/raid1/www/Hosts/bankrupt/TCRAP_Public/201113.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
Friday, November 13, 2020, Vol. 23, No. 228
Headlines
A U S T R A L I A
CREATIVE AVNU: First Creditors' Meeting Set for Nov. 20
MEDIACLOUD PTY: First Creditors' Meeting Set for Nov. 19
MEDIGARD LIMITED: First Creditors' Meeting Set for Nov. 23
SYAWISH PTY: First Creditors' Meeting Set for Nov. 24
B A N G L A D E S H
BANGLADESH: Fitch Affirms BB- LT IDR, Outlook Stable
C H I N A
GUANGZHOU R&F: Fitch Assigns B+ Rating on Proposed USD Sr. Notes
R&F PROPERTIES: Fitch Assigns B+ LT IDR, Outlook Negative
YONGCHENG COAL: $150 Million Default Threatens Debt-Ridden Parent
I N D I A
ANADRONE SYSTEMS: Ind-Ra Moves B- Issuer Rating to Non-Cooperating
ARTEMIS AUTO: CARE Lowers Rating on INR14.50cr Loan to D
BAJORIA AGRO: CARE Lowers Rating on INR32cr LT Loan to D
BALAJI BUSINESS: Ind-Ra Keeps B+ Issuer Rating in Non-Cooperating
BALAJI TRADING: CARE Lowers Rating on INR6cr LT Loan to C
CAMSON AGRI: CARE Lowers Rating on INR10cr LT Loan to C
DEWAN HOUSING: All 4 Suitors Raise Bid Prices
DHANALAKSHMI GREEN: CARE Keeps D Debt Rating in Not Cooperating
DHAULAGIREE POLYOLEFINS: Ind-Ra Keeps 'B' Rating in NonCooperating
ELITE INFRAPROJECTS: CARE Keeps D Debt Ratings in Not Cooperating
FURNACE FABRICA: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
GOLDSTAR POLYMERS: CARE Keeps D Debt Ratings in Not Cooperating
HYQUIP SYSTEMS: CARE Keeps D Debt Ratings in Not Cooperating
INDIA: Expands Rescue Package as Economy Slips Into Recession
JAI BHAVANI: Ind-Ra Keeps BB- LT Issuer Rating in Non-Cooperating
JMJ SWITCH: CARE Keeps D Debt Ratings in Not Cooperating Category
LAKSHMI ENGINEERING: CARE Cuts Rating on INR9.0cr LT Loan to C
M/S MECHANO: Ind-Ra Affirms BB- LT Issuer Rating, Outlook Stable
MADHURI P: CARE Moves D Debt Rating to Not Cooperating Category
MAKRO CAST: CARE Keeps D Debt Rating in Not Cooperating Category
MANDAKINI PACHIMATLA: CARE Moves D Debt Rating to Not Cooperating
NAVAYUGA BENGALOORU: CARE Moves D Debt Rating to Not Cooperating
NAVAYUGA JAHNAVI: CARE Moves D Debt Rating to Not Cooperating
OZONE INFRA: CARE Keeps D Debt Rating in Not Cooperating Category
P PADMA: CARE Moves D Debt Rating to Not Cooperating Category
PARANJAPE SCHEMES: CARE Keeps C Debt Ratings in Not Cooperating
PARSVNATH HOTELS: Ind-Ra Affirms 'D' Long Term Issuer Rating
RAHEJA DEVELOPERS: CARE Keeps D Debt Rating in Not Cooperating
RCL PAPER: CARE Keeps D Debt Ratings in Not Cooperating Category
RELIABLE POLYESTER: CARE Lowers Rating on INR5.50cr Loan to D
SANTLAL INDUSTRIES: CARE Lowers Rating on INR60cr LT Loan to C
SHRINET AND SHANDILYA: CARE Cuts Rating on INR35cr Loan to D
SUN PROJECTS: CARE Lowers Rating on INR14.71cr LT Loan to D
TENNY JOSE: CARE Lowers Rating on INR32cr LT Loan to D
TERRACIS TECHNOLOGIES: CARE Keeps D Ratings in Not Cooperating
UNNATI FORTUNE: CARE Keeps D Debt Rating in Not Cooperating
VESTA EQUIPMENT: CARE Keeps D Debt Ratings in Not Cooperating
S I N G A P O R E
IBC CAPITAL: Moody's Confirms B2 CFR; Alters Outlook to Neg.
IBC CAPITAL: S&P Alters Outlook to Stable, Affirms 'B' ICR
ROBINSON SINGAPORE: 3 Mattress Suppliers to Honor Customers Orders
SABANA SHARI'AH: Unitholders Scheme Meeting Set for Dec. 4
X X X X X X X X
COOK ISLANDS: S&P Affirms B+/B Sovereign ICR, Outlook Stable
- - - - -
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A U S T R A L I A
=================
CREATIVE AVNU: First Creditors' Meeting Set for Nov. 20
-------------------------------------------------------
A first meeting of the creditors in the proceedings of The Creative
Avnu Pty Ltd will be held on Nov. 20, 2020, at 10:00 a.m. via video
conference facilities.
Peter Hillig of Smith Hancock was appointed as administrator of
Creative Avnu on Oct. 16, 2020.
MEDIACLOUD PTY: First Creditors' Meeting Set for Nov. 19
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Mediacloud
Pty Ltd will be held on Nov. 19, 2020, at 11:00 a.m. at Level 12,
20 Martin Place, in Sydney, NSW.
Barry Frederic Kogan and Jonathan Philip Henry of McGrathNicol were
appointed as administrators of Mediacloud Pty on Nov. 9, 2020.
MEDIGARD LIMITED: First Creditors' Meeting Set for Nov. 23
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Medigard
Limited will be held on Nov. 23, 2020, at 10:00 a.m. at the offices
of Pearce & Heers, level 12, 127 Creek Street, in Brisbane,
Queensland.
Mark William Pearce and Michael Dullaway of Pearce & Heers were
appointed as administrators of Medigard Limited on Nov. 11, 2020.
SYAWISH PTY: First Creditors' Meeting Set for Nov. 24
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Syawish Pty
Ltd will be held on Nov. 24, 2020, at 11:00 a.m. at the offices of
Hamilton Murphy Advisory Pty Ltd, Level 1, 255 Mary Street, in
Richmond, Victoria.
Stephen Robert Dixon of Hamilton Murphy was appointed as
administrator of Syawish Pty on Nov. 12, 2020.
===================
B A N G L A D E S H
===================
BANGLADESH: Fitch Affirms BB- LT IDR, Outlook Stable
----------------------------------------------------
Fitch Ratings has affirmed Bangladesh's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook.
KEY RATING DRIVERS
Its rating affirmation balances resilient external finances and
rising general government debt (albeit still relatively low)
against a low government revenue base and income per capita, and a
weak business environment and banking sector.
Bangladesh's economic performance has been hurt by the coronavirus
pandemic through reduced external demand, particularly of
ready-made garments (RMG) exports, as well as local containment
measures. RMG exports constitute approximately 8.5% of GDP, and had
fallen by about 20% yoy between January-September. A nationwide
lockdown from March 26 to end-May has affected private consumption
and investment.
According to official statistics, the economy slowed significantly
to 5.2% in the financial year 2020 (FY20, from July 2019-June
2020), from 8.2% in FY19. Fitch expects growth to recover to 5.6%
in FY21 and 7% in FY22. However, its growth forecasts are subject
to a high degree of uncertainty, and downside risks would be linked
to the evolution of the pandemic within Bangladesh and key export
markets.
Remittances - an important driver of household consumption and
accounting for about 6% of GDP - have been surprisingly resilient,
supporting private consumption. Remittances grew by nearly 17% yoy
from January-October 2020. Fitch thinks this rise is temporary, and
due partly to factors such as workers repatriating their savings
before returning home, but also a shift towards more formal
remittance channels, which has been supported by Bangladesh Bank's
2% cash incentive for inward remittances.
Bangladeshi RMG exports (80% of total exports) reached USD27.9
billion in FY20, down from USD34.1 billion in FY19 as demand from
key markets, i.e. the EU (62%) and US (18%), has fallen. The
outlook for exports remains uncertain, due partly to the pandemic,
but there is also little evidence to suggest that Bangladesh might
be benefitting significantly from trade diversion due to US-China
trade disputes.
Bangladesh has strengthened its external buffers despite the
COVID-19 shock. According to the latest data, international
reserves increased to about USD40 billion from about USD33 billion
at end-2019 reflecting lower imports, higher remittances, and
increased borrowing from multilaterals. Fitch estimates
foreign-exchange (FX) reserve coverage of current external payments
to remain healthy at 8.6 months by end-2020, far above the 'BB'
median of 4.8 months.
Fitch believes that Bangladesh Bank will maintain its policy stance
for a stable and competitive exchange rate through FX intervention.
FX reserves in Bangladesh are high at present, although these could
come under pressure if the authorities were to intervene
aggressively to support the exchange rate in the event of an
external or confidence shock.
Bangladesh will continue to run modest current account deficits
from 2021, as imports of capital goods associated with large
infrastructure projects rise. However, external financing
requirements in the near-term are manageable. Fitch forecasts the
external debt service to be manageable in 2021 and 2022 at around
4% of current external receipts. The IMF approved USD244 million
under the Rapid Credit Facility (RCF) and USD488 million under the
Rapid Financing Instrument (RFI). Bangladesh has also received
support from the World Bank and Asian Development Bank to fund
COVID-19-related expenditure.
Bangladesh's increase in expenditure on infrastructure coupled with
a poor record of revenue collection has led to a rise in budget
deficits in recent years. The pandemic has raised further risks to
the fiscal outlook. The authorities' FY20 revised budget deficit is
now 5.3% of GDP, up from 4.8%. Fitch expects the actual budget
deficit in FY20 to be even higher at 7.8%, reflecting weaker
revenue collections and higher spending related to the COVID-19
stimulus package.
Fitch forecasts the budget deficit to remain at 7.8% of GDP in
FY21, higher than the authorities' projection of 6%, driven by
continued spending on economic recovery as part of the stimulus
package (around 4% of GDP over FY20 and FY21) and weak revenue
performance. Fiscal risks from contingent liabilities have
increased due to the economic fallout on state-owned enterprises
(SOEs) and a weak banking sector.
Bangladesh's low government revenue-GDP ratio remains a key
weakness in the fiscal profile. The official revenue-GDP ratio in
FY19 was 10%, which is far below the 'BB' median of around 29%.
Reforms such as the introduction of a new value-added-tax (VAT) law
from July 2019 have not been successful in raising the revenue
ratios so far. Bangladesh's government debt-GDP ratio of 40.3% in
FY20 is still low compared with the 'BB' median of 59.9%, but the
debt-revenue ratio at 438.6% in FY20 was far above the 'BB' median
of 245.4%. A high proportion (almost 50%) of external debt is
concessional, thus mitigating refinancing risks and reining in
debt-servicing costs.
Bangladesh's banking sector health and governance standards remain
weak, particularly in public-sector banks. The gross non-performing
loan (NPL) ratio remained high at around 9% in June 2020, as
against 11.2% a year ago. The NPL ratio of the state-owned banks is
significantly higher (20%). State-owned banks account for around
30% of the total banking sector's assets, thus creating the risk of
contingent liabilities for the sovereign. According to the IMF,
published NPL ratios grossly underestimate the NPL problem in the
banking sector, and Fitch expects NPL ratios to rise further. The
overall capital adequacy ratio of the banking sector is also low,
at 11.6%.
Bangladesh's structural indicators remain a weakness relative to
peers. In addition to weaker governance indicators, the country's
ranking on the Ease of Doing Business Index is the lowest in the
'BB' category. Foreign direct investment remains constrained by
large infrastructure gaps, although the government's focus on
building large infrastructure projects in the next few years could
bode well for investment. The security situation in Bangladesh has
improved in recent years and is less of concern to foreign visitors
now, however the recurrence of security incidents and political
turmoil remains a significant political risk.
ESG - Governance: Bangladesh has an ESG Relevance Score (RS) of 5
for both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption, as
is the case for all sovereigns. These scores reflect the high
weight that the World Bank Governance Indicators (WBGI) have in its
proprietary Sovereign Rating Model. Bangladesh has a low WBGI
ranking at the 21st percentile, reflecting the absence of a recent
record of peaceful political transitions, relatively limited rights
for participation in the political process, weak institutional
capacity, uneven application of the rule of law, and a high level
of corruption.
RATING SENSITIVITIES
The main factors that individually, or collectively, could trigger
positive rating action are:
- Public Finances: Increased confidence in Bangladesh's capacity
to deliver fiscal consolidation and debt stabilisation over the
medium term, for example through sustained improvement in the
structure of public finances in terms of a higher revenue base and
lower contingent liabilities
- Structural: Significant improvement in the health of the
banking sector and structural indicators, for example in terms of
governance standards including political stability, control of
corruption and regulatory quality.
The main factors that individually, or collectively, could trigger
negative rating action are:
- Public Finances: Failure to stabilize government debt over the
medium term, for example due to the absence of structural
improvements in public finances or the crystallisation of
contingent liabilities related to banks or other SOEs
- External Finances: Rapid weakening of external finances, for
example through a sustained widening of the current account deficit
or a significant decline in FX reserves
- Macro: Weaker medium-term growth prospects, for example caused
by lower remittances, a lasting impact from the COVID-19 pandemic
on key sectors of the economy such as RMG, or deterioration in
internal security.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Bangladesh a score equivalent to a
rating of 'BB' on the Long-Term Foreign-Currency (LT FC) IDR
scale.
Fitch's sovereign rating committee adjusted the output from the SRM
to arrive at the final Long-Term Foreign-Currency IDR by applying
its QO, relative to rated peers, as follows:
- Structural features: -1 notch, to reflect weak governance
hindering the strength and effectiveness of economic policy, weak
governance, the health of Bangladesh's banking sector, and a
challenging business environment because of red tape, polarised
political settings and domestic security issues.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
KEY ASSUMPTIONS
The global economy performs in line with Fitch's September 2020
Global Economic Outlook.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Bangladesh has an ESG Relevance Score of 5 for Political Stability
and Rights, as World Bank Governance Indicators have the highest
weight in Fitch's SRM - and are therefore highly relevant to the
rating and a key rating driver with a high weight.
Bangladesh has an ESG Relevance Score of 5 for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption, as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight.
Bangladesh has an ESG Relevance Score of 4 for Human Rights and
Political Freedoms, as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver.
Bangladesh has an ESG Relevance Score of 4 for Creditor Rights, as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Bangladesh, as for all sovereigns.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
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C H I N A
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GUANGZHOU R&F: Fitch Assigns B+ Rating on Proposed USD Sr. Notes
----------------------------------------------------------------
Fitch Ratings has assigned China-based property developer Guangzhou
R&F Properties Co. Ltd.'s (B+/Negative) proposed US dollar senior
notes a 'B+' rating with a Recovery Rating of 'RR4'.
The proposed notes will be issued by Easy Tactic Limited, a wholly
owned subsidiary of R&F Properties (HK) Company Limited (RFHK;
B+/Negative), which is in turn a subsidiary of Guangzhou R&F. The
notes' rating aligns with the rating of RFHK, which provides them
with an unconditional and irrevocable guarantee. Guangzhou R&F
provides credit support, via a keepwell deed and deed of equity
interest purchase and investment undertaking, to the notes.
Guangzhou R&F intends to use the net proceeds from the proposed
issuance to refinance medium-to-long-term debt that will be due
within one year.
The Negative Outlook reflects the refinancing risk on the upcoming
maturities of capital-market debt and the execution risks related
to Guangzhou R&F's refinancing plans. However, Fitch believes the
company has a number of options to address these upcoming debt
maturities, with CNY230 billion of saleable resources and an
increased willingness to boost sales by cutting prices. The company
is also in discussions for a number of asset disposals, which could
bring in additional liquidity.
KEY RATING DRIVERS
Significant Upcoming Maturities: Guangzhou R&F had CNY36 billion in
capital-market debt maturing or becoming puttable in the next 12
months as of 9M20, which includes CNY4.0 billion due in 4Q20 (after
repaying and extending CNY4.3 billion in October), CNY19.2 billion
in 1Q21, and CNY8.6 billion in 2Q21. The company had a cash
balance, including restricted cash, of CNY36 billion at end-9M20,
out of which the company plans to maintain CNY30 billion for normal
operations.
The company plans to address the debt maturities through cash
generated from operations (contracted sales net of expenses), asset
sales and bond issuance, but these are subject to execution risks.
Progress on Asset Disposals: The company has confirmed the sale of
a logistics park and an office building in Guangzhou for CNY6
billion in the past 30 days. It has received part of the proceeds
and expects to receive the rest in the next two months. It is in
advanced talks with investors on the disposal of its stakes in some
development-property projects and may reach an agreement in
November. This may enable the company to raise another CNY6 billion
by end-2020.
The company said its asset disposals will not be limited to the
CNY12 billion. Guangzhou R&F has a large portfolio of investment
properties (CNY37 billion at end-9M20) and hotels (market value of
about CNY54 billion) that it can monetise, but Fitch believes asset
disposals are also subject to execution risks.
Refinancing Hinges on Sales Rebound: The company's refinancing plan
includes its expectation of generating substantial cash flow from
operations by reaching its full-year sales target of CNY152
billion. Its 10M20 contracted sales fell 4% yoy to CNY103 billion,
which means it needs sales to rise by 56% yoy in November and
December to meet the target. Management remains confident on the
target as it has adequate saleable resources, it launched a new
sales campaign in November and it is more willing to cut prices to
boost sales than it was in 1H20.
Reduced Access to Capital Markets: Guangzhou R&F's access to
onshore bond markets appears limited, as it has not issued any
onshore bonds since its CNY1 billion issuance in April 2020 and its
bonds are trading at yields of around 15%-20%. Fitch believes it
may be challenging for the company to issue onshore bonds under
current market conditions despite the extension of CNY1.5 billion
in puttable onshore bonds in October. The company will issue a US
dollar bond in the offshore market with a maturity of 2-2.5 years
to refinance a USD350 million bond due in 1Q21.
Good Progress in Deleveraging: The company reduced its total debt
by CNY18 billion and net debt by CNY16 billion in 9M20 without
refinancing at high rates or asset sales, as it had more than CNY3
billion in cash flow from operations due to disciplined land
acquisitions and cost savings, despite weaker contracted sales.
Entities jointly controlled by the major shareholders of the
company increased their funding by CNY6 billion in 1H20, which also
cut its debt.
Low Off-Balance-Sheet Debt: The company's non-controlling interests
(NCI) remained low at only 3% of equity. As a result, Fitch
believes its risk from off-balance-sheet debt is much lower than
that of its peers. This also means that the company has more
flexibility to dispose of stakes in development projects compared
with developers that have high NCI.
RFHK's IDR Equalised to Parent's: RFHK is Guangzhou R&F's sole
offshore financing and investment platform, and its ratings are
supported by strong linkages with its parent, in line with Fitch's
Parent and Subsidiary Linkage Rating Criteria. RFHK's rating is
equalised with the parent's Issuer Default Rating (IDR), based on
its assessment of moderate legal ties, and strong operational and
strategic ties.
DERIVATION SUMMARY
Guangzhou R&F's ratings are mainly constrained by its weak
liquidity and refinancing risk, despite its strong business
profile.
Guangzhou R&F's CNY138 billion attributable contracted sales scale
is significantly larger than the CNY40 billion-100 billion of 'BB-'
rated peers, except that of Greenland Holding Group Company Limited
(BB-/Stable), and that of 'B+' peers, except for China Evergrande
Group (B+/Stable). Its contracted sales scale is similar to that of
Yango Group Co., Ltd. (B+/Stable), but Guangzhou R&F's 2019 EBITDA
was much higher. Yango's average selling price (ASP) is 17% higher
than that of Guangzhou R&F and it has a higher churn rate. However,
Guangzhou R&F's land bank size is double that of Yango, which means
Guangzhou R&F has more flexibility on land-acquisition spending to
control leverage. Fitch expects Guangzhou R&F's leverage to be
around 5pp lower than that of Yango throughout the forecast period
of 2020-2023.
Guangzhou R&F has a long land-bank life compared with its peers.
Guangzhou R&F's geographical diversification is comparable with
that of 'BB+' and 'BB' rated peers. It has a more geographically
diversified operation spread across more than 140 cities than CIFI
Holdings (Group) Co. Ltd.'s (BB/Stable) more than 50 cities. Still,
the geographical spread of both companies' operations should
mitigate the risk from local policy intervention and economic
volatility.
Guangzhou R&F's attributable contracted sales are more than double
that of Zhenro Properties Group Limited (B+/Stable). Zhenro's ASP
is 50% higher than that of Guangzhou R&F with a faster churn rate
as well. However, Zhenro has a much shorter land-bank life of
around 2 years, which will limit its control over land acquisition
costs. Zhenro's 2019 leverage was 8pp lower than that of Guangzhou
R&F. However, Zhenro has a much bigger NCI position, which limits
its deleveraging ability.
Guangzhou R&F has a better-quality land bank than China Fortune
Land Development Co., Ltd. (CFLD, BB-/Stable) as its ASP is 26%
higher. In addition, Guangzhou R&F's attributable contracted sales
scale is 55% bigger. Both developers have low churn rates, but CFLD
has a higher EBITDA margin. Guangzhou R&F's leverage is 9pp lower
than that of CFLD. Still, CFLD has much better interest coverage
from non-development EBITDA because of its leading position in
developing industrial parks.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales of CNY119 billion-132 billion in
2020-2023
- EBITDA margin, excluding capitalised interest from cost of
sales, at 27%-29% in 2020-2023
- 15%-25% of contracted sales proceeds to be spent on land
acquisitions in 2020-2023 to maintain a land bank sufficient for
about three-to-four years of development
- 45% of contracted sales proceeds to be spent on construction
cost in 2020-2023
- ASP to rise by 1%-2% a year on average in 2020-2023
RECOVERY RATING ASSUMPTIONS
- Guangzhou R&F to be liquidated in a bankruptcy, as it is an
asset-trading company
- 10% administration claims
- 70% advance rate to accounts receivable
- 75% advance rate to adjusted net inventory of Guangzhou R&F to
reflect the around 25% EBITDA margin
- 55% advance rate to investment properties, property, plant and
equipment
- 60% standard haircut to net property, plant and equipment
- 100% advance rate to restricted cash
The resulting recovery rate corresponds to a Recovery Rating of
'RR1'. However, the Recovery Rating is capped at 'RR4' because
under Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, China falls into Group D of creditor friendliness, and
instrument ratings of issuers with assets in the group are subject
to a soft cap at the issuer's IDR and Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- The rating Outlook will be revised to Stable if Guangzhou R&F
is able to sustain improvement in its liquidity position and if the
company demonstrates its ability to access the onshore bond market
with sizeable issuance
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- any delays or issues in the execution of asset disposals
- weaker-than-expected contracted sales in the coming months
- no meaningful improvement in the liquidity position, with total
cash to short-term capital-market debt sustained below 0.5x
LIQUIDITY AND DEBT STRUCTURE
Tight but Improving Liquidity: The company had CNY36 billion of
cash (including restricted cash) as of 9M20, which was just enough
to cover CNY36 billion of capital-market debt maturing or turning
puttable in the next 12 months. Guangzhou R&F has repaid CNY2.8
billion in debt maturing in 4Q20 and extended another CNY1.5
billion. It has another CNY4 billion in debt due in early December
2020, which will be repaid by cash on hand. There is CNY29 billion
in capital-market debt maturing or turning puttable in 2021, of
which CNY19 billion is due in 1Q21. Fitch expects the company to
cover the CNY19 billion in debt with cash on hand, contracted sales
proceeds collected (estimated to be at least CNY36 billion),
proceeds from asset sales and issuance of new bonds.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
R&F PROPERTIES: Fitch Assigns B+ LT IDR, Outlook Negative
---------------------------------------------------------
Fitch Ratings has assigned a Long-Term Foreign-Currency Issuer
Default Rating of 'B+' to R&F Properties (HK) Company Limited
(RFHK). The Outlook is Negative. Fitch has also assigned RFHK a
senior unsecured rating of 'B+' with a Recovery Rating of 'RR4'.
In addition, Fitch has affirmed all outstanding US dollar notes
issued by Easy Tactic Limited, a wholly owned subsidiary of RFHK,
at 'B+'. The rating on the notes align with the rating of RFHK,
which provides an unconditional and irrevocable guarantee to them.
RFHK's parent, Guangzhou R&F Properties Co. Ltd. (GZRF,
B+/Negative), provides credit support, via a keepwell deed and deed
of equity interest purchase and investment undertaking, to the
notes.
RFHK is GZRF's sole offshore financing and investment platform, and
its ratings are supported by strong linkages with its parent, in
line with Fitch's Parent and Subsidiary Rating Linkage Criteria.
RFHK's rating is equalised with that of GZRF, based on its
assessment of moderate legal ties, strong operational ties and
strong strategic ties.
KEY RATING DRIVERS
Strong Operational Ties: RFHK is fully controlled and managed by
GZRF, as it does not have its own management team. RFHK is an
integral part of GZRF and has substantial development-property and
investment-property operations. It holds all of GZRF's offshore
projects in Malaysia, Cambodia, Australia and the UK. RFHK and GZRF
also jointly own several development projects and properties,
including hotels and office buildings. RFHK is important to GZRF as
it raises long-term financing offshore for GZRF. RFHK's total debt
accounted for 35% of GZRF's total debt by end-2019, and half of
RFHK's total debt comprises offshore US dollar bonds.
Moderate Legal Ties: GZRF provides a keepwell deed and equity
interest purchase and investment undertaking to RFHK for the US
dollar bonds, which is deemed to be weaker than a guarantee.
Strong Strategic Ties: Fitch believes a default on RFHK's US dollar
bonds would significantly damage GZRF's reputation and jeopardise
its access to funding, as counterparties see RFHK as an integral
part of GZRF, and consider the bonds to be GZRF's bonds. This
provides strong incentive for GZRF to provide support in the event
of distress at RFHK. RFHK's total assets grew 15% yoy to CNY123
billion by end-2019, which is equal to around 29% of GZRF's total
assets. Fitch believes that it is important for GZRF to maintain a
platform for offshore financing and overseas investments.
DERIVATION SUMMARY
RFHK's ratings are supported by the strong linkage with its parent
GZRF. RFHK is positioned as its parent's main offshore financing
platforms, similar to Vanke Real Estate (Hong Kong) Company Ltd
(Vanke HK, BBB+/Stable), a subsidiary of China Vanke Co., Ltd.
(BBB+/Stable), and Tianji Holding Limited (B+/Stable), a subsidiary
of Hengda Real Estate Group Co., Ltd (B+/Stable).
Fitch believes offshore funding is crucial to property developers,
such as GZRF, China Vanke and Hengda. This is also demonstrated by
the fact that offshore funding represents a higher portion of
18%-35% of the parents' total debt, compared with 5% for Wanda
Commercial Properties (Hong Kong) Co. Limited (Wanda HK). This
explains why Wanda HK is rated one notch below its parent Dalian
Wanda Commercial Management Group Co., Ltd. (BB+/Stable), while the
ratings of RFHK, Vanke HK and Tianji are equalised with those of
their parents.
KEY ASSUMPTIONS
Fitch believes RFHK's financial performance depends on support from
GZRF.
Fitch's Key Assumptions Within Its Rating Case for GZRF:
- Attributable contracted sales of CNY119 billion-132 billion in
2020-2023
- EBITDA margin, excluding capitalised interest from cost of
sales, at 27%-29% in 2020-2023
- 15%-25% of contracted sales proceeds to be spent on land
acquisitions in 2020-2023 to maintain a land bank sufficient for
about three to four years of development
- 45% of contracted sales proceeds to be spent on construction
cost in 2020-2023
- ASP to rise by 1%-2% a year on average in 2020-2023
RECOVERY RATING ASSUMPTIONS FOR GZRF
- GZRF to be liquidated in a bankruptcy, as it is an
asset-trading company
- 10% administration claims
- 70% advance rate to accounts receivable
- 75% advance rate to adjusted net inventory of GZRF to reflect
the around 25% EBITDA margin
- 55% advance rate to investment properties, property, plant and
equipment
- 60% standard haircut to net property, plant and equipment
- 100% advance rate to restricted cash
The resulting recovery rate corresponds to a Recovery Rating of
'RR1'. However, the Recovery Rating is capped at 'RR4' because
under Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, China falls into Group D of creditor friendliness, and
instrument ratings of issuers with assets in the group are subject
to a soft cap at the issuer's IDR and Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Improvement in GZRF's IDR
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Deterioration in GZRF's IDR
- Weakened linkage with GZRF
The ratings on R&F HK are linked to the ratings on its parent. For
the rating on GZRF, the following sensitivities were outlined by
Fitch in its ratings action commentary of August 31, 2020:
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- The rating Outlook will be revised to Stable if GZRF is able to
sustain improvement in its liquidity position and if the company
demonstrates its ability to access the onshore bond market with
sizeable issuances
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- any delays or issues in the execution of asset disposals
- weaker-than-expected contracted sales in the coming months
- no meaningful improvement in the liquidity position, with total
cash to short-term capital-market debt sustained below 0.5x
LIQUIDITY AND DEBT STRUCTURE
Tight but Improving Liquidity: As of 9M20, the company had CNY36
billion of cash (including restricted cash), which was just enough
to cover CNY36 billion of capital-market debt maturing or turning
puttable in the next 12 months. GZRF has repaid CNY2.8 billion
maturing in 4Q20 and extended CNY1.5 billion. It has another CNY4
billion due in early December 2020, which will be repaid by cash on
hand. There is CNY29 billion of capital-market debt maturing or
turning puttable in 2021, of which CNY19 billion is due in 1Q21.
Fitch expects GZRF to cover the CNY19 billion of debt with cash on
hand, contracted sales proceeds collected (estimated to be at least
CNY36 billion), proceeds from disposal of assets and issuance of
new bonds.
YONGCHENG COAL: $150 Million Default Threatens Debt-Ridden Parent
-----------------------------------------------------------------
Liang Hong and Lu Yutong at Caixin Global report that a state-owned
coal miner in Central China's Henan province has defaulted on a
CNY1 billion ($151 million) bond, threatening to drag its powerful
parent into a crisis as both face mounting debts.
Yongcheng Coal and Electricity Holding Group Co. Ltd., which just
last month was given the highest possible rating by a domestic
credit rater, failed to repay a super short-term bond that matured
on Nov. 10, Caixin discloses citing a statement posted by the
Shanghai Clearing House. The note, issued in mid-February, has a
coupon rate of 4.39% and was underwritten by China Everbright Bank
Co. Ltd., the report says.
That's just the tip of its debt iceberg, the report states. Aside
from the latest default, the company has an additional CNY12
billion of bonds set to mature by year-end. Its parent Henan Energy
and Chemical Industry Group Co. Ltd., the province's largest
state-owned company by assets, has CNY22.9 billion of notes set to
mature by the end of this year. Its total debts as of midyear were
10 times that, Caixin notes.
Yongcheng Coal & Electricity Holding Group Co. Ltd. mines and
distributes coal products. The Company produces brown coal
products, bituminous coal products, hard coal products, coking coal
products, and other related products.Yongcheng Coal & Electricity
Holding Group also provides electric generation, apparel
processing, trade, and other related services.
=========
I N D I A
=========
ANADRONE SYSTEMS: Ind-Ra Moves B- Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Anadrone Systems
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND B- (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR35 mil. Fund-based working capital limits migrated to non-
cooperating category with IND B- (ISSUER NOT COOPERATING)
rating; and
-- INR105 mil. Non-fund-based working capital limits Migrated to
non-cooperating category with IND A4 (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 22, 2019. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Anadrone Systems (erstwhile Sure Safety Solution Private Limited)
was established in 2004. The company is engaged in manufacturing
and supplying security equipment to the Ministry of Defense.
Products manufactured by Anadrone Systems include radar and
remote-controlled improvised explosive device jammers, defense
simulators, training aids, electronic labs, aerial targets systems,
unmanned aerial vehicles, personal safety equipment, disaster
management equipment, among others.
ARTEMIS AUTO: CARE Lowers Rating on INR14.50cr Loan to D
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Artemis Auto India Private Limited (AIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 14.50 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE BB; Stable; ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
CARE had vide its press release dated January 1, 2020 placed the
rating of AIPL under the issuer non cooperating category as it had
failed to provide information for monitoring of the rating. AIPL
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated September 9, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating takes into account the ongoing delays in interest
servicing in the cash credit account by the company ascertained by
CARE as part of its due diligence exercise.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in Servicing of Debt Obligations: CARE as part of its due
diligence exercise interacts with various stakeholders of the
company including lenders to the company and as part of this
exercise has ascertained that there are ongoing delays in interest
servicing in the cash credit
account.
Artemis Auto India Private Limited (AIPL) is engaged in the
dealership of passenger cars of Volvo Auto India Private Limited
(VAIL) such as S60, V40, VC60, VC90, etc., spare parts &
accessories and servicing of vehicles. AIPL was incorporated in
2010 by Mrs. B. Umamaheswari, Managing Director and Mrs. Nrithya
Sivaganesh, Director and Mr. B.Sivaganesh.
BAJORIA AGRO: CARE Lowers Rating on INR32cr LT Loan to D
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Bajoria Agro Processing Private Limited (BAPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 32.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE B; Stable; ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 13, 2019, placed
the rating(s) of BAPPL under the 'Issuer non-cooperating' category
as BAPPL had failed to provide information for monitoring of the
rating. BAPPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated October 20, 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.
The ratings have been revised on account of delays in debt
servicing as per audit report of FY19 downloaded from MCA's
website.
Detailed description of the key rating drivers
At the time of last rating on September 13, 2019 the following were
the rating strengths and weaknesses: (updated for the information
available from Registrar of Companies):
Key rating weaknesses
* On-going delay in debt servicing: As per Audit report for FY19
downloaded from MCA's website, there were delays in debt servicing
owing to stretched liquidity position.
Rajasthan based Bajoria Agro Processing Private Limited (BAPPL) was
incorporated in 2013 and is currently being managed by Mr. Mahender
Gopal Bajoria and Mr. Ankur Bajoria. BAPPL manufactures wheat based
products including maida, sooji, rava and atta at its manufacturing
facility at Abohar, Punjab having a production capacity of about
240 tonnes per day. The company procures it's raw material i.e
wheat from manufactures located in Delhi, Punjab and Harayana.The
company sells its products to ITC, Bonn, Mrs. Bectors (Cremica) &
SS Foods ITC, Bonn, Mrs. Bectors (Cremica) & SS Foods.
BALAJI BUSINESS: Ind-Ra Keeps B+ Issuer Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Shri Balaji
Business House Private Limited's Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND B+ (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR95 mil. Fund-based working capital limit maintained in non-
cooperating category with IND B+ (ISSUER NOT COOPERATING)
rating; and
-- INR130 mil. Proposed fund-based limits withdrawn (the company
did not proceed with the instrument as envisaged).
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 27, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Founded in 2016, Shri Balaji Business House is engaged in the
trading of aqua feeds.
BALAJI TRADING: CARE Lowers Rating on INR6cr LT Loan to C
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sri
Balaji Trading Corporation (SBTC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE C; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE B; ISSUER NOT COOPERATING
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 29, 2019, placed the
ratings of SBTC under the 'issuer non-cooperating' category as firm
had failed to provide information for monitoring of the rating. The
firm continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated April, 2020 to October 14, 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.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by Sri Balaji
Trading Corporation with CARE's efforts to undertake a review of
the outstanding ratings as CARE views information availability risk
as key factor in its assessment of credit risk profile.
Detailed Rationale & Key Rating Drivers
Key Rating Weaknesses
At the time of last rating on August 22, 2019 the following were
the rating strengths and weakness:
Key Rating Weakness
* Moderate revenue and low profit margins: The total operating
income of the firm has been fluctuating over the last three years
ending FY16 (Prov.). The operating income is linked to demand and
supply functions in cotton market coupled with opportunities in
buying and selling of cotton lint and cotton yarn. The total
operating income of the firm increased from INR27.27 crore in FY14
to INR35.11 crore in FY15 led by stable demand in cotton market.
However, the same reduced to Rs, 32.32 crore in FY16 (Prov.) due to
lower demand of the cotton products during the year. The PBILDT
margin also has been fluctuating over the last three financial
years mainly on account of fluctuation in raw material prices of
traded goods. PBILDT margin dipped by 52 bps to 1.15% in FY15 over
FY14 and increased by 27 bps to 1.42% in FY16 (Prov.). In line with
increased PBILDT, PAT level also increased during FY15, however,
PAT margin remained stable at 0.21% due to reduction in capital
charge. During FY16, increase in PBILDT level resulted in increase
in PAT level and PAT margin of the firm.
* Constitution of the entity as a Sole proprietorship firm: SBTC,
being a Sole proprietorship firm, is exposed to inherent risk of
the proprietor's capital being withdrawn at time of personal
contingency and firm being dissolved upon the
death/retirement/insolvency of the proprietor. Moreover, the
business also has restricted avenues to raise capital which could
prove a hindrance to its growth.
* Volatility in raw material prices: Prices of raw cotton are
highly volatile in nature and depend upon the factors like area
under cultivation, crop yield, international demand-supply
scenario, export quota decided by the Government and inventory
carry forward of the previous year. During FY15, raw cotton and
cotton yarn prices fell below Minimum Support Price (MSP). This
in-turn affected the profit margins of the company.
* Weak financial capital structure and debt protection metrics: The
capital structure of the firm is weak and has been constantly
deteriorating during past three financial years ended FY16 (Prov.).
The overall gearing of SBTC deteriorated from 3.65x as on March 31,
2015 to 4.56x as on March 31, 2016 (Prov.) on account of increase
in debt levels due to increase in working capital utilization
coupled with increase in unsecured loans from the related parties.
The Total Debt/GCA has been weak over the years at 82.29x as on
March 31, 2016 (Prov.) due to increase in debt levels during the
year. Interest coverage ratio declined during FY15 and FY16 due to
increased debt level, particularly working capital utilization.
* Seasonal nature of availability of raw material resulting in
working capital intensive nature of operations: Cotton in India is
grown mainly during two major agricultural season Kharif (June to
September) and Rabi (November to April). The millers have to stock
enough raw cotton by the end of the each season as the price and
quality is better during the harvesting season. Moreover, the raw
cotton is procured from the farmers and CCIL generally against cash
payments or with a minimal credit period of 15-30 days while the
millers have to extend credit to the associate company (Vantage
Spinners Private Limited) and other clients around 30 days
resulting in moderate dependence on working capital utilization.
Furthermore, as the firm operates in cotton industry, it has to
maintain average inventory of around 60-90 days considering the
fluctuations in the price of raw cotton. The average utilization of
fund based working capital limits of the firm was utilized (70%)
during the last 12 months period ended April 30, 2016.
Key Rating Strengths
* Experience of promoter for more than five years in cotton trading
industry: SBTC was promoted by Mrs. Potluri Sitaratnam, who is a
first generation entrepreneur and is having more than 5 years of
experience in the field of cotton lint and cotton yarn traders.
Through her experience in cotton industry, she has established
healthy relationship with the key suppliers, customers and also
with the dealers which facilitates the trading business among the
various regions.
* Adequate raw material availability due to geographical advantage:
SBTC is located in the Krishna district in Andhra Pradesh which is
close to Guntur, one of the major cotton growing areas in Andhra
Pradesh and it is also well connected to Warangal and Khammam which
are prominent cotton growing region in Andhra Pradesh, thus there
is ample availability of raw material. Cotton is a seasonal crop
and available only during the period of October to April.
* Stable industry outlook: The cotton and textile industry is
expected remain stable in FY17 which is led by stable spinning
margins of cotton yarn segment, range-bound cotton prices and
favourable domestic and export demand for downstream fabrics and
garments sector. Stability of cotton prices depends upon global
factors such as China's strategy on releasing its cotton
inventories and domestic factors such as cotton production and
inventory policy of government procurement agencies. Similarly, an
improvement in realisations of manmade yarn, and consequently
margins would lead to a revision in the outlook for the synthetic
textile sector. On the supply side, the cotton cultivation is not
expected to get affected by the decline in the domestic price as
the cotton cultivation remains attractive to the farmers the profit
per quintal for cotton remains high amongst the competing crops.
Sri Balaji Trading Corporation (SBTC) was promoted by Mrs. Potluri
Sitaratnam in year 2011 as a sole proprietorship firm. SBTC is
engaged in trading of cotton lint and cotton yarn. The firm
primarily supplies cotton lint to one of its group companies;
Vantage Spinners Private Limited (VSPL) which is engaged in
manufacturing of cotton yarn and has an installed capacity of
31,500 spindles and also to other spinning units located in Krishna
District, Andhra Pradesh.
CAMSON AGRI: CARE Lowers Rating on INR10cr LT Loan to C
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Camson AgrI Ventures Private Limited (CAV), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 10.00 CARE C; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE B (CE); ISSUER NOT
COOPERATING
Short Term Bank 3.00 CARE A4; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE A4 (CE); ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 26, 2019, placed the
rating(s) of CAV under the 'issuer non-cooperating' category as CAV
had failed to provide information for monitoring of the rating. CAV
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated September 2, 2020 to September 8, 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.
The revision in the ratings is on account of non-availability of
requisite information due to non-cooperation by Camson AgrIVentures
Private Limited (CAV), with CARE'S efforts to undertake a review of
the rating outstanding, as CARE views information availability risk
as key factor in its assessment of credit risk profile. Further,
ratings also considers default of the one of directors in meeting
debt obligations.
Detailed Rationale& Key Rating Drivers
At the time of last rating on August 26, 2019, the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Significant decline in revenues and erosion of profits: The total
operating income of CAV decreased from INR30.81crore in FY17 to
INR14.05 crore in FY18. Further, CAV has
reported net loss of 2.79 crore and 1.21 crore in FY17 and FY18
respectively.
* Stretched liquidity position and vulnerability of sales and
profitability to agro climatic conditions and crop failure risk:
The current ratio of CAV decreased from 1.12x as on March 31, 2017
to 0.87x as on March 31, 2018. Further, CAV has reported negative
returns in both FY17 and in FY18.
* Exposure to intense competition from chemical fertilizers
manufacturers: The industry is exposed to intense competition from
chemical manufacturers of chemical fertilizers due to its large
scale
presence and easy availability. Also, slow effects of bio tech
products over chemical products and low adoption of bio tech
products is anticipated to hamper the growth of the market.
Key Rating Strengths
* Experienced management team: Mr. Dhirendra Kumar, founder of
Camson group holds a M.Sc. in plant genetics and breeding and an
MBA in marketing from the Punjab Agricultural University. He also
holds an MBA in export management from IIFT, New Delhi. Mr. Kumar
has headed the development of 'Zero-residue' products, new
technological platforms and organically viable hybrid seeds. He has
previously worked with ITC Ltd, Pioneer Seeds Co, Ranbaxy and
Coromandal Indag at different positions. Mr. Rohit Sareen,
Managing Director, is an MBA graduate and has worked globally with
Merrill Lynch International and Citibank Singapore Ltd across
various leadership roles. At CAV he is responsible for managing the
company and taking the Fresh & Safe Brand to the end customers.
Analytical Approach: Standalone
The analytical approach has been changed to standalone from credit
enhanced rating as corporate guarantee provided by company (Camson
Bio Technologies Limited) is undergoing Insolvency resolution
process under NCLT. Hence, Credit Enhancement rating approach will
not be valid.
Camson AgrI Ventures Pvt. Ltd. (CAV) was incorporated on January
25, 2013 by Mr. Rohit Sareen and Mr. Nimir Mehta. Camson Bio
Technologies Limited (CBT) is a holding company with 65% stake in
CAV as on March 31, 2015 and balance with Mr. Rohit Sareen (15%)
and Mr. Nimir Mehta (20%). CAV is an integrated provider of
eco-friendly agricultural solutions. CAV is engaged in the business
of contract farming, food processing and trading of seeds and
biocides. The company is majorly engaged in trading activity
(agricultural goods viz. maize and paddy seeds).
DEWAN HOUSING: All 4 Suitors Raise Bid Prices
---------------------------------------------
Livemint.com reports that the four bidders for debt ridden Dewan
Housing Finance Corporation Limited (DHFL) have raised their offer
price in the range of 10%-70% as part of the ongoing resolution
process. DHFL had received bids from Adani Group, Piramal
Enterprises, US-based Oaktree and Hong Kong-based SC Lowy to either
pick stake in the company or buy out assets, the report notes.
Livemint.com says Oaktree Capital has revised its bid price for the
entire portfolio to INR31,000 crore from INR28,000 crore earlier.
Piramal Enterprises has revised its bid price for the retail
portfolio to INR26,000 crore from INR15,000 crore earlier. Adani
has offered INR2,700 crore for the wholesale and SRA book compared
to INR2,200 crore earlier and SC Lowy has upped its bid for the
non-SRA book to INR2,300 crore from INR1,500 crore earlier.
Livemint.com relates that the new bids have been submitted after
the lenders asked the bidders to revise their offer. Lenders were
expecting the bidders to double their offer price after they found
them too low. According to the report, the promoter of DHFL Kapil
Wadhawan had proposed to transfer the rights, title and interest in
at least 10 projects valued at INR43,879 crore and settle the dues
with banks. A Press Trust of India (PTI) report dated October 19
said that the erstwhile promoters have written to the Reserve bank
of India-appointed administrator Subramaniakumar saying that their
offer would ensure maximum value for the assets that have been put
on the block, Livemint.com relays.
Promoters hold about 39.21% stake in DHFL. Bankers want promoters'
stake to fall below 10% after the stake sale as part of the
resolution plan, the report states.
According to Livemint.com, the Committee of Creditors will meet
next week post the Diwali holidays to finalise the bidder. The CoC
was hoping to finalise the resolution plan by November 16 before it
could send it to the Reserve bank of India for review, the report
notes. Ernst & Young is the process adviser reviewing the credit
and business risks and AZB & partners is looking after the legal
services.
Last month, National Company Law Tribunal (NCLT) had allowed 90
days extension for the resolution process till January 5, the
report notes.
DHFL is the first financial services company which has been sent to
the NCLT under the insolvency and bankruptcy code (IBC). Last year
in November, the RBI had superseded its board and placed it under a
three-member advisory committee comprising Rajiv Lall, executive
chairman of IDFC First Bank; NS Kannan, MD of ICICI Prudential
Life, and NS Venkatesh, CEO of the Association of Mutual Funds in
India.
About DHFL
Dewan Housing Finance Corporation Limited (DHFL) operates as a
housing finance company in India. The company's deposit products
include fixed deposit products for individuals, and trusts and
institutions; and corporate, recurring, and Wealth2Health deposits
products. It also offers home loans, which include home improvement
loans, home construction loans, home extension loans, plot
loans/land loans, plot and construction loans, and balance transfer
of home loans, as well as home loans for the self-employed; small
and medium enterprise loans, including property term, plant and
machinery, medical equipment, and business loans; mortgage loans,
such as loans against property, loan for purchase of commercial
premises, and loan through lease rental discounting; and NRI home
loans.
As reported in the Troubled Company Reporter-Asia Pacific, Deccan
Herald said the Mumbai bench of the National Company Law Tribunal
(NCLT) on Dec. 2, 2019, admitted a petition by the Reserve Bank of
India (RBI) seeking bankruptcy proceedings to resolve DHFL. The
move came in after the Reserve Bank on Nov. 29, 2019, made an
application for bankruptcy proceedings to resolve the credit and
liquidity crisis at the company, which became the first financial
sector player being sent for bankruptcy. RBI appointed R
Subramaniah Kumar as the company's administrator. Financial
creditors to DHFL have submitted claims worth INR86,892 crore
against the mortgage lender, BloombergQuint disclosed.
DHANALAKSHMI GREEN: CARE Keeps D Debt Rating in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shri
Dhanalakshmi Green Energy India Private Limited (SDGE) continues to
remain in the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 32.85 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
Category
Detailed Rationale & Key Rating Drivers
CARE had vide its press release dated March 27, 2017 placed the
rating of SDGE under the issuer non cooperating category as it had
failed to provide information for monitoring of the rating.
Further, vide press release dated July 2, 2018, July 29, 2019 CARE
has continued the rating at Issuer Not Cooperating category and
vide press release dated January 22, 2020 CARE has downgraded the
rating to CARE D; Issuer Not Cooperating. SDGE continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter dated
September 9, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating takes into account the delays in servicing of the term
loan obligations by the company ascertained by CARE as part of its
due diligence exercise.
Detailed description of the key rating drivers
Key Rating Weakness
* Delay in Servicing of Debt Obligations: CARE as part of its due
diligence exercise interacts with various stakeholders of the
company including lenders to the company and as part of this
exercise has ascertained that there are delays in debt servicing of
the term loan obligations.
Shri Dhanalakshmi Green Energy Pvt Ltd (SDGE) is a private limited
company incorporated in February 2013 and promoted by Mr. C.
Natrajan and Mrs. N. Leelavathy (W/o Mr. C Natrajan). SDGE operates
9 windmills and sells the entire generated power to various group
captive companies in and around Coimbatore who are shareholders in
SDGE.
DHAULAGIREE POLYOLEFINS: Ind-Ra Keeps 'B' Rating in NonCooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Dhaulagiree
Polyolefins Private Limited's Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND B (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR14 mil. Fund-based working capital limit maintained in non-
cooperating category with IND B (ISSUER NOT COOPERATING)
rating;
-- INR20 mil. Non-fund-based working capital limit maintained in
non-cooperating category with IND A4 (ISSUER NOT COOPERATING)
rating;
-- INR90 mil. Proposed term loans withdrawn (the company did not
proceed with the instrument as envisaged);
-- INR20 mil. Proposed fund-based limit withdrawn (the company
did not proceed with the instrument as envisaged); and
-- INR20 mil. Proposed non-fund-based limit withdrawn (the
company did not proceed with the instrument as envisaged).
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 10, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1984, Dhaulagiree Polyolefins manufactures high
molecular high-density polyethylene films, sheet, lines, poly bags,
tarpaulin sheet at its manufacturing facility in Howrah, West
Bengal.
ELITE INFRAPROJECTS: CARE Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Elite
Infraprojects Private Limited (EIPPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.50 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 6.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 14, 2019, placed the
ratings of EIPPL under the 'issuer non-cooperating' category as
company had failed to provide information for monitoring of the
rating. The firm continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 31, 2020 to September 8, 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.
Detailed description of the key rating drivers
At the time of last rating dated August 14, 2019 the following were
the Strengths and Weaknesses:
Key Rating Weakness
* Delay in debt servicing: The company has delays in servicing of
debt obligations owing to the stretched liquidity position of the
company.
* Short track record of the company: EIPPL was incorporated in
January 2009 and executed around eight contracts completely till
February 2014, amounting to around INR165.62 crores. The works
executed majorly include road works, irrigation works and other
civil construction works. Furthermore, its scale of operations are
small as compared with other industry peers marked by total
operating income of INR49.15 crore during FY13 and low net-worth
base of INR6.98 crore as on March 31, 2013.
* Moderate capital structure with elongated working capital cycle:
EIPPL has a moderate capital structure marked by moderately high
overall gearing of 1.75 times as on March 31, 2013, on account of
high working capital borrowings and increased term loans during
FY12 and FY13 for the purchase of additional equipment. The total
debt/GCA also stood moderately high at 5.87 times in FY13 on
account of high level of debt of the company and moderate cash
accruals. The company's working capital cycle stood high and
increased from 77 days in FY12 to 120 days in FY13 due to the
increased level of inventory holding days from 33 days in FY12 to
around 60 days in FY13 coupled with higher collection days of 88
days in FY13; the increased inventory level was due to the higher
amount of work in progress as on year ending date.
Key Rating Strengths
* Qualified and experienced promoters of the company: The company
is promoted and managed by Mr. B Narsimha Reddy and Mr. B Nagi
Reddy, who are the directors of the company. Mr. B Nagi Reddy a
graduate and Mr. B Narsimha Reddy an MBA graduate has around
thirteen years of experience in handling the company's activities.
Over the years, the promoters of the company have been able to
establish strong relationship with its customers.
* Significant growth in total operating income during the last
three years ended FY13: The total operating income of the company
has registered a Compounded Annual Growth Rate (CAGR) of 90.10%
during the periods FY11-FY13 (from INR13.60 crore in FY11 to
INR49.15 crore in FY13), backed by increased order book and
execution of contracts in hand. Furthermore, the company has
achieved a total operating income of INR60.30 crore during
11MFY14.
* Healthy albeit concentrated order book position: EIPPL has a
healthy order book position with orders in hand aggregating
INR172.46 crore as on March 15, 2014, to be executed majorly before
March 2016, thus providing long term revenue visibility to the
company. However, EIPPL is exposed to client concentration risk as
the current order book is from three customers, namely, Odisha
Construction Corporation Limited, Concast Infratech Limited and
Back Bone Construction Pvt Ltd. Also, around 68% of the order book
is from a single customer, Back Bone Construction Pvt Ltd. Such
concentrated order book would impact the company's business
turnover/cash flow position significantly in case of any slowdown
in the project execution or weakening of credit profile of the
contractors.
EIPPL was incorporated in the year 2009 by Mr. B Narsimha Reddy and
Mr. B Nagi Reddy. The company is engaged in the execution of civil
construction works such as laying of roads, canal irrigation works
and other civil works for both government and private
organisations. EIPPL mainly undertakes projects for government and
private organisations.
FURNACE FABRICA: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Furnace Fabrica
(India) Limited's (FFIL) Long-Term Issuer Rating to 'IND BB' from
'IND BBB'. The Outlook is Negative.
The instrument-wise rating actions are:
-- INR630 mil. Fund-based limit downgraded with IND BB/Negative
rating; and
-- INR3.355 bil. (reduced from INR3.40 bil.) Non-fund-based limit
downgraded with IND A4+ rating.
The downgrade reflects the company's tight liquidity profile as
indicated by the full utilization of its working capital limits
during the 12 months ended September 2020 along with devolvement in
the letter of credit for less than 30 days (as of November 4,
2020) and a stretched working capital cycle on account of delayed
debtors' recovery.
The Negative Outlook reflects Ind-Ra expectations that the stretch
in FFIL's debtors will continue in the near term and affect its
liquidity. The Negative Outlook also reflects the likely
deterioration in the company's credit metrics in FY21 due to
increased debt.
KEY RATING DRIVERS
FFIL's revenue declined to INR3,523 million, according to the
provisional financials for FY20, from INR3,944 million in FY19 due
to the fewer orders executed. Ind-Ra expects the revenue to further
decline in FY21 due to further lower-order execution on account of
the COVID-19-led nation-wide lockdown and delays in the clearance
from different departments.
The credit metrics of the company are modest with the interest
coverage of 1.96x in FY20 (FY19: 1.33x) and the net financial
leverage (adjusted debt/operating EBITDAR) of 2.86x (2.52x). The
interest coverage improved in FY20 due to a rise in the absolute
EBITDA and the net leverage deteriorated due to an increase in the
total debt. The total debt increased in FY20 as the company availed
term loans and business loans. Ind Ra expects the credit metrics to
deteriorate in FY21 on account of increased repayments and reduced
EBITDA. The operating EBITDA margin was modest at 9% in FY20 (FY19:
5.4%) and the return on capital employed was 9% (5%). The
improvement in the operating margin in FY20 was due to reduced
purchases and the execution of high-margin orders.
Liquidity Indicator - Poor: The company fully utilized its working
capital limits during the 12 months ended September 2020. There was
an instance of devolvement in the letter of credit in October 2020
for less than 30 days as of November 4, 2020. The working capital
cycle of the company was stretched at 213 days in FY20 (FY19: 156
days) with an increase in the debtor days to 166 (74). At FYE20,
the debtors stood at INR984 million and the retention money was
INR613.41 million as of March 31, 2020, which declined to INR651
million and INR565 million, respectively, as on 30 September 2020.
However, there are substantial delays in the payment from a few of
the major customers. The delay in the debtors' payments has
stretched the liquidity substantially leading to the devolvement of
LC. FFIL availed the Reserve Bank of India-prescribed debt
moratorium for its working capital facilities and term loans over
March-August 2020. The company also availed a COVID-19 emergency
credit line.
The ratings derive support from the company's strong order book of
INR10,000 million (2.9x of FY20 revenue), that has faced execution
delays in FY21 due to the lockdown and is now likely to be executed
over the next three years. The ratings are also supported by the
promoters' over five decades of experience in the engineering,
procurement and construction business.
RATING SENSITIVITIES
Negative: Further deterioration in the liquidity and the gross
interest coverage falling below 1.5x will be negative for the
ratings.
Positive: An improvement in the liquidity along with the gross
interest coverage remaining above 1.5x on a sustained basis will be
positive for the ratings.
COMPANY PROFILE
FFIL provides engineering, procurement and construction services
for metallurgical, fertilizer, petrochemical, refinery, cement,
power, and steel plants on a turnkey basis.
Its head office is in Mumbai. It has regional offices in Delhi,
Kochi and Kolkata, and its international offices are in Zambia,
Morocco and the UAE. Furthermore, FFIL has captive fabrication
facilities at Navi Mumbai (Maharashtra) and Kandla (Gujarat) in
India and Chingola in Zambia.
GOLDSTAR POLYMERS: CARE Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Goldstar
Polymers Limited (GPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 7.00 CARE D/CARE D; ISSUER NOT
Term Bank COOPERATING Rating continues
Facilities to remain under ISSUER NOT
COOPERATING category
Short-term Bank 0.25 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 21, 2019, placed the
rating(s) of GPL under the 'issuer non-cooperating' category as GPL
had failed to provide information for monitoring of the rating. GPL
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated August 19, 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).
Rating takes into account the delays in debt servicing.
Detailed description of the key rating drivers
At the time of last rating on August 21, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
* Delays in debt servicing: As per last interaction held with the
banker dated August 20, 2019, the account was classified under
SMA-2.
Established in 1990 as a proprietorship concern by Mr. Prem Prakash
Saraogi, Goldstar Containers (GC) was later converted into a public
limited company as Goldstar Polymers Limited (GPL) in 2006. The
company is engaged in manufacturing of plastic drums which find
application in carriage of various materials across different
industries viz. oil & petroleum, lubricants, inks, chemicals, etc.
The manufacturing facility of the company is located in Daman,
equipped with an installed capacity of 2,500 MTPA utilized at ~65%
during FY18. The products manufactured by the company are entirely
sold in the domestic market, whereas the primary raw material viz.
HDPE is sourced locally from domestic market and also import from
UAE [imports comprise 13.07% in FY18 (prov.)].
HYQUIP SYSTEMS: CARE Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Hyquip
Systems Limited (HSL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 5.38 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 27.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 30, 2019, placed the
rating(s) of HSL under the 'issuer non-cooperating' category as HSL
had failed to provide information for monitoring of the rating. HSL
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated from January 2020 to October 14, 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.
Detailed description of the key rating drivers
At the time of last rating on August 30, 2019, the following were
the key rating strengths and weaknesses.
Key Rating Weakness
* Delays in meeting debt obligations: The company is facing
liquidity issues due to stretched average debtor days hence
couldn't able to meet its debt obligations.
Key Rating Strengths
* Experienced promoters and management team: Mr. K B K Reddy, the
promoter of the Hyquip group has steered the group from a small
proprietary unit to a professionally managed engineering enterprise
during the last three decades. He looks after general
administrative functions of the company and also leads the research
wing of HSL. HSL has a team of qualified and experienced
professionals who look after the operations.
HSL was incorporated in 1984, and it is the flagship company of the
Hyderabad-based Hyquip group. HSL is primarily engaged in the
designing and manufacturing of material handling system and also
has interests in flow control equipment and industrial automation.
Mr K B K Reddy, the founder promoter of the Hyquip group has well
over three decades of experience in the material handling
equipment industry.
In FY19, HSL had a Profit after Tax (PAT) of INR0.07 crore on a
total operating income of INR25.71 crore as against PAT of INR0.06
crore and total operating income of INR13.89 crore in FY18
respectively.
INDIA: Expands Rescue Package as Economy Slips Into Recession
-------------------------------------------------------------
Anirban Nag at Bloomberg News reports that India's government
announced an enhanced credit guarantee program for small businesses
and tax relief for some real estate transactions, expanding
measures to support an economy clobbered by the coronavirus
pandemic.
Micro-, small- and medium-sized businesses across 26 sectors will
be eligible for the credit guarantee program, Finance Minister
Nirmala Sitharaman told reporters in New Delhi on Nov. 12,
Bloomberg relays. The companies will get a one-year moratorium on
loans and four more years to repay the amount, she said.
Bloomberg relates that Sitharaman counted a production-linked
incentive program worth INR1.46 trillion ($20 billion) for
manufacturing units, already approved by the government, as part of
12 support measures unveiled Thursday. An additional outlay of
INR180 billion will be made toward an affordable urban housing
program, she said.
According to Bloomberg, the other key measures are:
* Some income tax relief to real estate developers and buyers
* Government to infuse INR60 billion in infrastructure debt
platform
* Offers retirement fund subsidies to companies adding new jobs
* INR650 billion being provided to ensure supply of fertilizers
Bloomberg says the measures are the government's latest efforts at
supporting Asia's third-largest economy, which slipped into an
unprecedented recession after gross domestic product probably
declined for a second straight quarter in the three months ended
September. Prime Minister Narendra Modi's government in May
announced a 21 trillion-rupee rescue plan, but that's done little
to revive demand in a nation where consumption accounts for some
60% of gross domestic product, Bloomberg recalls.
Bloomberg notes that the economy's outlook is clouded by the virus
pandemic. While India's daily new infections have slowed, the
country is the second worst affected nation after the U.S., with
over 8.5 million cases.
The International Monetary Fund sees the South Asian nation now
facing the biggest contraction of major emerging markets, with GDP
forecast to shrink 10.3% in the year to March -- worse than the
4.5% decline it predicted in June, according to Bloomberg.
Still, high-frequency indicators, including exports, automobile
sales and manufacturing output, have shown strength in recent
months amid an uptick in consumption. Higher disposable incomes
with farmers, thanks to bountiful rains and record crops, have
helped boost demand in the hinterland.
"Recovery is happening," Bloomberg quotes Sitharaman as saying,
pointing to some high-frequency indicators. "It is just not pent up
demand."
JAI BHAVANI: Ind-Ra Keeps BB- LT Issuer Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Jai Bhavani
Furnishing Pvt Ltd.'s Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND BB- (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR80 mil. Fund-based working capital limits maintained in
non-cooperating category with IND BB- (ISSUER NOT
COOPERATING) rating; and
-- INR40 mil. Proposed fund-based working capital limits
withdrawn (the company did not proceed with the instrument as
envisaged) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 6, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2011, Jai Bhavani Furnishing is engaged in the
manufacturing and trading of furnishing fabrics. Its packaging and
storing units are located in Bhiwandi, Mumbai.
JMJ SWITCH: CARE Keeps D Debt Ratings in Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Jmj Switch
Gears Private Limited (JMJ) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 5.12 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 1.72 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 23, 2019, placed
the rating(s) of JMJ under the 'issuer not cooperating' category as
JMJ had failed to provide information for monitoring of the rating.
Jmj Switch Gears Private Limited continues to be non-cooperative
despite repeated requests for submission of information through
phone calls and e-mails dated September 14, 2020 to September 21,
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.
Detailed description of the key rating drivers
At the time of last press release dated September 23, 2019 the
following were the rating strengths and weaknesses:
Key Rating Weakness
* Ongoing delay in debt servicing: The banker has confirmed that
there are ongoing delays in interest payment attributed by
stretched liquidity position.
JMJ Switch Gears Private Limited (JMJ) incorporated in August, 2013
is promoted by Mr. Adaikalasamy along with his friend Mr. Philip
Kumar. The company started its commercial operation in January,
2014. It has been engaged in the business of manufacturing of
electrical products like power control panels, low-tension &
high-tension panels, compact substations with
its sole manufacturing facility located at Bommasandra Industrial
Area, Bangalore. These panels provide backup protection to the
power transformers, generation, capacitor banks and power
distribution.
LAKSHMI ENGINEERING: CARE Cuts Rating on INR9.0cr LT Loan to C
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sree
Lakshmi Engineering Works (SLEW), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.00 CARE C; Stable; ISSUER NOT
Facilities COOPERATING Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B-; Stable;
ISSUER NOT COOPERATING
Short Term Bank 1.00 CARE A4; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 5, 2019 placed the
rating(s) of SLEW, under the 'issuer non-cooperating' category as
SLEW had failed to provide information for monitoring of the
ratings. SLEW continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and emails dated January 2020 to October 14, 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.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by Sree Lakshmi
Engineering Works with CARE's efforts to undertake a review of the
outstanding ratings as CARE views information availability risk as
key factor in its assessment of credit risk profile.
Detailed description of the key rating drivers
At the time of last rating on August 5, 2019 the following were the
rating strengths and weaknesses:
Key Rating Weakness
* Small scale of operations: The firm was established in the year
2001 and despite long track record of the firm for 16 years; its
scale of operations remained small as compared to other industry
peers marked by total operating income of INR17.19 crore during
FY17 and low net worth base of INR3.23 crore as on March 31, 2017
making it vulnerable to fluctuations in the market conditions.
Further, the works executed include water supply and road works
which are procured from government organizations, representing
concentration of revenues.
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of the firm remained leveraged marked by
overall gearing of 3.04 times as on March 31, 2017 on account of
high working capital borrowings. Total debt/GCA improved from
13.85x in FY16 compared with 11.37x in FY17 due to increase in
gross cash accruals, still remained weak. The PBILDT interest
coverage ratio improved from 1.73x in FY16 to 2.15x in FY17 due to
increase in PBILDT levels and stood satisfactory.
* Elongated working capital cycle days: The operating cycle
improved from 345 days in FY16 to 218 days in FY17 due to reduction
in average collection period and average inventory days. Inspite of
improvement, the average collection period stood high at 121 days
while inventory holding days stood at 97 days in FY17 primarily due
to the delays in payments received from government organizations
and higher amount of work in progress as on year ending date. On
account of these factors, the firm relies on the bank borrowings
for funding their day to day operations and to bridge the gap
between the receivables and payables. The average cash credit
facility utilization of the firm was 70% for the last 12 months
ended November 30, 2017.
* Highly fragmented and intensely competitive business segment:
SLEW is operating in highly competitive and fragmented industry.
The firm witnesses intense competition from both the organized and
largely unorganized players. This fragmented and highly competitive
industry results into price competition thereby affecting the
profitability margins of the companies operating in the industry.
* Partnership nature of constitution with inherent risk of
withdrawal of capital: Constitution as a partnership has the
inherent risk of possibility of withdrawal of the capital at the
time of personal contingency which can adversely affect its capital
structure. Furthermore, partnership firms have restricted access to
external borrowings as credit worthiness of the partners would be
key factors affecting credit decision for the lenders.
Key Rating Strengths
* Experienced partners in the same line of business for more than a
decade: The firm was established and managed by Mr. K. Amarnatha
Reddy and his family members with around 14 years of experience in
civil contract works. Mr. K. Amarnatha Reddy was handling brick
manufacturing business before starting SLEW and has been
successfully handling water supply works under Municipal
Corporation and Panchayath Raj of Tirupati, Andhra Pradesh since
2001. The industry experience of the partners has helped the firm
in procuring contracts from government organizations.
* Increasing profitability margins: The PBILDT margin has been
increasing y-o- y basis from 6.95% in FY15 to 11.02% in FY17 at the
back of execution of projects y-o-y with relatively better profit
margins. The PAT margin of the firm has been increased from 0.43%
to 4.92% due to increase in PBILDT levels resulting in absorption
of financial expenses and depreciation provisions.
* Medium term revenue visibility from its current order book
position: The firm has satisfactory order book of INR50.36 crore as
on December 15, 2017, compared with the order book of INR3.48 crore
in August 2015 and the same is likely to be completed by September
2018. The said order book is related to laying of pipe lines and
water supply works. The current order book is concentrated with two
customers namely, The Indian Hume Pipe Co. Ltd and Amanulla
Contractor. Furthermore, the firm is expecting one more project of
laying pipeline in Ongole from The Indian Hume Pipe Co. Ltd with
the project cost of INR120 crore.
Tirupati-based SLEW was established by Mr. K. Amarnath Reddy and
his family members in the year 2001 as a partnership concern. The
firm is engaged in civil works such as water supply works, laying
roads and construction of buildings for government bodies such as
Panchayat Raj and Municipal Corporations which are procured through
tenders. The firm has executed several contracts since its
inception and currently has an order book worth around INR50.36
crore as on December 15, 2017 to be executed by September 2018.
M/S MECHANO: Ind-Ra Affirms BB- LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed M/s Mechano
Engineering Company's (MEC) Long-Term Issuer Rating at 'IND BB-'.
The Outlook is Stable.
The instrument-wise rating actions are:
-- INR45 mil. Term loan due on November 2024 affirmed with IND
BB-/Stable rating;
-- INR60 mil. Fund-based facilities affirmed with IND BB-/Stable
/IND A4+ rating; and
-- INR30 mil. Non-fund-based facilities affirmed with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects the continued small scale of operations,
as indicated by revenue of INR161 million in FY20 (provisional
figures) (FY19:INR245 million). The revenue fell by 34% yoy because
the COVID-19-led lockdown delayed the dispatch of its finished
goods in March 2020. As per the management, MEC achieved revenue of
INR52 million in 1HFY21. As of September 30, 2020, MEC had an
orderbook of INR150 million, which is scheduled to be executed by
March 2021. The agency believes the scale of operation will
continue to be small over the medium term. Ind-Ra expects MEC’s
revenue to increase marginally in FY21 on the back of the healthy
orderbook.
The ratings reflect the modest EBITDA margins. The margin
increased to 14.4% in FY20 (FY19: 11.6%) owing to better
realization from its projects and increase in proportion of job
work in overall revenue. The return on capital employed was 10% in
FY20 (FY19: 14%). The firm purchases its raw materials only upon
the receipt of purchase order to safeguard its margins against
fluctuations in input prices. Ind-Ra believes this policy will help
MEC sustain its operating margins in FY21.
The ratings are also constrained by MEC's high customer
concentration risk, with the top five customers accounting for 85%
of the revenue and top two customers accounting for 56% of the
revenue.
Liquidity Indicator – Stretched: MEC's average utilization of the
fund-based limits was 78% over the 12 months ended September 2020.
The cash flow from operations turned positive at INR15.2 million in
FY20 (FY19: negative INR20.7 million) owing to a decline in working
capital requirements. The free cash flow, however, deteriorated
further to a negative INR32.5 million in FY20 (FY19: negative
INR5.4 million) due to the capex undertaken by the firm during the
year. The net working capital cycle elongated to 154 days in FY20
(FY19: 140 days) due to an increase in inventory days to 101 days
(49 days). The agency expects the firm to meets its term loan
obligation of INR7.8 million in FY21 through cash accruals. The
company had availed the Reserve Bank of India-prescribed debt
moratorium and had also availed a COVID-19 term loan of INR17
million.
The rating also factors the moderate credit metrics due to the
modest margins. The credit metrics deteriorated in FY20 due to
the undertaking of debt of INR45 million for capex during the year,
and the resultant increase in interest costs, and the decline in
the absolute EBITDA to INR23 million (FY19: INR28 million). The
interest coverage (operating EBITDA/gross interest expense) was
2.6x during FY20 (FY19: 4.8x) and the net leverage (total adjusted
net debt/operating EBITDAR) was 3.9x (2.0x). The agency believes
the credit metrics will gradually improve over the medium term with
the repayment of term loans.
The ratings remain constrained by the partnership nature of the
organization.
The ratings, however, are supported by the partners' experience of
over three decades in the fabrication industry.
RATING SENSITIVITIES
Negative: A significant decline in the revenue or EBITDA margin,
leading to deterioration in the credit metrics, on a sustained
basis, will be negative for the ratings.
Positive: A significant improvement in the revenue and EBITDA
margin, leading to the net leverage falling below 2.5x, on a
sustained basis, will be positive for the ratings.
COMPANY PROFILE
Incorporated in 1983, MEC is a partnership firm that manufactures
large and high precision components for the power (thermal and
hydro), defense, aerospace, construction and process industries.
The company is headed by Shridhar Ramakrishnan.
MADHURI P: CARE Moves D Debt Rating to Not Cooperating Category
---------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Madhuri
P Padma Rural Godowns (MRG) to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.97 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MRG to monitor the rating
vide e-mail communications dated from September 2020 to October 19,
2020 and numerous phone calls. However, despite our repeated
requests, the firm 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 the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The rating(s) on Madhuri P. Rural Godowns
bank facilities will now be denoted as CARE D ISSUER NOT
COOPERATING.
The 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 dated August 14, 2019 the following were
the strengths and weaknesses:
Key Rating Weaknesses
* Ongoing delays in servicing debt obligations: The firm has
ongoing delays in term loan installment repayments along with
servicing of interest obligations due to stressed liquidity
position. As per the banker's feedback, the firm has an overdue of
INR0.54 crore as on August 13, 2019.
* Small Scale of operations: The scale of operations of the entity
marked by total operating income (TOI), remained small at INR0.52
crore in FY19 (C. A. Certified Prov.) with low net worth base of
INR4.36 crore as on March 31, 2019 (C. A. Certified Prov.) as
compared to other peers in the industry.
* Declining Profitability Margins: Profitability margins of the
firm remained comfortable during the review period. PBILDT margin
declined from 94.95% in FY17 to 91.39% in FY18 due to increase in
maintenance costs and improved to 91.42 in FY19 (C. A. Certified
Prov.) due to increase in scale of operations. PAT margin of the
firm deteriorated from 20.94% in FY17 to 8.05% in FY18 due to
increase in interest cost. Further, the PAT margin of the firm has
increased and stood at 11.33% in FY19 (C. A. Certified Prov.) on
account of decrease in interest expenses.
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of the firm remained leveraged. The debt
equity ratio of the firm deteriorated from 2.78x as on March 31,
2017 to 3.68x as on March 31, 2018 due to availment of loan for
construction of the godown and improved to 2.59x as on March 31,
2019 (C. A. Certified Prov.), due to repayment of the term loan. As
a result overall gearing ratio also deteriorated from 2.78x as on
March 31, 2016 to 3.68x as on March 2017 and improved to 2.59x as
on March 31, 2019 (C. A. Certified Prov.). The firm's debt coverage
indicators stood weak during review period. However, the Total
debt/GCA of the firm improved from 64.33x in FY18 to 57.80x in FY19
(C. A. Certified Prov.) at the back of accretion of profits in FY9
(C. A. Certified Prov.). Further, the interest coverage ratio also
improved from 1.74x in FY18 to 1.87x in FY19 (C. A. Certified
Prov.) due to increase in PBILDT in absolute terms.
* Proprietorship nature of constitution with risk of withdrawal of
capital: The firm being a proprietorship firm is exposed to
inherent risk of capital withdrawal by proprietor due its nature of
constitution. Any substantial withdrawals from capital account
would impact the net worth and thereby the gearing levels.
* Highly competitive and fragmented nature of business: The firm is
engaged into the business of providing godown facilities on lease
basis to the farmers where the profitability margins comparing to
other industry will be low. Apart from that there are numerous
organized and unorganized players entering into the market which
makes the industry competitive nature.
Key Rating Strengths
* Experience of Partners for more than a decade in agricultural
industry: Madhuri P. Rural Godowns was established in the year 2013
promoted by Ms. Madhuri Pachimatla. The day to day operations of
the firm are managed by Mr. Shiv Raju Pachimatla (Father of Ms.
Madhuri Pachimatla. The proprietor of the firm is having around 5
years of experience in agricultural and warehouse industry.
* Growth in operating income: The total operating income of the MRG
increased from INR0.50 crore in FY18 to INR0.52 crore in FY19 (C.
A. Certified Prov.) due to increase in rental income.
Andhra Pradesh based, Madhuri P Padma Rural Godowns (MRG) was
established as a proprietorship firm in the year 2013 and promoted
by Ms. Madhuri Pachimatla. The firm is engaged in providing ware
house on lease rental to Telangana State Civil Supplies Corporation
Limited (TSCSCL), Food Corporation of India (FCI) and Cotton
Corporation of India (CCI). The property is built on a total land
area of 10 acres and comprises of 4 godowns, with aggregate storage
capacity of around 23000 MT, for food crops like rice, wheat,
cotton etc respectively. Commercial operations for two godowns were
started in November 2014 and for other two commercial operations
started from July 2018.
MAKRO CAST: CARE Keeps D Debt Rating in Not Cooperating Category
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Makro Cast
Private Limited (MCPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 36.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 8, 2019, placed the
ratings of MCPL under the 'issuer non-cooperating' category as
company had failed to provide information for monitoring of the
rating. The firm continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 31, 2020 to September 8, 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.
Detailed description of the key rating drivers
At the time of last rating dated August 8, 2019 the following were
the Strengths and Weaknesses:
Key Rating Weakness
* Shutdown of the manufacturing unit resulting in stretched
liquidity position and delays in debt servicing: The company
continues to face stretched liquidity on account of nil cash flows
from operational activities due to shut down of the manufacturing
unit. Consequently, there has been substantial stress on the cash
flow resulting in delays in debt servicing.
Makro Cast Private Limited (MCPL), was promoted by Mr. MVL Narayana
and Mr. SrinivasaBabu in 2004. Mr. Narayana is an automobile
engineer and has about three decades of experience in the
manufacturing industry. Mr. SrinivasaBabu is a commerce graduate
and has an experience of about two and a half decades in handling
financial matters at various industries. MCPL manufactures
specialized castings used primarily in the automobile industry,
power and other engineering companies. The company's foundry unit
is located at Vijayawada, Andhra Pradesh and has a manufacturing
capacity of 1,200 Metric Tonnes per Month (MTPM).
MANDAKINI PACHIMATLA: CARE Moves D Debt Rating to Not Cooperating
-----------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of
Mandakini Pachimatla to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.25 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from Mandakini Pachimatla to
monitor the rating vide e-mail communications dated from September
2020 to October 19, 2020 and numerous phone calls. However, despite
our repeated requests, the firm 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 the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The rating(s) on Mandakini
Pachimatla bank facilities will now be denoted as CARE D ISSUER NOT
COOPERATING.
The 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 dated August 14, 2019 the following were
the strengths and weaknesses:
Key Rating Weaknesses
* Ongoing delays in servicing debt obligations: The firm has
ongoing delays in term loan installment repayments along with
servicing of interest obligations due to
stressed liquidity position. As per the banker's feedback, the firm
has an overdue of INR0.54 crore as on August 13, 2019.
* Small Scale of operations: The scale of operations of the entity
marked by total operating income (TOI), remained small at INR0.54
crore in FY19 (C. A. Certified Prov.) with low net worth base of
INR3.97 crore as on March 31, 2019 (C. A. Certified Prov.) as
compared to other peers in the industry.
* Declining Profitability Margins: Profitability margins of the
firm remained comfortable during the review period. PBILDT margin
declined from 98.64% in FY17 to 91.42% in FY19 (C. A. Certified
Prov.) due to increase in maintenance costs. PAT margin of the firm
improved from 17.63% in FY17 to 22.21% in FY18 due to decrease in
interest cost. Further, the PAT margin of the firm has decreased
and stood at 16.90% in FY19 (C. A. Certified Prov.) on account of
increase in interest.
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of the firm remained leveraged. The debt
equity ratio of the firm deteriorated from 1.38x as on March 31,
2017 to 3.98x as on March 31, 2018 due to availment of loan for
construction of the railway sliding and improved to 2.19x as on
March 31, 2019 (C. A. Certified Prov.), due to repayment of the
term loan. As a result overall gearing ratio also deteriorated from
2.78x as on March 31, 2016 to 4.31x as on March 2017 and improved
to 2.43x as on March 31, 2019 (C. A. Certified Prov.). The firm's
debt coverage indicators stood weak during review period. However,
the Total debt/GCA of the firm deteriorated from 45.66x in FY18 to
49.55x in FY19 (C. A. Certified Prov.) due to low net worth in FY9
(C. A. Certified Prov.). However, the interest coverage ratio
deteriorated from 2.13x in FY18 to 1.87x in FY19 (C. A. Certified
Prov.) due to increase in interest.
* Proprietorship nature of constitution with risk of withdrawal of
capital: The firm being a proprietorship firm is exposed to
inherent risk of capital withdrawal by proprietor due its nature of
constitution. Any substantial withdrawals from capital account
would impact the net worth and thereby the gearing levels.
* Highly competitive and fragmented nature of business: The firm is
engaged into the business of providing godown facilities on lease
basis to the farmers where the profitability margins comparing to
other industry will be low. Apart from that there are numerous
organized and unorganized players entering into the market which
makes the industry competitive nature.
Key Rating Strengths
* Experience of Partners for more than a decade in agricultural
industry: Mandakini Pachimatla was established in the year 2016
promoted by Ms. Mandakini. The day to day operations of the
firm are managed byMr. Shiv Raju Pachimatla (Father of Ms
Mandakini. The proprietor of the firm is having more than 8 years
of experience in agricultural and warehouse industry.
* Growth in operating income: The total operating income of the MRG
increased from INR0.50 crore in FY18 to INR0.52 crore in FY19 (C.
A. Certified Prov.) due to increase in rental income.
Andhra Pradesh based, Mandakini Pachimatla was established as a
proprietorship firm in the year 2016 and promoted by Ms. Mandakini
Pachimatla. The firm is engaged in providing ware house on lease
rental to Telangana State Civil Supplies Corporation Limited
(TSCSCL), Food Corporation of India (FCI) and Cotton Corporation of
India (CCI). The property is built on a total land area of 1.70
acres and comprises of 4 godowns, with aggregate storage capacity
of around 11000 MT, for food crops like rice, wheat, cotton etc
respectively. Commercial operations for two godowns were started
from August 2018.
NAVAYUGA BENGALOORU: CARE Moves D Debt Rating to Not Cooperating
----------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Navayuga
Bengalooru Tollway Private Limited (NBTPL) to Issuer Not
Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 444.96 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key rating drivers
CARE has been seeking information from NBTPL to monitor the
rating(s) vide e-mail communications dated October 17, 2020,
October 20, 2020 and October 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 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 public at
large) are hence requested to exercise caution while using the
above rating(s).
At the time of last rating on November 15, 2019 the following were
the rating strengths and weaknesses:
(Updated for information available from Registrar of Companies)
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delays in debt servicing albeit improvement in toll revenue: The
auditor in his report has mentioned that there are delays in
repayment of loans ranging from 1 to 89 days. In addition, the
bankers have confirmed the delays in debt servicing. The toll
revenue has marginally improved by 3.83% from Rs 71.43 crore (@Rs
19.57 lac/day) in FY18 to Rs 74.17 crore (@ Rs 20.32 lac/day) due
to subdued growth in traffic and WPI escalations. In spite of
having growth in toll revenue, the continuous delay in debt
servicing is primarily due to the actual toll revenue is Rs 74.17
crore for FY19 (@ Rs 20.32 lac/day), which is 40% lower than the
initial envisaged toll revenue of Rs 104.05 crore (@ Rs 28.51
lac/day). Further, the debt obligations for the FY19 including
principal and interest obligations works out to Rs 90.11 crore,
which is more than the net cash generated from the toll operations.
Hence, the short-fall in debt obligation is being met from infusion
of unsecured loans from promoters with delay.
* O&M risk with non-creation of Major Maintenance Reserve Account
(MMRA): NBTPL is mandated to operate and maintain the road as per
specifications set out in the CA, non-compliance of which could
result in penalties being levied by NHAI, thereby exposing NBTPL to
O&M risk. The routine maintenance and operations is being carried
out by the SPV itself. The SPV has engaged a dedicated team for O&M
activities. Further, the company is not maintaining any Major
Maintenance Reserve Account (MMRA) to meet the 2nd cycle of major
maintenance estimated in year FY2022 and FY2023.
* Inherent revenue risk being a toll based road project: Unlike an
annuity based project where the credit risk is mitigated largely as
the future cash flows are guaranteed by the respective annuity
provider, a toll-based project poses greater credit risk due to the
uncertainty associated with the traffic flow and in turn, revenue
collection. Revenue in a toll based road project is simultaneously
dependent on rate of traffic growth, traffic-mix and growth in toll
rates subject WPI escalation. Being a toll based project, NBTPL is
associated with the inherent revenue risks arising out of such
projects and various macro-economic factors beyond the control of
the company.
Liquidity Analysis: Liquidity position of the company is poor on
account low toll revenue and high debt servicing obligations.
Further the company has been in cash losses since its inception on
account of low toll revenue due to significant portion of the
traffic moving through service roads thereby escaping toll road.
Key Rating Strengths
* Promoter's experience in executing and maintaining road projects:
NBTPL is a Special Purpose Vehicle (SPV) promoted by Navayuga
Engineering Company Limited (NECL), through Navayuga Road Projects
Private Limited (NRPPL), for undertaking project awarded by
National Highways Authority of India (NHAI) in the state of
Karnataka on Built, Operate and Transfer (BOT) Toll basis. NECL is
into all types of core infrastructure development with focus on
foundation technology. The promoters have been extending support
towards the project and have infused funds to support cost overrun.
Further, the sponsors have also infused funds to support debt
servicing as well as Major Maintenance in the past. NECL'S order
book as on December 20, 2018 stood at INR30,355.50 crore (as
against INR21,769.27 crore as on October 10, 2017) which provides
revenue visibility for the next 5.76 years at gross billing level
for FY18.
Navayuga Bengalooru Tollway Private Limited (NBTPL) is an SPV
promoted by Navayuga Engineering Company Limited, for undertaking
project awarded by National Highways Authority of India (NHAI) in
the state of Karnataka on Built, Operate and Transfer (BOT) Toll
basis.The concession agreement (CA) was signed on May 09, 2007 for
a period of 20 years from appointed date i.e. November 04, 2007
which also includes construction period of 2 years. The project
involves capacity improvement of the existing carriageways from km
10.00 to km 29.50 on the Bangalore-Nelamangala section, of National
Highway no. 4 (NH-4) in the state of Karnataka on Design,
Engineering, Finance, Construction, Operation and Maintenance of
elevated highway (4.5 km) and six laning of highway (15 km along
with service roads) on BOT basis. The scheduled commercial
operation date (SCOD) of the project was in November 30, 2009
however, owing to the delays on account of non-availability of land
for part of the project stretch, provisional commercial operation
was achieved on November 30, 2010 and subsequently tolling
operations started from December 1, 2010, the final completion
certificate was received on December 12, 2010.
Since then, the tollable traffic on the project stretch has been
lower than initial estimates primarily on account of traffic
diversion over service roads. However, the traffic on the stretch
has been gradually picking up y-o-y. There are six toll plazas
located on the project road and the toll rates are linked to the
annual WPI movement with annual revision every year in the month of
July.
NAVAYUGA JAHNAVI: CARE Moves D Debt Rating to Not Cooperating
-------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Navayuga
Jahnavi Toll Bridge Private Limited (NJTB) to Issuer Not
Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 720.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key rating drivers
CARE has been seeking information from NJTB to monitor the
rating(s) vide e-mail communications dated October 17, 2020,
October 20, 2020 and October 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 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 public at
large) are hence requested to exercise caution while using the
above rating(s).
At the time of last rating on November 12, 2019 the following were
the strengths and weaknesses
(Updated for the information available from Registrar of
Companies)
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delays in debt servicing: There are delays in interest servicing
on account of delay in achievement of commercial operation date.
* Project implementation risk with further delay in project
progress: The project has been delayed substantially by more than
43 months against the envisaged scheduled commercial operations
date of May 29, 2016 and having achieved physical progress of
47.23% as on August 2019. On account of delays attributed to
intermittent floods, hail storms, collapse of gantry,
non-availability of RoW on time have resulted in delay and cost
overrun. The company has revised its project to Rs 2129 crore (to
fund additional IDC and EPC costs), which is being proposed to be
funded by way of unsecured loans from promoters of Rs 546 crore,
VGF grant of Rs 585 crore and term loans of Rs 998 crore.
Currently, the company has brought in unsecured loans of Rs 439.57
crore, received VGF of Rs 333.49 crore from the Authority and
outstanding debt of Rs 458.57 crore. The revised financial plan is
pending for approval from the existing lenders. Further, the
company has sought extension of time from Authority up to May 2022
through the letter dated 27.07.2019, which is pending for
approval.
Key Rating Strengths
* Experienced promoter group: NJTB is promoted by Navayuga
Engineering Company Limited (NECL) which is the flagship company of
the Hyderabad based Navayuga group. NECL is into all types of core
infrastructure development with focus on foundation technology.
Having gained requisite experience over the years and possessing
the financial capabilities, the company has presence in
infrastructure development segment on Public Private Partnership
(PPP) basis.
Navayuga Jahnavi Toll bridge Pvt. Ltd is a special purpose vehicle
(SPV) incorporated for development of Greenfield Bridge across
river Ganges and its approaches connecting Bhaktiyarpur Bypass of
NH-31, near village Karjan & NH28 at Tajpur in the state of Bihar
on DBFOT (Toll Basis). The project involves construction of
Four-Lane Greenfield Bridge across river Ganges for a length of
5.55 km long and 45.393 km length for approach road. The concession
was awarded by Bihar State Road Development Corporation Limited
(BSRDCL) for a period of 30 years including construction period of
1642 days. The concession agreement was signed on October 8, 2010
and the SPV received appointed date on November 30, 2011.
The initial project cost was INR1599.57 crore which was proposed to
be funded by way of equity of INR294.57 crore grant of INR585.00
crore and debt of INR720.00 crore. The project is being funded at a
debt equity ratio of 0.95x (taking grant as equity). With the grant
forming substantial part of the project cost, timely receipt of the
same is critical for scheduled completion of the project. Owing to
delay in project completion, the total project cost has been
revised to INR2042.00 crore excluding forex loss of INR87.00 crore
which will be funded by promoters, the revised cost is proposed to
be funded through the promoters' contribution (INR459.00 crore),
BSRDCL Grant (INR585.00 crore) and term loans (INR998.00 crore).
Financial closure for the additional funds has not been achieved
and the company is in process of tying up the same in the existing
project debt-equity ratio. The competent authority has approved
extension of time for completion of the project up to May 31, 2020,
duly shifting the Milestone II & Milestone III, merged together for
achievement up to May 31, 2020 owing to further delay on account of
handing over of complete Right of Way (RoW) by authority and
collapsing of stressed segment. The cumulative EPC expenditure
incurred on the project up to end of August 31, 2019 was INR797.26
crore as against planned amount of INR1113.27 crore after expiry of
102 months of time. The cumulative financial progress achieved upto
August 31, 2019 has found to be 54.98% as against 76.80% with
reference to the EPC contract amount of INR1450.00 crore.
OZONE INFRA: CARE Keeps D Debt Rating in Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Ozone Infra
Projects (OIP) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 14, 2019, placed the
rating(s) of OIP under the 'issuer non-cooperating' category as OIP
had failed to provide information for monitoring of the rating. OIP
continues to be noncooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated Aug 19, 2020. In line with the extant SEBI guidelines, CARE
has reviewed the ratings 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).
Rating takes into account the default in debt servicing.
Detailed description of the key rating drivers
At the time of last rating on August 14, 2019, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* Default in debt servicing: As per the interaction with the
banker, the cash credit facility of OIP has been continuously
overdrawn by INR0.16 crore since March 31, 2018 owing to liquidity
crunch. In view of this, the account has been classified as NPA by
the bank with effect from September 30, 2018.
Established as a partnership firm in April 2008 by Mr. B.T. Mishra,
Mr. Ghanshyam Dubey, Mr. Keshrinath Vartak, Mrs. Manisha Patil, and
Rohit Infra Projects Private Limited, Ozone Infra Projects (OIP) is
engaged in infrastructure construction activities on an EPC
(Engineering Procurement Construction) basis. The aforementioned
partners were retired in January 2015, whereas the new partners
viz. Mr. Santosh Pote, Mr. Changdeo Kadam and Mr. Shashikant Shinde
were admitted during the same month (however, the overall
operations of the firm were managed by the current partners since
2008 as managers, whereas the earlier partners acted as only
stakeholders in the firm). OIP acts as a sub-contractor for
carrying out various infrastructure construction activities viz.
laying pipes & SWD (Storm Water Drainage) works, earth work & other
foundation work for laying railway lines, construction of roads,
construction of dams & canals (dams & canals comprised 100% of the
net sales in FY17), etc. across Maharashtra and Andhra Pradesh.
P PADMA: CARE Moves D Debt Rating to Not Cooperating Category
-------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of P Padma
Rural Godowns (PRG) to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.79 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from PRG to monitor the rating
vide e-mail communications dated from September 2020 to October 27,
2020 and numerous phone calls. However, despite our repeated
requests, the firm 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 the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The rating(s) on P Padma Rural Godowns
bank facilities will now be denoted as CARE D 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 dated August 5, 2019 the following were
the strengths and weaknesses:
Key Rating Weaknesses
* Ongoing delays in servicing debt obligations: The firm has
ongoing delays in term loan installment repayments along with
servicing of interest obligations due to stressed liquidity
position. As per the banker's feedback, the firm has an overdue of
INR0.54 crore as on July 31, 2019.
* Small Scale of operations: The scale of operations of the entity
marked by total operating income (TOI), remained small at INR0.54
crore in FY19 (C. A. Certified Prov.) with low net worth base of
INR3.97 crore as on March 31, 2019 (C. A. Certified Prov.) as
compared to other peers in the industry.
* Declining Profitability Margins: PBILDT margin declined from
95.26% in FY17 to 92.78% in FY18 due to increase in maintenance
costs and PBILDT margin has marginally increased and stood at
93.71% in FY19 (C. A. Certified Prov.) at the back of increase in
scale of operations. PAT margin of the firm declined from 20.07% in
FY17 to 8.18% in FY18 due to increase in interest cost due to
availing of loans and at the back of decrease in PBILDT in absolute
terms. Further, the PAT margin of the firm has increased and stood
at 15.01% in FY19 (C. A. Certified Prov.) at the back of increase
in PBILDT in absolute terms.
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of the firm remained leveraged. The debt
equity ratio of the firm deteriorated from 1.51x as on March 31,
2017 to 2.74x as on March 31, 2019 (C. A. Certified Prov.), due to
increase in term loan. As a result overall gearing ratio also
deteriorated from 1.51x as on March 31, 2017 to 3.06x as on March
31, 2019 (C. A. Certified Prov.). The firm's debt coverage
indicators stood weak during review period. The Total debt/GCA of
the firm deteriorated from 112.12x in FY18 to 126.81x in FY19 (C.
A. Certified Prov.) due to availment of term loan. However, the
interest coverage ratio deteriorated from 2.05x in FY17 to 1.69x in
FY18 due to decrease in PBILDT in absolute terms and improved to
1.80x due to increase in interest cost and decline in PBILDT.
* Proprietorship nature of constitution with risk of withdrawal of
capital: The firm being a proprietorship firm is exposed to
inherent risk of capital withdrawal by proprietor due its nature of
constitution. Any substantial withdrawals from capital account
would impact the net worth and thereby the gearing levels.
* Highly competitive and fragmented nature of business: The firm is
engaged into the business of providing godown facilities on lease
basis to the farmers where the profitability margins comparing to
other industry will be low. Apart from that there are numerous
organized and unorganized players entering into the market which
makes the industry competitive nature.
Key Rating Strengths
* Experience of Partners for more than a decade in agricultural
industry: P Padma Rural Godowns (PRG) was established in the year
2013 and is promoted by Mrs. Padma Pachimatla. The day to
day operations of the firm are managed by Mr. Shiv Raju Pachimatla
(Spouse of Mrs Padma). The proprietor of the firm is having more
than a decade of experience in agricultural industry and having
five years of experience in warehouse industry.
* Growth in operating income: The total operating income of the SRP
increased from INR0.59 crore in FY17 to INR0.75 crore in FY19 (C.
A. Certified Prov.) due to increase in rental income.
Andhra Pradesh based, P Padma Rural Godowns (PRG) was established
as a proprietorship firm in the year 2013 and promoted by Mrs.
Padma Pachimatla. The firm is engaged in providing ware house on
lease rental to Telangana State Civil Supplies Corporation Limited
(TSCSCL), Food Corporation of India (FCI) and Cotton Corporation of
India (CCI). The property is built on total land area of 8 acres
and comprises of 8 godowns, with aggregate storage capacity of
around 23000MT, for food crops like rice, wheat, cotton etc
respectively.
PARANJAPE SCHEMES: CARE Keeps C Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Paranjape
Schemes (Construction) Limited (PSCL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 175.00 CARE C; ISSUER NOT COOPERATING
Debentures Rating continues to remain
under Issuer not cooperating;
Based on best available
information
Fixed Deposits 55.00 CARE C (FD); ISSUER NOT
COOPERATING; Rating continues
to remain under Issuer not
cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from PSCL to monitor the ratings
vide email communications dated September 29, 2020, October 3,
2020, October 21, 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 PSCL's
instruments will now be denoted as CARE C; ISSUER NOT COOPERATING
and CARE C (FD); ISSUER NOT COOPERATING for non-convertible
debentures and fixed deposits, respectively.
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 take into account non-availability of the latest
operational and financial information of the company and frequent
extensions sought by the company for interest payment on NCDs;
initially due on April 30, 2020 and July 31, 2020. The company
sought moratorium on the interest payment on NCDs from the above
mentioned dates and revised the due date of October 8, 2020 to
October 22, 2020 after due approval from the investors.
Subsequently, the company, investors and trustee has entered into
mutual agreement ( i.e. fifth supplemental Debenture Trust Deed)
dated 22nd October 2020 that the debentures shall be redeemed by
repaying the entire debenture subscription amount along with all
outstanding coupon and all other amounts due on or before
April 30, 2021.
CARE also takes into account adverse impact of COVID-19 on the real
estate sector which may lead to pressure on the cashflow position
of PSCL in the short term to medium term.
Detailed description of the key rating drivers
At the time of last rating on October 7, 2020 the following were
the rating strengths and weaknesses:
Key Rating Strengths
* Experienced promoters with long track record coupled with
geographical diversification: The Paranjape group is in the real
estate business since 1930 and PSCL is in the existence since 1987.
The current directors of the company are Mr. Shrikant Paranjape and
Mr. Shashank Paranjape having an experience of over two decades in
the real estate business.
Key Rating Weakness
* Deterioration in financial risk profile marked by continuing net
losses leading to erosion of net worth, weakening of capital
structure and debt coverage indicators: During H1FY20 (Unaudited),
PSCL registered a Total Operating Income (TOI) of INR80.86 crore
against INR121.24 crore in H1FY19 (Unaudited). However, PSCL
registered a TOI of INR80.86 crore in H2FY19 which rose by 31.95%
as against INR61.28 crore in H2FY19 (Unaudited). PSCL registered
net losses of INR97.11 crore in H1FY20. Further, Net losses widened
by 54% from INR69.78 crore in FY18 to INR107.63 crore in FY19. Net
worth as on March 31, 2019 stood at INR72.54 crore as compared to
INR191.82 crore as on March 31, 2018, leading to
wakening of capital structure. Operating losses have also resulted
in weakening of debt coverage indicators.
* Downturn in real estate sector exacerbated by COVID-19 impact:
While the residential segment was already witnessing downturn since
last few years with the slump in property markets on the back of
piling inventories, lower demand and stalled projects, the outbreak
of COVID-19 has been latest challenge to the sector. The sector has
been gravely hit with the occurrence of pandemic as the imposition
of nationwide lockdown has brought down the sales to almost nil for
most of the developers, while the construction activity has been
halted completely and the collections are limited to the milestones
achieved prior to lockdown. Even, in the event of resumption of
operations post lockdown, fresh sales is expected to remain
marginal with subdued demand on the back of pessimistic sentiments
of buyers and construction activity is expected to remain passive
on account of slower approval processes, disruption in supply chain
and weakening of cash flows in the near term. Accordingly,
developers may choose to reschedule their new launches and wait for
the sentiments to improve.
Incorporated in 1987, Paranjape Schemes Construction Limited (PSCL)
is in the business of real estate development, both residential and
commercial. The company has undertaken real estate projects in
Pune, Mumbai, Chiplun, Kolhapur and Bangalore. The group has
completed over 191 projects with total saleable area of 20.9
million square feet (msf) (~85% residential and 15% commercial)
till May 2020. The company has shown reasonable execution
capability; moreover the major funding being advance from customers
indicate company's ability to market the projects during
construction period and maintain high collection efficiency.
PARSVNATH HOTELS: Ind-Ra Affirms 'D' Long Term Issuer Rating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Parsvnath Hotels
Limited's (PHL) Long-Term Issuer Rating at 'IND D'.
The instrument-wise rating action is:
-- INR116.25 mil. Term loan (long-term) due on March 2022
affirmed with IND D rating.
KEY RATING DRIVERS
The affirmation reflects continued delays in interest servicing
during the 12 months ended September 2020 by PHL. This was due to
delays in the commencement of commercial operations at its hotel in
Shirdi, which is still under construction, owing to tight
liquidity. As per the discussion with the management, the company
is fully repaying the term loan ahead of its schedule backed by the
financial support from its parent Parsvnath Developers Limited.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could lead to positive rating action.
COMPANY PROFILE
Incorporated in November 2007, Parsvnath Hotels, a wholly-owned
subsidiary of Parsvnath Developers Limited, is constructing a
three-star hotel in Shirdi, Maharashtra.
RAHEJA DEVELOPERS: CARE Keeps D Debt Rating in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Raheja
Developers Limited (RDL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 1171.64 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 13, 2019,
continued to place the ratings of RDL under the 'Issuer Not
Cooperating' category as the company had failed to provide the
requisite information required for monitoring of the ratings as
agreed to in its rating agreement. Raheja Developers Limited
continues to be noncooperative despite repeated requests for
submission of information through phone calls and a letter/email
dated Oct. 9, 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. The ratings for the bank facilities of
Raheja Developers Limited are denoted as 'CARE D; Issuer Not
Cooperating'.
Detailed description of the key rating drivers
CARE has not received any information from the company. However as
per the last rating exercise there were irregularities in the bank
facilities.
Raheja Developers Limited (RDL) was incorporated in 1990 and was
promoted by Mr. Navin M Raheja and his family members. The company
is engaged in real estate development (residential and commercial).
Mr. Navin M Raheja (Chairman & Managing Director) has an
established track record in the real estate sector. He is also
chairman of real estate committee of FICCI (Federation of Indian
Chambers of Commerce and Industry) and a chairman of advisory
council of National Real Estate Development Council (NAREDCO).
RCL PAPER: CARE Keeps D Debt Ratings in Not Cooperating Category
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of RCL Paper
and Packagings Limited (RCL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.28 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 2.75 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 20, 2019, placed the
ratings of RCL under the 'issuer non-cooperating' category as
company had failed to provide information for monitoring of the
rating. The firm continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 31, 2020 to October 8, 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.
Detailed description of the key rating drivers
At the time of last rating on August 20, 2019 the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Delays in debt servicing: The company has delayed servicing its
debt obligations on account of cash flow mismatch.
RCL Paper and Packaging Limited (RCL) formerly known as RCL
Technologies Limited was incorporated in 1993 as Reddy Computers
Limited and subsequently its name was to RCL Technologies Limited
in the year 2000. Further, On November 05, 2014, the name was
changed to RCL Paper and Packaging Limited. The company is engaged
in the business of digital printing of letter heads, bus tickets,
account books, pin mailers and other printed documents. Initially,
RCI used to outsource the printing works, after receiving order
from its clients, to various third parties, on a job-work basis
till 2011. However they have started own printing unit in 2011. The
company has its servicing facility located at Sanathnagar,
Hyderabad with an installed capacity of 2,000 metric tonnes of
paper per annum. RCL has around 170 customers across Andhra Pradesh
and Telangana states including reputed clients like banks,
A.P.S.R.T.C, Karvy Consultants, etc. The major raw materials of the
company include paper, printing ink and other printing materials
which are procured from domestic suppliers.
RELIABLE POLYESTER: CARE Lowers Rating on INR5.50cr Loan to D
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Reliable Polyester Private Limited (RPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.50 CARE D; ISSUER NOT COOPERATING
Facilities Revised from CARE B+; Stable
and moved to Issuer Not
Cooperating Category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from RPPL to monitor the ratings
vide e-mail communications dated July 31, 2020, August 3, 2020,
August 5, 2020, August 7, 2020, August 14, 2020, August 21, 2020,
August 31, 2020, September 2, 2020, September 04, 2020, September
08, 2020, September 10, September 16, 2020, September 30, 2020,
October 1, 2020, October 2, 2020, October 6, 2020, October 8, 2020,
October 14, 2020, October 16, 2020, October 19, 2020, October 20,
2020, October 21, 2020, October 22, 2020, October 23, 2020,
numerous phone calls and final remainder dated October 27, 2020.
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
ratings on RPPL's bank facilities will now be denoted as CARE D;
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.
The rating assigned to the bank facilities of RPPL has been revised
due to ongoing irregularities in its debt servicing.
Detailed description of the key rating drivers
At the time of last rating on November 7, 2019 the following were
the key weaknesses (Updated from info available from lender):
Key Rating Weaknesses
* Ongoing delay in debt servicing: As per due diligence with lender
bank facilities of RPPL has been recalled by bank and account is
declared NPA due to poor liquidity position of the associate
concern.
Surat-based (Gujarat) RPPL, a family run business was incorporated
in May 1988, by Mr. Radha Mohan Mittal which is now managed by Mr.
Ruchir Radha Mohan Mittal and Mrs. Esha Ruchir Mittal. The company
is engaged into the manufacturing of greige (unprocessed) polyester
fabrics from polyester yarn (primarily Air Textured Yarn (ATY)),
prior to which it discontinued the operations of manufacturing
polyester yarn. RPPL operates from its sole manufacturing facility
located in Surat (Gujarat) with 135 shuttle-less water jet looms
having an installed capacity of 1.20 crore metres of greige fabric
as on March 31, 2019.
SANTLAL INDUSTRIES: CARE Lowers Rating on INR60cr LT Loan to C
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Santlal Industries Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 60.00 CARE C; ISSUER NOT COOPERATING
Facilities Revised from CARE B; ISSUER NOT
COOPERATING; Based on best
available information
Short-term Bank 37.00 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 22, 2019, continued
to place the rating of Santlal Industries Limited under the 'Issuer
Non-Cooperating' category as the company had failed to provide the
requisite information required for monitoring of the rating as
agreed to in its Rating Agreement. Santlal Industries Limited
continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated October 20, 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).
In view of the publically available information and lack of
management cooperation, CARE has revised the rating for bank
facilities of Santlal Industries Limited from CARE B/ CARE A4;
ISSUER NOT COOPERATING to CARE C/CARE A4; ISSUER NOT COOPERATING.
Thus, the rating revision is based on the best available
information. The ratings on Santlal Industries Limited's bank
facilities will now be denoted as CARE C/CARE A4; ISSUER NOT
COOPERATING.
Detailed description of the key rating drivers
CARE has not received any information for the review of the ratings
except the financials for FY19 extracted from ROC. However, at the
time of last rating on October 22, 2019 the following were the
rating weaknesses and strengths.
Key Rating Weaknesses
* Moderate Financial Risk Profile: The company has witnessed an
increase in its total income from INR225.22 crore in FY18 to
INR303.25 crore in FY19 (refers to the period April 1 to March 31).
However, the PBILDT margins declined from 10.16% in FY18 to 8.16%
in FY19. At PAT level, the company reported profit of Rs 14.45 cr
in FY19 (PY: Rs . 6.71 cr). The capital structure is leveraged with
overall gearing of the company at 0.30x as on March 31, 2019 (PY:
1.45x).
* Customer concentration risk: The company sold around 23% of its
produce in the domestic market and approximately 77% to the rice
exporters in FY14. The top 3 customers contributed 47.84% of the
total revenue in FY14 exposing the company to client concentration
risk.
* Susceptible to government regulations: Paddy is the major raw
material for rice processing. The prices of paddy (basmati variety)
are highly volatile due to supply- side constraints like seasonal
nature and exposure to the vagaries of monsoon. The company
procures majority of its raw material during the harvest season,
i.e., October–January. Given the time lag between raw material
procurement and realization of inventory, the company is exposed to
the risk of adverse price movement. Internationally the basmati
rice prices have witnessed a downward trend on the back of supply
surplus, decline in demand for Basmati rice from Iran which is a
major market for Indian rice exports; and under-developed export
markets of Saudi Arabia, Dubai and Europe. Thereby, SIL, which
supplies majorly to rice exporting companies, faces the risk of
export curtailment.
* Susceptible to government regulations: The raw material (paddy)
prices are regulated by the government minimum support price policy
to protect farmer interests; this makes the rice milling industry
vulnerable to government regulations and adverse price movements.
In addition to this, the government has also in the past made many
changes in the rice export policies, which further
aggravates the risk faced by rice milling industry towards
government regulations.
Key Rating Strengths
* Experienced promoters with long track record of operations in
agro business: SIL has a long track record of operations of over a
decade. The company was promoted by Mr. Anil Agarwal, Mr. Anand
Swaroop Agarwal and Mr. Sunil Agarwal in 1999. The promoters have
been engaged in agro-business through its flour manufacturing unit
Rudi Rollers Flour Mills P Ltd since 1989. Additionally, the
promoters have also ventured into various other businesses like
real estate, fertilizer trading and healthcare.
Santlal Industries Ltd (SIL), incorporated in the year 1999 by Mr.
Anand Swaroop Agarwal, Mr. Anil Agarwal and Mr. Sunil Agarwal, is
engaged in milling, processing and manufacture of Basmati rice at
Mainpuri, Uttar Pradesh. The company commenced its operations in
2000 and has an installed capacity of 96,000 Metric Tonnes Per
Annum (MTPAs) as on March 31, 2015. The company is a part of
Santlal Group, which started its business with fertilizers & cloth
trading in 1935 as Santlal Agarwal & Sons.
SHRINET AND SHANDILYA: CARE Cuts Rating on INR35cr Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shrinet and Shandilya Construction Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 3.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
category and Revised from
CARE B-; Stable; ISSUER NOT
COOPERATING
Short Term Bank 32.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category and Revised from
CARE A4; ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
The ratings have been revised on account of ongoing delays in
servicing of its debt obligations based on information available on
public domain.
Detailed description of the key rating drivers
Key Rating Weakness
* On-going delays in servicing of debt obligation: There are
ongoing delays in servicing of its debt obligations as per
information available on public domain.
Shrinet and Shandilya Construction Private Limited (SSPL) was
incorporated in July 10, 1998 by Mr. Sanjay Partap Singh. The
company is engaged in construction works which involve construction
of roads and development work like construction of drains and
culvert. SSPL executes contracts mainly for government departments
like New Okhla Industrial Development Authority (NOIDA), Office of
Executive Engineer-Irrigation Division, Road Division and
Superintending Engineer-Rural Engineering Department.
SUN PROJECTS: CARE Lowers Rating on INR14.71cr LT Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sun
Projects India Private Limited (SPIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 14.71 CARE D Revised from CARE BB-;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of SPIPL
factored by delays in servicing debt obligations due to stressed
liquidity position.
Rating sensitivities
Detailed description of the key rating drivers
Positive Factors
* Improvement in liquidity position and delay free track record for
minimum period of single quarter or consecutive three months.
Key Rating Weaknesses
* On-going delays in debt serving: The company is unable to
generate sufficient cash flows leading to strained liquidity
position resulting in on-going delays in meeting its debt
obligations.
* Small scale of operations with decrease total operating income:
Though the company is in real estate business for more than two
decades, the scale of operations remained small marked by
total operating income which dropped marginally from 1.30% to
INR10.60 crore in FY20(Prov.) as against INR10.74 crore in FY19
coupled with a networth base of INR2.62 crore as on March 31, 2020
(Prov.). The company has recorded revenue of INR3.50 crore in
6MFY21.
* Delay in ongoing projects: The project 'Sun Medanta' was
commenced in May 2017 and expected to be completed by December
2020. However there was a delay in project execution due to
outbreak of COVID 19 and hence the project elongates and expected
to be completed by December 2021. As on June 2020, the company has
incurred only 20% (PY: 14%) of total cost and it has sold 0.40 lsf
(52%) out of total saleable area of 0.77 lsf worth INR20.00 crore.
Further, the new project 'Sun Corner Stone' initiated on Aug 2019
which is at the nascent stage of construction has incurred only
total cost of INR0.90 crore (5%) as on June 2020 and it has sold
0.10 lsf (32%) as against total saleable area of 0.31 lsf worth
INR4.94 crore.
* Financial closure yet to be achieved for the project 'Sun Medanta
and Sun Corner Stone': The company is yet to achieve financial
closure for the ongoing projects 'Sun Medanta' and 'Sun Corner
Stone'. As on June 2019, the company has incurred only INR7.09
crore (19%) of total cost through promoters fund and customer
advances and the project is expected to complete in December 2021.
Further, 'Sun Corner Stone' was initiated in Aug 2019 which is at
nascent stage of constructions with cost incurred of INR0.90 crore
(5%) of total cost which was funded through promoter's capital of
INR0.50 crore (10%) and customer advances of INR0.40 (4%) crore and
the company has envisaged completion by December 2022.
* Moderate projects' execution risk with 25% of the total project
cost incurred on an average: With an average of 25% of the total
project cost incurred as on June 2020, there is moderate execution
risk. However, considering the past track record of the company of
executing ten projects with an aggregate saleable area of 4.13 lakh
square feet, execution risk is mitigated to some extent.
* Improved capital structure albeit stood leveraged in FY20
(Prov.): The capital structure of the company though improved
continued to remain leveraged marked by overall gearing of 3.55x as
of March 31, 2020(Prov.) as against 4.83x as of March 31, 2019
owing to decrease in debt levels on back of repayments of term
loans borrowed for execution of orders.
* Geographically concentrated revenue profile: SPIPL is primarily
located in Kerala state and executing projects in and around
Thiruvananthapuram which reflects geographical concentration risk.
In case, the real estate market of Thiruvananthapuram slows down or
there happens to be any political uncertainties, the same will
impact the operations of the company. Furthermore, the company is
likely to face intense competition from well established players.
* Inherent cyclical nature of the real estate industry: The company
is exposed to the cyclicality associated with the real estate
sector which has direct linkage with the general macroeconomic
scenario, interest rates and level of disposable income available
with individuals. In case of real estate companies, the
profitability is highly dependent on property markets. A high
interest rate scenario could discourage the consumers from
borrowing to finance the real estate purchases and may depress the
real estate market.
Key Rating Strengths
* Experienced promoters with more than two decades in real estate
business: Sun Projects India Private Limited is promoted by Mr.
Sajeev Vidhyadaran and Mrs. Sreeja Sajeev. Mr. Sajeev Vidhyadaran
is the Managing Director of the company and has more than two
decades of experience in real estate industry. His long presence in
the market has helped the company in establishing good
relationships with customers.
* Favorable location of the projects: The ongoing as well as
completed projects are located at one of the developing residential
and commercial areas of Thiruvananthapuram. The projects are
centrally located and well connected to other main roads in the
city. Schools, hospitals, commercial areas, accessibility of roads,
availability of public transportation, all are well connected.
Stretched liquidity
Liquidity position of the company remained stretched characterized
by low cash accruals which stood at INR0.79 crore in FY20 (Prov.)
to repay its term debt of INR3.84 crore as on March 31, 2020
(Prov.). The company's cash and bank balance stood modest at
INR0.29 crore as on March 31, 2020(Prov.). However the current and
quick ratio of the company stood comfortable at 3.61x and 3.16x
respectively as on balance sheet date, to meet out its short term
debt obligations. As per RBI announcement on COVID-19, the company
has availed moratorium for the period of March 2020 to August 2020
for bank facilities.
Sun Projects India Private Limited (SPIPL), a Kerala based
developer, is engaged in real estate development projects. SPIPL
was incorporated in the year 1998 and promoted by Mr. Sajeev
Vidhyadaran and Mrs. Sreeja Sajeev. Since its inception, the
company has executed ten projects both residential and commercial
in Kerala with an aggregate saleable area of 4.13 lakh square feet.
TENNY JOSE: CARE Lowers Rating on INR32cr LT Loan to D
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Tenny Jose Limited (TJL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 32 CARE D Revised from CARE BB-;
Facilities Stable
Short-term Bank 27.50 CARE D Revised from CARE A4
Facilities
Detailed Rationale & Key Rating Drivers
The revision in ratings assigned to the bank facilities of TJL
factors in the continuous overdrawals for more than 30 days in the
working capital facilities of the company.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in Servicing of Debt Obligations: CARE as part of its due
diligence exercise interacts with various stakeholders of the
company including lenders to the company and as part of this
exercise has ascertained that the working capital limits are
continuously overdrawn for more than 30 days till date.
Tenny Jose Limited (TJL) was incorporated on October 11, 2011. TJL,
located at Thrissur, Kerala is engaged in trading and
distributorship of steel, paper and paper products through its
warehouses in Aluva and Vizag (Kerala), and Chennai (Tamil Nadu).
During FY19, sales from paper and paper products contributed 82.34%
(PY: 95.13%) and steel contributed 17.66% (4.87%) to the total
income of TJL.
TERRACIS TECHNOLOGIES: CARE Keeps D Ratings in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Terracis
Technologies Limited (TTL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 45.00 CARE D; Issuer not cooperating;
Facilities– Based on best available
Fund Based information
Long-term Bank 121.55 CARE D; Issuer not cooperating;
Facilities– Based on best available
Non-Fund Based Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 4, 2019, placed the
ratings of TTL under the 'Issuer Not Cooperating' category as the
company had failed to provide the requisite information required
for monitoring the ratings as agreed to in its rating agreement.
TTL continues to be non-cooperative despite repeated requests for
submission of information through email dated Sep 16, 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. The
rating of the bank facilities of Terracis Technologies Limited will
be denoted as 'CARE D; 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.
CARE has not received any information from the company except
financial of FY19 extracted from ROC. However as per the lender
there are on-going delays in debt servicing.
Analytical approach: Consolidated. TTL has four wholly-owned
subsidiaries and one overseas subsidiary (Philippines) with 67%
stake.
Terracis Technologies Limited (formerly known as IL&FS Technologies
Limited (ITL)) is a part of IL&FS group. TTL was incorporated on
February 9, 1993 and is engaged in complete end-to-end technology
solutions offering consulting, software development, systems
integration, data digitization and management service and
solutions, performance tuning solutions and IT infrastructure
management services to global customers. TTL works closely with
various government departments (pan India and globally) to create
e-Governance infrastructure. TTL, over the years has developed
significant expertise in developing and delivering citizen centric
IT projects in Public Private Partnership mode in both domestic and
international markets.
UNNATI FORTUNE: CARE Keeps D Debt Rating in Not Cooperating
-----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Unnati
Fortune Hotmart Private Limited (UFH) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 25.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 20, 2019 placed the
rating of UFH under the 'issuer non-cooperating' category as UFH
had failed to provide information for monitoring of the rating. UFH
continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated September 9, 2020,
August 31, 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).
The ratings take into account ongoing delays in meeting the debt
obligations. The account has been classified as NPA as per the
banker feedback.
Ghaziabad (Uttar Pradesh) based Unnati Fortune Hotmart Pvt Ltd
(UFH), a private limited company was incorporated by Mr. Anil
Mithas and Mrs. Madhu Mithas in June 2011 and is part of Unnati
Fortune group. The group consists of 25 companies however, only few
of them are operational. UFH is setting up a four star hotel in
Vaishali near Ghaziabad (Uttar Pradesh). The proposed hotel is
being developed on a land parcel of 3,902 sq. mtrs. The proposed
hotel consists of 30 rooms, convention centre, fitness centre,
restaurant, banquet and other facilities (which include pool,
Terrace Garden and Meditation room). Apart from the mentioned
facilities the company is also constructing anchor shop (12,002
sqft) and retail shop (15,003 sqft). Initially the hotel was
expected to start by July, 2016 but due to delays in disbursement
of loan the construction activity was delayed. The hotel will be
operational by May 2017.
VESTA EQUIPMENT: CARE Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Vesta
Equipment Private Limited (VEPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 3.45 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
Category
Long Term/Short 8.50 CARE D; ISSUER NOT COOPERATING
Term Bank Rating continues to remain
Facilities Under ISSUER NOT COOPERATING
Category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 23, 2019, placed the
rating(s) of VEPL under the 'issuer not cooperating' category as
VEPL had failed to provide information for monitoring of the rating
VEPL continues to be non-cooperative despite repeated requests for
submission of information through phone calls and e-mails dated
September 2, 2020 to September 8, 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.
Detailed description of the key rating drivers
At the time of last rating on August 23, 2019 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* Ongoing delays in debt servicing: The banker has confirmed that
there are ongoing delays in repayment and interest payment.
Key Rating Strengths
* Experienced promoters: The company is being promoted by Mr. R.
Balasubramanian and Mr. Sam Alumkal Thampi of Bangalore, Karnataka.
Mr. R. Balasubramanian (aged 54 years), Managing Director, is an
Engineer, having around three decades of experience in
manufacturing of industrial machineries and was associated with
various heavy equipment manufacturing companies like Ingersoll-Rand
(India) Ltd as a strategic business unit head, Thermo King India
Pvt Ltd as a country head and also worked in Doosan Infracore's
Construction Equipment (India) as CEO. While Mr. Sam Alumkal Thampi
(Director, aged 44 years, Post Graduate), having more than two
decades of experience in sales and marketing with several companies
(like Voltas Ltd, Ingersoll-Rand (India) Ltd, Volvo India Pvt. Ltd.
etc), looks after the marketing aspect of the company. They are
actively supported by a team of experienced personnel.
Vesta Equipment Private Limited (VEPL) was incorporated in May,
2010 and is promoted by Mr. R. Balasubramanian and Mr. Sam Alumkal
Thampi of Bangalore, Karnataka. The company is engaged in
designing, development and manufacturing of diesel engine driven
portable screw air compressor in technical collaboration with M/s.
Sullair Corporation, USA. Currently the company manufactures three
kinds of air screw compressors which are utilized in water well
drilling, coal bed methane drilling, geothermal, underbalanced
drilling etc. The manufacturing unit of the company is situated at
Bangalore.
=================
S I N G A P O R E
=================
IBC CAPITAL: Moody's Confirms B2 CFR; Alters Outlook to Neg.
------------------------------------------------------------
Moody's Investors Service has confirmed the B2 corporate family
rating (CFR) of IBC Capital Limited following the successful
refinancing of its $195 million credit line due March 2021.
At the same time, Moody's has confirmed the B2 senior secured
rating on the $610 million first lien term loan due September 2023,
and the B3 senior secured rating on the $155 million second lien
term loan due September 2024. These loans are issued by Goodpack as
the parent borrower and IBC Capital US LLC as the US co-borrower,
and substantially guaranteed by all subsidiaries.
The outlook on all ratings is changed to negative from rating under
review.
This action concludes the review for downgrade initiated on July 2,
2020.
"The ratings confirmation reflects the improvement in Goodpack's
liquidity position following the successful refinancing of its $195
million credit line due March 2021," says Stephanie Cheong, a
Moody's Analyst. "However, the negative outlook reflects the
company's elevated leverage, which Moody's expects will remain at
the top end of its tolerance range over the next 12-18 months,
barring a meaningful expansion of profitability."
RATINGS RATIONALE
On November 6, 2020, Goodpack successfully refinanced its $195
million credit line due March 2021 with a new $200 million credit
line from BDO Unibank, Inc. (Baa2 stable). The new credit line
consists of (1) a $175 million revolving credit, and (2) a $50
million letter of credit facility, both subject to a maximum
utilization of $200 million in aggregate.
The new credit line will extend Goodpack's debt maturity profile by
more than two years to 2023. The increase in its revolving credit
to $175 million from $95 million under its previous credit line
also provides the company with more financial flexibility to fund
container purchases on top of general working capital spending.
Goodpack's B2 CFR reflects Moody's expectations that the company
will maintain a good liquidity profile and continue to generate
free cash flow over the next 12-18 months. Moody's expects
Goodpack's cash balance of $78 million, along with its operating
cash flow, will be sufficient to cover its capital spending and $84
million of supplier payables, and service its debt amortization of
around $9 million over the next 18 months. Goodpack's liquidity is
further bolstered by access to its $175 million revolving credit
facility, of which, Moody's estimates around $94 million is
available.
That said, the company will face a large refinancing wall in 2023
where it will have its new $200 million credit line come due in
March and its $610 million first-lien term loan due in September.
But Moody's expects Goodpack to be proactive in its capital
management and address its maturing debt well in advance of
maturity.
Given its elevated leverage, Goodpack was already weakly positioned
for its B2 rating even prior to the coronavirus outbreak. With the
coronavirus pandemic exacerbating the effects from a cyclical
downturn in the global tire market, the company's credit profile
will likely remain weak for a prolonged period.
While Goodpack's earnings should improve in fiscal 2021 ending in
June 2021, driven by a recovery in trip volumes following rubber
production restarts, new contract wins and ongoing cost
rationalization efforts, lower global tire production and consumer
demand will challenge the trajectory of its earnings recovery.
Moody's estimates Goodpack's leverage -- as measured by adjusted
debt/EBITDA -- will be around 6.6x at the end of fiscal 2022, after
peaking above 7.0x in the current year.
Goodpack's B2 CFR continues to reflect its (1) high customer,
channel and supplier concentration, which exposes its business to
the current downturn in the automotive industry and slowing global
trade; (2) aggressive financial policies, following its acquisition
by Kohlberg Kravis Roberts & Co L.P. (KKR); and (3) small scale
when compared with rated peers. These factors are balanced against
Goodpack's leading position in the niche logistics market for
rubber and synthetic rubber and high EBITDA margins, which are
typically at or above 45%.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered governance risk arising from Goodpack's
concentrated ownership and its aggressive financial policy as
demonstrated by its heightened refinancing risk and tolerance for
elevated leverage following the leveraged buy-out by Kohlberg
Kravis Roberts & Co L.P. in 2014.
The negative outlook reflects Moody's expectations that the
company's credit metrics will remain stretched for its rating level
over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook, the ratings are unlikely to be upgraded
over the next 12-18 months.
The ratings could be stabilized if Goodpack demonstrates an ability
to reduce its financial leverage, such that it stays well below
6.5x and EBITA/Interest exceeds 1.5x over a sustainable period
while maintaining a good liquidity profile.
The rating could be downgraded if Goodpack's earnings decline and
margins weaken such that its (1) financial leverage is sustained
above 6.5x; or (2) EBITA/interest is consistently below 1.5x; or
(3) available liquidity, defined as cash plus committed revolving
facilities availability, falls below $40 million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
IBC Capital Limited, operating as Goodpack, acquired Goodpack in
September 2014 for $1.4 billion. IBC Capital Limited is an indirect
wholly-owned subsidiary of a fund affiliated and advised by
Kohlberg Kravis Roberts & Co L.P.
Headquartered in Singapore, Goodpack owns a fleet of 4.06 million
intermediate bulk containers used for the packaging, transportation
and storage of cargo; primarily natural rubber and synthetic
rubber.
IBC CAPITAL: S&P Alters Outlook to Stable, Affirms 'B' ICR
----------------------------------------------------------
S&P Global Ratings revised the outlook on IBC Capital Ltd.
(Goodpack) to stable from negative. S&P affirmed its 'B' long-term
issuer credit rating on Goodpack, the 'B' long-term issue rating on
the company's first-lien senior secured term loan, and the 'CCC+'
long-term issue rating on the second-lien term loan. The recovery
ratings on the first-lien term loan is '3' and on the second-lien
term loan is '6'.
The refinancing of Goodpack's RCF and LC will bolster liquidity.
The company used the new RCF of US$175 million to settle its
outstanding RCF and container payables of about US$120 million due
within the next 12 months. In addition to an available RCF of
approximately US$56 million (after refinancing), Goodpack will
benefit from an extended maturity of two years, removing near-term
refinancing risks. S&P estimates the company's weighted average
maturity will improve slightly to 2.9 years (from 2.7 years) as of
November 2020.
Goodpack's underlying business is recovering faster than S&P
anticipated.
The first three months of fiscal 2021 (year ending June 30, 2021)
saw the company's sales volumes recovered to close to 90% of
pre-COVID-19 levels, bolstered by higher exposure to the more
resilient replacement tire segment, compared to original equipment
manufacturers. Despite weaker macroeconomic conditions, Goodpack's
cash collections have improved, with days sales outstanding (based
on gross revenue) declining to 53 days in fiscal 2020 from 61 days
in the same period last year. Goodpack has a larger geographical
concentration to Asia Pacific, where more than 60% of its revenue
originates. Approximately 30% of revenues are from Northeast Asia,
which is leading the recovery from the pandemic. Most tire plants
in the region are operating at 75%-85% capacity, while Chinese tire
production and export volumes continue to expand at 3%
year-on-year. S&P believes Goodpack is well placed to ride out a
prospective market recovery, bolstered by the potential for the
Chinese market to resume moderate long-term growth, driving rubber
demand.
S&P believes Goodpack will maintain rating headroom despite weak
operating conditions.
S&P said, "In our view, the company's credit profile can
accommodate our projections of an approximate 12% decline in EBITDA
in fiscal 2021, on the back of a flattish revenue profile during
the same period. With Goodpack's new revenue initiatives, better
variability in costs, as well as higher customer conversion to new
contract pricing models, we now project the company's EBITDA in
fiscals 2020 and 2021 will be 10% higher than our earlier
projections. Despite a modest rise in debt due to higher
utilization of RCF, we now project an improvement in the
debt-to-EBITDA ratio to less than 7x in fiscals 2021 and 2022, from
our previous expectations of 7x-7.5x. We also anticipate that
Goodpack will benefit from low interest rates since its debt is
largely pegged to floating LIBOR rates. In our base case, we
forecast the EBITDA interest coverage will be at least 2.5x over
the next two fiscal years, compared with 2.3x in fiscal 2020.
"We view Goodpack's leasing business as more resilient to exogenous
shocks compared to that of auto manufacturers.
"Although more than 70% of Goodpack's revenue is exposed to the
automotive industry, we believe the company's business model
supports its ability to tolerate exogenous shocks caused by the
pandemic." Besides transporting commodities, Goodpack's containers
can also serve as a storage solution for its customers. As such,
even though the pandemic has reduced delivery volumes, customers
have continued to utilize Goodpack's containers, translating into
higher extended hire billings, cushioning the decline in revenue.
Goodpack's sticky customer base, with relationships averaging over
10 years for its major customers, and high renewal rates are key
risk mitigants, in S&P's opinion.
The low costs of packaging, representing an average of about 1% of
customers' total production costs, also mean that these container
costs are generally immaterial to the customers' cost structure. As
such, there is little incentive for customers to switch to a
different supplier, or to discontinue Goodpack's solutions.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "The stable outlook reflects our expectation that
Goodpack's business prospects will remain relatively stable over
the next 12 months, despite weaker macroeconomic conditions that
may weigh on its customers and end markets. The outlook also
reflects our expectation that the company's debt-to-EBITDA ratio
would remain below 7.5x over the next 12 months.
"We may lower the rating on Goodpack if business prospects
deteriorate significantly or if the company adopts a more
aggressive financial risk appetite, causing its EBITDA interest
coverage to fall below 2x sustainably or its debt-to-EBITDA ratio
to remain above 7.5x. Persistent negative free operating cash flow
along with heightened liquidity pressure could also precipitate a
downgrade.
"We view an upgrade of Goodpack to be less likely over the next 12
months. We could consider an upgrade if we see credible prospects
for the company's debt-to-EBITDA ratio to remain below 5.5x." This
would likely require meaningful and sustainable earnings growth,
along with a commitment by Kohlberg Kravis Roberts & Co L.P. (KKR,
a financial sponsor that owns Goodpack) to reduce leverage.
Headquartered in Singapore, Goodpack provides transportation and
logistics services. It has a leading market position in the
synthetic and natural rubber segment. The company owns and operates
a fleet of more than 3.9 million intermediate bulk containers,
which are leased by customers. Clients primarily use Goodpack's
boxes to transport natural and synthetic rubber, food and liquid,
and auto parts to a lesser extent. The company has a global network
of over 5,000 delivery and collection points.
ROBINSON SINGAPORE: 3 Mattress Suppliers to Honor Customers Orders
------------------------------------------------------------------
Channel News Asia reports that three mattress suppliers said on
Nov. 4 that they will honor orders made by customers at Robinsons,
despite not having received payments from the retailer.
Customers had reported delays or cancellations on the delivery of
mattresses they purchased, after Robinsons announced that it is
closing its last two department stores and is undergoing
liquidation, CNA relates.
On Nov. 11, mattress suppliers Sealy, Simmons and King Koil said
they will honor and fulfil orders of customers who have paid
Robinsons in full, according to CNA.
"We will be honouring orders for customers who have made full
payments to Robinsons - even though we may not be paid by
Robinsons," King Koil said, CNA relays.
For customers who have made partial payment or deposits, it said it
will absorb the amounts that have been paid, adding that there will
be no transportation and other hidden charges imposed.
CNA relates that Simmons made a similar statement on its Facebook
page, saying: "For Robinsons customers who have made deposits or
partial payments, Simmons will absorb the deposit or partial
payment made to Robinsons.
"Simmons will also contact every customer as soon as possible to
advise you on your balance payments and fulfil your order as soon
as possible."
Sealy noted the impact of Robinsons' closure on customers.
"This has resulted in hundreds of Sealy's valued customers having
paid Robinsons in full for their Sealy beds, with Sealy not having
been paid to supply and deliver them," it said in a Facebook post.
"Notwithstanding Robinsons' failure to pay Sealy, Sealy will honour
the orders placed by customers who have paid Robinsons in full for
Sealy beds and will supply and deliver those orders to Sealy’s
valued customers."
According to CNA, Sealy said there will be a "modest S$50 delivery
fee", and that it would contact each customer "shortly" to arrange
for delivery.
"Sealy will also contact customers who have either paid deposits or
made part-payment to Robinsons for Sealy beds to make further
arrangements for the fulfilment of their orders," said the
company.
Following Sealy's statement, Robinsons said on Facebook that an
agreement had been reached between the liquidators and Sealy to
fulfil orders made by customers, the report relays.
"We are in ongoing discussions with other suppliers and will
continue to provide updates to affected customers as and when
available," said Robinsons.
Robinsons announced on Oct. 30 that it is closing its last two
stores in Singapore at The Heeren and Raffles City Shopping Centre,
citing weak consumer demand, the report recalls.
Just two months earlier, it closed its seven-year-old, 85,000 sq ft
outlet at Jem shopping mall, the report notes.
SABANA SHARI'AH: Unitholders Scheme Meeting Set for Dec. 4
----------------------------------------------------------
The Business Times reports that Sabana Shari'ah Compliant
Industrial Real Estate Investment Trust (Sabana Reit) will be going
ahead with its scheme meeting on Dec. 4 for unitholders to vote on
the proposed merger with ESR-Reit, said chief executive of the
manager Donald Han in a media call on Nov. 12.
This is in response to queries posed about the requisition notice
made by fund managers Quarz Capital and Black Crane Capital on Nov.
10 for Sabana Reit's board to convene an extraordinary general
meeting (EGM), proposing five resolutions for unitholders to vote
on.
"We're taking that letter very seriously and are seeking advice
from our advisers. In the meantime, we are continuing the process
for the proposed merger as we believe (that) all unitholders, not
just one or two, should have the chance to make their own decision
on the transaction and vote accordingly," the report quotes
Mr. Han as saying.
Unitholders of Sabana Reit must pre-register for next month's
scheme meeting and vote on the scheme resolution by the afternoon
of Dec. 1, BT says.
BT relates that ESR-Reit's EGM will also be held on Dec. 4, and
unitholders will only be able to vote on two resolutions -- one of
which being the merger -- at the EGM by appointing the chairman of
the EGM as proxy to vote on their behalf.
===============
X X X X X X X X
===============
COOK ISLANDS: S&P Affirms B+/B Sovereign ICR, Outlook Stable
------------------------------------------------------------
On Nov. 12, 2020, S&P Global Ratings revised to stable from
positive the outlook on the Cook Islands. At the same time, S&P
affirmed its 'B+/B' sovereign issuer credit ratings on the Cook
Islands. The transfer and convertibility (T&C) assessment remains
'AAA'.
Outlook
The stable outlook on the long-term ratings on the Cook Islands
reflects S&P's expectation that the country will narrow its fiscal
deficits, thereby slowing the rise in net debt over the next few
years.
Downside scenario
S&P could lower its ratings if the effects of the pandemic were
greater or more prolonged than we currently expect. This could
cause public finances to underperform our forecasts with large
deficits and higher net debt.
Upside scenario
S&P could raise its ratings over the next 12 months if there is a
sustained improvement in data disclosure and quality, leading to
increased transparency about the country's external liquidity and
indebtedness.
Rationale
The economic downturn caused by the spread of COVID-19 and
subsequent recovery will exacerbate the fragilities inherent in
Cook Islands' tourism-centric economy. The downturn is driving
large fiscal deficits that S&P expects to narrow within the next
few years. As a result, net debt will rise and remain much higher
than in the past. Cook Islands' debt burden nevertheless will
remain modest compared with its peers, and the debt will be owed to
official lenders.
S&P said, "The Cook Islands is taking steps to address important
deficiencies in its fiscal, economic, and external data, but has
been slower than we expected. Our credit ratings are constrained by
weak data disclosure and uncertainties created by frequent
revisions."
The country is improving the timeliness of its publications of
audited consolidated government financial statements. The
government in 2019 published balance of payments and international
investment position for 2011 to 2017 for the first time. Balancing
these improvements, GDP estimates are still revised regularly and
there is a lack of transparency in the activities of statutory
authorities and other government-controlled entities.
S&P's ratings also reflect the vulnerabilities associated with a
weak institutional framework for making policies, limited monetary
policy flexibility, and a narrow economic base that suffers from
heavy emigration. These factors are partly offset by the
government's supportive relationship and high labor mobility with
highly rated New Zealand, financial and technical assistance from
donor agencies, and the country's sound financial system.
Institutional and economic profile: A severe economic contraction
as borders close to prevent the spread of COVID-19
-- Border closures to prevent the spread of COVID-19 will sharply
weaken the Cook Islands economy this year.
-- Weak policymaking culture and institutional settings constrain
the ratings.
While the Cook Islands is one of the only countries in the world
not to have had a case of coronavirus, it has been forced to close
its borders to stop the spread of COVID-19. S&P said, "We believe
this will cause a severe contraction in the Cook Islands' economy.
We now expect real GDP to shrink by about 9% in 2020 and 5.3% in
2021 before recovering. GDP per capita will fall to NZ$23,600 in
2021 from NZ$25,100 in 2020."
The economy is centered on tourism, which is the country's major
revenue earner. In S&P's view, it makes the economy particularly
vulnerable to cyclones and downturns in major tourism markets.
Tourism numbers have collapsed to zero after several years of
strong growth and will remain weak for some time. S&P said, "We
believe borders could open some time in 2021 between the main
tourist locations of New Zealand and Australia, with the remainder
of other markets opening later. This will limit tourism activity
and mute economic activity until a vaccine or effective treatment
becomes widely available, which we believe could be around
mid-2021. New Zealand tourists make up about 65% of arrivals,
followed by Australians at 15%-20%."
The vulnerabilities associated with the country's weak policymaking
culture and institutional settings are a key ratings constraint.
The outcome of the 2018 election continued the country's historical
political fragmentation and uncertainty. This leaves the Cook
Islands vulnerable to policy shifts driven by populist sentiment,
which has hampered previous development and much-needed reform
efforts. Shortages of skilled labor continue to weigh on
institutional capacity, though the government is attempting to fill
this gap. The policymaking settings are supported by a vigorous
free press, an outspoken business community, and efforts by major
aid donors to promote sound financial and economic public policies
and stronger administration.
The Cook Islands on Jan. 1, 2020, acquired the status of a
developed country from the Organisation for Economic Co-operation
and Development (OECD). As a result, the Cook Islands will no
longer qualify to receive official development assistance through
the OECD's development assistance committee. However, this change
has not hurt the Cook Islands' funding structure; S&P expects New
Zealand--the country's largest aid donor--will maintain its
historical support, reflecting long-standing political ties. On the
other hand, the islands will lose official technical assistance
support, which provides vital help to the government. The New
Zealand government recently provided the nation with an additional
budget support grant to support the first phase of the government's
Economic Response Plan.
The Cook Islands is a self-governing country with a free
association with New Zealand. Cook Islanders are citizens of New
Zealand. The country achieved self-governance in 1965, but New
Zealand controls its foreign policy, defense, and continues to
provide budgetary support. The country benefits from a close and
comprehensive political and economic relationship with New
Zealand.
Flexibility and performance profile: The consequences of the
pandemic will lead to fiscal deterioration and higher debt levels
-- The pandemic's economic impact will strain public finances over
the next few years.
-- The lack of data on balance of payments and net international
investment position continues to constrain our sovereign analysis.
S&P said, "We expect the pandemic to have a significant effect on
the Cook Islands' government revenues, expenditures, and debt over
the next several years. Previous fiscal targets have been placed on
hold while the country weathers the COVID-19 storm. With a decrease
in taxation revenues, which are highly correlated to economic
performance, there has been a significant pivot in government
expenditure planning over the medium term, with a pause of new
programs and a focus on maintaining core services to the
community.
"We estimate fiscal deficits will peak at more than 30% of GDP in
2021 at the height of the pandemic, before averaging about 3% in
2022 and 2023. To cover these fiscal deficits, the government will
draw down its cash reserves, including the NZ$56.7 million
Stabilisation Fund, and increase its borrowing from official
lenders. This will result in net general government debt increasing
to 32% of GDP by 2023.
"The concessional and long-term nature of current government
borrowings as well as the government's relatively low debt mean
that the ratio of the general government interest expenditure to
revenues is low; we estimate it to average below 1% of revenues
during 2020 and 2022. Typically, borrowings are over 20 years to
maturity. The government does not have any commercial debt.
"Poor coverage and timeliness of statistical releases is a key
factor that restricts a robust analysis of the Cook Islands'
economic and external accounts. We therefore currently assess the
Cook Islands' external position in accordance with our criteria for
sovereigns that have limited external data. We consider New Zealand
to be the starting point, then apply a negative qualifier for
uncertainty arising from external data gaps.
"We believe some of these data shortcomings could improve over the
medium term. The International Monetary Fund (IMF) visited the Cook
Islands in 2019 to undertake its inaugural review of the
sovereign's economic and external accounts. The IMF report lacks
sufficient information to close data deficiencies in the Cooks
external accounts, in our view. These data are a staple in IMF
Article IVs, but weren't as forthcoming in this technical
assistance report as we had expected."
The government has improved the timeliness of its consolidated
fiscal reports. The audit office in 2019 published the previous
three years' worth of consolidated government accounts. As part of
its Public Sector Expenditure Review, the government is
implementing a government-wide financial tool--the Integrated
Financial Management System--enabling reporting across departments
to be provided on a more timely basis.
The country's monetary policy flexibility is limited because of the
absence of a central bank and its use of the New Zealand dollar.
This arrangement means it forfeits monetary independence, which is
an important lever for promoting economic and financial stability.
That said, use of the New Zealand dollar has enabled the Cook
Islands to benefit from lower inflation than its peers.
S&P equalize the local currency rating with the foreign currency
rating, reflecting the Cook Islands' absence of monetary policy
flexibility, its use of the New Zealand dollar, and its lack of a
domestic capital market. The T&C assessment for the Cook Islands is
'AAA', which also reflects its use of the New Zealand dollar.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
In accordance with our relevant policies and procedures, the Rating
Committee was composed of analysts that are qualified to vote in
the committee, with sufficient experience to convey the appropriate
level of knowledge and understanding of the methodology applicable.
At the onset of the committee, the chair confirmed that the
information provided to the Rating Committee by the primary analyst
had been distributed in a timely manner and was sufficient for
Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Ratings Affirmed
Cook Islands
Transfer & Convertibility Assessment
Local Currency AAA
Ratings Affirmed; CreditWatch/Outlook Action
To From
Cook Islands
Sovereign Credit Rating B+/Stable/B B+/Positive/B
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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