/raid1/www/Hosts/bankrupt/TCRAP_Public/201210.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, December 10, 2020, Vol. 23, No. 247
Headlines
A U S T R A L I A
ATEC RAIL: Second Creditors' Meeting Set for Dec. 16
CONTINENTAL DEVELOPMENT: Second Creditors' Meeting Set for Dec. 18
CORIO BAY: Second Creditors' Meeting Set for Dec. 17
OLD PORT: First Creditors' Meeting Set for Dec. 16
SYAWISH PTY: Second Creditors' Meeting Set for Dec. 17
C H I N A
TIANQI LITHIUM: To Sell Stake in Lithium Mine to Pay Loans
[*] CHINA: Rash of Bond Defaults Tests Fixed Income Fund Market
I N D I A
A. R. CHAINS: CRISIL Reaffirms B+ Rating on INR16cr Cash Loan
DWARKADHISH UDYOG: CRISIL Keeps D Debt Rating in Not Cooperating
EUROTAS INFRASTRUCTURE: Insolvency Resolution Process Case Summary
GAAP TUFF: CRISIL Assigns B+ Ratings to INR10cr Loans
GOODDAY VENURES: Insolvency Resolution Process Case Summary
HI BUILD: CRISIL Withdraws B+ Rating on INR10.76cr LT Loan
J.P ELECTRICAL: CRISIL Assigns B- Ratings to INR3cr Loans
K T VARGHESE: CRISIL Withdraws B- Rating on INR4.25cr Cash Loan
M MADHAVARAYA: CRISIL Reaffirms B+ Rating on INR27cr Cash Loan
MALWA AUTOMOBILES: CRISIL Withdraws B+ Ratings on INR14cr Loans
MPL MOTORS PRIVATE: Insolvency Resolution Process Case Summary
PANTEL TECHNOLOGIES: Insolvency Resolution Process Case Summary
RAVI IRON: CRISIL Rate INR26cr Loans 'B+'; Suspension Revoked
SAJEEV MATHEW: CRISIL Withdraws B Rating on INR15cr Cash Loan
V MART STORES: CRISIL Puts B+ on INR6cr Credit on Watch Negative
V MART: CRISIL Puts B Ratings on Watch with Negative Implications
VAIJANATH INDUSTRIES: CRISIL Keeps D Ratings in Not Cooperating
[*] INDIA: To Step Up Scrutiny of Shadow Lenders, Local Banks
S I N G A P O R E
HIN LEONG: Marine Fuels Unit Placed in Provisional Liquidation
- - - - -
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A U S T R A L I A
=================
ATEC RAIL: Second Creditors' Meeting Set for Dec. 16
----------------------------------------------------
A second meeting of creditors in the proceedings of ATEC Rail Group
Limited, The Steel Mississippi Pty Ltd, and ATEC Freight Terminals
Pty Limited, has been set for Dec. 16, 2020, at
10:00 a.m. at the offices of SV Partners, 22 Market Street, in
Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 15, 2020, at 4:00 p.m.
Terry Grant Van der Velde and David Michael Stimpson of SV Partners
were appointed as administrators of ATEC Rail on Nov. 11, 2020.
CONTINENTAL DEVELOPMENT: Second Creditors' Meeting Set for Dec. 18
------------------------------------------------------------------
A second meeting of creditors in the proceedings of Continental
Development Pty Ltd ATF The Continental Development Unit Trust has
been set for Dec. 18, 2020, at 10:00 a.m. via teleconference.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 17, 2020, at 4:00 p.m.
Malcolm Kimbal Howell of Jirsch Sutherland was appointed as
administrator of Continental Development on Nov. 13, 2020.
CORIO BAY: Second Creditors' Meeting Set for Dec. 17
----------------------------------------------------
A second meeting of creditors in the proceedings of Corio Bay Dairy
Group Pty. Ltd. has been set for Dec. 17, 2020, at 10:00 a.m. via
electronic means.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 16, 2020, at 4:00 p.m.
David Mutton and Jonathon Colbran of RSM Australia Partners were
appointed as administrators of Corio Bay on Aug. 21, 2020.
OLD PORT: First Creditors' Meeting Set for Dec. 16
--------------------------------------------------
A first meeting of the creditors in the proceedings of Old Port
Road Pty Ltd will be held on Dec. 16, 2020, at 12:00 p.m. via
Teleconference.
Nathan Lee Deppeler and Ivan Glavas of Worrells Solvency & Forensic
Accountants were appointed as administrators of Old Port Road on
Dec. 4, 2020.
SYAWISH PTY: Second Creditors' Meeting Set for Dec. 17
------------------------------------------------------
A second meeting of creditors in the proceedings of Syawish Pty Ltd
has been set for Dec. 17, 2020, at 11:00 a.m. at the offices of
Hamilton Murphy, Level 1, 255 Mary Street, in Richmond, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 16, 2020, at 4:00 p.m.
Stephen Robert Dixon of Hamilton Murphy was appointed as
administrator of Syawish Pty on Nov. 12, 2020.
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C H I N A
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TIANQI LITHIUM: To Sell Stake in Lithium Mine to Pay Loans
----------------------------------------------------------
Annie Lee and James Thornhill at Bloomberg News report that Tianqi
Lithium Corp. plans to sell a minority stake in the world's biggest
lithium mine, giving the producer access to the cash it needs to
repay the major loan behind its ballooning financial troubles.
Australian miner IGO Ltd. will pay $1.4 billion in cash for a 49%
stake in Tianqi Lithium Energy Australia Pty, the majority
shareholder in the Greenbushes mine in the country's west,
according to a statement to the Shenzhen Stock Exchange on Dec. 8,
Bloomberg relays. The deal also includes a minority stake in
Tianqi's lithium hydroxide plant at Kwinana once a restructuring of
units is completed.
Bloomberg relates that Tianqi will use the proceeds to repay $1.2
billion of principal on an existing acquisition loan, as well as
for working capital for the Kwinana project, it said. The company
plans to sign an amended loan agreement with lenders to extend a
$1.88 billion payment to November 2021. After the equity investment
and a repayment of no less than $1.2 billion, the due date of the
facility will be further deferred to 2022.
According to Bloomberg, the deal expands IGO's push into battery
materials as it seeks to tap into an expected surge in demand as
the world's clean energy transition gathers pace. At the same time,
it gives Tianqi a possible way out from under the massive loan
repayment that it's been struggling to repay after buying a stake
in a Chilean producer in 2018 at the height of the lithium-price
boom.
IGO will fund the deal with AUD1.1 billion ($815 million) in new
debt and an equity raising of up to AUD766 million priced at
AUD4.60 per share -- a 9.7% discount to IGO's last traded price on
Dec. 7, Bloomberg discloses. The remainder will come from existing
cash. Completion, which is conditional on approval by Australia's
Foreign Investment Review Board, is expected in the June quarter of
2021.
"Both Greenbushes and Kwinana are world-class assets with
attractive growth profiles that together provide the platform for
building a global lithium business," Bloomberg quotes Peter
Bradford, IGO's managing director and chief executive officer, as
saying in a statement.
While Tianqi said there's still uncertainty around whether the
transaction with IGO can be completed, it would effectively lower
its asset-liability ratio and optimize capital structure without
losing control of its core assets, Bloomberg relays.
Bloomberg adds that the Australian Financial Review reported the
possible deal on Dec. 7. IGO shares went into a trading halt the
same day, pending a potential acquisition announcement, the report
states.
Tianqi had previously said it was weighing options including asset
sales or seeking strategic investors to ease its liquidity stress,
and the deal with IGO comes after lenders granted a last-minute
extension of about a month on its jumbo loan payment, Bloomberg
recalls.
The Chinese company had held a 51% stake in Greenbushes mine in
Western Australia through a joint venture with Albemarle Corp.,
which held the rest.
"We do not yet know the full details on the final structure of the
Tianqi transaction as it is still unfolding," Albemarle said in an
emailed statement, Bloomberg relays. "It appears to be structured
in a way that would not trigger Albemarle's right of first refusal.
If so, we believe the structure of the Talison JV would remain
unchanged. However, we will evaluate further once the full details
are known."
The Kwinana facility, Tianqi's first refinery outside of China, is
planned to be the world's biggest lithium hydroxide processing
plant, according to Bloomberg. The producer has warned the
company's operations were threatened by challenges including that
project, which has been delayed and faces litigation and liquidity
risks.
Bloomberg adds that the deal also underscores the risks of
boom-and-bust cycles in commodities. Prices of lithium chemicals
plunged since 2018 as a rush from producers to deliver supply
overwhelmed the pace of demand gains. While they've stabilized in
recent months, they're still about half their peak levels despite a
bullish outlook for electric vehicle and battery demand.
About Tianqi Lithium
Headquartered in Chengdu, Sichuan Province, Tianqi Lithium
Corporation is a leading lithium chemicals producer that mines,
makes and sells lithium minerals and lithium chemicals. The
company owns a 51% stake in the Greenbushes lithium mine in Western
Australia. It also owns a 25.9% stake in Chilean chemical producer,
Sociedad Quimica y Minera de Chile S.A.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
7, 2020, Moody's Investors Service has downgraded to Caa2 from Caa1
Tianqi Lithium Corporation's corporate family rating (CFR), and to
Caa3 from Caa2 the senior unsecured rating on the bonds issued by
Tianqi Finco Co., Ltd and guaranteed by Tianqi Lithium. The ratings
outlook remains negative.
[*] CHINA: Rash of Bond Defaults Tests Fixed Income Fund Market
---------------------------------------------------------------
Chris Flood at The Financial Times reports that China's fast
growing $15 trillion onshore bond market has been rattled by a wave
of defaults by state-owned enterprises that threaten to expose
systemic weaknesses across the financial system of the world's
second-largest economy.
More bond defaults are expected to follow as Beijing has indicated
that it is no longer prepared to help state-owned debtors that run
into trouble, the FT says. But the ending of China's deeply
entrenched system of implicit government guarantees has left
investors struggling to price credit risks.
"More defaults are coming as the Chinese authorities focus on the
deleveraging of state-owned enterprises [SOEs] now that the worst
of the coronavirus pandemic has passed," the FT quotes Chang Li, a
China specialist at S&P Global Ratings, as saying.
According to the FT, Beijing's push to impose more market
discipline on debt issuers has hit valuations for some bond mutual
funds and forced some fixed income managers to suspend buying
orders from local retail investors. The instability also threatens
to disrupt Beijing's carefully choreographed plans to draw more
participation into the bond market by international investors.
The FT relates that international investors currently own about 3
per cent of China's onshore bonds, according to BNP Paribas, the
French bank, but foreign demand is expected to increase
significantly due to the wide yield gap between China and developed
markets and the inclusion of Chinese onshore bonds into global
fixed income indices.
JPMorgan, Bloomberg and FTSE Russell are in the process of
integrating China bonds into some of their widely followed fixed
income indices, which will lead to substantial buying by a wide
variety of tracker funds, the FT says. BNP Paribas Asset
Management, the bank's investment arm, reckons index inclusion
could lead to inflows of up to $1tn from international investors.
Chi Lo, a senior China economist at BNP Paribas AM, said that
investor confidence will be affected by the turmoil, according to
the report.
"The macroeconomic impact should be manageable, though market
sentiment will be hurt temporarily as investors wonder where the
authorities will draw the line and implement bailouts," the FT
quotes Mr. Lo as saying.
The increased volatility in the bond market also poses new credit
risk problems for China's mutual fund industry, which has just
passed its second annual stress test with flying colours, the FT
adds citing regulators in Beijing.
According to the FT, China's central bank examined 5,906 equity,
bond, money market and commodity mutual funds to assess whether
they had sufficient liquidity to meet redemption requests by
investors. Only a single bond fund failed after a "light"
redemption shock and just 52 bond funds failed after a "heavy"
redemption shock, the report says.
Lan Shen, an economist at Standard Chartered Bank in Shanghai, said
the fund stress tests are "reliable" and the results reflect the
government's determination to maintain stability in China's
financial markets, the report adds.
"The government will try to let market forces play a bigger role in
pricing credit and default risks while also standing ready to take
decisive action to eliminate any systemic risk if such problems
were to emerge," the report quotes Ms. Lan as saying.
But Ivan Shi, head of research at Z-Ben, a Shanghai-based
consultancy, said the regulator could be underestimating the extent
of the potential problems because the hunt for better returns has
driven some smaller asset managers to increase their exposure to
bond issuers that are less fundamentally sound.
Regulators have approved new liquidity management tools, such as
subscription gates, to help fund managers deal with potential
problems.
"It remains unclear how investor confidence might be affected if a
manager were to use liquidity management mechanisms," Mr. Shi said,
the FT relays.
Regulators' determination to reassure investors that the mutual
fund industry is in good health looks set to be tested severely by
the contagion that is now spreading across the bond market, the
report states. The yield on 5-year Chinese government bonds has
risen from less than 2 per cent during the second quarter to 3.2
per cent.
Subscriptions from retail investors have been halted into 13 bond
funds since October by managers including China Fund, Taikang AM
and Yingda AM, the FT says.
The FT notes that problems are now appearing for bonds issued by
companies backed by local governments as well as state-owned
enterprises following defaults by Brilliance Auto, Tsinghua
Unigroup and Yongcheng Coal.
"The defaults among state-owned enterprises have brought China's
bond market to its darkest hour," the FT quotes Logan Wright, a
Hong-Kong-based analyst at Rhodium Group, a research provider, as
saying.
A dozen Chinese bond funds have registered a drop of more than 5
per cent in their net asset value following the defaults, the FT
notes.
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I N D I A
=========
A. R. CHAINS: CRISIL Reaffirms B+ Rating on INR16cr Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facility of A. R. Chains (ARC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 16 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average financial
risk profile and exposure to intense competition in the jewellery
industry. These weaknesses are partially offset by its proprietor's
extensive experience in the industry.
Analytical Approach
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of ARC and Alain Gold and Diamonds (AGD).
This is because both the entities, together referred to as the ARC
group, are engaged in the same business and have significant
financial and operational fungibility.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile: Financial risk profile is
constrained by high gearing and subdued debt protection metrics.
Gearing is estimated at 6.34 times as on March 31, 2020, and
interest coverage ratio at 1.13 times in fiscal 2020.
* Exposure to intense competition: The gold jewellery industry in
India is intensely competitive and has a few organized players and
several unorganized players. New designs are introduced frequently
to stay ahead of competition. ARC has large working capital
requirement marked by GCA days of 136 days in FY 2020 due to
inventory of around 60 days and credit of 5 to 15 days extended to
customers, against limited credit from suppliers.
Strength:
* Proprietor's extensive industry experience: ARC benefits from its
proprietor's experience of over two decades in the gold jewellery
segment. The firm is well-equipped, with an in-house team of
goldsmiths and designers who are well aware of customer
preferences. It has established strong relationships with
customers.
Liquidity Stretched
Average bank limit utilization for the last 12 months ended on
September 2020 is high at around 100%. Net cash accruals of around
INR0.2 crore is sufficient against repayment obligations. Need
based unsecured loan from related parties and moderate cash balance
maintained supports liquidity.
Outlook: Stable
CRISIL believes ARC will continue to benefit from the proprietor's
extensive industry experience.
Rating Sensitivity Factor:
Upward Factors:
* Strong revenue growth while maintaining EBITDA margin of more
than 2.3%
* Efficient working capital management and maintenance of moderate
capital structure
Downward Factors:
* Major decline in revenues or operating margin falling below 1.6%
* Stretch in working capital cycle or significant debt funded
capex
ARC was set up in 2013 as a sole proprietorship firm by Ms Rahumath
S. The firm, based in Kollam (Kerala), manufactures gold jewellery.
Mr. M Hussain manages daily operations.
DWARKADHISH UDYOG: CRISIL Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the rating on bank facilities of Shree Dwarkadhish
Udyog Private Limited (SDUPL) continues to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SDUPL for obtaining
information through letters and emails dated April 18, 2020 and
October 17, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SDUPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SDUPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of SDUPL
continues to be 'CRISIL D Issuer Not Cooperating'.
SDUPL is based in Ranchi (Jharkand) and was incorporated in 2012.
The company trades in steel, cement, and other construction
materials such as electrical items and sanitary ware. It started
operations in July 2012. The company is promoted by Mr. Amit
Sarawgi and Mr. Gyan Prakash Sarawgi, who have experience of more
than 15 years in trading of steel and cement products.
EUROTAS INFRASTRUCTURE: Insolvency Resolution Process Case Summary
------------------------------------------------------------------
Debtor: Eurotas Infrastructure Limited
Registered office:
Basement, A-103
Road No. 4
Mahipalpur Extension
South West Delhi
New Delhi 110037
Insolvency Commencement Date: November 24, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: May 23, 2021
(180 days from commencement)
Insolvency professional: Ram Singh Setia
Interim Resolution
Professional: Ram Singh Setia
203, Tower 2
Cresent Bay
Jerbai Wadia Road
Parel, Mumbai 400012
Maharashtra
E-mail: setiars@gmail.com
cirp.eurotas@gmail.com
Last date for
submission of claims: December 8, 2020
GAAP TUFF: CRISIL Assigns B+ Ratings to INR10cr Loans
-----------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Gaap Tuff Glass LLP (GTG).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 8 CRISIL B+/Stable (Assigned)
Open Cash Credit 2 CRISIL B+/Stable (Assigned)
The rating reflects GTG's modest scale of operations with exposure
to risks related to the commoditised nature of float glass and
intense industry competition and a below-average financial risk
profile. These weaknesses are partially offset by the extensive
industry experience of the partners.
Analytical Approach
Unsecured loan of INR1.87 crore as on March 31, 2020, from the
partners have been treated as debt as these are interest bearing
and may not be retained in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: GTG's business profile is constrained
by its subdued scale in the intensely competitive float glass
industry, which will continue to limit its operating flexibility.
Operating income was INR4-12 crore in the three fiscals through
2020.
* Exposure of risks related to the commoditised nature of float
glass and to intense industry competition: The processing of float
glass involves limited value addition and the main entry barrier to
the glass processing industry is knowledge of glass handling to
reduce breakage and wastage. With increasing demand for
architectural glass in real estate and commercial projects and
industrial glass in the automotive industry, competition in this
segment is expected to increase, constraining the prospects for
improving profitability over the medium term. Moreover, the key raw
material, float glass, has volatile prices. The operating margin is
likely to remain vulnerable to any volatility in the price of float
glass and to competition over the medium term. However, a partially
order-backed inventory provides some insulation against adverse
changes in raw material prices.
* Below-average financial risk profile: Financial risk profile is
marked by a modest networth and high gearing of INR3.86 crore and
2.71 times as of March 31, 2020. Debt protection metrics are
however adequate, as reflected in the interest coverage and net
cash accrual to total debt ratios of 2.02 times and 0.11 times
respectively in fiscal 2020 supported by healthy operating margin
of over 20%
Strength:
* Extensive industry experience of the partners: The partners have
experience of over ten years in the glass manufacturing industry.
This has given them an understanding of the market dynamics and
enabled them to establish strong relationships with suppliers and
customers.
Liquidity Stretched
The bank limit was highly utilised at 96.59% for the 12 months
through October 2020. Cash accrual is expected to be INR1.8-2.7
crore, which will be sufficient against term debt obligation of
INR1.25 and INR1.5 crore in fiscals 2021 and 2022, respectively.
The partners are likely to extend need-based support in the form of
capital and unsecured loans to meet the firm's working capital
requirement and capital expenditure.
Outlook: Stable
CRISIL believes GTG will continue to benefit from the extensive
experience of its partners and established relationships with
clients.
Rating Sensitivity factors
Upward factors
* Sustained improvement in scale of operations by over 50% and
stable operating margin, leading to higher net cash accrual
* Improvement in the working capital cycle
Downward factors:
* Decline in operating profitability by over 5%, leading to net
cash accrual lower than INR60-70 lakhs
* Substantial increase in working capital requirement, weakening
liquidity and financial profile
* Any unanticipated large debt funded capital expenditure or
capital withdrawal by partners impacting the financial risk
profile
Established in 2015, GTG is based in Vishakhapatnam, Andhra
Pradesh. The firm is owned and managed by Mr. B. Praveen Kumar, Mr.
Gangireddy, Mr. Ajay Ramkrishna and Mr. V Avinash. The firm
manufactures toughened glass which is commonly used in buildings,
houses, stairways, doorways, standard windows, sliding doors and
floor level, among others.
GOODDAY VENURES: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Goodday Ventures India Private Limited
133 Clover Centre
Camp 7 Moledina Road
Pune MH 411001
IN
Insolvency Commencement Date: November 23, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: June 2, 2021
(180 days from commencement)
Insolvency professional: Mr. Prashant Jain
Interim Resolution
Professional: Mr. Prashant Jain
A501, Shanti Heights
Plot No. 2, 3, 9B/10
Sector 11
Koparkharine, Thane
Navi Mumbai 400709
E-mail: ipprashantjain@gmail.com
- and -
AAA Insolvency Profesionals LLP
A301, Bsel Tech Park
Sector 30a
Opp. Vashi Railway Station
400705
Tel: 022-42667394
E-mail: gooddayventures@aaainsolvency.com
Last date for
submission of claims: December 18, 2020
HI BUILD: CRISIL Withdraws B+ Rating on INR10.76cr LT Loan
----------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of HI Build
Coatings Private Limited (HCPL) on the request of the company and
receipt of a no objection certificate from its bank. The rating
action is in line with CRISIL's policy on withdrawal of its ratings
on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 16 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Long Term Loan 10.76 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long 6.24 CRISIL B+/Stable (ISSUER NOT
Term Bank COOPERATING; Rating Withdrawn)
Loan Facility
CRISIL has been consistently following up with HCPL for obtaining
information through letters and emails dated April 18, 2020 and
October 17, 2020, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of HCPL. This restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on HCPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the rating on bank facilities of HCPL
continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
CRISIL has withdrawn its rating on the bank facilities of HCPL on
the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with
CRISIL's policy on withdrawal of its ratings on bank loans.
Incorporated in 1999 and based in Kochi, HCPL is into manufacturing
and sale of wood coatings and decorative paints. The company is
promoted by Mr. K V Narayankutty, a post-graduate in management
from the Indian Institute of Management, Kolkata; Dr. K S Udapa,
who has a doctorate in chemistry with more than 45 years'
experience in the paint and related industries; and Mr. K M
Noordin, who hails from one of the prominent business families in
Kochi that has interests in real estate, construction, and banking.
The Company was recently acquired by Indigo Paints Private
Limited in FY 17 and is expected to merge over the medium term.
J.P ELECTRICAL: CRISIL Assigns B- Ratings to INR3cr Loans
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable/CRISIL A4' ratings to the
bank facilities of J.P Electrical Industries (JPEI).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 0.9 CRISIL B-/Stable (Assigned)
Overdraft 4 CRISIL A4 (Assigned)
Proposed Long Term
Bank Loan Facility 2.1 CRISIL B-/Stable (Assigned)
The ratings reflect the firm's modest scale of operations, working
capital intensive operations and average financial risk profile.
These weaknesses are partially offset by the extensive experience
of the proprietor in the industry.
Analytical Approach
Unsecured loans of INR74.16 lakh in fiscal 2019 and INR57 lakh in
fiscal 2020 from the proprietor have been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Working capital intensive operations: The firm's intensive
working capital management is reflected in its gross current assets
(GCA) of 521 days as on March 31, 2019. Its large working capital
requirements arise from its high debtor and inventory levels. Due
to business need, it is required to extend long credit period to
its clients and hold large work in process & inventory which makes
the business operations working capital intensive.
* Average financial risk profile: Gearing was 3.2 times and total
outside liabilities to adjusted networth ratio (TOL/ANW) was 4.57
times as on March 31, 2019. The gearing and TOL/ANW is estimated at
4.64 times and 5.77 times respectively as on March 31, 2020. Debt
protection metrics were subdued due to high gearing and low
accrual. The interest coverage ratio was 1.50 times for fiscal 2019
and is estimated at 1.19 times for fiscal 2020. The debt protection
metrics will remain average because of high debt over the medium
term.
* Modest scale of operations: Intense competition constrains the
scalability, as reflected in modest operating income of INR4.49
crore in fiscals 2019. Revenue is estimated at INR4.3 crore in
fiscal 2020 and expected to be in range of 4-5 crore only in medium
term.
Strengths:
* Extensive experience of the proprietor: The proprietor's
experience of over 20 years in the power industry, understanding of
market dynamics, and established relationships with suppliers and
customers will continue to support the business.
* Low to moderate debtor risk: The firm mainly works on the orders
of state electricity boards (SEB) of Uttarakhand and Uttar Pradesh
in the regions of Dehradun, Agra, Meerut, Varanasi and Allahabad.
Payment from SEB's gets stretched up to 9-12 months, however
ultimately received as SEB's are supported by state governments.
Liquidity Stretched
Bank limit utilisation was high at 99.39% on average for the 12
months through October 2020. Cash accrual is expected to be
negative over the medium term because of the large working capital
requirement and capital withdrawals by the proprietor. The firm,
however, manages its repayment through receivables realisation and
also receives support from the proprietor by way of unsecured
loans.
Current ratio was moderate at 1.07 times as on March 31, 2019 and
is expected to remain stable over the medium term.
Outlook: Stable
CRISIL believe JPEI will continue to benefit from the extensive
experience of the proprietor and established relationships with
clients.
Rating Sensitivity factors
Upward factors
* Sustained improvement in scale of operation and sustenance of
operating margin, leading to higher than expected net cash
accruals
* Improvement in liquidity profile marked by net cash accruals to
repayment obligation ratio of more than 1.3 times
* Improvement in the working capital cycle
Downward factors
* Lower than expected revenue and profitability adversely impacting
liquidity of company and leading to delay in servicing debt
obligation
* Stretched working capital cycle
* Large, debt-funded capital expenditure weakening the capital
structure
Based in Dehradun, Uttarakhand, JPEI was established in 1997. The
firm manufactures and repairs power and distribution transformers.
It is owned and managed by Mr. Anand Kumar Pandey.
K T VARGHESE: CRISIL Withdraws B- Rating on INR4.25cr Cash Loan
---------------------------------------------------------------
CRISIL has withdrawn the ratings on certain bank facilities of K T
Varghese (KTV), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.25 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Cash Credit 4.25 CRISIL B-/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Fund- 3.50 CRISIL B-/Stable (ISSUER NOT
Based Bank Limits COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with KTV for obtaining
information through letters and emails dated February 29, 2020 and
March 19, 2020, among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KTV. This restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KTV is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KTV
continues to be 'CRISIL B-/Stable/CRISIL A4 Issuer Not
Cooperating'.
CRISIL has withdrawn its ratings on the bank facilities of KTV on
the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with
CRISIL's policy on withdrawal of its ratings on bank loans.
Set up in 2000, K T Varghese is a proprietor who owns Mannakunnathu
Constructions which is a Piravom, Ernakulam, Kerala based civil
contractor. The firm undertakes road construction projects for
'Kerela State Rural Roads Development Agency' in rural areas of
Ernakulam and Kottayam. The operations of the firm are managed by
proprietor Mr. K T Varghese.
M MADHAVARAYA: CRISIL Reaffirms B+ Rating on INR27cr Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facility of M Madhavaraya Prabhu (MMP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 27 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the company's average financial
risk profile because of average capital structure and
susceptibility of profitability to volatility in raw material
prices. These weaknesses are partially offset by extensive industry
experience of the proprietor.
Key Rating Drivers & Detailed Description
Weaknesses:
* Average Financial Risk Profile: Capital structure is average as
reflected in high gearing of 1.74 times and modest Networth of
INR18.78 crores as on March 31, 2020. The high gearing is mainly on
account of high reliance on working capital debt. Debt protection
metrics are average, marked by average interest coverage ratio and
net cash accruals to adjusted debt (NCA/AD) ratio at 3.23 and 0.15
times.
* Susceptibility of profitability to volatility in raw material
prices: MMP's operating margin is constrained by the commodity
nature of its products, and was low, at 0.4-4.2% in the four
fiscals through 2020. The low margin limits the firm's ability to
absorb unanticipated adverse price movements. Presence in a segment
with limited value addition and negligible differentiation in
products of different players also constrains the margin.
Strength:
* Extensive industry experience of proprietor, and established
customer relationships: MMP's proprietor, Mr. Tukaram Prabhu, has
experience of over 15 years in the cashew processing industry,
which has helped the firm establish a strong distribution network
and market its product in several states across India. It has also
helped the firm survive adverse business conditions and build
relationships with major customers and suppliers, resulting in
consistent order flow and raw material supply at favorable prices.
Liquidity Stretched
Bank limit utilisation is high at around 97.99 percent for the past
twelve months ended August, 2020. Cash accrual are expected to be
over INR1.5 crores which are sufficient against minimum term debt
obligation over the medium term. In addition, it will be act as
cushion to the liquidity of the company. Current ratio is moderate
at 1.14 times on March 31, 2020.
Outlook: Stable
CRISIL believes MMP will continue to benefit from its strong track
record in the cashew industry.
Rating Sensitivity factors
Upward Factors:
* Revenue growth of over 20% in fiscal 2021 and operating margins
to over 4.5%, leading to improvement in cash accruals
* Improvement in capital structure leading to improvement in
financial risk profile
Downward Factors:
* Decline in revenue by 40% and deterioration in operating
margins to 2% leading to weak accruals.
* High debt funded capex
MMP, a proprietorship firm set up in 1983, processes raw cashew
nuts of various grades into cashew kernels. The firm also trades in
raw cashew nuts and cashew kernels. Its processing unit is in
Muduperar village in Dakshina Kannada, Karnataka, and has installed
capacity of 30 tons per day. The firm is managed by Mr. Tukaram
Prabhu.
MALWA AUTOMOBILES: CRISIL Withdraws B+ Ratings on INR14cr Loans
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Malwa Automobiles Private Limited (MAPL) and subsequently
withdrawn the rating at the company's request and on receipt of a
no-objection certificate from the bankers. The withdrawal is in
line with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13.6 CRISIL B+/Stable (Rating
Reaffirmed and Withdrawn)
Proposed Fund- .4 CRISIL B+/Stable (Rating
Based Bank Limits Reaffirmed and Withdrawn)
MAPL was incorporated in 1997. It is present in multiple
businesses, including a dealership and workshop for Tata's
passenger vehicles and a petrol pump. The Delhi-based firm operates
the vehicle and workshop business under its own name, while the
petrol pump is run under Hindustan Petroleum Corporation Ltd
(HPCL).
The showroom and workshop are located at Prashant Vihar and
Jahangirpuri, respectively, while the petrol pump is situated in
Kundli.
MPL MOTORS PRIVATE: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: MPL Motors Private Limited
No. 6, F1
Abdul Regency
South Mada Street
Srinagar Colony
Saidapet, Chennai
TN 600015
Insolvency Commencement Date: December 1, 2020
Court: National Company Law Tribunal, Chennai Bench
Estimated date of closure of
insolvency resolution process: May 30, 2021
Insolvency professional: A. Mohan Kumar
Interim Resolution
Professional: A. Mohan Kumar
Flat F1, Sudarsan Apartments
72, VGP Selva Nagar
Second Main Road
Velachery
Chennai 600042
Mobile: 9003012871
E-mail: needamohan@gmail.com
Last date for
submission of claims: December 15, 2020
PANTEL TECHNOLOGIES: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: Pantel Technologies Private Limited
602/96, 6th Floor
Siddharth Building
Nehru Place
Near Central Bank
New Delhi 110019
Insolvency Commencement Date: November 26, 2020
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: June 2, 2021
(180 days from commencement)
Insolvency professional: Deepak Kukreja
Interim Resolution
Professional: Deepak Kukreja
31/36, Basement
Old Rajinder Nagar
New Delhi 110060
E-mail: csdeepakkukreja@yahoo.com
pantelirp@gmail.com
Last date for
submission of claims: December 18, 2020
RAVI IRON: CRISIL Rate INR26cr Loans 'B+'; Suspension Revoked
-------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Ravi Iron Limited (RIL) and has assigned its 'CRISIL
B+/Stable' rating to the long term bank facilities of RIL. CRISIL
had suspended the ratings on Nov 28, 2014 on account of
non-cooperation by RIL with CRISIL's efforts to undertake a review
of the ratings. RIL has now shared the requisite information
enabling CRISIL to assign its ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 21.6 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Working Capital 4.4 CRISIL B+/Stable (Assigned;
Term Loan Suspension Revoked)
The rating reflect extensive industry experience of RIL's promoters
and moderate financial profile These strength are partially offset
by its vulnerability to cyclicality in the infrastructure and real
estate sectors, working capital intensive operations and weak debt
protection matrices.
Key Rating Drivers & Detailed Description
Weaknesses:
* Vulnerability to cyclicality in the end-user industry: RIL's
business is linked to the fortunes of the inherently cyclical steel
industry, which has strong correlation with overall growth in gross
domestic product. Operating performance will remain susceptible to
volatility in raw material prices, and offtake by key user
sectors.
* Working capital intensive operations: Operations of the company
are working capital intensive as shown by high gross current assets
(GCA) of 295 days as on March 31, 2020. High GCA days are driven by
high level of inventory of 215 days and sizeable debtors of 67
days. Operations are expected to rea=main working capital intensive
in medium term.
* Weak debt protection metrics: Debt protection metrics of the
company are weak as shown in interest coverage of only 1.14 times
and NCATD of only 0.01 times for FY 20, and is expected to remain
at similar level.
Strengths:
* Extensive industry experience of the promoter: The promoters have
an extensive experience in the industry of over 50 years. This has
given them an understanding of the dynamics of the market, and
enabled them to establish relationships with suppliers and
customers.
* Moderate financial profile: RIL's capital structure has been at
moderate levels due to modest net-worth of INR33.45 Cr, as on March
31, 2020, yielding gearing of 0.88 times and total outside
liabilities to Adj tangible net-worth (TOL/ANW) of 1.01 for the
year ending on March 31, 2020.
Liquidity Poor
Bank limit utilization is high around 98% for the past twelve
months ended Sept'20. Cash accruals are expected to be over INR0.2
Cr against no repayment obligation. Current ratio is healthy at
2.17 times on March 31, 2020.
Outlook: Stable
CRISIL believes RIL will continue to benefit over the medium term
from its longstanding relationships with principals and experience
of the management to mitigate the inherent risk in trading
business.
Rating Sensitivity factors
Upward factor
* Increase in Cash Accruals to over INR1 Cr.
* Significant decline in GCA days
Downward factors
* Decline in volume by 15%
* Significant increase in debt levels leading to weakening of
financial risk profile
Incorporated in 1997 by Mr. Ravindra Kumar Garg and his son, Mr.
Manu Garg, RIL trades in long and flat steel products. The company
is the authorised stockist for Steel Authority India Ltd and
Rashtriya Ispat Nigam Ltd in Ghaziabad (Uttar Pradesh). Company
also undertakes EPC contracts for installation of solar power
plant.
SAJEEV MATHEW: CRISIL Withdraws B Rating on INR15cr Cash Loan
-------------------------------------------------------------
CRISIL said the rating on bank facilities of Sajeev Mathew and Co.
(SMC) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Cash Credit 15 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with SMC for obtaining
information through letters and emails dated June 30, 2020 and July
28, 2020, among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SMC. This restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SMC is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the rating on bank facilities of SMC
continues to be 'CRISIL B/Stable/CRISIL A4 Issuer Not
Cooperating'.
CRISIL has withdrawn its ratings on the bank facilities of SMC on
the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with
CRISIL's policy on withdrawal of its ratings on bank loans.
Established as a proprietorship firm in 1992, SMC is engaged in
execution of civil contracts for Public Works Department in Idukki
district throughout Kerala.
V MART STORES: CRISIL Puts B+ on INR6cr Credit on Watch Negative
----------------------------------------------------------------
CRISIL has placed its rating on the long-term bank facility of V
Mart Stores (VMS; part of the V Mart Group (VMG) on 'Rating Watch
with Negative Implications'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Open Cash Credit 6 CRISIL B+ (Placed on 'Rating
Watch with Negative
Implications')
CRISIL's rating action reflects the temporary financial stress
caused to VMG because of the imposition of 30-day moratorium on
deposits and facilities with Lakshmi Vilas Bank (LVB), and limited
allowance on withdrawals.
The group is dependent on LVB, for its entire working capital
limits and further has also availed term loans from the bank. LVB
remains sole banker for the group with all bank facilities and
current account being managed by LVB, the group may face higher
financial stress. The ensuing financial stress caused by inability
to access available working capital limits, owing to restrictions
imposed, is likely to impact VMG's ability to service its financial
obligations in a timely manner. The rating action does not reflect
the company's inability or unwillingness to meet bank obligations,
but is more a reflection of systemic stress at the bank's end.
CRISIL believes that the disruption in routine functioning of the
group is temporary because of possibility of merger of LVB with DBS
Bank India Limited. CRISIL will continue to monitor the situation
and shall resolve the watch once operations normalize.
The rating continues to reflect the extensive experience of the V
Mart group's partners. This strength is partially offset by
exposure to intense competition in the apparel retail segment,
exposure to project risk and modest scale of operations.
Analytical Approach
To arrive at its rating, CRISIL has combined business and financial
risk profiles of VMS and V Mart Stores 'Gajwel (VMSG). This is
because both the entities, together referred to as the V Mart
group, are in the same business and have a common management.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to higher competitive intensity in the apparel retail
segment: Attractiveness of the apparel industry is expected to lead
to increasing competition in the sector. For instance, large global
apparel brands, including The GAP Inc, Aeropostale Inc, and H&M
have entered the Indian markets in the recent past. The presence of
domestic brands is also increasing.
* Modest scale of operations: Revenue for fiscal 2020 was estimated
at INR84 crore for VMS while VMSG is yet to begin operations.
Subdued scale will continue limit operating flexibility.
Strength:
* Extensive experience of the partners: Industry presence of more
than 30 years has enabled the promoters to understand market
dynamics and establish healthy relationships with suppliers and
customers.
Liquidity Stretched
Though bank limit was fully utilised in the 12 months through
October 2020, liquidity is backed by moderate cash accrual against
debt obligation. Also, since the group maintains all its bank
facilities with LVB, liquidity is currently constrained by the
imposition of moratorium on the bank. Arrangement of temporary
funds, management of working capital requirement and debt repayment
will remain key monitorables in the near term.
Rating Sensitivity factors
Upward factors
* Strengthening of business risk profile, with revenue over INR125
crore and stable operating margin leading to sizeable cash accrual
* Early resolution of LVB moratorium imposition leading to normalcy
in bank limit utilisation
Downward factors
* Fall in operating performance with decline in revenue or
operating margin resulting in lower cash accrual below INR80 lakh
* Weakening of financial risk profile, especially liquidity, on
account of large, debt-funded capital expenditure or stretched
working capital cycle
* Inability to access bank limit and adverse impact on
debt-servicing ability
VMS was established in 2017 by Ms Thota Padma, Mr. Thota Spandan,
Mr. Kacham Shashikanth, Mr. Kura Arun Kumar and Mr. Kacham
Akhilesh. The firm retails kirana, general, electrical, home
appliances and plastic items under the V Mart Stores brand in
Siddipet, Telangana. VMS has another store in Gajwel, Telangana,
which is in project phase and is expected to be operational in
fiscal 2021.
V MART: CRISIL Puts B Ratings on Watch with Negative Implications
-----------------------------------------------------------------
CRISIL has placed its rating on the long-term bank facilities of V
Mart Stores - Gajwel (VMSG; part of the V Mart Group (VMG)) on
'Rating Watch with Negative Implications'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B (Placed on 'Rating
Watch with Negative
Implications')
Long Term Loan 3.92 CRISIL B (Placed on 'Rating
Watch with Negative
Implications')
Proposed Long .08 CRISIL B (Placed on 'Rating
Term Bank Watch with Negative
Loan Facility Implications')
CRISIL's rating action reflects the temporary financial stress
caused to VMG because of the imposition of 30-day moratorium on
deposits and facilities with Lakshmi Vilas Bank (LVB), and limited
allowance on withdrawals.
The group is dependent on LVB, for its entire working capital
limits and further has also availed term loans from the bank. LVB
remains sole banker for the group with all bank facilities and
current account being managed by LVB, the group may face higher
financial stress. The ensuing financial stress caused by inability
to access available working capital limits, owing to restrictions
imposed, is likely to impact VMG's ability to service its financial
obligations in a timely manner. The rating action does not reflect
the company's inability or unwillingness to meet bank obligations,
but is more a reflection of systemic stress at the bank's end.
CRISIL believes that the disruption in routine functioning of the
group is temporary because of possibility of merger of LVB with DBS
Bank India Limited. CRISIL will continue to monitor the situation
and shall resolve the watch once operations normalize.
The rating continues to reflect the extensive experience of the V
Mart group's partners. This strength is partially offset by
exposure to intense competition in the apparel retail segment,
exposure to project risk and modest scale of operations.
Analytical Approach
To arrive at its rating, CRISIL has combined business and financial
risk profiles of V Mart Stores (VMS) and VMSG. This is because both
the entities, together referred to as the V Mart group, are in the
same business and have a common management.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to higher competitive intensity in the apparel retail
segment: Attractiveness of the apparel industry is expected to lead
to increasing competition in the sector. For instance, large global
apparel brands, including The GAP Inc, Aeropostale Inc, and H&M
have entered the Indian markets in the recent past. The presence of
domestic brands is also increasing.
* Exposure to Project Risk: The group has an ongoing project in
VMSG which is in similar lines of business is expected to be
completed over next few months. Although the project is in similar
line of business, timely completion of this project along with
commensurate ramp up over the medium term will remain key
monitorable.
* Modest scale of operations: Revenue for fiscal 2020 was estimated
at INR84 crore for VMS while VMSG is yet to begin operations.
Subdued scale will continue limit operating flexibility.
Strength:
* Extensive experience of the partners: Industry presence of more
than 30 years has enabled the promoters to understand market
dynamics and establish healthy relationships with suppliers and
customers.
Liquidity Stretched
Though bank limit was fully utilised in the 12 months through
October 2020, liquidity is backed by moderate cash accrual against
debt obligation. Also, since the group maintains all its bank
facilities with LVB, liquidity is currently constrained by the
imposition of moratorium on the bank. Arrangement of temporary
funds, management of working capital requirement and debt repayment
will remain key monitorables in the near term.
Rating Sensitivity factors
Upward factors
* Strengthening of business risk profile, with revenue over INR125
crore and stable operating margin leading to sizeable cash accrual
* Early resolution of LVB moratorium imposition leading to
normalcy in bank limit utilisation
Downward factors
* Fall in operating performance with decline in revenue or
operating margin resulting in lower cash accrual below INR80 lakh
* Weakening of financial risk profile, especially liquidity, on
account of large, debt-funded capital expenditure or stretched
working capital cycle
* Inability to access bank limit and adverse impact on
debt-servicing ability
VMS was established in 2017 by Ms Thota Padma, Mr. Thota Spandan,
Mr. Kacham Shashikanth, Mr. Kura Arun Kumar and Mr. Kacham
Akhilesh. The firm retails kirana, general, electrical, home
appliances and plastic items under the V Mart Stores brand in
Siddipet, Telangana. VMS has another store in Gajwel, Telangana,
which is in project phase and is expected to be operational in
fiscal 2021.
VAIJANATH INDUSTRIES: CRISIL Keeps D Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Shri Vaijanath
Industries Private Limited (SVPL) continue to be 'CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.1 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 4.53 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Rupee Term Loan 1.37 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SVPL for obtaining
information through letters and emails dated April 18, 2020 and
October 31, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SVPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SVPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of SVPL
continues to be 'CRISIL D Issuer not cooperating'.
SVPL was incorporated in 2008 as a private limited company by Mr.
Girish Huddar, Mr. Namdeo patil and Mr. Dayanand Shastri. The firm
is engaged in the manufacturing of tractor & farm equipment
primarily comprising gears. SVPL's manufacturing facility is
located in Kolhapur, Maharashtra.
[*] INDIA: To Step Up Scrutiny of Shadow Lenders, Local Banks
-------------------------------------------------------------
Suvashree Ghosh at Bloomberg News reports that the Reserve Bank of
India will undertake closer scrutiny and auditing of shadow lenders
and large urban co-operative banks in a bid to improve supervision
of the financial sector.
The central bank will implement risk-based audits at shadow lenders
and urban co-operative banks that focus on localized lending,
Governor Shaktikanta Das said Dec. 4, Bloomberg relates. It will
also harmonize guidelines relating to the appointment of auditors
across all types of lenders.
According to Bloomberg, the tighter scrutiny comes after India's
financial sector was rocked by a shadow banking crisis that led to
the bankruptcy of two major finance firms and the rescue of a
couple of banks. The debacle added to bad loans at the nation's
banks, which are estimated to swell to a two-decade high of 12.5%
of credit by March.
"Our supervisory focus in improving governance and assurance
functions in supervised entities continues to engage the attention
of the RBI," Das said after keeping key interest rates unchanged as
expected, Bloomberg relays.
To date, the RBI has focused such audits on traditional banks and
large shadow lenders, the report notes.
In the recent past, weakness in business units, risk management and
internal audits have proved to be a "major fault line" affecting
some lenders, Das said in his statement, reports Bloomberg.
Bloomberg adds that the central bank will also put in place minimum
security standards for payment systems, following a surge in
digital transactions during the pandemic.
The RBI gives "highest importance to the security controls" and
will develop guidelines to ensure customers can use digital payment
products in a safer manner, Das, as cited by Bloomberg, said in the
statement.
The proposals come a day after the RBI imposed rare curbs on HDFC
Bank Ltd.'s digital initiatives following a series of technical
glitches at the private-sector lender, Bloomberg states.
Das urged all financial entities to spend more on technology.
"Public confidence in digital banking has to be maintained," he
said at a virtual briefing, Bloomberg relays. "If you want to
remain competitive in coming years, technology robustness is the
key."
=================
S I N G A P O R E
=================
HIN LEONG: Marine Fuels Unit Placed in Provisional Liquidation
--------------------------------------------------------------
Ship & Bunker News reports that Ocean Bunkering Services, formerly
Singapore's largest bunker supplier, is to be wound up following
the Hin Leong scandal.
The company "cannot by reason of its liabilities continue its
business," its management wrote in a notice posted in Singapore's
Government Gazette.
Leow Quek Shiong and Gary Log Weng Fatt of BDO Advisory Pte Ltd
have been appointed provisional liquidators of the firm, according
to a separate notice.
A meeting of the company's creditors will be held on Dec. 15 at
3:00 p.m. Singapore time. Creditors will receive a statement of the
company's affairs, as well as a list of its creditors and their
estimated claims. The meeting will be held online via Zoom.
Ocean Bunkering was the marine fuels unit of Hin Leong Trading.
The company was listed as Singapore's largest bunker supplier by
volume in 2018, and its third-largest in 2019.
Legal cases against Hin Leong founder OK Lim and his family over
alleged fraud at his company are still progressing through the
courts.
About Hin Leong
Hin Leong Trading (Pte.) Ltd. provides petroleum products and
transportation services. The Company offers oil, lubricants,
grease, and diesel products, as well grants storage, terminalling,
trucking, and marine logistics services. Hin Leong Trading serves
customers globally.
Hin Leong Trading and shipping unit Ocean Tankers (Pte.) Ltd. filed
for court protection from creditors on April 17, 2020, as the
former struggles to repay debts of almost US$4 billion.
Hin Leong posted a positive equity of US$4.56 billion and net
profit of US$78 million in the period ended October 31, 2019,
according to the people, who asked not to be identified as the
matter is sensitive, Bloomberg News reported.
But Hin Leong told its creditors that total liabilities reached
US$4.05 billion as of early April, while assets were just US$714
million, leaving a hole of at least US$3.34 billion, according to
screenshots of the presentation to a group of bankers seen by
Bloomberg News.
The balance sheet of the company showed no equity at all as of
April 9, 2020, and warned that "figures obtained from the company
are subject to verification," Bloomberg News added.
On April 27, 2020, the Company was granted interim judicial
management by the Singapore High Court. Goh Thien Phong and Chan
Kheng Tek of PricewaterhouseCoopers Advisory Services (PwC) have
been appointed as interim judicial managers. Ernst & Young (EY),
has been appointed interim judicial manager for Ocean Tankers.
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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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