/raid1/www/Hosts/bankrupt/TCRAP_Public/200213.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, February 13, 2020, Vol. 23, No. 32
Headlines
A U S T R A L I A
DEVILS HOLDINGS: First Creditors' Meeting Set for Feb. 20
EXUBERANS ONE: First Creditors' Meeting Set for Feb. 20
HOWCON PTY: First Creditors' Meeting Set for Feb. 20
MCWILLIAM'S WINES: Administrators to Sell Assets and Business
MEMTECH PTY: First Creditors' Meeting Set for Feb. 20
RAPID FINANCE: First Creditors' Meeting Set for Feb. 21
T & S NEW ERA: First Creditors' Meeting Set for Feb. 24
C H I N A
CHINA: Coronavirus Set to Dampen Economic Growth, Fitch Says
CHINA: Slow Restart Could Inflict Bigger Pain, Nomura Says
YUZHOU PROPERTIES: Fitch Rates New USD Senior Notes 'BB-'
[*] Fitch Says Coronavirus Ups Risks for China Toll Road Operators
I N D I A
AIRCEL LTD: Distributors Seek Classification as Financial Creditors
AJANTA OFFSET: Insolvency Resolution Process Case Summary
ALCOB INDIA: CARE Lowers Rating on INR8.0cr LT Loan to 'D'
B K RICE: CARE Assigns B+ Rating to INR12.97cr LT Loan
BINA METAL: CARE Maintains B+ Rating in Not Cooperating
BONCON TRADE: CARE Maintains B- Rating in Not Cooperating
CI CAPITAL: CARE Cuts INR10cr LT Loan Rating to B, Not Cooperating
CLASSIC KNITS: Insolvency Resolution Process Case Summary
CMC TEXTILES: Ind-Ra Affirms BB+ LT Issuer Rating, Outlook Stable
DAVANGERE SUGAR: CARE Lowers Rating on INR99cr Loan to 'C'
EDUCOMP SOLUTIONS: CBI Books Firm, Directors for Defrauding Banks
GLOBAL PACKAGING: Ind-Ra Affirms BB Issuer Rating, Outlook Stable
GWALIOR DISTILLERIES: CARE Keeps D Rating in Not Cooperating
JOY MA: CARE Reaffirms B+ Rating on INR5.84cr LT Loan
M.B PARIKH: CARE Maintains 'B' Rating in Not Cooperating
MANI MORE: Ind-Ra Affirms BB+ LT Issuer Rating, Outlook Stable
MARUTI KESRI: Insolvency Resolution Process Case Summary
MN BIO-TECHNOLOGY: Ind-Ra Withdraws BB(SO) NCD Rating
MN BIO-TECHNOLOGY: Insolvency Resolution Process Case Summary
MN TAKSHILA INDUSTRIES: Insolvency Resolution Process Case Summary
MN TAKSHILA: Ind-Ra Withdraws BB(SO) NCD Rating
MOHAN COLD: CARE Reaffirms B+ Rating on INR9cr LT Loan
MURLI ELECTRODE: CARE Keeps 'B' Rating in Not Cooperating
NANDINI ENTERPRISES: CARE Maintains B+ Rating in Not Cooperating
NEELACHAL ISPAT: CARE Reaffirms D Rating on INR644.64cr Loan
R.P. INFO SYSTEMS: Insolvency Resolution Process Case Summary
RELIANCE COMM: Anil Ambani Asked to Deposit $100MM to Pay Debt
SETHU EDUCATIONAL: Ind-Ra Withdraws BB Rating on INR270.06MM Loan
SHITALPUR MOHINDER: CARE Reaffirms B Rating on INR6.48cr Loan
SHRIRAM EPC: Ind-Ra Affirms 'D' Long Term Issuer Rating
SONU REALTORS: CARE Reaffirms B+ Rating on INR15cr LT Loan
SRI VENKATACHALAPATHY: CARE Lowers Rating on INR10cr Loan to B
STARLITE COMPONENTS: Insolvency Resolution Process Case Summary
SURPRISE STEEL: Insolvency Resolution Process Case Summary
VIRTUE MARKETING: CARE Maintains 'D' Rating in Not Cooperating
WINMEEN ENGINEERS: CARE Keeps B+ Rating in Not Cooperating
J A P A N
SANYO SHOKAI: Activist Urges Clothing Firm to Sell Itself
N E W Z E A L A N D
MANCHESTER UNITY: Fitch Affirms 'BB-' IFS Rating, Outlook Stable
S I N G A P O R E
ENVICTUS INT'L: To Sell Loss-making Unit to Hansells Masterton
S R I L A N K A
SRILANKAN AIRLINES: CEO Aims to Bring Carrier to Profitability
X X X X X X X X
[*] Fitch Says Coronavirus May Strain Liquidity of Some APAC Cos.
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A U S T R A L I A
=================
DEVILS HOLDINGS: First Creditors' Meeting Set for Feb. 20
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Devils
Holdings Pty Ltd, trading as "Pipe Dreams" and "High Fidelity" will
be held on Feb. 20, 2020, at 10:30 a.m. at the offices of WA
Insolvency Solutions, a division of Jirsch Sutherland, Suite 6.02,
Level 6, at 109 St Georges Terrace, in Perth, WA.
Greg Mathew Prout and David Ashley Norman Hurt of WA Insolvency
were appointed as administrator of Devils Holdings on Feb. 10,
2020.
EXUBERANS ONE: First Creditors' Meeting Set for Feb. 20
-------------------------------------------------------
A first meeting of the creditors in the proceedings of:
- Exuberans One Pty Ltd, trading as Walker's Doughnuts NSW
- Exuberans Mc Pty Ltd, trading as Walkers Doughnuts Metcentre
- Exuberans Pty Ltd, trading as Walker's Doughnuts Harbourside
will be held on Feb. 20, 2020, at 11:00 a.m., 11:30 a.m. and 12:00
p.m., respectively, at the offices of Mackay Goodwin Level 2, at 10
Bridge St, in Sydney, NSW.
Grahame Ward and Domenic Calabretta of Mackay Goodwin were
appointed as administrators of Exuberans One, et al. on Feb. 10,
2020.
HOWCON PTY: First Creditors' Meeting Set for Feb. 20
----------------------------------------------------
A first meeting of the creditors in the proceedings of Howcon Pty
Ltd, formerly trading as "Affordable Garage Doors" and "Country
Leisure Centre", will be held on Feb. 20, 2020, at 11:30 a.m. at
Training Room 2, QV1 Conference Centre, at 250 St Georges Terrace,
in Perth, WA.
David Hurt and Jimmy Trpcevski of WA Insolvency Solutions were
appointed as administrators of Howcon Pty on Feb. 10, 2020.
MCWILLIAM'S WINES: Administrators to Sell Assets and Business
-------------------------------------------------------------
James Atkinson at The Shout reports that KPMG Administrators has
appointed Colliers International to sell the business and assets of
McWilliam's Wines Group by an expressions of interest campaign.
According to the report, the assets and business of McWilliam's are
being sold as a going concern or separately, including
recapitalisation, or a sale of the business/assets via a Deed of
Company Arrangement (DOCA).
The Shout relates that Colliers International's Tim Altschwager
said the sale represented a unique opportunity to acquire an
iconic, 142-year-old, privately-owned Australian family business as
well as a large amount of stock and significant property.
"We anticipate wide-ranging interest from major wine industry
participants, private equity investors, high net worth individuals
and buyers looking for restructure opportunities," the report
quotes Mr. Altschwager as saying.
"In particular, existing wine industry groups will see an
outstanding opportunity to add an iconic Australian name to their
portfolios.
"McWilliam's does not currently have an extensive international
distribution network, which makes this a substantial opportunity
for a buyer with overseas networks to really ramp the business up."
Colliers said McWilliam's is a Top 10 Australian wine producer by
revenue, generating circa. 1.3m 9LE volume and $97 million gross
sales per annum, with operational capacity to crush up to 43,000
tonnes annually, The Shout relays.
"Sales volumes of Australian wine is at an all-time high, driven by
exports," Mr. Altschwager, as cited by The Shout, said. "The
McWilliam's business is well positioned to capture this growth
potential."
According to The Shout, KPMG Administrators' Tim Mableson said the
2020 vintage was well underway for McWilliam's, with no direct
impact to its Riverina vineyards as a consequence of the recent
Australian bushfires.
"However, as is the case for the majority of the wineries in the
Hunter Valley, there will be no 2020 vintage due to smoke taint,"
he said.
"There is sufficient back vintage bulk wine and finished goods for
the Mt Pleasant brands so that commitments to markets are not
impacted."
Expressions of interest close on March 31 at 4:00 p.m., The Shout
discloses.
About McWilliam's Wines
McWilliam's Wines Group is an unlisted publicly owned company which
has been operating for over 141 years across six generations of
family ownership. Its range includes the McWilliam's and Mount
Pleasant wine brands, as well as sole Australian distribution
rights for Champagne Taittinger, Mateus, Henkell and Mionetto.
As reported in the Troubled Company Reporter-Asia Pacific on Jan.
13, 2020, Australian Financial Review said McWilliam's Wines Group
called in administrators from KPMG to seek new capital or a buyout
after a decline in financial performance.
KPMG partners Gayle Dickerson, Tim Mableson and Ryan Eagle were
appointed to the role on Jan. 8, 2020.
MEMTECH PTY: First Creditors' Meeting Set for Feb. 20
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Memtech Pty
Ltd, formerly known as ABR Enacellar Pty Ltd, and Memtech Corporate
Pty Ltd, formerly known as ABR Essofor Pty Ltd, will be held on
Feb. 20, 2020, at 11:00 a.m. at the offices of Rodgers Reidy (QLD)
Pty Ltd, Level 9, at 46 Edward Street, in Brisbane, Queensland.
David James Hambleton and James Marc Imray of Rodgers Reidy were
appointed as administrators of Memtech Pty on Feb. 10, 2020.
RAPID FINANCE: First Creditors' Meeting Set for Feb. 21
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Rapid
Finance (Aust) Pty Ltd will be held on Feb. 21, 2020, at 12:00 p.m.
at the offices of Rapid Finance, at 98 Agar Drive Truganina, in
Victoria.
Ben Verney of Grey House Partners was appointed as administrator of
Rapid Finance on Feb. 11, 2020.
T & S NEW ERA: First Creditors' Meeting Set for Feb. 24
-------------------------------------------------------
A first meeting of the creditors in the proceedings of T & S New
Era Constructions Pty Ltd will be held on Feb. 24, 2020, at 11:00
a.m. at the offices of SV Partners, Level 7, at 151 Castlereagh
Street, in Sydney, NSW.
Shumit Banerjee and Jason Lloyd Porter of SV Partners were
appointed as administrators of T & S New Era on Feb. 10, 2020.
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C H I N A
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CHINA: Coronavirus Set to Dampen Economic Growth, Fitch Says
------------------------------------------------------------
The ongoing coronavirus outbreak will dampen economic growth in
China this year, but the scale of the impact remains uncertain and
will depend on the duration and intensity of the health crisis,
says Fitch Ratings. If the government were to launch a large-scale
stimulus to offset the effects of the epidemic, it could have an
adverse effect on other policy goals such as reducing financial
risk. However, Fitch believes that the government is only likely to
do so if the economic impact of the virus proves to be
substantially larger than the SARS outbreak in 2003.
Huge uncertainties remain over the impact of the coronavirus on
China's economy. "We believe it is still too early to make
definitive adjustments to our GDP forecasts at this stage and
instead have examined some illustrative scenarios. The SARS
outbreak provides a useful benchmark, but there are significant
differences between that epidemic and the latest one. Notably, the
novel coronavirus (2019-nCoV) has spread faster than SARS, and
official travel and workplace activity restrictions have been more
aggressive. These factors suggest that the impact of the current
outbreak on economic activity on a daily basis may be more intense
than SARS, but the impact on GDP will also depend on the length of
time taken to contain the virus," Fitch said.
SARS influenced economic behaviour significantly between early
March and late May 2003 and is estimated to have reduced China's
GDP growth by 1.5-2pp in 2Q03. The service sector was hardest hit,
but industrial output growth also slowed.
Services account for a larger share of China's GDP today than they
did in 2003 (54% compared with 42%). The much harsher official
'lock-down' restrictions in place would also imply that that, if
the 2019-nCoV epidemic were to last three months, its economic
impact would very likely be more severe than SARS. The tough
official restrictions on economic activity could, however, result
in a more rapid containment than SARS.
A shock to services and industrial output similar in scale to that
from SARS would cut growth in 1Q20 to around 4% year-on-year,
according to Fitch's calculations, compared with a forecast of 5.9%
in Fitch's most recent update and 6% in 4Q19. Even allowing for
some pick-up in growth in late 2020, this could see annual growth
in 2020 fall to around 5.5%, compared with our latest annual
forecast of 5.9%.
In a scenario where the virus peaks soon and starts to be contained
within the next couple of weeks -- causing panic to fade rapidly
and official restrictions to be dismantled swiftly -- there could
be a smaller impact on growth, possibly knocking only 0.2pp off of
2020 annual growth.
Alternatively, if the epidemic is not contained until well into the
second quarter, growth could fall more steeply. GDP growth in 1Q20
could be closer to 3%. This more adverse scenario would, however,
be likely to prompt a more assertive policy-easing response that
would boost growth in the second half, cushioning the impact of the
shock to annual economic growth, possibly leaving annual growth
above 5%.
Fitch added, "If the government were to substantially ease credit
policy to support the economy, this could impede or delay its
efforts to reduce risks in the financial sector. However, we
believe that this would only be likely if the outbreak were to
extend into 2Q20. Fitch believes the authorities have more room to
ease fiscal policy, but a substantial easing of credit policy could
put downward pressure on China's sovereign rating, which we
affirmed at 'A+/Stable' in December 2019."
CHINA: Slow Restart Could Inflict Bigger Pain, Nomura Says
----------------------------------------------------------
Bloomberg News reports that the coronavirus outbreak may have a
bigger and longer-term impact on China's economy than thought, as
fewer migrant workers have returned for work than in previous years
and business activities have been slow to pick up, according to
Nomura Holdings Inc.
Bloomberg says to contain the spread of the novel coronavirus
pneumonia (NCP), Chinese authorities have ordered city lockdowns
and extended holidays at the expense of near-term economic growth.
The impact of such efforts could extend well into March owing to
the slow resumption of businesses, which will likely result in
rising numbers of bankruptcies, mass layoffs and worsening demand,
economists including Lu Ting, chief China economist at Nomura in
Hong Kong, wrote in a note, Bloomberg relays.
"While we emphasize that there will be a V-shape recovery after the
NCP is contained and the medium-to-long term economic impact of the
NCP should be limited, we are concerned that markets might be too
complacent when evaluating the NCP's near-term shock," he wrote.
According to Bloomberg, the ratio of migrant workers that have
returned to cities for work is substantially lower this year than
in 2019, the economists said, while most people had returned to
their hometowns before the Lunar New Year as usual. The "cumulative
return rate" in the firm's sample of 15 major cities was 18.4% on
the 15th day after the Lunar New Year, around one fourth of the
rate recorded on the same day in 2019.
The government expects that another 160 million people will return
to work from now until February 18, transport ministry official Xu
Yahua said in Beijing on February 11, Bloomberg relates.
Travel and business activities also dropped sharply and broadly in
urban areas in China, the firm said. An index tracking traffic
flows in major cosmopolitan areas, the Gaode Congestion Index
(GCI), showed traffic is close to free-flow status with barely no
congestion, while congestion usually recovers to normal levels
around the Lantern Festival, the 14th day after the Lunar New Year,
when business operations normalize, according to Bloomberg.
"Our flat and low GCI suggest that the recovery in the service
sector especially in urban areas, including transport, catering,
and entertainment is still out of sight," the firm, as cited by
Bloomberg, said.
A slew of other indicators also displayed a similar trend. Overall
passenger traffic flows were roughly 80% lower during the first 16
days of this Lunar New Year holiday compared with the same period
last year, Bloomberg discloses citing Ministry of Transport data.
Daily coal consumption, new home sales volume and box office
revenues were all significantly down from 2019's levels.
Bloomberg says the pain felt in China could ripple through the
globe, given the size of the Chinese economy. The likelihood of a
global recovery in the first half of this year could have already
been reduced, Nomura's economists wrote, adds Bloomberg.
YUZHOU PROPERTIES: Fitch Rates New USD Senior Notes 'BB-'
---------------------------------------------------------
Fitch Ratings has assigned China-based Yuzhou Properties Company
Limited's (BB-/Stable) proposed US dollar senior notes a 'BB-'
rating.
The notes are rated at the same level as Yuzhou's senior unsecured
rating because they constitute its direct and senior unsecured
obligations. Yuzhou intends to use the net proceeds from the issue
to primarily refinance its existing debt.
Yuzhou's ratings are supported by a higher contracted sales scale
and healthy profitability, with an EBITDA margin of above 25%. Its
quality, low-cost land bank should continue to support a wider
margin than those of peers. The company's sales expansion and
relatively short land-bank life of about three years, however, will
limit room for deleveraging.
KEY RATING DRIVERS
Expansion Pressures Leverage: Fitch expects leverage - measured by
net debt/adjusted inventory that proportionately consolidates joint
ventures and associates - to stay at about 40% in the next 18-24
months (1H19: about 40% after adjusting for unpaid land premium of
CNY2.8 billion, end-2018: 39%). The company had a total land bank
by end June-2019 of 19.2 million square metres (sq m), which was
sufficient for development in the next three to four years.
Yuzhou's contracted sales will not be able to continue expanding at
the current pace unless the company replenishes its land bank.
Fitch estimates Yuzhou will spend 50%-60% of its annual total
contracted sales on acquiring land (1H19: 49%).
Larger Sales Scale: Fitch estimates Yuzhou's total annual
contracted sales will rise to more than CNY100 billion in 2021.
Yuzhou's total contracted sales climbed by 34% to CNY75.1 billion
in 2019, driven by an increase in gross floor area sold to 5.0
million sq m, while the contracted average selling price stayed
flat at CNY15,110 per sq m (2018: CNY15,125). The company achieved
its sales target for 2019, taking into account its pipeline of
CNY80 billion in saleable resources available in 2H19, of which 55%
by sales value were projects located in the Yangtze River Delta,
where housing demand remains resilient.
Margins to Stay Healthy: Fitch expects Yuzhou's gross profit and
EBITDA margins to stay healthy at 27%-28% and 25%, respectively, in
2019-2020. Yuzhou's gross profit margin was 27% in 1H19 (2018:
31%). Yuzhou had unrecognised contracted sales by end-June 2019 of
CNY68 billion, which carry a gross profit margin of about 30% and
will be recognised on the income statement over the next two to
three years. Operating costs remained well-controlled, with
selling, general and administrative expenses as a percentage of
revenue falling to 4.2% in 1H19, from 5.3% in 1H18.
DERIVATION SUMMARY
CIFI Holdings (Group) Co. Ltd. (BB/Stable) is Yuzhou's closest peer
in terms of geography, as both companies focus on the Yangtze River
Delta region. Yuzhou is also strongly positioned in the West Strait
Economic Zone and has less exposure to the Bohai Rim region. CIFI
has higher attributable contracted sales and lower leverage, which
explains why it is rated a notch higher than Yuzhou. CIFI has
higher sales efficiency than Yuzhou, but a narrower EBITDA margin.
In terms of scale, Times China Holdings Limited (BB-/Stable), which
is focussed on the Greater Bay Area, had a similar level of 2018
attributable contracted sales as Yuzhou, at around CNY50 billion.
Times China has adopted a faster churn strategy, and thus its
EBITDA margin is narrower than that of Yuzhou, as is its leverage.
KWG Group Holdings Limited (BB-/Stable) has slightly lower
attributable contracted sales than Yuzhou. KWG's focus is on
Guangzhou, although both companies have some exposure to Suzhou,
Shanghai and Tianjin. KWG has a slower churn model than Yuzhou,
which explains its slightly wider EBITDA margin. KWG's leverage is
rising towards Yuzhou's level.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Annual total contracted sales of CNY86 billion in 2020, and
CNY104 billion in 2021 (2018: CNY75 billion)
- 50%-60% of contracted sales to be spent on land acquisitions to
maintain a land-bank reserve sufficient for three to four
years of development (1H19: about three years)
- Gross profit margin of 27%-28% in 2019-2021 (1H19: 27%)
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Proportionally consolidated net debt/adjusted inventory
sustained below 40%
- Proportionally consolidated contracted sales/gross debt
sustained above 1.2x (2018: 0.8x)
- EBITDA margin sustained above 25%
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Proportionally consolidated net debt/adjusted inventory above
45% for a sustained period
- Proportionally consolidated contracted sales/gross debt below
1.0x for a sustained period
- EBITDA margin below 20% for a sustained period
LIQUIDITY
Sufficient Liquidity: Yuzhou had a total cash balance of CNY38.9
billion, including restricted cash of CNY3.2 billion, as of
end-1H19. This is sufficient to cover debt maturing within a year
of CNY13.6 billion and to support planned expansion. The company
has diversified funding channels to ensure the sustainability of
its liquidity, including bank loans, onshore and offshore bond
issuance, as well as equity placements.
[*] Fitch Says Coronavirus Ups Risks for China Toll Road Operators
------------------------------------------------------------------
The coronavirus outbreak in China could raise the risk of negative
rating impacts for Chinese highway operators, particularly if the
health crisis is sustained over a long period, says Fitch Ratings.
However, the effect of disruption stemming from epidemics on road
traffic may be temporary, and Fitch believes that the resilience of
road operators to a short-lived shock would be relatively strong.
The ultimate ratings impact of the outbreak will depend on how
severe and sustained the crisis proves to be. Fitch believes that
this remains unclear at this stage. In Hubei province, numerous
travel restrictions have been put in place, with some key
expressway entries and exits from the province closed, public
transport suspended, and private cars banned from the roads.
However, traffic passing through Hubei is still flowing on
inter-provincial roads. Restrictions have been particularly tight
in Wuhan, where the virus was first detected, as well as a number
of other major cities in Hubei province.
Fitch expects the large-scale travel restrictions and shutdown of
business in Wuhan and other areas in Hubei to have dampened
passenger and freight traffic on toll roads passing through Hubei.
There is also likely to have been a broader impact on toll roads
outside of Hubei, both because of Wuhan's role as a transport and
industrial hub and because widespread public fear of contagion will
have reduced travel in other parts of China as well. The Ministry
of Transport has indicated that road passenger volumes over 10-30
January dropped by 18% year on year.
The authorities have not yet clarified how long travel restrictions
will remain in place, and the prospects for the pace of recovery
after they are lifted are also cloudy. During the SARS epidemic,
China's highway traffic bottomed out in May 2003, after the first
case was discovered in December 2002. Monthly passenger traffic and
freight traffic in China in May 2003 was 46% and 24% lower,
respectively, compared with pre-crisis levels, but returned to
pre-crisis levels within five and four months respectively. Over
2003 as a whole, passenger traffic fell by 2%, but freight traffic
posted 5% growth. Nevertheless, there are numerous factors that
differ on this occasion compared with SARS, including the number of
cases, the speed of the official response and prevailing economic
conditions. Consequently, there may be significant differences in
how the epidemic affects transport.
Fitch rates a number of Chinese toll road operators, including
Yuexiu Transport Infrastructure Limited (YXT, BBB-/Stable),
Shenzhen Expressway Company Limited (SZE, BBB/Stable) and parent
Shenzhen International Holdings Limited (BBB/Stable). Among these,
we expect YXT to be more directly hit. After its consolidation of
three assets in Hubei that it acquired in November 2019, YXT has
five toll roads in the province accounting for 52% of its total
mileage. These assets are expected to generate about 45% of the
firm's total EBITDA in 2020. In contrast, SZE has only a 70km
stretch in Hubei, which contributes around 8% of EBITDA.
Nevertheless, all the three companies have good financial cushions
and healthy liquidity, which bolster their capacity to withstand
short-lived shocks.
Fitch said: "We believe that toll road operators are in general
likely to be more resilient to the impact of the epidemic than some
other sectors, such as airlines or travel and accommodation, partly
because traffic volumes are likely to rebound quickly once the
crisis eases. In YXT's case, a drop of over 10% in toll road
revenues 2020, compared with our pre-epidemic base case forecast of
no growth, could raise net leverage to a level that would be credit
negative, although it would not necessarily imply a rating
downgrade."
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I N D I A
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AIRCEL LTD: Distributors Seek Classification as Financial Creditors
-------------------------------------------------------------------
BloombergQuint reports that Aircel Ltd distributors on Feb. 11
filed an application in the National Company Law Tribunal (NCLT)
seeking classification as a financial or operational creditor in
the firm's insolvency matter.
More than 53 distributors, who have been classified as other
creditors by the resolution professional of Aircel, sought to be
classified either as financial or operational creditors,
BloombergQuint relates. The distributors informed the tribunal that
they had purchased vouchers and other products under the
distributorship agreement, which was in force till February 2018.
Aircel did not deliver the products or return their payments, they
added. Meanwhile, Indus Towers sought directions from the NCLT
against the resolution professional, saying it is opposed to the
resolution plan, BloombergQuint reports. The company claimed that
Aircel, Aircel Cellular and other connected companies owe Indus
Towers INR843 crore.
Further, Indus said it has filed a claim in this regard, however,
the entire value was not admitted by the resolution professional,
BloombergQuint relates. Therefore, Indus Towers said, it has
objections with the resolution plan. The tribunal has kept both the
matters for hearing next week.
Aircel and its subsidiaries Aircel Cellular and Dishnet Wireless
together owe around INR50,000 crore to creditors, BloombergQuint
discloses. The combined liability of the firms towards financial
creditors stands at INR15,545 crore and around INR35,000 crore to
operational creditors. The telco's assets, including spectrum
licenses, and fibre assets, are valued at around INR32,362 crore.
Aircel group had on Dec. 1, 2017, informed Telecom Regulatory
Authority that it intended to surrender its entire license in
Gujarat, Maharashtra, Haryana, Himachal, Madhya Pradesh, and Uttar
Pradesh-West circles, following which the company shut services in
these circles from Jan. 31, 2018. On Feb. 22, Aircel had informed
TRAI that it was facing deep financial stress. Subsequently, TRAI
asked it to give time to its subscribers to shift to other
networks.
About Aircel Limited
Aircel Limited, along with its subsidiaries Aircel Cellular Limited
and Dishnet Wireless Limited, is a telecom service provider with a
pan India presence. Aircel offers GSM-based 2G services in all the
22 telecom circles and has also introduced 3G services in select
geographies.
As reported in the Troubled Company Reporter-Asia Pacific on March
2, 2018, Reuters said Aircel Ltd filed for bankruptcy on Feb. 28,
2018, pressured by a high debt pile and mounting losses following a
price war triggered by a telecom upstart. Talks between Aircel, 74%
owned by Malaysia's Maxis Communications Bhd, and Reliance
Communications Ltd (RCom) to combine their wireless business was
called off in late 2017 due to regulatory and legal uncertainties
and interventions by various parties, Reuters said.
Aircel, whose debt amounts to INR155 billion (US$2.38 billion),
then tried unsuccessfully to restructure its debt, Reuters related.
AJANTA OFFSET: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Ajanta Offset and Packaging Limited
Madani Hall 1
Bahadur Shah Zafar Marg
New Delhi 110002
Insolvency Commencement Date: February 4, 2020
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: August 2, 2020
(180 days from commencement)
Insolvency professional: Satya Narayana Guddeti
Interim Resolution
Professional: Satya Narayana Guddeti
Plot No. 23, First Floor
Durganagar Colony
Punjagutta, West Marredpally
Hyderabad, Telangana 500082
E-mail: gsnhyd@rediffmail.com
- and -
CS-14, 1st Floor, Ansal Plaza
Vaishali, Ghaziabad
U.P. 201012
E-mail: ip.ajantaoffset@gmail.com
Last date for
submission of claims: February 18, 2020
ALCOB INDIA: CARE Lowers Rating on INR8.0cr LT Loan to 'D'
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Alcob India Private Limited (AIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 8.00 CARE D Revised from CARE B+
Facilities Stable
Short term Bank 16.75 CARE D Revised from CARE A4
Facilities
Detailed Rationale & Key Rating Drivers
The rating revision to the bank facilities of AIPL factors in
continuous overdrawals in cash credit (CC) account by AIPL due to
its stressed liquidity position.
Detailed description of the key rating drivers
Key Rating Weakness
Continuous overdrawals in CC facility
Due to stressed liquidity there have been continuous overdrawals in
CC account for more than 30 days at various instances during Q3FY20
(refers to the period October to December 2019)
Alcob India Private Limited (AIPL), formerly known as Alcob System
Private Limited was incorporated on July 26, 2004 based in Pune
promoted by Mr. Badrinarayan Rajagopalan. AIPL is engaged into
aluminum façade engineering includes designing, engineering,
manufacturing and installation of all types of facade systems, the
advanced curtain-wall and cladding systems which is offered
globally. AIPL's client base includes ITC, Hindustan Unilever,
Sahayadri Hospitals, Ruby Hall Clinic etc. The company operates
from headquarter at Pune however has office in Mumbai, Noida and
Ahmedabad as well.
B K RICE: CARE Assigns B+ Rating to INR12.97cr LT Loan
------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of B K Rice
Industries (BKRI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 12.97 CARE B+; Stable Assigned
Facilities
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BKRI are tempered by
small scale with nascent stage of operations and partnership nature
of entity, leveraged capital structure and weak debt coverage
indicators, working capital intensive nature of operations, monsoon
dependent operations and high-level of government regulations and
fragmented nature of industry and low entry barriers.
The rating, however, derives strength from experienced promoters in
rice industry, successful commissioning of the project,
satisfactory profitability margins and high demand outlook for
rice.
Rating Sensitivities
Positive Factors
* Increase in the scale of operations by ~15%
* Improvement in the capital structure marked by overall gearing
below 3.5x
Negative Factors
* Decline in PBIDLT margin by 100 bps
* Elongation in working capital cycle and decline in cash flows
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale and nascent stage of operations and partnership nature
of entity
The firm was established in 2017 and started its commercial
operations from April 2018, hence it has a short track record. The
firm recorded a total operating income of INR32.15 crore and profit
of INR0.07 crore during FY19. Further, during 9MFY20, the firm has
achieved a total operating income of ~INR20 crore. Partnership
nature of business has an inherent risk of withdrawal of capital by
the partners at the time of their personal contingencies. It also
has the inherent risk of business being discontinued upon the
death/insolvency of a partner. The ability to raise funds is also
very low as partnership concerns have restricted access to external
borrowings. During the year, the partners have infused capital of
up-to INR0.16 crore.
Leveraged capital structure and weak debt coverage indicators
The capital structure of the firm marked by overall gearing of the
remained leveraged and stood at 4.12x as on March 31, 2019 due to
increase in the total debt on back of increase in the working
capital bank borrowing for the day-to-day activities. The debt
coverage indicators marked by total debt/GCA improved from 24.89x
in FY15 to 13.89x in FY17 due to increase in cash accruals. The
PBILDT interest coverage ratio, improved from 1.40x in FY15 to
1.91x in FY17 due to increase in PBILDT in absolute terms.
Working capital intensive nature of operations due to seasonal
availability of paddy resulting in high inventory holding period
Paddy in India is harvested mainly at the end of two major
agricultural seasons Kharif (June to September) and Rabi (November
to April). The millers have to stock enough paddy by the end of
each season as the price and quality of paddy is better during the
harvesting season. During this time, the working capital
requirements of the rice millers are generally on the higher side.
On account of the same, working capital limits have been utilized
upto 90-95% over the last 12 months ended April 30, 2019. The
average collection period for the firm is 20 days while the average
creditor period is 9 days. The working capital cycle of the firm
stood at 34 days with an average inventory period of 23 days during
the first full year of operations.
Monsoon dependent operations and high-level of government
regulations
BKRM's operations are dependent on agro-climatic conditions and may
get adversely impacted in case of weak monsoon or poor crop
quality. The rice industry is highly regulated by the government as
it is seen as an important sector which could affect the food
security of the country. The sale of rice in the open market is
also regulated by the government through levy quota and fixed
prices. Hence, the firm is exposed to the risk associated with
fluctuation in price of rice.
Fragmented nature of industry and low entry barriers
The rice milling business requires limited quantum of investment in
machinery, however, has high working capital needs. Further, rice
milling is not very technology intensive and as a consequence the
industry is highly fragmented with large number of players
operating in the organized and unorganized segments. The high level
of competition has ensured limiting bargaining power, as a
consequence of which rice mills are operating at low to moderate
profitability margins.
Key Rating Strengths
Experienced partners in rice industry
Mr. Nagaraj S, aged 34, has been in the business of rice milling
and processing for a period of about 8 years before commencing
operations in the B.K. Rice Industries. Ms. Visalakshi is also
experienced in the same industry for about 6 years. The firm is
likely to be benefited by its qualified and experienced partners,
due to their presence in the industry and have established good
relations with the suppliers for raw material.
Successful commissioning of the project
The construction of the manufacturing unit was completed in
April 2018 and the commercial operations of the firm commenced from
May 2018 and have recorded a total operating income of INR32.15
crore and profit of INR0.0.7 crore during FY19. Further, during
9MFY20, the firm has achieved a total operating income of ~INR20
crore.
Satisfactory profitability margins
The PBILDT margin stood satisfactory in FY19 at 10.08% during FY19
on back of increase in number of orders executed and absorption of
overheads. The PAT margin, however, stood thin at 0.20% in FY19 due
to high interest and finance expense and depreciation cost.
High demand outlook for rice
Rice is consumed in large quantity in India which provides
favorable opportunity for the rice millers and thus the demand is
expected to remain healthy over medium to long term. India is the
second largest producer of rice in the world after China and the
largest producer and exporter of basmati rice in the world. With
growing consumer class and increasing disposable incomes, demand
for premium rice products is on the rise in the domestic market.
Demand for non-basmati segment is primarily domestic market driven
in India. Initiatives taken by government to increase paddy and
better monsoon conditions will be the key factors which will boost
the supply of rice to the rice processing units. Rice being the
staple food for almost 65% of the population in India, it has a
stable domestic demand outlook.
Liquidity analysis: Stretched
Liquidity is marked by tightly matched accruals to repayment
obligations, highly utilized bank limits and modest cash balance of
INR0.01 crore as on March 31, 2019. Its bank limits are utilized to
the extent of ~90% and has sought enhancement in bank lines,
supported by above unity current ratio.
Karnataka based B K Rice Industries was established as a
partnership concern, in 2017, by Mr. Nagaraj and Ms. S Vishalakshi
for doing the business of rice milling and processing. The
construction of the manufacturing unit was completed in March 2018
and the commercial operations commenced in May 2018. The firm
sources its raw material, paddy, from local farmers in and around
Karnataka and sells mostly to Tamil Nadu, Maharashtra and Karnataka
their finished product i.e; rice, broken rice and rice bran. The
rice mill has an installed capacity of 08 tons per hour.
BINA METAL: CARE Maintains B+ Rating in Not Cooperating
-------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Bina Metal
Way Private Limited (BMWPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 1.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Long/Short term 16.50 CARE B+; Stable/CARE A4;
Bank Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from BMWPL to monitor the ratings
vide e-mail communications/letters dated December 12, 2019, January
21, 2020 and January 22, 2020 and numerous phone calls. However,
despite our repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the publicly available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. The rating on
BMWPL's bank facilities will now be denoted as CARE B+; Stable;
ISSUER NOT COOPERATING/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating in February 13, 2019 the following were
the rating strengths and weaknesses: (Updated the information
available from Ministry of Corporate Affairs).
Key Rating Weaknesses
Small scale of operations with moderate profit margins: The scale
of operations of the company remained small marked by total
operating income of INR22.34 crore (Rs.22.16 crore in FY18) with a
PAT of INR0.94 crore (Rs.0.51 crore in FY18) in FY19. Furthermore,
the total capital employed has also remained low at INR9.57 crore
as on March 31, 2019. The profit margins of the company remained
moderate marked by PBILDT margin of 11.11% (FY18: 9.97%) and PAT
margin of 4.20% (2.28% in FY18) in FY19.
Volatility in raw material prices: The company does not have
backward integration for its basic raw-materials (iron and steel
alloys) and it procures the same from open market at spot prices.
Since the raw-material is the major cost driver and the prices of
which are volatile in nature, the profitability of the company is
susceptible to fluctuation in raw-material prices.
Moderate capital structure with moderate debt coverage indicators:
The capital structure of the company remained moderate marked by
debt equity and overall gearing ratios of 1.28x (1.50x in FY18) and
1.28x (1.90x in FY18) respectively as on March 31, 2019. The debt
coverage indicators of the company also remained moderate marked by
interest coverage of 2.66x (2.07x in FY18) and total debt to GCA of
3.56x (5.29 in FY18) in FY19.
Intensely competitive industry: BMWPL is engaged in the
manufacturing of auto components and other railway track materials
which is primarily dominated by large players and characterized by
high fragmentation and competition due to the presence of numerous
players in India owing to relatively low entry barriers. High
competitive pressure limits the pricing flexibility of the industry
participants which induces pressure on profitability.
Key Rating Strengths
Experienced promoters with long track record of operations: BMWPL
is into manufacturing of railway products and auto components since
1986 and thus has more than a three decade of track record of
operations. Being in the same line of business since long period,
the promoters have built up established relationship with its
clients and the company is deriving benefits out of this. The key
promoter: Mr. Shyam Sunder Goyal has more than a three decade of
experience in same industry, looks after the day to day operations
of the company. He is supported by other director Mr. Rohit Goyal
also has more than a decade of experience in similar type of
industry.
Proximity to the raw material sources: BMWPL's plant is located in
the industrial belt of Jamshedpur where the raw materials are
available in abundance. Further, the steel and iron-ore rich state
of Orissa is also located nearby. The proximity to the raw material
sources reduces the transportation cost to the company.
Bina Metal Way Private Limited (BMWPL) was incorporated in February
1986. Currently, the company is managed by Mr. Shyam Sunder Goyal
and Mr. Rohit Goyal. Since its inception, the company has been
engaged in manufacturing of railway products like switches, turnout
components, crossing etc and auto components at its plant located
at Adityapur, Jamshedpur with installed capacity of 2400 sets for
railway products and 3000 sets for auto components.
BONCON TRADE: CARE Maintains B- Rating in Not Cooperating
---------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Boncon
Trade Private Limited (BTPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 15.00 CARE B-; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated August 1, 2018, placed the
rating of BTPL under the 'issuer non-cooperating' category as BTPL
had failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. BTPL continues to be
non-cooperative despite repeated requests for submission of
information through email dated January 21, 2020 and numerous phone
calls. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on August 1, 2018 the following were the
rating strengths and weaknesses
Key Rating Weaknesses
Small Scale of operations along with losses registered: The scale
of operations of the company remained small with significant
deterioration in total operating income to INR 0.03 crore in FY19
as against INR0.19 lakh in FY18, restricting its financial
flexibility. The company continues to register cash loss over the
last two years ended FY19 leading to complete erosion of net
worth.
Fragmented nature of industry: The mobile phone segment is highly
fragmented with a large number of organized and unorganized players
operating in the market. The company faces competition other
players operating in the same segment and also from low-priced
products from China in the mobile handset and accessories segment.
Technology obsolescence risk: The mobile handsets and accessories
segment is characterized by rapid changes in technology keeping in
line with the changing customer preferences and requirements and
continuous innovation. Thus, the company faces the risk of its
products getting obsolete with the introduction of new
technologies.
Key Rating Strengths
Experienced Partners: BTPL is promoted by Mr Sunil Somani and Mr
Gaurav Somani having an experience of more than two decades in the
cellular phone trading business.
Established distribution network: The company has an established
the dealership network during the year in Tier I and Tier II cities
for ZTE Mobiles. Till December 2014, the company had 29 dealers for
ZTE mobiles which are continued for the current distributorship of
Samsung, Lenovo and Gionee. Furthermore, the company has increased
the number of distributors to 60. These distributors further
distribute the products to retailers across India.
Incorporated in the year 2013, BTPL is a part of Calyx Group based
out of Pune, Maharashtra. Till December 2014, BTPL was engaged in
distribution of smart phones of ZTE Telecom India Private Limited
(ZTE) through a contract with ZTE. However, in FY15, the company
discontinued the contract and is currently engaged in wholesale
trading of mobile handsets for Lenovo, Gionee and Samsung (no
contract). The company is registered with Amazon India, Flipkart
and Snapdeal for online selling.
CI CAPITAL: CARE Cuts INR10cr LT Loan Rating to B, Not Cooperating
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of CI
Capital Private Limited (CICPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B; Stable; Issuer not
Facilities cooperating; Revised from
CARE B+; Stable; on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from CICPL to monitor the
rating(s) vide e-mail communications/letters dated June 18, 2019,
July 2, 2019, July 29, 2019, August 22, 2019, November 20, 2019,
January 7, 2020, January 9, 2020 and numerous phone calls. However,
despite our repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the best available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating on CICPL's
bank facilities will now be denoted as CARE B; STABLE; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating assigned to the bank facilities of CICPL has been
revised on account of non-receipt of no default statement for the
month of October 2019, November 2019 and December 2019, moderation
of the capital structure as indicated by an overall gearing of
1.50x as on March 2019 due to debt funded growth in loan portfolio
and dip in profitability; as indicated by low return on asset
margin of 0.76% alongwith meager profit after tax of INR0.03 crore
during FY19 (refers to the period from April 2018 to March 2019).
Further, client has also not submitted any information to CARE for
monitoring the ratings. Rating continues to remain constrained on
account of its limited track record of operations, its modest loan
portfolio the geographic and borrower concentration of its business
along with modest profitability.
The rating, however, derives strength from the experience of its
promoters, adequate capitalization and exposure to secured loan
portfolio.
Detailed description of the key rating drivers
At the time of last rating on January 22, 2019 the following were
the rating strengths and weaknesses (updated for FY19 audited
financials available from Ministry of Corporate Affairs):
Key Rating Weaknesses
Limited track record of operations and modest scale of operations:
CICPL commenced regular lending operations in July 2018 and hence
has limited track record of operations. Therefore, its scale of
operations was modest with an outstanding loan portfolio of INR4.50
crore as on March 31, 2019 spread over its two products viz.
vehicle finance and loans against property (LAP).
Regional concentration of portfolio; along with borrower
concentration: The operations of CICPL are currently restricted to
the customers of its group entities which have business operations
in Bhopal (Madhya Pradesh) and hence its operations are regionally
concentrated. Moreover, the borrower profile of the company is also
concentrated with a large ticket sized LAP contributing 27% of the
total outstanding loan portfolio at the end of 8MFY19.
Modest profitability with dip in full year FY19: CICPL's
profitability remained modest and dipped in FY19, with net interest
margin (NIM) of 5.91% and Return on Total Assets (ROTA) of 0.76%
during FY19, as against a NIM of 6.40% registered in 8MFY19. PAT of
the company dipped to a meagre 0.03 crore in FY19, as against PAT
of INR0.06 crore registered in 8MFY19 considered during CARE's last
review.
Deterioration in overall gearing: Company's overall gearing
deteriorated from 0.64x as on Nov. 30, 2018 to 1.50x as on March
31, 2019 with its entire incremental loan portfolio during this
period having been funded through additional debt.
Key Rating Strengths
Experienced promoters: Mr. Rakesh Malik, director of CICPL has an
experience of more than three decades in auto-dealership and real
estate business through C.I. Automotors Pvt. Ltd. (rated: CARE B+;
Stable; Issuer Not Co-operating) and C.I. Finlease Ltd. (rated:
CARE B+; Stable; Issuer Not Co-operating), which have business
operations in Bhopal. He is ably supported by his wife Mrs. Anju
Malik in the strategic and administrative decision making for
CICPL.
Secured loan portfolio: CICPL is primarily engaged in providing
vehicle loans and LAP with a loan to value ratio of 75%. Entire
loan portfolio of CICPL is secured by way of mortgage of the
vehicle being financed or property against which loan is given and
hence provides comfort for the lending business.
Adequate capitalization: As on November 30, 2018, CICPL had
adequate capitalization with a capital adequacy ratio (CAR) of over
100% due to limited lending operations. However, CICPL availed debt
during FY19 and its overall gearing deteriorated at 1.50x as on
March 31, 2019.
Stretched Liquidity: The liquidity of CICPL is stretched as
indicated by high Cash Credit limit utilization as per lender
interaction and low free cash and bank balance at INR0.89 crore at
FY19 end.
CICPL, incorporated in 1996 as Penny Care Leasing and Finance
Private Limited, is registered with Reserve Bank of India (RBI) as
a Non deposit taking Non-Banking Financial Company (NBFC-ND). In
2017, Mr. Rakesh Malik of CI group of Bhopal took over the company
and rechristened it to its present name. The company commenced
regular lending operations from July 2018 and as on FY19 end, it
had an outstanding loan portfolio of INR4.50 crore. Currently,
CICPL operates in Bhopal region in Madhya Pradesh and is primarily
engaged in the business of providing vehicle finance (mainly four
wheelers) and LAP.
CLASSIC KNITS: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Classic Knits India Private Limited
43, Jayalakshmi Ginning Factory
Compound Alangadu
Mangalam Road, Tirupur
TN 641604
IN
Insolvency Commencement Date: February 7, 2020
Court: National Company Law Tribunal, Coimbatore Bench
Estimated date of closure of
insolvency resolution process: August 5, 2020
Insolvency professional: S. Muthuraju
Interim Resolution
Professional: S. Muthuraju
No. 3 Sundaram Brothers Layout
Opp to all India Radio
Trichy Road, Ramanathapuram
Coimbatore 641045
E-mail: smrajunaidu@gmail.com
Mobile: 99941-03021
Last date for
submission of claims: February 21, 2020
CMC TEXTILES: Ind-Ra Affirms BB+ LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed CMC Textiles
Private Limited's (CTPL) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR88.98 mil. (increased from INR68.9 mil.) Term loan due on
April 2023 affirmed with IND BB+/Stable rating;
-- INR210.0 mil. Fund-based limits affirmed with IND
BB+/Stable/IND A4+ rating; and
-- INR18.9 mil. Non-fund-based limits affirmed with IND A4+
rating.
Analytical Approach: Ind-Ra continues to take a consolidated view
of CTPL, Mani More Synthetics Private Limited (MSPL; 'IND
BB+'/Stable) and Global Packaging ('IND BB'/Stable), together
referred to as CMC Group, due to the strong operational and
strategic interlinkages among the entities, to arrive at the
ratings. The companies operate in the same line of business and
have common promoters and fungibility of funds. MSPL has provided a
corporate guarantee for CTPL's bank loans. All three companies
manufacture texturized yarn and fabrics.
KEY RATING DRIVERS
The affirmation reflects consolidated EBITDA margin remaining
modest, due to the raw material price volatility in the textile
industry, despite improving slightly to 4.3% in FY19 (FY18: 4.0%)
on reduced variable cost. Return on capital employed (RoCE) came in
at 5% in FY19 (FY18: 3%). In 1HFY20, the group recorded a margin of
4.74%. On a standalone basis, CTPL's EBITDA margin was 4.1% in FY19
(FY18: 4.0%) and RoCE was 4% (3%). In 1HFY20, the company recorded
a margin of 4.6%.
The consolidated credit metrics were modest in FY19 with gross
interest coverage (operating EBITDA/gross interest expense) of 1.9x
(FY18: 2.1x) and net financial leverage (adjusted net
debt/operating EBITDAR) of 4.7x (6.2x). On a standalone basis too,
CTPL's credit metrics remained modest with gross interest coverage
of 1.9x in FY19 (FY18: 2.1x) and net financial leverage of 4.8x
(7.4x). Despite the addition of term loan in FY19, the net leverage
improved due to the scheduled repayment of term loan and the
reduction of unsecured debt. Interest coverage declined due to
increased interest expenses.
Liquidity Indicator - Stretched: The group's average maximum
utilization of fund-based limits was 97% and that of non-fund-based
limits was 95% for the 12 months ended November 2019. On a
standalone basis, CTPL's liquidity remained tight with fund-based
limits being utilized on an average at 97.4% and non-fund-based
limits at 80.8% for the same period. The group's cash flow from
operations (CFO) remained positive at INR67.0 million in FY19
(FY18: INR104 million) on improved operating EBITDA and moderate
working capital. Free cash flow remained positive at INR53.0
million in FY19 (FY18: INR51.0 million) due to positive CFO. The
cash and cash equivalents at FYE19 were INR12.0 million in FY19
(FY18: INR15.0 million). The CMC group has scheduled debt repayment
INR43.67 million in FY20 and INR 32.1 million in FY21. The debt
service coverage ratio is likely to remain in the range of
0.8x-1.2x over FY20-FY22.
The group's working capital cycle improved to 63 days in FY19
(FY18: 66 days) due to fewer debtor days of 56 (64). CTPL's net
cash conversion cycle improved to 67 days in FY19 (FY18: 76 days)
due to debtor days reducing to 48 (67).
The ratings are supported by the group's medium scale of operations
marked by revenue of INR2,401.0 million in FY19 (1HFY20: INR1,301.0
million, FY18: INR2,245.0 million) due to improved realizations and
increased orders from longstanding customers. The overall
utilization capacity of the group is almost at peak at 93%. On a
standalone basis, CTPL's moderate revenue improved to INR1,614.0
million in FY19 (1HFY20: INR856.8 million, FY18: INR1,294.0
million) due to increased volumes and realization.
The ratings remain constrained by the fluctuations in the price of
materials that are related to crude prices. Any significant change
in the crude prices impacts the raw material prices and
realization.
The ratings continue to be supported by the CMC group's promoters'
experience of over three decades in the yarn and fabric
manufacturing industry.
RATING SENSITIVITIES
Positive: An improvement in the EBITDA margin and liquidity profile
leading to the net leverage being below 4.5x on a sustained basis
and an improvement in the standalone credit profile will be
positive for the ratings.
Negative: Any deterioration in the revenue and EBITDA margin and/or
working capital cycle leading to the net leverage being sustained
above 5.5x will be negative for the ratings.
COMPANY PROFILE
Incorporated in 2002 by Ajeet Yadav, Pawan Yadav, and Dheerendra
Yadav, CTPL manufactures texturized yarn and fabrics with a total
installed capacity of 10,030 metric tons per annum.
DAVANGERE SUGAR: CARE Lowers Rating on INR99cr Loan to 'C'
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Davangere Sugar Company Limited (DSCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 12.23 CARE D Revised from CARE BB+;
Facilities– Stable
Term Loan
Long term bank 99.00 CARE C Revised from CARE BB+;
facilities– Stable
Cash Credit
Short Term Bank 13.22 CARE A4 Revised from CARE A4+
Facilities
Detailed Rationale & Key Rating Drivers
The revision in rating of bank facilities of DSCL is on account of
delay reported in servicing of rated facility as per term loan
account statements submitted by company for the month of December,
2019. The delay was reported on account of cash flow mismatches
during the month. The company's ratings are constrained by
stretched liquidity position and operations in a cyclical and
regulated industry.
The company's weaknesses are partially offset by the experience and
track record of promoters and the improvement in operational and
financial performance in FY19 and 9MFY20.
Rating Sensitivities
Positive Factors
* Continuous timely servicing of the term loan with no delays for
period of more than 3 months.
* Sustained positive cash accruals in the near and medium term
Negative Factors
* Any government regulations which can affect the company's
performance adversely.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delay in servicing of term loan for the month of December 2019
The company had reported delay in servicing the debt obligations
pertaining to two term loans during the month of December, 2019 and
the same was on account of cash flow mismatches during the month.
However the bankers have informed that there are no instances of LC
devolvement or CC overdrawals.
Operations in a cyclical and regulated industry and stretched
liquidity position
The cyclical nature of the sugar industry significantly impacts the
operating performance and cash flow generation of DSCL. The
company's inventory holding period was as high as 370 days in FY19
(FY18: 337 days) which resulted into a stretched operating cycle of
403 days (PY: 403 days). The current ratio of the company was 0.9
and quick ratio was 0.43 as on March 31, 2019 against 0.77 and 0.43
respectively as on March 31, 2018. The company's fund based
utilisation was close to 100% for the 12 month ended November,
2019. The raw material prices are regulated by the government. In
addition to this, sale and distribution of by-products (molasses
and power) are also regulated at different levels in different
States.
Key Rating Strengths
Long track record and experienced promoters
DSCL has more than four decades of track record in the present line
of business. DSCL enjoys established relationship with farmers
having operated in the same region over the decades. The day to day
operations of the company are looked after by Mr S S Ganesh (MD),
who is adequately supported by a group of professionals having rich
business experience in the operative industry.
Improvement in operational performance in FY19 and 9MFY20
The company produced 21,804 metric tonnes of sugar in FY19 (PY:
6482 metric tonnes) at a recovery rate of 9.45% against 9.24% the
previous year. The company also produced 53.65 million units power
in FY19 against 21.22 million units in FY18. The company reported
33% growth in total operating income in FY19 wrt FY18 at a PBILDT
margin of 27.65% (PY: -3.24%) and PAT of INR 3.22 Cr with a PAT
margin of 2.83% (PY: -13.45%). TDGCA though remained stretched,
improved from 92.02x as on March 31, 2018 to 17.59x as on March 31,
2019. For 9MFY20, the company reported total operating income of
INR 151.19 Cr at a PBILDT margin of 15.4% and a PBT of INR 1.24
Cr.
Liquidity: Poor
Liquidity position of the company is poor as reflected in near full
utilization of its fund based working capital limit and cash flow
mismatches leading to delays in debt servicing.
Davangere Sugar Company Limited was incorporated in 1970 as a joint
sector undertaking between Karnataka Agro Industries Corporation
(KIAC), Karnataka State Industrial Investment and Development
Corporation (KSIIDC) and Farmers. DSCL commenced commercial
operations in October 1974. However, owing to continuous losses
from operation, it was declared a sick unit in FY87. Subsequently,
with the debt restructuring and support from financial
institutions, DSCL came out of Board of Industrial and Financial
Reconstruction in 1996. The present promoters acquired the shares
owned by KIAC and KSIIDC and took over the management of DSCL in
1995. Shri. S S Ganesh takes care of the day to day functioning of
the company. As on March 31, 2019, the promoters hold 59.54% stake
in DSCL. The company has an installed sugar crushing capacity of
4750 TCD and a multi fuel co-generation unit of 24.5MW.
EDUCOMP SOLUTIONS: CBI Books Firm, Directors for Defrauding Banks
-----------------------------------------------------------------
BloombergQuint reports that the Central Bureau of Investigation
booked Educomp Solutions Ltd., its subsidiary and directors for
allegedly defrauding State Bank of India-led consortium of 13 banks
to the tune of INR1,955 crore and carried out searches at eight
locations on Feb. 11, officials said.
The agency booked Educomp Solutions Ltd., its managing director
Shantanu Prakash, guarantor Jagdish Prakash, its subsidiary Edu
Smart Services Pvt. Ltd. and directors Vijay Kumar Choudhary and
Vinod Kumar Dandona, they said, BloombergQuint relays.
After filing the First Information Report, the agency carried out
searches at eight locations in Delhi, Dehradun and Gurgaon on the
premises of Educomp Solutions, Edu Smart and its directors, the
officials said, according to BloombergQuint.
BloombergQuint adds that the officials said the account was
declared a non-performing asset in 2016.
Educomp Solutions Limited is engaged in providing digital
educational content in the classroom through its patented product
'Smart Class' and 'Edureach' (ICT).
Educomp, promoted by Shantanu Prakash, filed for bankruptcy in May
2017.
GLOBAL PACKAGING: Ind-Ra Affirms BB Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Global Packaging's
(GP) Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR12.4 mil. (reduced from INR28.46 mil.) Term loan due on
April 2023 affirmed with IND BB/Stable rating;
-- INR66.0 mil. Fund-based limits affirmed with IND BB/Stable/IND
A4+ rating; and
-- INR5.6 mil. Non-fund-based limits affirmed with IND A4+
rating.
Analytical Approach: Ind-Ra continues to take a consolidated view
of GP, CMC Textiles Private Limited (CTPL; 'IND BB+'/Stable) and
Mani More Synthetics Private Limited (MSPL; 'IND BB+'/Stable),
together referred to as CMC Group, due to the strong operational
and strategic interlinkages among the entities, to arrive at the
ratings. The companies operate in the same line of business and
have common promoters and fungibility of funds. MSPL has provided a
corporate guarantee for CTPL's bank loans. All three companies
manufacture texturized yarn and fabrics.
KEY RATING DRIVERS
The affirmation reflects consolidated EBITDA margin remaining
modest, due to the raw material price volatility in the textile
industry, despite improving slightly to 4.3% in FY19 (FY18: 4.0%)
on reduced variable cost. Return on capital employed (RoCE) came in
at 5% in FY19 (FY18: 3%). In 1HFY20, the group recorded a margin of
4.74%. On a standalone basis, GP's EBITDA margin was 3.6% in FY19
(FY18: 3.5%) and RoCE was 5% (4%). In 1HFY20, the company recorded
a margin of 4.7%.
The consolidated credit metrics were modest in FY19 with gross
interest coverage (operating EBITDA/gross interest expense) of 1.8x
(FY18: 1.9x) and net financial leverage (adjusted net
debt/operating EBITDAR) of 4.7x (6.2x). On a standalone basis too,
GP’s credit metrics remained modest with gross interest coverage
of 2.1x in FY19 (FY18: 2.2x) and net financial leverage of 4.8x
(4.8x).
Liquidity Indicator - Stretched: The group's average maximum
utilization of fund-based limits was 97% and that of non-fund-based
limits was 95% for the 12 months ended November 2019. On a
standalone basis, GP's liquidity remained tight with fund-based
limits being utilized on an average at 95.2% and non-fund-based
limits at 80.8% for the same period. The group's cash flow from
operations (CFO) remained positive at INR67.0 million in FY19
(FY18: INR104 million) on improved operating EBITDA and moderate
working capital. Free cash flow remained positive at INR53.0
million in FY19 (FY18: INR51.0 million) due to positive CFO. The
cash and cash equivalents at FYE19 were INR12.0 million in FY19
(FY18: INR15.0 million). The CMC group has scheduled debt repayment
INR43.67 million in FY20 and INR32.1 million in FY21. The debt
service coverage ratio is likely to remain in the range of
0.8x-1.2x over FY20-FY22.
The ratings remain constrained by GP's partnership nature.
The group's working capital cycle improved to 63 days in FY19
(FY18: 66 days) due to fewer debtor days of 56 (64). GP's net cash
conversion cycle improved to 48 days in FY19 (FY18: 50 days).
The ratings are supported by the group's medium scale of operations
marked by revenue of INR2,401.0 million in FY19 (1HFY20: INR1,301.0
million, FY18: INR2,245.0 million) due to improved realizations and
increased orders from longstanding customers. The overall
utilization capacity of the group is almost at peak at 93%. On a
standalone basis, GP's moderate revenue improved to INR508.0
million in FY19 (1HFY20: INR220.8 million, FY18: INR538.0 million)
due to increased volumes and realization.
The ratings remain constrained by the fluctuations in the price of
materials that are related to crude prices. Any significant change
in the crude prices impacts the raw material prices and
realization.
The ratings continue to be supported by the CMC group's promoters'
experience of over three decades in the yarn and fabric
manufacturing industry.
RATING SENSITIVITIES
Positive: An improvement in the EBITDA margin and liquidity profile
leading to the net leverage being below 4.5x on a sustained basis
and an improvement in the standalone credit profile will be
positive for the ratings.
Negative: Any deterioration in the revenue and EBITDA margin and/or
working capital cycle leading to the net leverage being sustained
above 5.5x will be negative for the ratings.
COMPANY PROFILE
GP was incorporated in 2011 as a partnership firm by Kshitij Ajeet
Yadav and Sumit Brijpal Yadav. The firm has 4,101 metric tons per
annum texturized yarn and fabric manufacturing capacity in Dadra
and Nagar Haveli.
GWALIOR DISTILLERIES: CARE Keeps D Rating in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Gwalior
Distilleries Limited (GDL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 37.50 CARE D; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated August 21, 2018, placed the
rating of GDL under the 'issuer non-cooperating' category as GDL
had failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. GDL continues to be
non-cooperative despite repeated requests for submission of
information through email dated January 21, 2020 and numerous phone
calls. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on August 21, 2018 the following were
the rating strengths and weaknesses
Key Rating Weaknesses
Delay in debt servicing obligations and weak liquidity position: As
per the interaction with the banker, there have been instances of
delays in repayment of interest obligation in the term facility
availed on account of the stretched liquidity position and delay in
achieving COD, due to delay in receiving approvals.
GDL was incorporated in the year 1986 by Mr Govind Yadav to
undertake the business of blending and bottling of Indian made
foreign liquor (IMFL). The IMFL blending and bottling unit of the
company is located in Bhind district of Madhya Pradesh.
JOY MA: CARE Reaffirms B+ Rating on INR5.84cr LT Loan
-----------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Joy
Ma Lakshmi Cold Storage Private Limited (JMLCSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.84 CARE B+; Stable Removed from
Facilities Non Cooperation and Reaffirmed
Short term Bank 0.10 CARE A4 Removed from Non
Facilities Cooperation and Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of JMLCSPL continue to
remain constrained by its short track record with small scale of
operation, leveraged capital structure with moderately weak debt
coverage indicators, regulated nature of industry, seasonality of
business with susceptibility to vagaries of nature, risk of
delinquency in loans extended to farmers and competition from local
players. The ratings, however, continue to derive comfort from
experienced promoters and proximity to potato growing area.
Rating Sensitivities
Positive factors
* Sizable increase in scale of operation (turnover above INR3.50
crore and cash accruals above INR0.50 crore) on a sustained basis.
* Improvement in overall gearing ratio below 1.50x on a long term
basis with reduced reliance on external borrowings to fund working
capital requirements.
Negative factors
* Any sizeable decline in scale of operation (turnover below
INR1.50 crore) on a sustained basis.
* Deterioration in overall gearing ratio beyond 3.00x with
increased reliance on external borrowings to fund working capital
requirements on a sustained basis.
Detailed description of the key rating drivers
Key Rating Weaknesses
Short track record with small scale of operation: JMLCSPL has
started its commercial operation from April 2018 and accordingly
FY19 was the first year of operation for the company. During FY19,
the company has reported a total operating income of INR1.83 crore,
PBILDT of INR0.73 crore, net loss of INR0.29 crore and cash
accruals of INR0.27 crore. Moreover, the tangible networth and
total capital employed stood low at INR2.40 crore and INR8.18
crore, respectively, as on March 31, 2019. This apart, the entity
has achieved a turnover of INR1.31 crore in 9MFY20.
Leveraged capital structure with moderately weak debt coverage
indicators: The capital structure of the company remained leveraged
marked by debt equity and overall gearing ratios at 2.14x and 2.41x
respectively as on March 31, 2019. The debt coverage indicators of
the company remained moderately weak marked by interest coverage of
1.57x and total debt to GCA of 21.26x in FY19.
Regulated nature of business: In West Bengal, the basic rental rate
for cold storage operations is regulated by the state government
through West Bengal State Marketing Board. The rent of these cold
storages is decided by taking into account political
considerations, not economic viability. Due to severe government
intervention, the cold storage facility providers cannot enhance
rental charge commensurate with increased power tariff and labour
charge.
Seasonality of business with susceptibility to vagaries of nature:
JMLCSPL's operation is seasonal in nature as potato is a winter
season crop with its harvesting period commencing in March. The
loading of potatoes in cold storages begins by the end of February
and lasts till March. Additionally, with potatoes having a
perceivable life of around eight months in the cold storage,
farmers liquidate their stock from the cold storage by end of
season i.e., generally in the month of November. The unit remains
non-operational during the period from December to January.
Furthermore, lower agricultural output may have an adverse impact
on the rental collections as the cold storage units collect rent on
the basis of quantity stored and the production of potato is highly
dependent on vagaries of nature.
Risk of delinquency in loans extended to farmers: Against the
pledge of cold storage receipts, JMLCSPL provides interest bearing
advances to the farmers & traders. Before the closure of the season
in November, the farmers & traders are required to clear their
outstanding dues with the interest. In view of this, there exists a
risk of delinquency in loans extended, in case of downward
correction in potato or other stored goods prices, as all such
goods are agro commodities.
Competition from other local players: In spite of being capital
intensive, the entry barrier for new cold storage is low, backed by
capital subsidy schemes of the government. As a result, the potato
storage business in the region has become competitive, forcing cold
storage owners to lure farmers by providing them interest bearing
advances against stored potatoes which augments the business risk
profile of the companies involved in the trade.
Key Rating Strengths
Experienced promoters: JMLCSPL is currently being managed by Mr.
Arup Kumar Ghosh who has around two decades of experience in the
same industry though his family business, looks after the day to
day operations of the company. He is being duly supported by the
other director Mrs. Moutusi Ghosh along with a team of experienced
personnel.
Proximity to potato growing area: JMLCSPL's storing facility is
situated at Cooch Bihar, West Bengal which is one of the major
potato growing regions of the state. The favorable location of the
storage unit, in close proximity to the leading potato growing
areas provides it with a wide catchment and making it suitable for
the farmers in terms of transportation and connectivity.
Liquidity:
Liquidity: Stretched - Liquidity is marked by inadequate accruals
to repayment obligations. The cash and bank balance stood low at
INR0.23 crore as on March 31, 2019. Moreover the average bank limit
utilisation was low at 34% for the last 12 months ended on December
31, 2019.
Incorporated in April 2017, Joy Ma Lakshmi Cold Storage Private
Limited (JMLCSPL) was promoted by Mr. Arup Kumar Ghosh and Mrs.
Moutusi Ghosh based out of West Bengal to set up cold storage
facility in the state of West Bengal with an aggregate storing
capacity of 140000 quintal. The company has setup its cold storage
unit with an aggregate cost of INR7.69 crore funded at debt equity
of 1.11x and the company has loading of potatoes at its cold
storage from March 2018 and the commercial operation started from
April 2018.
M.B PARIKH: CARE Maintains 'B' Rating in Not Cooperating
--------------------------------------------------------
CARE Ratings said the rating for the bank facilities of M.B Parikh
&Sons (MBPS) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated September 28, 2018, placed
the rating of MBPS under the 'issuer non-cooperating' category as
MBPS had failed to provide information for monitoring of the rating
as agreed to in its Rating Agreement. MBPS continues to be
non-cooperative despite repeated requests for submission of
information through email dated January 21, 2020 and numerous phone
calls. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on September 28, 2018 the following were
the rating strengths and weaknesses
Key Rating Weaknesses
Small scale of operations with low and fluctuating profitability:
Total operating income of the firm has grown at compounded annual
growth rate (CAGR) of 24.98% over the period of FY14 to FY16 on
account of addition in the customer base coupled with increase in
demand from existing customers. However, the scale of operations
remained small with total operating income (TOI) of INR35.19 crore
in FY16 and tangible net worth of INR1.35 crore as on March 31,
2016, thus limiting financial flexibility of the firm. The firm
operates at thin PBILDT and PAT margin due to trading nature of
operations. Also, margins are susceptible to price fluctuations in
food grain prices. The PBILDT margin of the organization remained
low in the range 3.48% to 4.70% during last three years.
Leveraged capital structure and weak debt coverage indicators: The
capital structure of MBPS remained highly leveraged during last
three balance sheet dates on account of higher reliance on working
capital limits and unsecured loans from related parties.
Furthermore, the debt coverage indicators also remained weak during
FY14-FY16 due to increase in debt level and low profit margins.
Working capital intensive nature of operation: Operations of MBPS
are working capital intensive in nature with funds being largely
blocked in inventory (as the firm has to maintain sufficient amount
of inventory to meet the urgent requirement of the clients) and
also in receivables (as the firm has to give higher credit period
to its customers due to intense competition from the market and to
maintain relationship with its customer). Furthermore, with low
credit period received from its suppliers the operations are highly
dependent on working capital borrowing which led to higher average
utilisation of working capital limits.
Key Rating Strengths
Long track record of operations and experienced partners: MBPS has
been in existence for more than a century and is managed by Parikh
family, with Mr Sanjeev Vardhibhai Parikh, Mr Sourabh Sanjeev
Parikh and Mr Aditya Sanjeev Parikh managing the firm as partners.
Mr Sanjeev Parikh has been associated with trading for nearly 4
decades and has developed strong business relations with customers.
His sons are also looking after day-to-day operations of the firm
who possesses more than a decade of experience through their
association with the firm. Over the years of its operation in the
trading of food grains industry, the promoters of the firm have
developed longstanding & established relationships with customers
and suppliers. It also has distributorship of many basmati rice
brands like Fortune, Heritage, Dawat, Sadhu, Star, Jalsa,etc.
M.B. Parikh & Sons (MBPS) was established in the year 1914 by Late
Mr Manilal Parikh. Presently Mr Sanjeev Vardhibhai Parikh, Mr
Sourabh Sanjeev Parikh and Mr Aditya Sanjeev Parikh are managing
the firm as partners. The firm is engaged in trading of food grains
viz. Pulses, Dal, Rice, Wheat, Poha, Jawar, Sabudana, Rawa, Maida
etc. MBPS operates out of its registered office at Kolhapur,
Maharashtra.
MANI MORE: Ind-Ra Affirms BB+ LT Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Mani More
Synthetics Private Limited's (MSPL) Long-Term Issuer Rating at 'IND
BB+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR20.1 mil. (increased from INR4.78 mil.) Term loan due on
April 2023 affirmed with IND BB+/Stable rating;
-- INR60.0 mil. Fund-based limits affirmed with IND
BB+/Stable/IND A4+ rating; and
-- INR1.0 mil. Non-fund-based limits affirmed with IND A4+
rating.
Analytical Approach: Ind-Ra continues to take a consolidated view
of MSPL, CMC Textiles Private Limited (CTPL; 'IND BB+'/Stable) and
Global Packaging ('IND BB'/Stable), together referred to as CMC
Group, due to the strong operational and strategic interlinkages
among the entities, to arrive at the ratings. The companies operate
in the same line of business and have common promoters and
fungibility of funds. MSPL has provided a corporate guarantee for
CTPL's bank loans. All three companies manufacture texturized yarn
and fabrics.
KEY RATING DRIVERS
The affirmation reflects consolidated EBITDA margin remaining
modest, due to the raw material price volatility in the textile
industry, despite improving slightly to 4.3% in FY19 (FY18: 4.0%)
on reduced variable cost. Return on capital employed (RoCE) came in
at 5% in FY19 (FY18: 3%). In 1HFY20, the group recorded a margin of
4.74%. On a standalone basis, MSPL's EBITDA margin was 4.1% in FY19
(FY18: 4.3%) and RoCE was 4% (3%). In 1HFY20, the company recorded
a margin of 4.7%.
The consolidated credit metrics were modest in FY19 with gross
interest coverage (operating EBITDA/gross interest expense) of 1.8x
(FY18: 1.9x) and net financial leverage (adjusted net
debt/operating EBITDAR) of 4.7x (6.2x). On a standalone basis too,
MSPL’s credit metrics remained modest with gross interest
coverage of 1.9x in FY19 (FY18: 2.1x) and net financial leverage of
4.4x (4.7x). Despite the addition of term loan in FY19, the net
leverage improved due to the scheduled repayment of term loan.
Interest coverage declined due to a fall in operating EBITDA.
Liquidity Indicator - Stretched: The group's average maximum
utilization of fund-based limits was 97% and that of non-fund-based
limits was 95% for the 12 months ended November 2019. On a
standalone basis, MSPL's liquidity remained tight with fund-based
limits being utilized on an average of 98% for the same period. The
group's cash flow from operations (CFO) remained positive at
INR67.0 million in FY19 (FY18: INR104 million) on improved
operating EBITDA and moderate working capital. Free cash flow
remained positive at INR53.0 million in FY19 (FY18: INR51.0
million) due to positive CFO. The cash and cash equivalents at
FYE19 were INR12.0 million in FY19 (FY18: INR15.0 million). The CMC
group has scheduled debt repayment INR43.67 million in FY20 and INR
32.1 million in FY21. The debt service coverage ratio is likely to
remain in the range of 0.8x-1.2x over FY20-FY22.
The group's working capital cycle improved to 63 days in FY19
(FY18: 66 days) due to fewer debtor days of 56 (64). MSPL's net
cash conversion cycle remained almost unchanged year-on-year at 45
days in FY19.
The ratings are supported by the group's medium scale of operations
marked by revenue of INR2,401.0 million in FY19 (1HFY20: INR1,301.0
million, FY18: INR2,245.0 million) due to improved realizations and
increased orders from longstanding customers. The overall
utilization capacity of the group is almost at peak at 93%. On a
standalone basis, MSPL's moderate revenue declined to INR424.0
million in FY19 (1HFY20: INR223.2 million, FY18: INR459.0 million)
due to a decline in volumes and realization.
The ratings remain constrained by the fluctuations in the price of
materials that are related to crude prices. Any significant change
in the crude prices impacts the raw material prices and
realization.
The ratings continue to be supported by the CMC group's promoters'
experience of over three decades in the yarn and fabric
manufacturing industry.
RATING SENSITIVITIES
Positive: An improvement in the EBITDA margin and liquidity profile
leading to the net leverage being below 4.5x on a sustained basis
and an improvement in the standalone credit profile will be
positive for the ratings.
Negative: Any deterioration in the revenue and EBITDA margin and/or
working capital cycle leading to the net leverage being sustained
above 5.5x will be negative for the ratings.
COMPANY PROFILE
MSPL was incorporated in 2011 as a partnership firm. Kshitij Ajeet
Yadav and Sumit Brijpal Yadav. The firm has 4,101 metric tons per
annum texturized yarn and fabric manufacturing capacity in Dadra
and Nagar Haveli.
MARUTI KESRI: Insolvency Resolution Process Case Summary
--------------------------------------------------------
Debtor: Maruti Kesri Nandan Agrofoods Private Limited
495/7, Kadipur Industrial Area
Near Shiv Mandir
Pataudi Road
Gurgaon 122001
Insolvency Commencement Date: February 6, 2020
Court: National Company Law Tribunal, Chandigarh Bench
Estimated date of closure of
insolvency resolution process: August 4, 2020
(180 days from commencement)
Insolvency professional: Mr. Ajay Kumar Jain
Interim Resolution
Professional: Mr. Ajay Kumar Jain
E-15/209, Sector-8
Rohini, New Delhi 110085
E-mail: ajayjain721@gmail.com
marutikesri.cirp@gmail.com
Last date for
submission of claims: February 21, 2020
MN BIO-TECHNOLOGY: Ind-Ra Withdraws BB(SO) NCD Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn MN Bio-Technology
Private Limited's (MNBTPL) non-convertible debentures' (NCDs)
rating of 'IND BB (SO)'. The Outlook was Stable.
The detailed rating action is:
-- INR485.0 mil. NCDs ISIN INE781V07010 issued on October 4, 2016
11% coupon rate due in September 2021 is withdrawn.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the rating as the NCDs
have been paid in full.
COMPANY PROFILE
MNBTPL is a wholly-owned subsidiary of LC Core Opportunities Fund
Pte Limited (LCCOF) which owns two buildings with a total leasable
area of 0.147 million square feet in a biotech cluster located 45km
from Hyderabad. It commenced operations in October 2016.
LCCOF is a private limited company incorporated in Singapore on
March 24, 2016, as an exempt private company limited by shares. The
registered office of the fund is in Singapore.
Lighthouse Canton Pte. Ltd. (LCPL) is the fund manager of LCCOF.
Lighthouse Canton is a private limited company incorporated in
Singapore on July 29, 2014, and has been appointed by the fund to
manage, supervise, select and evaluate investments. It performs
fund management, capital raising, investor relations, and other
fund-related functions.
MN BIO-TECHNOLOGY: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: MN Bio-Technology Private Limited
Building-450, Genome Valley
Turkapally (V)
Shamirpet Mandal
Hyderabad Rangareddi
TG 500078
Insolvency Commencement Date: February 4, 2020
Court: National Company Law Tribunal, Hyderabad Bench
Estimated date of closure of
insolvency resolution process: August 2, 2020
Insolvency professional: Mr. Kranthi Kumar Kedari
Interim Resolution
Professional: Mr. Kranthi Kumar Kedari
Flat No. 202, D.No. 8-3-167/D/49
Balaji Kalyan Apartment
Kalyan Nagar Hyderabad 500038
E-mail: kranthikumar1980@gmail.com
- and -
Flat No. 101, Sri Krishna Rali Nilayam
G-134 Madhura Nagar
Hyderabad, Telangana 500038
Last date for
submission of claims: February 20, 2020
MN TAKSHILA INDUSTRIES: Insolvency Resolution Process Case Summary
------------------------------------------------------------------
Debtor: MN Takshila Industries Private Limited
Building-450, Genome Valley
Turkapally (V)
Shamirpet Mandal
Hyderabad Rangareddi
TG 500078
Insolvency Commencement Date: February 4, 2020
Court: National Company Law Tribunal, Hyderabad Bench
Estimated date of closure of
insolvency resolution process: August 2, 2020
Insolvency professional: Mr. Kranthi Kumar Kedari
Interim Resolution
Professional: Mr. Kranthi Kumar Kedari
Flat No. 202, D.No. 8-3-167/D/49
Balaji Kalyan Apartment
Next to Axis Bank
Kalyan Nagar Hyderabad 500038
E-mail: kranthikumar1980@gmail.com
- and -
Flat No. 101, Sri Krishna Rali Nilayam
G-134 Madhura Nagar
Hyderabad, Telangana 500038
Last date for
submission of claims: February 20, 2020
MN TAKSHILA: Ind-Ra Withdraws BB(SO) NCD Rating
-----------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn MN Takshila
Industries Private Limited's (MNTIPL) non-convertible debentures'
(NCDs) rating of 'IND BB (SO)'. The Outlook was Stable.
The detailed rating action is:
-- INR1,517.0 bil. NCDs ISIN INE784V07014 issued on October 4,
2016 11% coupon rate due on September 2021 is withdrawn.
KEY RATING DRIVER
Ind-Ra is no longer required to maintain the NCD rating as the NCDs
have been paid in full.
COMPANY PROFILE
MNTIPL is a wholly-owned subsidiary of LC Core Opportunities Fund
(LCCOF), which owns three SPVs holding multiple assets with a total
leasable area of 0.422 million sf in Genome Valley and Pragnapur, a
bio-tech cluster located 45km from Hyderabad. It started operations
in October 2016.
LCCOF is a private limited company incorporated in Singapore on
March 24, 2016, as an exempt private company limited by shares. The
registered office of the fund is in Singapore.
Lighthouse Canton Pte. Ltd. (LCPL) is the fund manager of LCCOF.
LCPL is a private limited company incorporated in Singapore on July
29, 2014, and has been appointed by the fund to manage, supervise,
select and evaluate investments. It performs fund management,
capital raising, investor relations, and other fund-related
functions.
MOHAN COLD: CARE Reaffirms B+ Rating on INR9cr LT Loan
------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Mohan
Cold Storage Private Limited (MCSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.00 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of MCSPL continues to be
constrained by its small size of operations with moderate
profitability margins, regulated nature of business, seasonality of
business and susceptibility to vagaries of nature, risk of
delinquency in loans extended to farmers, competition from local
players, working capital intensive nature of business resulting in
leveraged capital structure. However, the aforesaid constraints are
partially offset by its experienced management and long track
record of operations, proximity to potato growing area.
Key Rating Sensitivities
Positives
* Increase in turnover beyond INR10 crore and cash accruals beyond
INR1.50 crore on a sustained basis.
Negatives
* Any sizeable decline in scale of operation (turnover below
INR1.50 crore and cash accruals below INR0.10 crore) on a sustained
basis.
* Deterioration in capital structure with overall gearing being
higher than 1.50x on a sustained basis.
Key Rating Weaknesses
Small Scale of operation with moderate profitability margins Mohan
Cold Storage Pvt. Ltd. is a small player in the cold storage
industry with a PAT of INR0.06 crore on total operating income of
INR2.16 crore in FY19. The moderate size restricts the financial
flexibility of the company in times of stress and deprives it from
economies of scale. The profitability margins remained low marked
by PBILDT and PAT margins of 14.80% and 2.95%, respectively, in
FY19. Further the company has achieved revenue of INR1.48 crore
during 9MFY20.
Seasonality of business with susceptibility to vagaries of nature
MCSPL's operation is seasonal in nature as potato is a winter
season crop with its harvesting period commencing in March. The
loading of potatoes in cold storages begins by the end of February
and lasts till March. Additionally, with potatoes having a
perceivable life of around eight months in the cold storage,
farmers liquidate their stock from the cold storage by end of
season i.e., generally in the month of November. The unit remains
non-operational during the period from December to January.
Furthermore, lower agricultural output may have an adverse impact
on the rental collections as the cold storage units collect rent on
the basis of quantity stored and the production of potato is highly
dependent on vagaries of nature.
Risk of delinquency in loans extended to farmers
Against the pledge of cold storage receipts, MCSPL provides
interest bearing advances to the farmers & traders. Before the
closure of the season in November, the farmers & traders are
required to clear their outstanding dues with the interest. In view
of this, there exists a risk of delinquency in loans extended, in
case of downward correction in potato or other stored goods prices,
as all such goods are agro commodities.
Competition from other local players
In spite of being capital intensive, the entry barrier for new cold
storage is low, backed by capital subsidy schemes of the
government. As a result, the potato storage business in the region
has become competitive, forcing cold storage owners to lure farmers
by providing them interest bearing advances against stored potatoes
which augments the business risk profile of the companies involved
in the trade.
Working capital intensive nature of business resulting in leveraged
capital structure
MCSPL extend loans to farmers and traders against receipts of stock
of potatoes and thus the operations of the company remained working
capital intensive in nature. Accordingly the utilization of the
fund based limit remained moderately high at 90% during last 12
months ended November, 2019.
Key Rating Strengths
Experienced management and long track record of operations
The company is into cold storage business since 1965 and thus has
long track record of operations of around 54 years. Furthermore the
key promoters, Mr. Sushant Anil (aged about 33 years), and Mrs.
Kajal Anil (aged about 35 years) has more than one decade of
experience in cold storage industry, looks after the overall
management of the company. They are supported by other director
Mrs. Soni Kumari (aged about 31 years) who also has around four
years of experience in this line of business. The promoters are
supported by a team of experienced professionals.
Proximity to potato growing area
MCSPL's storage facility is located at Samastipur, Bihar, which is
one of the major potato growing regions of the state. The favorable
location of the storage unit, in close proximity to the leading
potato growing areas provides it with a wide catchment and making
it suitable for the farmers in terms of transportation and
connectivity.
Comfortable leverage ratios with satisfactory interest coverage
indicators
The capital structure of the company remained comfortable as marked
by nil long term debt-equity ratio and comfortable overall gearing
ratio of 0.90x, respectively, as on March 31, 2019. Moreover, the
interest coverage ratio remained satisfactory at 2.51x during
FY19.
Mohan Cold Storage Private Limited (MCSPL) was established as a
private limited company in 1965. MCSPL is owned by the Samastipur
(Bihar) based family having extensive experience of around five
decades in cold storage industry. Since its inception, the company
provides cold storage services for potatoes. The cold storage unit
of the company is located at N.H. – 28, Tajpur, Dist-Samastipur,
Bihar with aggregated storage capacity of 15000 Metric Tonne Per
Annum (MTPA) Mr. Sushant Anil (aged about 33 years), and Mrs. Kajal
Anil (aged about 35 years) has experience of around a decade in
cold storage industry, looks after the overall management of the
company. They are supported by other director Mrs. Soni Kumari
(aged about 31 years) who also has around five years of experience
in this line of business. The promoters are supported by a team of
experienced professionals.
Liquidity
The liquidity position of the company remained moderate marked by
current ratio remaining at 1.16x as on March 31, 2019. The balance
sheet shows cash and bank balance amounting to INR 0.37 crore as on
March 31, 2019. The Gross cash accruals also remained moderate at
INR0.17 crore as on March 31, 2019.
MURLI ELECTRODE: CARE Keeps 'B' Rating in Not Cooperating
---------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Murli
Electrode Private Limited (MEPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 4.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Based on best
Available information
Short-term Bank 1.00 CARE A4; ISSUER NOT
facilities COOPERATING; Based on best
Available information
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated August 1, 2018, placed the
rating of MEPL under the 'issuer non-cooperating' category as MEPL
had failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. MEPL continues to be
non-cooperative despite repeated requests for submission of
information through email dated January 21, 2020 and numerous phone
calls. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on August 1, 2018 the following were the
rating strengths and weaknesses
Key Rating Weaknesses
Susceptibility of operating profitability margins to fluctuation in
raw material prices: The major raw materials used by MEPL are
steel-wire and silicate which forms around 85% of the cost of sale.
The prices of steel-wire and silicate are highly volatile in nature
hence it is exposed to price fluctuation risk. MEPL usually
maintains inventory for around 90-100 days for smooth flow of
operations.
Cyclicality in the industry and susceptibility to slowdown in the
end user industry: The fortunes of MEPL is closely linked to the
fortunes of the primary steel industry and heavily dependent on the
automotive, engineering and infrastructure industries as the main
customers.
Key Rating Strengths
Extensive experience of promoters in the industry: MEPL is owned by
Maloo family based out of Nagpur. Key promoter of MEPL, Mr. Murli
Maloo, Director, has almost two decades of experience in the
welding electrodes industry and looks after the finance division of
the company. He is assisted by Mr. Mahesh Maloo, Director, who also
looks after the finance division, Mr. Dinesh Maloo, Director, who
looks after the sales division and Mr. Harish Maloo, Director, who
looks after the overall administration of the company. The
company's senior management team comprises of well-qualified and
experienced professionals.
Established dealership and distribution network: MEPL has a wide
distribution network across India with more than 32-40 authorized
distributors which are spread across India. Moreover, the company
has spread its operations covering 10-12 states of India. Over the
years, it has developed market for its products and established
good relationship with various customers.
Nagpur based, Murli Electrode Private Limited (MEPL) was
incorporated on June 23, 1998, by Mr. Murli Maloo, Mr. Mahesh
Maloo, Mr. Dinesh Maloo and Mr. Harish Maloo. MEPL is engaged in
the manufacturing of various types of welding electrodes, welding
consumables and wires.
NANDINI ENTERPRISES: CARE Maintains B+ Rating in Not Cooperating
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Nandini
Enterprises (NE) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 3.50 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Based on best
Available information
Short-term Bank 10.00 CARE A4; ISSUER NOT
facilities COOPERATING; Based on best
Available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from NE to monitor the rating(s)
vide e-mail communications/letters dated September 12, 2019,
October 4, 2019, October 15, 2019 November 1, 2019, November 8,
2019, November 25, 2019, December 19, 2019 and December 27, 2019
and numerous phone calls. However, despite our repeated requests,
the company has not provided the requisite information for
monitoring the ratings. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. Further, NE has not paid the surveillance
fees for the rating exercise as agreed to in its Rating Agreement.
The rating on NE's bank facilities will now be denoted as CARE B+;
Stable and CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings assigned to the bank facilities of Nandini Enterprises
(NE) are primarily constrained on account of its small scale of
operations, moderate capital structure and moderate liquidity
position. The ratings are, further, constrained on account of its
presence in the highly competitive government civil construction
segment and constitution as a proprietorship concern. The ratings,
however, favorably take into account experienced promoters with
long track record of operations and its moderate order book
position. The ratings, further, derive strength from its long
standing association with reputed client and moderate profitability
margins.
Detailed description of the key rating drivers
At the time of last rating on December 11, 2018, the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Small scale of operations
During FY18, the scale of operations of the firm stood small marked
by Total Operating Income (TOI) of INR5.98 crore, declined by
16.48% over FY17 mainly due to issue with the running bills and GST
implication. The firm registered Total Operating Income of INR6.00
crore till October 31, 2018.
Moderate capital structure
The capital structure of the firm stood moderate marked by overall
gearing of 1.76 times as on March 31, 2018, improved from 2.67
times as on March 31, 2017 mainly on account of lower utilisation
of working capital borrowing. Further, the debt service coverage
indicators also stood moderate with total debt to GCA of 7.83 times
as on March 31, 2018, improved from 8.38 times as on March 31, 2017
mainly due to decline in total debt. Furthermore, interest coverage
stood moderate at 2.55 times in FY18 improved from 2.30 times in
FY17 on account of decline in interest and finance cost.
Moderate liquidity position
Liquidity position of the firm stood moderate marked by 60%
utilization of working capital bank borrowing during last 12 month
ended October 31, 2018. Owing to high creditors, the working
capital cycle remained negative at 83 days. Further, current ratio
and quick ratio also stood below unity at 0.90 and 0.89 times
respectively as on March 31, 2018.
High competitive intensity in the government civil construction
segment
The construction industry is highly fragmented in nature with
presence of large number of unorganized players and a few large
organized players coupled with the tender driven nature of
construction contracts poses huge competition and puts pressure on
the profitability margins of the players. Further, as the firm
participates in tenders invited by government departments, high
competition and lower bargaining power restricts its profitability
margins.
Key Rating Strengths
Experienced Promoter with long track record of operations
Mr. Raj Kumar Bhargava, Proprietor, has around two decade of
experience in the industry and looks after overall affairs of the
firm. Since present in the industry from around 2 decades, the firm
has established relations with government departments such as the
Public Works Department and Public Health Engineering Department
(PHED) and same is reflecting from the repeated orders from them as
well as moderate order book position.
Moderate order book position with long standing association with
reputed client
As on October 31, 2018, NE had moderate order book position of
INR9.62crorewith total twelve projects in hand. The projects mainly
related to public water supply, other irrigation projects (pipeline
work, tube well construction, water storage tanks, and drainage)
and civil construction work (building construction). NE is
registered 'AA' class approved government contractor working for
Public Health Engineering Department (PHED) so mainly gets order
from Public Health Engineering Department (PHED).The on-going
projects of the firm are likely to be executed within a period of
15 month to 18 month, providing medium term revenue visibility.
Moderate profitability margins
The profitability margins of the firm stood moderate marked by
PBILDT and PAT margin of 9.93% and 5.03% respectively in FY18.
During FY18, PBILDT margin of the firm declined by 49 bps over FY17
mainly on account of increase in power & fuel expenses and employee
expenses. However, despite decline in PBILDT margin, PAT margin of
firm improved marginally by 3 bps in FY18 over FY17 owing to lower
interest expenses. Further, GCA level of the firm also stood
moderate at INR0.36crore in FY18, although declined from
INR0.42crore in FY17 owing to decline in scale of operations.
Jaipur(Rajasthan) based Nandini Enterprises (NE) was formed in
1999as a proprietorship firm by Mr.Raj Kumar Bhargava. NE is
registered 'AA' class approved government contractorfor Public
Health Engineering Department (PHED) to undertake projects related
to public water supply, other irrigation projects (pipeline work,
tube well construction,water storage tanks, and drainage) and civil
construction work (building construction).
NEELACHAL ISPAT: CARE Reaffirms D Rating on INR644.64cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Neelachal Ispat Nigam Limited (NINL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
(i) Long-term Bank 644.64 CARE D Reaffirmed
Facilities
(ii) Short-term 252.05 CARE D Reaffirmed
Bank Facilities
(iii) Long-term 646.52 CARE BBB+ (CE) Revised
Bank Facilities from CARE A- (CE)
(Term Loans)#
(iv) Short-term 5.00 CARE A3+ (CE) Revised
Bank Facilities from CARE A2+ (CE)
(LC/BG)#
(v) Long-term Bank 39.00 CARE C (CE) Reaffirmed
Facilities
(Term Loan)^
(vi) Non-Convertible 100.00 CARE BBB+ (CE) Revised
DebenturesI# from CARE A- (CE)
(vii) Non-Convertible 200.00 CARE BBB+ (CE) Revised
DebenturesII# from CARE A- (CE)
# the said facilities (long term loans, short term bank
facility(non-fund based) and non-convertible debentures are backed
by unconditional and irrevocable corporate guarantee of MMTC Ltd
(rated CARE BBB+/CARE A3+ (under credit watch with developing
implications) revised on January 17, 2020 from CARE A-/CARE A2+
(under credit watch with developing implications).
^ the said facility is backed by partial guarantee from MMTC to the
extent of INR10.46 crore plus interest.
Detailed Rationale & Key Rating Drivers - CE Rating
The ratings assigned to the bank facilities (S.no. (iii) & (iv))
and to the non-convertible debentures (S.no. (vi) & (vii)) of
Neelachal Ispat Nigam Limited take into account the credit
enhancement in the form of unconditional and irrevocable corporate
guarantee extended by MMTC Limited (rated CARE BBB+/ CARE A3+
(under credit watch with developing implications)) while the rating
assigned to bank facility with S.no. (vi) takes in to account the
credit enhancement in the form of unconditional and irrevocable
partial corporate guarantee extended by MMTC Limited.
The revision in the ratings factors in deterioration in credit
profile of MMTC Limited due to delay in the envisaged fund infusion
in its associate company, Neelachal Ispat Nigam Limited (NINL) by
its other shareholders, namely National Mineral Development
Corporation (NMDC) and Odisha Mining Corporation (OMC) which was
expected by December 2019. Out of the total envisaged infusion of
funds of ~INR 350 crore by the other two shareholders, only INR 60
crore is received in NINL from NMDC as on December 31, 2019. NINL's
liquidity position, therefore continues to remain stretched and
MMTC being the 'Managing Promoter' of NINL, as per the shareholders
agreement, is responsible to provide continued financial and
operational support to NINL which adversely impacts the financial
profile of MMTC. The revision in the rating also factors in the
financial support that MMTC has already provided to NINL & in view
of the continued support that MMTC is expected to give in the
medium term, the financial profile of MMTC (after considering the
group exposure) remains susceptible to the weakness in the
liquidity profile of NINL.
Further the revision in the rating also takes into account the
devolvement of Letter of Credits (LC) of MMTC for less than 30 days
in the month of December 2019. The devolvement of these LCs was on
account of advance funds not received from Department of
Fertilizers (Government of India).
The ratings continue to remain on credit watch with developing
implications on account of the ongoing process of divestment of
equity shareholding in NINL. MMTC holds 49.78% in NINL as on
September 30, 2019. Further, CARE notes that the Cabinet Committee
on Economic Affairs (CCEA) has given an 'in-principle' approval for
strategic disinvestment of 100% equity of NINL in January 2020.
CARE will continue to monitor the developments in this regard and
will take a view on the ratings once the exact implications of the
above on the credit risk profile of the company are clear.
Detailed Rationale & Key Rating Drivers-Standalone Ratings
The ratings assigned to the bank facilities with S.no. (i) & (ii)
of Neelachal Ispat Nigam Limited continues to factor in delays in
debt servicing by the company due to its subdued operational
performance and stressed liquidity and weak financial risk
profile.
Detailed Description of the Key Rating Drivers - MMTC Limited
Out of the total envisaged infusion of funds of ~INR 350 crore by
the other two shareholders, only INR 60 crore is received in NINL
from NMDC as on December 31, 2019. The release of funds from OMC is
expected post their Board Meeting scheduled in January 2020.
Further, as per the No default Statement (NDS) submitted by the
company for the month ended December 31, 2019, there have been
instances of devolvement of LCs for less than 30 days. As informed
by the company management, MMTC imports Urea for the Department of
Fertilizers and the LC's of MMTC are on back to back basis with
Department of Fertilizers, Government of India and 98% of the LC
value is paid by them as advance. However, due to the year-end
considerations, the budget of Department of Fertilizers was
completely exhausted and the money was not paid in advance for the
LCs by the Government and thus resulting in devolvement of LC's on
the due date which was settled by MMTC out of its own funds on
December 30, 2019.
MMTC, a public sector undertaking, was incorporated on September
26, 1963, to facilitate foreign trade in India and canalize the
export and import of essential minerals and metals. It is under the
administrative control of the Ministry of Commerce & Industry, and
Government of India (GOI) held 89.93% stake in the company as on
June 30, 2019. MMTC deals in multiple products and markets. The
business operations of the company span across six major divisions
i.e. minerals, metals, precious metals, agro products, fertilisers
& chemicals and coal & hydrocarbons. MMTC has also set up a 15-MW
wind energy mill in Karnataka. MMTC is one of the few agencies,
apart from banks, permitted by the GOI for import of bullion in the
country. Neelachal Ispat Nigam Limited (NINL); associate company of
MMTC was incorporated in 1982 to set-up an Integrated Steel Plant
(ISP) to undertake the manufacture and sale of pig iron.
Originally, the main promoters were Industrial Promotion &
Investment Corporation of Orissa (IPICOL) and Orissa Sponge Iron
Ltd (OSIL). Subsequently MMTC Limited, a majority owned undertaking
of Govt. of India, was inducted as the main promoters since FY16
with equity share holding of 49.78%. Further, the Cabinet Committee
on Economic Affairs (CCEA) gave 'in-principle' approval for
strategic disinvestment of 100% equity of NINL on January 08, 2020
by selling the government's stake to a strategic buyer which would
be identified through a two stage auction procedure.
The ratings have further been placed on credit watch with
developing implications on account of the announcement by the
company to divest its equity holding in NINL. CARE will continue to
monitor the developments in this regard and will take a view on the
ratings once the exact implications of the above on the credit risk
profile of the company are clear.
Detailed description of Key Rating Drivers - NINL
Delay in debt servicing: The Company has not been able to service
its debt obligations due to its stretched liquidity position. As on
March 31, 2019, the company had not paid interests worth INR11.88
crore to its lenders who are State Bank of India, India Bank, Union
Bank of India, Allahabad Bank, Odisha Mining Corporation and Dena
Bank.
Subdued operational performance and weak financial risk profile
During FY19, the financial risk profile of the company continued to
remain weak with declining PAT although total operating income
registered growth. The total operating income of the company
increased to INR2025.32 Crore in FY19 from INR955 Crore in FY18.
The PAT margin reported was -19.86% in FY19 which has remained
negative for the last few years owing reduced margins and high
interest costs. The capital structure of the company remained weak
with erosion of net worth due to losses. Net worth was reported at
negative INR956.49 crore as on March 31, 2019 further deteriorating
from negative INR552.91 the previous year.
Liquidity: Poor
The liquidity profile of the company is marked by negative gross
cash accrual of INR449.21 crore as on March 31, 2019 (PY:
-Rs.389.35 crore) and instances of delay in debt servicing. The
current ratio remained low at 0.16x as on March 31, 2019 (PY:
0.14x). The average utilization of fund based limit has remained
high.
Analytical approach for NINL: Guarantor's assessment for
facilities/instruments carrying corporate guarantees of MMTC.
Neelachal Ispat Nigam Limited (NINL) was incorporated in 1982 to
set-up an Integrated Steel Plant (ISP) to undertake the manufacture
and sale of pig iron. Originally, the main promoters were
Industrial Promotion & Investment Corporation of Orissa (IPICOL)
and Orissa Sponge Iron Ltd (OSIL). Subsequently MMTC Limited, a
majority owned undertaking of Govt. of India, was inducted as the
main promoters since FY16 with equity share holding of 49.78%.
NINL's manufacturing unit is located at Kalinga Nagar Industrial
complex, Dubri, Orissa having 1.1 Million Tonnes Per Annum (MTPA)
capacity blast furnace as on March 31, 2019.
R.P. INFO SYSTEMS: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: R.P. Info Systems Limited
20/1 C Lal Bazar Street
Bazar Street, 2nd Floor
Kolkata, West Bengal 700001
India
Insolvency Commencement Date: February 4, 2020
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: August 2, 2020
Insolvency professional: Ms. Ramanathan Bhuvaneshwari
Interim Resolution
Professional: Ms. Ramanathan Bhuvaneshwari
C-006, Pioneer Paradise
24th Main Road, 7th Phase
JP Nagar, Bengaluru 560078
E-mail: bhoona.bhuvan@gmail.com
- and -
No. 161, 1st Floor, 4th Main Road
7th Cross Road, Chamarajpet
Bengaluru 560018
E-mail: cirp.rpinfo@gmail.com
bhoona.bhuvan@gmail.com
Last date for
submission of claims: February 18, 2020
RELIANCE COMM: Anil Ambani Asked to Deposit $100MM to Pay Debt
--------------------------------------------------------------
Bijou George at Bloomberg News reports that Indian tycoon owners of
bankrupt companies are being told their assets aren't off limits.
Bloomberg relates that weeks after India's criminal enforcement
bureau announced a second auction of the prized personal
possessions of fugitive jeweler Nirav Modi including his favorite
watch and his Rolls Royce Ghost, the U.K High Court recently asked
Anil Ambani to deposit $100 million of his personal wealth to
partially pay back debt due to a trio of Chinese banks.
According to Bloomberg, the rush to collect on the assets includes
a swoop on Vijay Mallya's French island mansion and yacht by Qatar
National Bank. The moves come as India is battling $130 billion of
bad debt that has sparked bankruptcies at some companies. Some
tycoons have held assets through arcane webs of holding companies,
which has complicated creditors' efforts to recover funds, the
report states.
Bloomberg says the three Chinese banks who provided a $925 million
loan to now-bankrupt Reliance Communications are a case in point.
The Chinese banks argue that they granted the loan in 2012 on the
condition that Anil Ambani personally guarantee the debt.
Bloomberg relates that Ambani contends the collapse of his main
businesses, as well as the struggles of his other companies, have
left him with no "meaningful assets" and that the brother of Asia's
wealthiest man Mukesh Ambani is "unable to raise any finance from
external sources."
Judge David Waksman, however, ruled that Ambani must pay up $100
million into the court's account within six weeks of the judgment
last week, adds Bloomberg.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile communication
(GSM) technology-based networks across India; voice, long distance
services and broadband access to enterprise customers; managed
Internet data center services, and direct-to-home (DTH) business.
Global operations comprise Carrier, Enterprise and Consumer
Business units. It provides carrier's carrier voice, carrier's
carrier bandwidth, enterprise data and consumer voice services. The
Company owns and operates Internet protocol (IP) enabled
connectivity infrastructure, comprising over 280,000 kilometers of
fiber optic cable systems in India, the United States, Europe,
Middle East and the Asia Pacific region.
As reported in the Troubled Company Reporter-Asia Pacific on May
10, 2019, The Economic Times said the National Company Law Tribunal
on May 9 allowed Reliance Communications (RCom) to exclude the 357
days spent in litigation and admitted it for insolvency. With
this, RCom, which owes over INR50,000 crore to banks, has become
the first Anil Ambani group company to be officially declared
bankrupt after the NCLT on May 9 superseded its board and appointed
a new resolution professional to run it and also allowed the
SBI-led consortium of 31 banks to form a committee of creditors.
SETHU EDUCATIONAL: Ind-Ra Withdraws BB Rating on INR270.06MM Loan
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Sethu Educational
Trust's bank loan rating as follows:
-- The 'IND BB (ISSUER NOT COOPERATING)' rating on the INR270.06
mil. Term loans due on December 31, 2022, are withdrawn.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the rating, as the agency
has received no-dues certificates from the lenders for the above
facility.
COMPANY PROFILE
Sethu Educational Trust was started with three disciplines in 1995.
It now offers courses in 11 disciplines of B.E/ B.Tech and five
disciplines of M.E programmes with an annual intake of 1,590
students. All courses are affiliated to Anna University, Chennai.
The trust is based in Kariapatti in the Virudhunagar district,
Tamil Nadu.
SHITALPUR MOHINDER: CARE Reaffirms B Rating on INR6.48cr Loan
-------------------------------------------------------------
CARE has reaffirmed the rating assigned to the bank facilities of
Shitalpur Mohinder Kalimata Himghar Private Limited (SMKHPL):
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.48 CARE B; Stable Reaffirmed
Facilities-
Cash Credit
Long-term Bank 0.18 CARE B; Stable Reaffirmed
Facilities-
Bank Guarantee
Long-term Bank - Rating revised to CARE D
Facilities- and Withdrawn
Term Loan
Detailed Rationale & Key Rating Drivers
The revision in the term loan rating takes into account past
instances of delays. Subsequently, CARE has withdrawn the rating
assigned to the bank facilities of SMKHPL with immediate effect.
The above action has been taken on account of 'No Due Certificate'
received from the bank that has extended the term loan facility
rated by CARE.
Further, the rating for cash credit and bank guarantee facilities
of SMKHPL continues to remain constrained by its small size of
operations along with satisfactory profit margins, regulated nature
of business, competition from local players, seasonality of
business with susceptibility to vagaries of nature, working capital
intensive nature of business, leveraged capital structure with
moderate debt coverage indicators and risk of delinquency in loans
extended to farmers. The rating, however, derives strength from its
experienced management and proximity to potato growing area.
Rating Sensitivities
Positive Factors
* Sizeable increase in scale of operations from present level
(Total Operating Income above INR10 crore) of the entity on a
sustained basis.
* Improvement in capital structure with overall gearing ratio
reaching comfortable below 1.00x on a sustained basis.
Negative Factors
* Any sizeable de-growth in scale of operations from present level
(total operating income below INR2.00 crore with cash accruals
below INR0.05 crore) on a sustained basis.
* Deterioration in capital structure with overall gearing ratio
reaching higher than the level of 3.00x on a sustained basis.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation along with satisfactory profit margins
Shitalpur Mohinder Kalimata Himghar Private Limited continues to be
a small player in the cold storage industry with a PAT of INR0.12
crore on total operating income of INR2.84 crore in FY19. The
moderate size restricts the financial flexibility of the company in
times of stress and deprives it from economies of scale. The
profitability margins remained satisfactory marked by PBILDT and
PAT margins of 40.16% and 4.29%, respectively, in FY19. Further the
company has achieved revenue of INR4.00 crore during 9MFY20.
Regulated nature of business
In West Bengal, the basic rental rate for cold storage operations
is regulated by the state government through West Bengal State
Marketing Board. The rent of these cold storages is decided by
taking into account political considerations, not economic
viability. Due to severe government intervention, the cold storage
facility providers cannot enhance rental charge commensurate with
increased power tariff and labour charge.
Seasonality of business with susceptibility to vagaries of nature
SMKHPL' s operation is seasonal in nature as potato is a winter
season crop with its harvesting period commencing in March. The
loading of potatoes in cold storages begins by the end of February
and lasts till March. Additionally, with potatoes having a
preservable life of around eight months in the cold storage,
farmers liquidate their stock from the cold storage by end of
season i.e., generally in the month of November. The unit remains
non-operational during the period between December to February.
Furthermore, lower agricultural output may have an adverse impact
on the rental collections as the cold storage units collect rent on
the basis of quantity stored and the production of potato is highly
dependent on vagaries of nature.
Risk of delinquency in loans extended to farmers
Against the pledge of cold storage receipts, SMKHPL provides
interest bearing advances to the farmers & traders. Before the
closure of the season in November, the farmers & traders are
required to clear their outstanding dues with the interest. In view
of this, there exists a risk of delinquency in loans extended, in
case of downward correction in potato or other stored goods prices,
as all such goods are agro commodities.
Competition from other local players
In spite of being capital intensive, the entry barrier for new cold
storage is low, backed by capital subsidy schemes of the
government. As a result, the potato storage business in the region
has become competitive, forcing cold storage owners to lure farmers
by providing them interest bearing advances against stored potatoes
which augments the business risk profile of the companies involved
in the trade.
Leveraged capital structure with moderate debt coverage indicators
Overall gearing ratio of the entity, although improved marginally,
remained leveraged at 2.03x respectively as on March 31, 2019
vis-a-vis 3.32x as on March 31, 2018. Improvement in capital
structure due to scheduled repayment of term loan and lower cash
credit utilized as on the balance sheet date. The debt coverage
indicators represented by total debt to GCA has also improved
marginally in FY19 over FY18 and remained moderately high at 10.96x
as on March 31, 2019. The same has improved mainly on account of
lower debt levels as on balance sheet date closing date. Moreover,
the Interest coverage ratio marginally deteriorated to 1.87x in
FY19 from 2.52x in FY18 on account of higher increase in interest
expenses vis-à-vis increase in PBILDT level.
Key Rating Strengths
Experienced promoters
The company has been promoted by Mr. Tarun Kanti Ghosh having about
three decades of experience in similar line of business. He is
being duly supported by the other director Mr. Arun Ghosh , Mr.
Bimalendu Ghosh, Mr. Biswanath Das and Mr. Krisna Chandra Nayek and
a team of experienced personnel.
Proximity to potato growing area
SMKHPL' s storing facility is situated in the Hooghly district of
West Bengal which is one of the major potato growing regions of the
state. The favorable location of the storage unit, in close
proximity to the leading potato growing areas provides it with a
wide catchment and making it suitable for the farmers in terms of
transportation and connectivity.
Liquidity: Adequate - Liquidity is marked by sufficient cushion in
accruals vis-a-vis repayment obligations and modest cash balance of
INR0.22 crore as on March 31, 2019. The average utilization of
working capital limit remained 37% utilized during last 12 month
ended on December 31, 2019. The current ratio remained unity at
1.00x as on March 31, 2019.
Shitalpur Mohinder Kalimata Himghar Pvt. Ltd. (SMKHPL) was
incorporated on May 6, 2011 by Mr. Tarun Kanti Ghosh, along with
other directors of Hooghly West Bengal to provide cold storage
services with the facility being located at Dhaniakhali, Hooghly,
West Bengal. The company commenced commercial operation since
April, 2012. SMKHPL is currently engaged in the business of
providing cold storage facility at the same location primarily for
potatoes and is operating with a storage capacity of 1,98,450
quintals. Besides providing cold storage facility the unit also
works as a mediator between the farmers and marketers of potato,
to facilitate sale of potatoes stored and it also provides interest
bearing advances to farmers for farming purposes of potato against
potato stored. Mr. Tarun Kanti Ghosh (MD) looks after the day to
day operations of the unit.
SHRIRAM EPC: Ind-Ra Affirms 'D' Long Term Issuer Rating
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shriram EPC Ltd's
(SEPC) Long-Term Issuer Rating at 'IND D (ISSUER NOT COOPERATING)'.
The issuer did not participate in the surveillance exercise,
despite continuous requests and follow-ups by the agency. Thus, the
rating is based on the best available information. Therefore,
investors and other users are advised to take appropriate caution
while using the rating.
The instrument-wise rating actions are:
-- INR4.240 bil. Fund-based working capital limits (long-/short-
term) affirmed with IND D (ISSUER NOT COOPERATING) rating;
-- INR6.706 bil. Non-fund-based limits (long-/short-term)
affirmed with IND D (ISSUER NOT COOPERATING) rating; and
-- INR18,231.7 bil. Term loan (long-term) affirmed with IND D
(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
the best available information.
KEY RATING DRIVERS
The affirmation reflects SEPC's continued delays in debt
servicing.
RATING SENSITIVITIES
Timely debt servicing for at least three consecutive months could
result in a rating upgrade.
COMPANY PROFILE
Set up in 2000, SEPC is an engineering, procurement and
construction company that operates in the renewable energy, process
and metallurgy, and municipal service segments.
SONU REALTORS: CARE Reaffirms B+ Rating on INR15cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Sonu
Realtors Private Limited (SRPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 15.00 CARE B+; Stable Reaffirmed
Facilities
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SRPL continues to be
constrained by pending regulatory approval for Slum Rehabilitation
Authority (SRA) projects namely Vijay Nagar and Kokan Nagar project
funding and execution risk, marketing risk pertaining to Kukreja
Residency & Haji Malang projects and adequate liquidity position.
The rating further continues to be constrained by the cyclical
nature of real estate industry and risk associated with SRA
projects. The rating, however, continues to derive strength from
the resourceful and considerable track record of Kukreja group in
the real estate industry, favourable location of the projects and
established track record of the group in successful execution of
the projects in the past.
Rating Sensitivities
Positive factors
* Timely recipient of customer advances for Haji Malang project
(for C&D wing)
* Achieving financial closure for the ongoing projects to support
execution and completion of on-going projects within envisaged time
and cost parameters.
Negative Factors
* Non receipt of the regulatory approvals for Vijay Nagar and Kokan
Nagar projects
* Slower booking of units along with lower than envisaged sales
realization and delayed receipts of customer advances
Detailed description of the key rating drivers Key Rating Weakness
Pending regulatory approvals: Haji Malang-The construction for B
Wing (Rehab Building) has completed and handed over to the slum
dwellers however and the occupation certificate (OC) is expected to
be received by end of Feb 2020. Further for C & D Wing (Saleable
Building), the construction is completed upto 10th slab and
commencement certificate (CC) is received till 9th floors only and
for balance floors CC is applied for and is expected to be received
by February 2020. Thus the timely receipt of CC to complete the
construction for balance floors will be critical from credit
perspective.
Vijay Nagar & Kokan Nagar-The commencement certificate (CC) for
saleable building for Kokan Nagar (A wing) and Vijay Nagar (A Wing)
projects are expected to be received by the end of April 2020 and
November, 2020 respectively. Thus SRPL's ability to timely receive
the commencement certificate (CC) for both the projects in the
timely manner would be critical from credit perspective.
Project execution and funding risk: SRPL is executing three
projects namely Vijay Nagar, Haji Malang and Kokan Nagar under SRA
(Slum Rehabilitation Authority) scheme. The estimated total cost of
the above three projects is INR486.64 crore which will be funded in
the ratio of 0.28:0.67:0.05 (debt: equity: customer advances). Till
Dec. 31, 2019, SRPL has incurred a total cost of INR57.40 crore
which was funded through promoter's funds and proceeds from sale of
one flat under Haji Malang Project.Thus going forward, the timely
receipt of the CC and arrangement of sufficient funds to complete
the construction of the project without any time and cost overrun
will be critical from credit perspective.
Marketing risk pertaining to Kukreja Residency & Haji Malang
projects: In Kukreja residency SRPL has booked 147 flats (out of
the total 162 flats to be booked) till Dec 31st 2019 and have 2
flats leased out to Sankirtan Seva Trust on a three year lease with
monthly rental income of INR125000. In Haji Malang out of 94 flats
to be developed, SRPL are liable to sell only 89 flats with total
saleable area of 4116 sq. ft. and balance flats will be given to
existing owners, since it is redevelopment project Moreover as on
December 31, 2019 SRPL has booked 1 flat and received customer
advances amounting to INR0.15 crore and INR0.85 crore is yet to be
received. Going forward SRPL's ability to book the balance flats
and complete the construction to receive the customer advances of
flat already booked will be crucial.
Liquidity: Adequate
SRPL's liquidity stood adequate as company has sufficient accruals
of INR 25.43 crore and free cash & bank balance of INR12.95 crore
as on March 31, 2019 against nil repayment obligations. SRPL is
heavily dependent on promotors fund to execute the ongoing projects
in envisaged timeline. However, generation of sufficient cash flows
to support pending construction cost is crucial from credit
perspective.
Risk associated with SRA projects: Timely receipt of the regulatory
approval from the concerned regulatory authority and payment of the
land premium (if the land belongs to collector or Municipal
Authority) along with timely competition of the projects are the
key risks pertaining to SRA project.
Key Rating Strengths
Resourceful and considerable track record of Kukreja group in the
real estate industry
Directors of SRPL are reasonably experienced with Mr Sunil Kukreja
and Mr Mohan Kukreja having more than two decades of experience in
the construction of residential and commercial projects and real
estate sector; moreover, the group has around six decades of
experience. Further the promoters are resourceful and infusing
funds regularly to support the business operations. During FY19 the
promoters infused funds in form of unsecured loan to the tune of
INR5.28 crore.
Location advantage
The projects are located in the prime locality of Mahalaxmi &
Chembur in Mumbai. Further the projects have good connectivity with
the railway station, road and mono rail. Furthermore, the project
is located in close proximity to banks, schools, restaurants and
hospitals.
Incorporated in 1984, Sonu Realtors Private Limited (SRPL) is
set-up by Kukreja group which is into developing of real estate
properties. Kukreja group was founded in 1947 to develop properties
in the area of Mumbai. Currently, SRPL is executing three projects
namely Vijay Nagar, Haji Malang and Kokan Nagar under SRA (Slum
Rehabilitation Authority) scheme.
SRI VENKATACHALAPATHY: CARE Lowers Rating on INR10cr Loan to B
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sri
Venkatachalapathy Sago Factory, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable on the basis
Of best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from Sri Venkatachalapathy Sago
Factory to monitor the rating vide e-mail communications/ letters
dated December 23, 2019, December 24, 2019 January 6, 2019 and
January 17, 2020 and numerous phone calls. However, despite our
repeated requests, the company has not provided the requisite
information for monitoring the rating. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of best
available information which however, in CARE's opinion is not
sufficient to arrive at fair rating. The rating on Sri
Venkatachalapathy Sago Factory bank facilities will now be denoted
as CARE B; Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on October 1, 2018 the following were
the rating strengths and weaknesses:
Key Rating Weakness
Small scale of operations and fluctuating profitability margins
during the review period
SVSF was established in the year 2014. The total operating income
stood small at INR46.68 crore in FY18 (Prov.) with a low net worth
base of INR1.43 crore as on March 31, 2018 (Prov) when compared to
other peers in the industry. The profitability margins of the firm
were fluctuating during the review period. The PBILDT margin
decreased from 2.38% in FY16 to 1.22% in FY18 (Provisional), due to
fluctuation in price of raw material and other manufacturing
expenses. The firm incurred net loss in FY16 and FY17 due to
increase in depreciation and interest cost.
Leveraged capital structure and weak debt coverage indicators
The capital structure of the firm remained leveraged during review
period. The debt equity ratio of the firm has been improving
year-on-year and remained below unity during the last three
financial years due to repayment of term loans. Furthermore, the
overall gearing ratio stood leveraged, however improved year on
year from 12.35x as on March 31, 2016 to 4.52x as on March 31,
2018(Prov) due to repayment of long term loan coupled with increase
tangible networth along with infusion of capital by the partners of
INR 0.83 crore. The debt coverage indicators of the firm though
improved remained weak marked by total debt/GCA improved from
188.51x in FY16 to 16.49x in FY18 (prov.) due to decrease in total
debt. The PBILDT interest coverage ratio, improved from 1.07x in
FY15 to 3.31x in FY18 (Prov.) due to decrease in interest cost
associated with repayment of debt.
Constitution of the entity as a partnership firm
SVSF, being a partnership firm, is exposed to inherent risk of the
partner's capital being withdrawn at time of personal contingency
and firm being dissolved upon the death/retirement/insolvency of
the partners. Moreover, partnership firm business has restricted
avenues to raise capital which could prove a hindrance to its
growth. However, the partners infused capital of INR 0.83crore.
Key Rating Strengths
Experience of partners for two decades in sago manufacturing
SVSF was promoted by Mr. R Durairaj (Managing Partner), Mr. D.
Thilakam (partner) and Mrs. D. Vishnupriya (partner). Partners have
about 20 years of experience in sago processing business. Through
this experience in the sago processing, they have established
healthy relationship with key suppliers, customers, local farmers,
dealers and also with the brokers facilitating easy flow of sago
business within the state.
Growth in total operating income during review period
The total operating income of the firm has increased at a
Compounded Annual Growth Rate (CAGR) of 34.17% from INR 25.93 crore
in FY16 to INR46.68 crore in FY18 (Prov) due to increase in
installed capacity from 18000 kgs to 25000 kgs . Comfortable
operating cycle during review period The operating cycle of the
firm remained comfortable at 41 days in FY18 (Prov.). The firm
receives the payment from its customer within 10-15 days and makes
the payment to its supplier within 25-35 days. The firm holds the
average inventory of around 60-80 days to meet the requirements of
the customers. The average utilization of the working capital limit
stood at 70% for the last 12 months ended June 30, 2018.
Locational advantage with presence in cluster and easy availability
of tapioca root
The Sago manufacturing unit of SVSF is located in Salem district,
which is the top district for producing sago in Tamil Nadu, which
ensures easy raw material access and smooth supply of raw materials
at competitive prices and lower logistic expenditure.
Healthy demand outlook of tapioca
The global tapioca market is expected to grow steadily at a CAGR of
around 3% by 2021. Tapioca is high in carbohydrates and free from
nut, grain, this helps prevent food allergies, celiac disease, and
gluten sensitivity. Tapioca also helps in the reduction of
cholesterol levels and the tapioca flour has a high amount of fiber
that helps maintain blood sugar level and prevent constipation.
Tapioca flour is a source of calcium, folate, manganese, and iron
which is beneficial for pregnant women and helps metabolize
carbohydrates. Moreover, tapioca also extends the feeling of
fullness and helps avoid overeating. The increased awareness on the
health benefits of tapioca will be one of the major factors fueling
the growth of the tapioca market during the next few years.
Sri Venkatachalapathy Sago Factory (SVSF) was established in 2014
as a partnership firm. SVSF is engaged in manufacturing of sago.
The Sago manufacturing unit of the firm is located at Attur Main
Road, Mettala, Karkudalpatty, Salem.
STARLITE COMPONENTS: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: Starlite Components Limited
Plot No. F-108, MIDC Area
Satpur Nashik, Nashik
MH 422007
IN
Insolvency Commencement Date: January 29, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: July 27, 2020
Insolvency professional: CA Naren Sheth
Interim Resolution
Professional: CA Naren Sheth
1014-1015, Prasad Chamber
Tata Road No. 1, Opera House
Charni Road (East)
Mumbai 400004
Mobile: 09821133426
Tel: 02266322870
E-mail: mkindia58@gmail.com
cirp.starlite@gmail.com
Last date for
submission of claims: February 21, 2020
SURPRISE STEEL: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Surprise Steel Private Limited
Sankrail Industrial Park
Jala Dhulagori
Sankrail Dhulagori
Howrah (WB) 711302
Insolvency Commencement Date: February 5, 2020
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: August 3, 2020
Insolvency professional: Mr. Sandip Kumar Kejriwal
Interim Resolution
Professional: Mr. Sandip Kumar Kejriwal
322, 3rd Floor, Martin Burn House
1, R.N. Mukherjee Road
Kolkata 700001
E-mail: sandipkej2@gmail.com
Last date for
submission of claims: February 19, 2020
VIRTUE MARKETING: CARE Maintains 'D' Rating in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Virtue
Marketing Private Limited (VMPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 15.00 CARE D; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Short term Bank 20.00 CARE D; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 17, 2018, placed the
rating of VMPL under the 'issuer non-cooperating' category as VMPL
had failed to provide information for monitoring of the rating.
VMPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and an email
dated December 31, 2019, January 2, 2020 and January 3, 2020. In
line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive
at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on October 17, 2018 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Stretched liquidity position leading to delays in meeting the debt
obligations
There have been continuous overdrawals in cash credit account along
with interest overdue and devolvement in letter of credit due to
stretched liquidity position consequently leading to delays in
meeting the debt obligations.
Incorporated in 2013, Virtue Marketing Private Limited (VMPL) is
promoted by Mr. Ramesh Jain and Mr. Hitesh Jain. VMPL is currently
engaged in the trading of Aluminium Plates, Aluminium Coils,
Aluminium Foils, Aluminium Wires, Aluminium Ingots, Aluminium
Conductors, Aluminium Extrusions, steel products and scraps. The
product range finds application in transport, machinery, defense,
healthcare, automobile, engineering etc. The other company of the
promoters, R.E Cables & Conductors Private Limited (rated CARE D;
Issuer Not Cooperating) is into designing, manufacturing and
marketing all types of aluminum products and scraps. These cables
and conductors find its use in power generating and distributing
companies. The company markets the cables and conductors under
'RECC' brand.
WINMEEN ENGINEERS: CARE Keeps B+ Rating in Not Cooperating
----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Winmeen
Engineers Private Limited continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; based on best
Available information
Long-term/Short- 2.00 CARE B+; Stable/CARE A4;
Term Bank ISSUER NOT COOPERATING;
Facilities based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from Winmeen Engineers Private
Limited to monitor the rating vide e-mail communications/ letters
dated November 25, 2019, November 29, 2019, December 4, 2019,
January 3, 2019 and numerous phone calls. However, despite our
repeated requests, the company has not provided the requisite
information for monitoring the rating. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of publicly
available information which however, in CARE's opinion is not
sufficient to arrive at fair rating. The rating on Winmeen
Engineers Private Limited's bank facilities will now be denoted as
CARE B+; Stable; ISSUER NOT COOPERATING, CARE B+; Stable/CARE A4;
ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating.
Detailed description of the key rating drivers
The rating assigned to the bank facilities of Winmeen Engineers
Private Limited continue to remained constrained by small scale of
operation with declining profitability margin, working capital
intensive nature of business operations, high competition from
other players in the industry.
The rating, however continue to derive strength from qualified and
experienced management team along with reasonable track record of
operations, increase in total operating income during review
period, improvement in capital structure and debt coverage
indicators.
Key Rating Weakness
Small scale of operation with declining profitability margin: The
scale of operations of the company stood small marked by total
operating income at INR 34.40 crore in FY19 and with a networth
base of INR 3.81 crore as on March 31, 2019. The PBILDT margin of
the company declined by 8.19 bps to 6.36% in FY19 from 6.44% in
FY18 on account of increase in cost of sales. Furthermore, PAT
margin of the company increased from 1.13% in FY18 to 1.45% in FY19
on account of increase in PBILDT terms although there is an
increase in interest and finance charges.
Working capital intensive nature of business operations: The
operating cycle of the company stood at 94 days. The creditor
period and collection period of the company stood at 138 days and
230 days in FY19. The company holds inventory for about 10 days.
High competition from other players in the industry: The industry
is highly competitive with presence of number of players.
Furthermore, the civil construction industry is tender driven;
therefore, WEPL faces stiff competition from other established
players in the industry.
Key Rating Strengths
Qualified and experienced management team along with reasonable
track record of operations
WEPL is managed by Mr. Sabasingaram, Director is qualified in MBA
(Marketing in Construction) from Strayer University, London. Prior
to this business he was designated as CEO of South India
Corporation for almost a decade. The promoters are supported by
qualified and experienced second level management team consisting
of a technical team which includes engineers, technicians and
administrative staff. Apart from that the company's reasonable
track record of operations since 2011 will be a benefit to the
company.
Increase in total operating income during the review period
The total operating income of the company is increasing y-o-y. The
TOI is increased by 35.27% to INR 34.40 crore in FY19 from INR25.43
crore in FY18.
Improvement in capital structure and debt coverage indicators
The capital structure of the firm marked by overall gearing
improved and stood at 3.37x as on March 31, 2019 as compared to
4.26x as on March 31, 2018 on account of decrease in total debt
coupled with increase in networth on back of accretion of profit.
The debt equity ratio of the company also improved to 0.18x as on
March 31, 2019 as against 0.93x as on March 31, 2018 on
account of decrease in term debt.
The debt coverage indicators of the company marked by interest
coverage ratio improved and stood at 1.82x in FY19 as against 1.78x
in FY18 on account of increase in PBIDLT despite of increase in
interest and finance charges. TD/GCA of the company improved and
stood at 15.10x in FY19 as compared to 21.69x in FY18 on account of
decrease in total debt coupled with increase in
accruals.
Xcel Project Development Private Limited was established in the
year 2011 as a Private Limited Company by Mr. L. Sabasingaram,
Director. However, changed to current nomenclature Winmeen
Engineers Private Limited in the same year. The company is engaged
in the construction of industrial, residential and commercial
buildings.
=========
J A P A N
=========
SANYO SHOKAI: Activist Urges Clothing Firm to Sell Itself
---------------------------------------------------------
Min Jeong Lee and Takako Taniguchi at Bloomberg News report that a
U.S. activist investor has called on Japanese clothing company
Sanyo Shokai Ltd. to sell itself, saying a new owner would help
turn around the firm.
RMB Capital sent a letter in December to the company's board,
urging it to seek a strategic buyer, according to Masakazu
Hosomizu, a Chicago-based portfolio manager for the investment
firm, Bloomberg relates. Sanyo Shokai should seek a partner with
more capital because its own efforts to revive the company haven't
been successful and it doesn't have enough scale to reorganize its
business on its own, he said.
RMB, which owns about 5 percent of Sanyo Shokai, decided to go
public about the letter because it wasn't satisfied with the
company's noncommittal response, Hosomizu said in an interview,
Bloomberg relays.
"They should hire a financial adviser and contact potential
buyers," the report quotes Hosomizu as saying. "I'm envisaging a
tender offer by the strategic buyer as the purchasing method."
According to the report, investor activism has been increasing in
Japan as the country takes steps to make its companies more
shareholder-friendly. But it's less common for an investor to call
on a board to seek to sell the company.
In the letter, RMB said Sanyo Shokai has posted years of losses,
and its own turnaround efforts, such as cutting head count, brands
and stores, have failed, Bloomberg relates. Sanyo Shokai "lacks
enough scale to bear the costs" of mounting investments needed to
its sales channels, it said. The company, which once held a license
to sell Burberry Group PLC products in Japan, also lacks strong
in-house brands and doesn't have enough capacity to add proprietary
and third-party brands, it said.
"RMB believes Sanyo should join a strategic partner that has larger
capital and potential to complement its capabilities," the
investor, as cited by Bloomberg, said. "RMB is concerned that the
motivation of Sanyo's talented employees will deteriorate under
this ongoing business underperformance and repeated layoffs,
resulting in serious damage to Sanyo's tangible and intangible
assets."
Sanyo Shokai shares have lost about 90 percent of their value from
a high in 2006, Bloomberg discloses. The company trades at less
than 0.4 times book value.
Bloomberg says RMB Capital attempted last year to block Bandai
Namco Holdings Inc.'s bid to acquire Sotsu Co., the licensing firm
for the popular animation franchise "Gundam," saying the offer
price was too low. After the completion of the tender offer, Bandai
Namco now holds about 80 percent of Sotsu, according to data
compiled by Bloomberg.
"I'm hoping this will serve a trigger for change at the company,"
Hosomizu said of Sanyo Shokai. He said the investor hasn't decided
its strategy from here, but making shareholder proposals to elect
board members is "a possibility."
=====================
N E W Z E A L A N D
=====================
MANCHESTER UNITY: Fitch Affirms 'BB-' IFS Rating, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Manchester Unity Friendly Society's
Insurer Financial Strength Rating at 'BB-' (Moderately Weak). The
Outlook is Stable.
KEY RATING DRIVERS
The affirmation reflects the insurer's 'Least Favourable' business
profile, 'Moderately Weak' financial performance and earnings as
well as 'Good' capitalisation and leverage. The rating incorporates
support from its loyal membership base, low-risk insurance exposure
and conservative investment portfolio.
Fitch assesses MUFS's business profile as the least favourable
compared with that of other New Zealand life insurance companies,
due to its limited competitive positioning and diversification as
well as declining membership. Therefore, Fitch scores MUFS's
business profile at 'b+' under its credit-factor scoring
guidelines.
MUFS is a small operator in the domestic life insurance sector,
with a market share of less than 1%. Most of its life products have
been closed to new business since 2012. MUFS offers low-cost
funeral and medical insurance to members; to become a policyholder,
an individual must also be a member. It also provides holiday
accommodation and fraternal services to members.
MUFS's membership declined to 12,223 in the financial year ending
May 2019 (FY19), from 12,642 at FYE18, as member deaths outpaced
new joiners. The society's strategies do not include business
development or selling objectives to maximise its membership base,
with word of mouth being the main source of new business.
Fitch sees MUFS's financial performance and earnings as 'Moderately
Weak', in light of the trend of falling premiums (FY19: 4%, FY18:
4%) due to the decreasing membership and also because most of its
insurance products are closed to new business. MUFS is not a
profit-maximising entity due to its mutual ownership. Net profit
fell to NZD1.9 million in FY19 (FY18: NZD2.4 million) following a
liability adequacy test, which increased insurance contract
liabilities by NZD2.0 million due to falling interest rates.
MUFS's coverage of the regulatory capital requirement dropped to
129% by FYE19 (FYE18: 168%), due mainly to falling interest rates,
but was well above the regulatory minimum of 100%. MUFS purchased
long-dated bonds to reduce the sensitivity of its regulatory
capital position to interest rate changes and consequently, expects
the ratio to climb closer to its internal target of 150%. We think
MUFS's small absolute capital base and limited access to new
capital leaves it vulnerable to unexpected operational risk and
changes in the external operating environment.
MUFS's risky assets ratio remained well below Fitch's criteria
guidelines for a 'BB' rated insurer despite increasing to 20% by
FYE19 (FYE18: 0%). The rise was due to MUFS adding equity
investments to boost investment income and offset its higher
allocation to lower-yielding long-dated bonds in FY19. Unaffiliated
equity investments accounted for 5% of invested assets at FYE19
(FYE18: 0%), while fixed income securities and cash were 70% of
total investments and real estate was 25% at FYE19.
The mismatch in the duration of asset and liabilities - a risk
faced by most life insurers - has declined following the purchase
of long-dated bonds. Insurance liabilities have a longer average
duration than fixed income investments, although MUFS increased the
duration of its fixed income portfolio to 5.9 years at end-1H20
(FYE18: 2.3 years).
RATING SENSITIVITIES
Downgrade rating sensitivities:
- a fall in coverage of the regulatory capital requirement below
140% for an extended period; or
- continued deterioration in the weak business profile, including
a decrease in the number of lodges and significant reduction in the
membership base
Upgrade rating sensitivities:
- a sustained improvement in MUFS's business profile; or
- maintain coverage of the regulatory capital requirement above
170% on a sustained basis
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
=================
S I N G A P O R E
=================
ENVICTUS INT'L: To Sell Loss-making Unit to Hansells Masterton
--------------------------------------------------------------
Annabeth Leow at The Business Times reports that watch-listed
Envictus International Holdings, which last year moved to close
down its loss-making Texas Chicken operations in Indonesia, on Feb.
11 signed and disclosed a deal to sell off sports nutrition
products subsidiary Naturalac Nutrition.
According to the report, Naturalac Nutrition, which purveys its
wares in Australia and New Zealand, will be sold for NZD400,000
(SGD355,000) to New Zealand-based dry powder blender and packer
Hansells Masterton, under a conditional sale-and-purchase
agreement.
The value of Naturalac Nutrition's inventory, the cost of all
purchase orders that it does not hold at the completion date, and
any goods and services tax, will all be added to the price tag too,
the report says.
BT relates that Envictus said in its bourse filing that it had
planned to shut down the Naturalac Nutrition business, and would
have written off the assets if they had not been sold.
"The proposed disposal therefore represents a good opportunity for
the group to dispose of the assets of a loss-making business and
obtain some consideration for it," the company said, adding that
net proceeds will be used for working capital purposes, BT relays.
It also disclosed that the loss from the planned sale comes up to
about MYR2.47 million (SGD823,000). No independent valuation was
done on the assets, which had a book value of RM6.93 million as at
Sept. 30, 2019, BT says.
BT notes that the completion of the sale requires Envictus to get
confirmation from the bourse, by the long-stop date in 30 days'
time, that the transaction does not need shareholders' approval.
Envictus has also agreed not to carry out any similar business or
compete in New Zealand and Australia for three years from the date
that the deal is completed, adds BT.
Singapore-based Envictus International Holdings Limited
manufactures and distributes sweetened condensed milk and
evaporated milk. The Company also repacks and distributes
complementary products such as full cream and instant high calcium
non-fat milk powder, instant coffee powder, and tea dust.
=================
S R I L A N K A
=================
SRILANKAN AIRLINES: CEO Aims to Bring Carrier to Profitability
--------------------------------------------------------------
ColomboPage reports that Vipula Gunatilleka, chief executive
officer of SriLankan Airlines, said the focus is on to bring the
loss-making national carrier to a break-even stage.
Speaking on "Bloomberg Markets" on the sidelines of the Singapore
Airshow on Feb. 11, the CEO of SriLankan Airlines discussed the
challenges the airline is facing, and plans to return the airline
to profitability, ColomboPage relates.
According to ColomboPage, the airline chief said the SriLankan like
any other airline in the industry is going through many challenges
-- geopolitical issues, the economic slowdown and now the
coronavirus starting the year with Iranian tensions.
"We are not different to any other airlines…We are coping with
that at the moment. We have reduced the capacity to certain Chinese
destinations more than 50 percent. We've done some consolidations.
We'll continue like this for a week or two to get a real assessment
of the situation," Gunatilleka told Bloomberg Markets.
Gunatilleka said while the Easter attack was a quite a setback for
the airline, the management is proud of the airline's performance
post Easter.
"We are proud of what we did post-Easter. For example, our January
numbers, we are only -$10 million EBITA, which is quite a
significant achievement compared to last year. Last year, our EBITA
was -$55 million. Of course our yield came under somewhat pressure
due to competition and slowdown in demand. But we have worked on
many aspects like improving the customer experiences, product in
our key markets and embracing more on technology to improve our
online services as well as revamp the online platforms."
When asked about the Airbus scandal and whether the airline is
seeking legal action for hurting its reputation, the CEO said it is
too early to comment on the matter, ColomboPage relays.
"We will do the right thing by the airline and by the country. Too
premature to comment on seeking compensation from Airbus at this
stage," the CEO said.
Responding to a question about privatization of 49 percent stake of
the airline, the CEO said it was an idea put forward by the
previous government to make the airline profitable but nothing has
materialized yet, according to ColomboPage.
"We want to basically bring the airline to a decent stage and then
also to have a viable business plan. Privatization is not the only
option. There are many other options like private public
partnerships. At the moment our focus is to bring the airline to a
break-even stage," Gunatilleka, as cited by ColomboPage, said.
The CEO said the airline is an economic priority for the government
as it has contributed tremendously to the national economy, adds
ColomboPage.
About SriLankan Airlines
SriLankan Airlines is the flag carrier of Sri Lanka and a member of
the Oneworld airline alliance. It is currently the largest airline
in Sri Lanka by number of aircraft and destinations and was
launched in 1979 as Air Lanka following the termination of
operations of the original Sri Lankan flag carrier Air Ceylon.
As reported in the Troubled Company Reporter-Asia Pacific on Jan.
16, 2020, Fitch Ratings affirmed SriLankan Airlines Limited's
USD175 million government guaranteed 7% unsecured bonds due June
25, 2024 at 'B'. The airline's bonds are rated at the same level
as SLA's parent, the government of Sri Lanka (B/Negative), due to
the unconditional and irrevocable guarantee provided by the
government. The state held 99.5% of SLA as at end-March 2019
through direct and indirect holdings.
===============
X X X X X X X X
===============
[*] Fitch Says Coronavirus May Strain Liquidity of Some APAC Cos.
-----------------------------------------------------------------
The Wuhan coronavirus epidemic will have a negative impact on
operations and cause disruption for several corporate sectors both
within and beyond China, says Fitch Ratings. Some companies may
face liquidity strains as a result, especially those issuers with
weak credit profiles and high refinancing needs in the near term,
notwithstanding measures taken by the Chinese authorities to ease
access to channels of financing.
Fitch said, "We do not expect the credit profiles of the vast
majority of rated corporates in Asia-Pacific (APAC) to be
significantly impaired if the impact from the virus is short-lived.
However, more corporate issuers may face rating pressures if the
epidemic is not sufficiently contained by end-1Q20."
The potential inability of Chinese corporates to refinance maturing
local and cross-border debt remains a risk, and this risk will
escalate the longer the health crisis continues. The government has
announced various measures -- including liquidity support - for
corporates affected by the epidemic. It has also asked banks to
roll over/extend loans to corporates with debt/bonds maturing, and
intends to set up "green channels" to help Chinese firms replace
their maturing bonds with fresh issuance. However, it is possible
some weak companies may still face difficulties, especially those
that were already struggling prior to the outbreak of the virus.
For APAC corporates in general, Fitch views the sectors most
exposed to the crisis as airlines, tourism/hospitality, gaming,
non-food retail, energy and metals & mining. Specifically within
China, Fitch expects all corporate sectors characterised by Chinese
consumers mixing in public spaces to be affected so long as the
crisis continues. This includes traditional retail, tourism,
transport, and hospitality. In addition, industries reliant on
migrant workers - such as construction and autos - will be
constrained, as they face an exodus of employees unlikely to return
until the virus is well and truly contained.
China's homebuilding sector will remain a key investor focus,
particularly as such firms account for almost 40% of the
cross-border bonds issued by Chinese corporates maturing over
February to December 2020. "We believe that the impact on housing
sales will be limited if the epidemic is short-lived, given that
January and February are typically the slow season for new home
sales and construction. However, the effects on the sector will be
more substantial should the epidemic not be contained by April.
Smaller, highly leveraged, homebuilders might be challenged in
terms of liquidity, and may need to resort to repaying offshore
debt using onshore financing. Large and medium-sized homebuilders
typically refinance offshore maturities well before they are due,
and would therefore be less likely to be affected by any disruption
in offshore financing," Fitch said.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
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firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
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