% for the 12 months through September 2019. Current
ratio is low at 0.92 time as on March 31, 2019.
Outlook: Stable
CRISIL believes SSPL will continue to benefit from the extensive
experience of its promoter.
Rating Sensitivity factors
Upward factor
* Sustained expansion in scale of operations leading to increased
cash accruals by more than INR60 lakh.
* Improvement in bank limit utilisation
Downward factor
* Decline in profitability or scale of operation leading to cash
accruals of less than term debt repayment obligation of INR35 lakh
* Continuous overutilisation in bank limits
Incorporated in 2011, SSPL, promoted by Mr Kartick Ghosh, commenced
operations from March 2012. The company has set up a cold storage
facility for potatoes in Paschim Mednipur, West Bengal with a
capacity of 18,000 metric tonne (MT) (2 chambers of 9000 MT each).
SUBRAHMANYESWARA SWAMY: CRISIL Keeps B- Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Subrahmanyeswara
Swamy Rice Mill (SSRM) continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 5.79 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 3.21 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with SSRM for obtaining
information through letters and emails dated March 30, 2019 and
September 23, 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 SSRM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SSRM is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of SSRM continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
SSRM was established in 1983, promoted by Mr V Peddanna , Mr V
Rajendra Prasad, and their family members. The firm mills and
processes paddy into rice, rice bran, broken rice, and husk. It has
an installed paddy milling capacity of 4 tonne per hour (tph) at
its mill in Guntur, Andhra Pradesh.
SUSHEE INFRA: Ind-Ra Affirms 'D' LT Issuer Rating
-------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Sushee Infra &
Mining Limited's (Sushee) Long-Term Issuer Rating at 'IND D'.
The instrument wise rating actions are:
-- INR1.0 bil. Fund-based working capital limits (Long-term/Short
term) downgraded with IND D rating;
-- INR4.94 bil. (reduced from INR5.32 bil.) Non-fund-based
working capital limits(Long-term/Short term) downgraded with
IND D rating;
-- INR200 mil. Proposed fund-based working capital limits (Long-
term/Short term)* downgraded & withdrawn (the company did not
proceed with the issue as envisaged); and
-- INR2.68 bil. Proposed non-fund-based working capital limits
(Long-term/Short term)* downgraded and withdrawn (the company
did not proceed with the issue as envisaged).
* Downgraded to 'Provisional IND D' before being withdrawn
KEY RATING DRIVERS
The affirmation reflects Sushee's continued delays in debt
servicing owing to stretched liquidity position, resulting from
delays in the realization of its irrigation segment receivables.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could lead to positive rating action.
COMPANY PROFILE
Incorporated in 1986, Sushee undertakes mining, irrigation,
railways, and road projects. Its clients include the Irrigation
Department of Andhra Pradesh and Telangana, Singareni Collieries,
subsidiaries of Coal India Ltd, Indian Railways and Ministry of
Road Transport & Highways and National Highways & Infrastructure
Development Corporation Limited.
WESTERN HEAT: CRISIL Withdraws B+/Not Coop. Rating on INR34cr Loan
------------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Western
Heat and Forge Private Limited (WHFPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL's policy on withdrawal of
its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 34 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with WHFPL 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 WHFPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on WHFPL 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 WHFPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB+/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
CRISIL has withdrawn its rating on the bank facilities of WHFPL 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 1988 and promoted by Mr. Krishna Kumar Jindal and
his son, Mr. Sanjay Jindal, WHFPL manufactures open and closed
die-forged products used in the gear and transmission, oil and gas,
construction and earth-moving equipment, and mining industries.
Unit is in Bhosari, Pune. The company was non-operative till fiscal
2015 and commenced operations in fiscal 2016.
=====================
N E W Z E A L A N D
=====================
CBL CORPORATION: Investors Want Maximum Compensation for Losses
---------------------------------------------------------------
Radio New Zealand reports that investors in the failed insurance
group CBL Corporation have accused its former directors of
misleading statements, failure to disclose key information, and
insider trading, in papers just filed in court.
CBL Corp failed in 2018 when its insurance subsidiary was forced
into liquidation by the Reserve Bank, and overseas regulators moved
against other operations.
The group was a sharemarket high flyer after its listing in 2015
and was worth almost NZ$750 million when it collapsed.
According to RNZ, major shareholders in CBL Corp, Harbour Asset
Management and Argo Investments, have now lodged a class action in
the High Court against the company and its former directors, Peter
Harris and Alistair Hutchison, claiming maximum compensation for
their losses.
"Shareholders globally lost hundreds of millions of dollars when
CBL collapsed. The directors must be held to account for their
actions and shareholders compensated for their losses," RNZ quotes
Harbour's managing director and chair of the class action claim
committee Andrew Bascand as saying.
He said the CBL directors misled investors in documents for the
sharemarket listing when they said the company had adequate
financial reserves to meet its insurance obligations, RNZ relates.
"The claim also alleges that directors are responsible for the
company failing to update the market in the period after the IPO
(initial public offer) with material information about CBL's
financial position."
RNZ says the insider trading claim alleged Mr. Harris and Mr.
Hutchison sold shares in CBL through other companies they owned
while they knew material information unknown to other investors.
The class action was backed by the litigation funder LPF Group, the
report notes.
RNZ says CBL Corp's liquidation was delayed for a year as its
directors asked for time to devise a restructuring plan but became
inevitable when its mainstay insurance arm collapsed following
regulatory action by the Reserve Bank.
The CBL Insurance company's net liabilities have been put at
somewhere between NZ$25 million and NZ$343 million, RNZ discloses.
"We believe legal action is the only way investors in CBL can get
any money back," RNZ quotes Mr. Bascand as saying.
The Financial Markets Authority and the Serious Fraud Office are
still investigating the CBL Group, the report notes.
About CBL Corp.
Founded in 1973, CBL Corporation Limited together with its
subsidiaries, provided insurance and reinsurance products and
services primarily in New Zealand. It offered financial risk
products, builders' risks, sureties, guarantees, and contractor
bonds primarily in Europe and Scandinavia; deposit guarantees in
Australia; and bonding and fiduciary services to the Mexican
commercial sector. The company also provided a range of specialty
products, such as credit enhancement, surety bonds, specialized
property insurance, aviation, and rural risk in Australia, as well
as distributes construction-sector insurance products in France
through a network of brokers.
CBL Corp. went into voluntary administration in late February 2018,
in a move to prevent other regulators from taking action after the
Reserve Bank moved to have its subsidiary CBL Insurance placed in
interim liquidation.
On Feb. 23, 2018, KordaMentha New Zealand partners Brendon Gibson
and Neale Jackson were appointed Voluntary Administrators by the
Board of CBL Corporation Ltd and certain of its subsidiaries.
The administration relates to New Zealand-domiciled companies.
Messrs. Gibson and Jackson are administrators to these CBL
entities: CBL Corporation Limited; LBC Holdings New Zealand Ltd;
LBC Holdings Americas Ltd; LBC Holdings UK Ltd; LBC Holdings Europe
Ltd; LBC Holdings Australasia Ltd; LBC Treasury Company Ltd;
Deposit Power Ltd; South British Funding Ltd; and CBL Corporate
Services Ltd.
In November 2018, the High Court in Auckland placed CBL Insurance
into liquidation with Kare Johnstone and Andrew Grenfell from
McGrathNicol appointed as liquidators.
TARATAHI AGRICULTURAL: UCOL Proposes to Offer Training at Farm
--------------------------------------------------------------
George Heagney at Stuff.co.nz reports that Palmerston North-based
polytech UCOL has made a bid to run primary sector training at the
troubled Taratahi Agricultural Training Centre farm in Wairarapa.
Taratahi, which had campuses across New Zealand, went into
liquidation at the end of last year with about NZ$23 million of
debt.
But UCOL, which also has campuses in Whanganui, Levin and
Masterton, now has plans to run agricultural training there, Stuff
says.
According to Stuff, Chief executive Amanda Lynn said UCOL made a
proposal to the liquidators of Taratahi Agricultural Training
Centre Trust Board, Grant Thornton New Zealand, to run primary
sector training on the Wairarapa home farm, previously operated by
Taratahi.
"The primary sector is the cornerstone of regional economies in
UCOL's rohe (region), contributing NZ$1.2 billion in GDP. We
appreciate the support shown by the mayor of Palmerston North and
his counterparts across the UCOL rohe," the report quotes Ms. Lynn
as saying. "UCOL's role is to support regional industries and the
figures show the importance of the primary sector."
Earlier this year, the Government announced a major overhaul of
vocational education and training, where New Zealand's 16
institutes of technology and polytechnics would be merged into one
national entity next year.
Despite the coming changes, UCOL has continued to think ahead and
has been involved in the Government changes.
According to Stuff, Ms. Lynn said UCOL was aware of the importance
of the primary sector in the region and wanted to play a part in
its future by operating the education business at Taratahi.
"Both UCOL and Taratahi have a rich 100-year history of providing
modern education and training.
"We see a future of immense potential in combined institutional
heritage and collaborating with the sector to provide an
innovative, relevant and best-of-breed educational offering across
New Zealand."
UCOL wanted to create opportunities for students and the primary
sector.
"Our vision is a vibrant and attractive experience for students to
learn and connect with industry, employers and the local community.
This initiative has the potential to make a massive positive
contribution to shaping a workforce that innovates from the farm to
marketplace."
Whether UCOL would take over the running of the site or what things
would look like would depend on what the liquidators decided, the
report says.
Stuff relates that Grant Thornton liquidator David Ruscoe said it
had received a competitive request, but had asked for proposals
from various education providers. He would not confirm how many
proposals there were, but said it was more than one.
Once all the bids had been made, the liquidators would make a
decision, the report says.
Mr. Ruscoe said the requirement was education would continue on the
home farm through the new education provider.
He said the farm manager had been doing a fantastic job in the mean
time, the report adds.
About Taratahi Agricultural
Wairarapa-based Taratahi Agricultural Training Centre has campuses
across New Zealand, and owned, leased, or managed eight farms.
Taratahi had 2,850 students in 2018.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
21, 2018, BusinessDesk said that the Taratahi Agricultural Training
Centre has been placed into interim liquidation at the request of
its board of trustees as declining student numbers saw its funding
drop faster than it could cut costs.
The High Court on Dec. 19 appointed David Ruscoe and Russell Moore
of Grant Thornton as interim liquidators after the board sought to
protect the position of its staff, students, creditors and other
stakeholders, the accounting firm said, BusinessDesk related.
=================
S R I L A N K A
=================
BANK OF CEYLON: Moody's Affirms B2 Issuer Rating, Outlook Stable
----------------------------------------------------------------
Moody's Investors Service affirmed the long-term/short-term local
currency deposit ratings of Bank of Ceylon, Hatton National Bank
Ltd. and Sampath Bank PLC at B2/NP.
At the same time, Moody's has affirmed the long-term foreign
currency issuer ratings and long-term/short-term foreign currency
deposit ratings of these three banks at B2 and B3/NP respectively.
Moody's has also affirmed the Baseline Credit Assessments and
adjusted BCAs of the three banks at b2. As a result, Moody's has
affirmed their local and foreign currency Counterparty Risk Ratings
(CRRs) and Counterparty Risk Assessments at B1/NP and
B1(cr)/NP(cr), respectively.
Moody's has maintained the rating outlooks of the banks at stable.
RATINGS RATIONALE
Moody's has affirmed the ratings and assessments of the three Sri
Lankan banks because they have adequate capital buffers against the
backdrop of deteriorating asset quality and profitability.
Moreover, these banks have stable funding and liquidity which
support their standalone credit profiles.
The asset quality of the banks is deteriorating mainly because of
weaknesses in the agriculture and construction segments and
dampened consumer sentiment, against the backdrop of a challenging
operating environment in the country. Moody's expects some problems
in the tourism-related exposures once the debt moratorium ends in
July 2020.
As a result, Moody's expects the banks' profitability to remain
strained by elevated credit costs, higher taxes and muted loan
growth. Moody's also expects that the recent central bank's
mandated cut to the lending rates will add pressure to net interest
margins, further straining bank profitability.
For BOC, Moody's notes downward pressure on its standalone credit
profile stemming from its weaker asset quality and profitability.
BOC's annualized return on assets (ROA) declined to 0.6% in the
first half of 2019 from 0.8% in 2018.
BOC's capitalization is also modest, with a common equity tier 1
(CET1) ratio of 10.7% at the end of June 2019. Nevertheless,
Moody's expects that the bank will maintain stable capital ratio by
lowering dividend payouts. Slow credit growth will also support its
capitalization.
HNB and Sampath maintain adequate capital buffers against rising
credit risk, as measured by their CET1 ratios of 13.0% and 13.7%,
respectively, as of June 30, 2019. Nevertheless, their ROAs has
also deteriorated to 0.9% each in the first half of 2019 from 1.7%
and 1.3%, respectively, in 2018.
For the three banks, their weakening asset quality and
profitability are balanced by their good funding and liquidity, as
underpinned by their strong deposit franchises, with sizeable
market shares in system deposits.
Moody's does not have any particular governance concern for the
three Sri Lankan banks, and does not apply any corporate behavior
adjustment to the banks. Moody's views their risk management
framework as consistent and commensurate with their risk appetite.
AFFIRMATION OF LONG-TERM RATINGS
Moody's government support assumptions for the three banks are
driven by the systemic importance of these banks, as well as the
government's track record of supporting the banking system.
Moody's incorporates a very high level of government support in the
ratings of BOC, given its 100% ownership by the Government of Sri
Lanka (B2 stable) and dominant share of system loans and deposits.
Moody's incorporates a high level of government support in the
ratings of HNB and Sampath, based on their significant market
shares of system loans and deposits.
Nevertheless, given that the adjusted BCAs of these banks are
already at the same level as the sovereign rating, their long-term
local currency deposit and foreign currency issuer ratings do not
benefit from any uplift due to government support.
The B3 long-term foreign currency deposit ratings of the banks are
constrained by Sri Lanka's foreign currency deposit ceiling.
WHAT COULD MOVE THE RATING UP
An upgrade of the banks' long-term ratings is unlikely, because the
ratings are already at the same level as the sovereign rating, and
the sovereign rating outlook is stable.
WHAT COULD MOVE THE RATING DOWN
A downgrade of the sovereign rating would result in a downgrade of
the banks' long-term ratings.
Moody's could also downgrade the banks' BCAs if there is a material
deterioration in solvency factors, such as asset quality or
capital. Tighter liquidity and increased reliance on market funding
could also lead to a downgrade of the BCA.
The principal methodology used in these ratings was Banks published
in August 2018.
===============
T H A I L A N D
===============
THAI AIRWAYS: Chairman Quits as Carrier Struggles to Stem Losses
----------------------------------------------------------------
Sunil Jagtiani at Bloomberg News reports that Ekniti Nitithanprapas
resigned as chairman of Thai Airways International Pcl after 16
months in the job, as Thailand's national airline struggles to stem
losses.
Chaiyapruk Didyasarin, the carrier's vice chairman, has taken over
the role, the airline said in a stock exchange filing on Nov. 1,
Bloomberg relates.
According to Bloomberg, the carrier this year put a plan to add 38
aircraft under review and has been forced to dispel media reports
of liquidity problems.
Second-quarter losses more than doubled as the global economic
slowdown, fierce competition and a strong baht took their toll,
Bloomberg notes.
Thai Airways International PCL (BAK:THAI) --
http://www.thaiairways.co.th/-- is the national carrier of
Thailand. The company provides air transportation, freight and
mail services on domestic and international routes including Asia,
Europe, North America, Africa and South West Pacific. The Company
is a state enterprise which is controlled by the government and
partly owned by the public.
*********
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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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2019. All rights reserved. ISSN: 1520-9482.
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