/raid1/www/Hosts/bankrupt/TCRAP_Public/210217.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
Wednesday, February 17, 2021, Vol. 24, No. 29
Headlines
A U S T R A L I A
GREENBATCH FOUNDATION: First Creditors' Meeting Set for Feb. 25
L'AQUILA OF AUSTRALASIA: First Creditors' Meeting Set for Feb. 25
I N D I A
ADVATECH CERA: CRISIL Withdraws B+ Rating on INR12.5cr Cash Loan
AGARWAL DAL: CRISIL Reaffirms B+ Rating on INR13cr Loans
ALP MILK: CRISIL Affirms Then Withdraws B+ Rating on INR8cr Loan
AMBICA DECOPRINTS: CRISIL Reaffirms B- Rating on INR5.67cr Loan
ARM WINSYS: Insolvency Resolution Process Case Summary
B.P. CONSTRUCTION: Ind-Ra Lowers Long Term Issuer Rating to 'D'
BAFNA JEWEL: CRISIL Migrates B+ Rating from Not Cooperating
BARANI FERROCAST: CARE Lowers Rating on INR9.70cr Loan to B+
BLA PACKAGING: CRISIL Migrates B+ Ratings from Not Cooperating
BLISS ENTERPRISES: CRISIL Reaffirms B+ Rating on INR3.5cr Loan
COMPETENT ENGINEERS: CARE Cuts Rating on INR8.53cr Loan to B+
DANEM HEAVY: CARE Lowers Rating on INR30cr LT Loan to B
DIVYA SIMANDHAR: CARE Lowers Rating on INR15cr LT Loan to D
GANESH METALIKS: Ind-Ra Affirms & Withdraws 'B' LT Issuer Rating
GAZIABAD FORGINGS: CRISIL Migrates B+ Rating from Not Cooperating
HOTEL BABYLON: CRISIL Migrates D Rating from Not Cooperating
IMP ENERGY: CRISIL Withdraws B- Rating on INR4cr Bank Guarantee
IRULAPPA MILLS: CRISIL Withdraws B Rating on INR10cr Loans
JCT LIMITED: CARE Lowers Rating on INR90cr LT Loan to D
JUST LOGICAL: First Creditors' Meeting Set for Feb. 24
MCNALLY SAYAJI: Faces Bankruptcy; Admitted for CIRP
MCNALLY SAYAJI: Insolvency Resolution Process Case Summary
NATURAL COTTON: CARE Lowers Rating on INR23.20cr Loan to B
RAMESHWAR PRASAD: CRISIL Reaffirms B+ Rating on INR10cr Loan
REFAIR INDIA: CARE Lowers Rating on INR3.0cr LT Loan to B
RENU RESIDENCY: Insolvency Resolution Process Case Summary
RK WIND: CARE Lowers Rating on INR9.73cr LT Loan to B+
ROYAL GENERAL: CRISIL Assigns B+ Rating to INR25cr New Loan
RUKMINI SILK: CRISIL Assigns B+ Rating to INR12cr Loans
SARMANGAL SYNTHETICS: CARE Lowers Rating on INR14cr Loan to B+
SEAFOOD INNOVATIONS: CRISIL Withdraws Rating on INR5.0cr Loan
SONIA MARINE: CRISIL Reaffirms B Rating on INR3.35cr Term Loan
SUHASINI BUILDER: CRISIL Reaffirms B+ Rating on INR20cr Loans
SUN FOODS: CRISIL Reaffirms B Rating on INR10.5cr Cash Loan
SUPREME BATTERIES: CARE Keeps D Debt Ratings in Not Cooperating
SUPREME MILLS: CARE Lowers Rating on INR5.75cr LT Loan to B
VISHNU PRIYA DRIER: CARE Assigns B+ Rating to INR6.87cr Loans
VISHNU PRIYA: CARE Assigns B+ Rating to INR1.50cr LT Loan
WAINGANGA EXPRESSWAY: CARE Lowers Rating on INR298.99cr Loan to B+
N E W Z E A L A N D
MAGSONS HARDWARE: Owes Over NZD22 Million, Receivers Report Shows
P H I L I P P I N E S
LUFTHANSA TECHNIK: To Slash 300 Jobs Amid Pandemic
S O U T H K O R E A
KUMHO TIRE: Union Votes to Accept Wage Freeze
SSANGYONG MOTOR: Extends Plant Suspension Amid Parts Shortage
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A U S T R A L I A
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GREENBATCH FOUNDATION: First Creditors' Meeting Set for Feb. 25
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Greenbatch
Foundation Ltd will be held on Feb. 25, 2021, at 10:00 a.m. via
online video conference using Zoom meeting software.
Jeremy Joseph Nipps and Clifford Stuart Rocke of Cor Cordis were
appointed as administrators of Greenbatch Foundation on Feb. 13,
2021.
L'AQUILA OF AUSTRALASIA: First Creditors' Meeting Set for Feb. 25
-----------------------------------------------------------------
A first meeting of the creditors in the proceedings of L'Aquila of
Australasia Pty. Ltd. will be held on Feb. 25, 2021, at 11:00 a.m.
at Suite 3, 167 The Entrance Road, in Erina, NSW.
Amanda Lott and Timothy Heesh of TPH Insolvency were appointed as
administrators of L'Aquila of Australasia on Feb. 15, 2021.
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I N D I A
=========
ADVATECH CERA: CRISIL Withdraws B+ Rating on INR12.5cr Cash Loan
----------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with SEBI
guidelines, had migrated the ratings of Advatech Cera Tiles Limited
(ACTL) to 'CRISIL B+/Stable/CRISIL A4 Issuer Not Cooperating'.
CRISIL Ratings has withdrawn its rating on bank facility of ACTL
following a request from the company and on receipt of a 'no dues
certificate' from the banker. Consequently, CRISIL Ratings is
migrating the ratings on bank facilities of ACTL from 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating to 'CRISIL
B+/Stable/CRISIL A4'. The rating action is in line with CRISIL
Ratings' policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 (Migrated from 'CRISIL A4
ISSUER NOT COOPERATING';
Rating withdrawn)
Cash Credit 12.5 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
Proposed Long Term
Bank Loan Facility 9.2 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
Term Loan 3.97 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
Working Capital
Term Loan 2.33 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
ACTL, incorporated in 2004, is based in Mehsana (Gujarat). It is
promoted by Mr. B T Patel, Mr. Jagdish Rawal, and Mr. Baldeo Rawal.
The company manufactures glazed porcelain floor tiles and glazed
vitrified tiles.ACTL, incorporated in 2004, is based in Mehsana
(Gujarat). It is promoted by Mr. B T Patel, Mr. Jagdish Rawal, and
Mr. Baldeo Rawal. The company manufactures glazed porcelain floor
tiles and glazed vitrified tiles.
AGARWAL DAL: CRISIL Reaffirms B+ Rating on INR13cr Loans
--------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of Shree Agarwal Dal Masala Udhyog
(SADMU).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Proposed Working
Capital Facility 3 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's low profitability and
average financial risk profile. These weaknesses are partially
offset by the proprietor's extensive experience in the rice milling
industry and funding support.
Analytical Approach
Unsecured loan of INR12.25 crore as on March 31, 2020, from the
proprietor has been treated as debt as it has been repaid in the
past.
Key Rating Drivers & Detailed Description
Weaknesses
* Low profitability: Intense competition in the rice milling
industry constrains bargaining power. In addition, volatility in
the price of raw material (paddy) on account of seasonal
availability puts pressure on profitability, reflected in operating
margin of 4.4% in fiscal 2020. CRISIL Ratings believes the
operating margin will remain subdued over the medium term,
constraining the firm's business risk profile.
* Average financial risk profile: The total outside liabilities to
tangible networth ratio was high at 7.00 times as on March 31,
2020, and is expected to remain high over the medium term too
because of low networth and high dependence on working capital
loans. Also, debt protection metrics are likely to remain weak due
to low profitability; the interest coverage and net cash accrual to
adjusted debt ratios are expected at 1.2 times and 0.01 time,
respectively, for fiscal 2021.
Strength
* Extensive experience of the proprietor: The proprietor's
experience of over two decades, strong understanding of local
market dynamics and healthy relationships with customers and
suppliers will continue to support the business. Also, the
proprietor will continue to provide timely, need-based financial
support through unsecured loans over the medium term.
Liquidity: Poor
Bank limit utilisation was moderate at 64.18% on average in the 14
months through October 2020. Net cash accrual is expected to be low
at INR0.4-0.5 crore per annum, but will be sufficient as the firm
has nil debt obligation over the medium term. Further, need and
time based financial support from promoters is expected to
continue.
Outlook Stable
CRISIL Ratings believes SADMU will continue to benefit from the
extensive experience of the proprietor.
Rating Sensitivity factors
Upward factors
* Stable revenue and better profitability, leading to interest
coverage ratio of over 2.0 times
* Increase in net cash accrual to INR1 crore
Downward factors
* Decrease in revenue and/or profitability, leading to interest
coverage ratio of less than 1 time
* Stretched working capital cycle, weakening the financial risk
profile and liquidity
SADMU was set up in 1994 in Bundi, Rajasthan, by the proprietor,
Mr. Govind Garg. It mills and processes rice with a capacity of 5
tonne per hour.
ALP MILK: CRISIL Affirms Then Withdraws B+ Rating on INR8cr Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of ALP Milk Foods Private Limited (ALP) and subsequently
withdrawn the rating at the request of the company and on receipt
of a no-objection certificate from the bankers. The rating action
is in line with CRISIL Ratings' policy on withdrawal of bank loan
ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (Rating
Reaffirmed and Withdrawn)
Proposed Long Term 3.5 CRISIL B+/Stable (Rating
Bank Loan Facility Reaffirmed and Withdrawn)
Term Loan 7.5 CRISIL B+/Stable (Rating
Reaffirmed and Withdrawn)
Incorporated in December 2012, ALP processes milk and milk
products, such as ghee and skimmed milk powder, under its Maa
Anjani brand. The manufacturing facility is in Firozabad, Uttar
Pradesh. Operations are managed by the key promoter, Mr. Rajeev
Kumar.
AMBICA DECOPRINTS: CRISIL Reaffirms B- Rating on INR5.67cr Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B-/Stable/CRISIL A4'
ratings on the bank facilities of Shree Ambica Decoprints Private
Limited (SADPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.3 CRISIL A4 (Reaffirmed)
Cash Credit 5.67 CRISIL B-/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.03 CRISIL B-/Stable (Reaffirmed)
The ratings continue to reflect SADPL's modest scale of operations,
large working capital requirement and below-average financial risk
profile. These weaknesses are partially offset by the extensive
experience of the promoters in the ceramic tiles industry.
The lockdown and other measures taken by the government to contain
the Covid-19 pandemic are expected to impact the business risk
profile of SADPL. Revenue dropped sharply in the first quarter of
fiscal 2021 but improved gradually thereafter, with recovery in
real estate construction activities; however, overall revenue is
expected to be significantly lower than expected.
CRISIL Ratings has taken into cognisance the moratorium granted by
the banker for debt servicing up to August 31, 2020, under the
Reserve Bank of India's Covid-19 Regulatory Package .
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operations: Scale of operations will likely
remain modest, as reflected in revenue of INR16.18 crore in fiscal
2020. The small scale and intense competition in the ceramic tiles
industry continue to constrain scalability and profitability.
* Large working capital requirement: Operations are expected to
remain highly working capital-intensive, as reflected in estimated
gross current assets of 225 days as on March 31, 2020, driven by
large inventory of 161 days and receivables of 55 days.
* Below-average financial risk profile: Networth and total outside
liabilities to adjusted networth ratio were at INR1.48 crore and
7.16 times, respectively, as on March 31, 2020. Debt protection
metrics were subdued, indicated by interest coverage and net cash
accrual to adjusted debt ratios of 1.01 times and 0.03 time,
respectively, in fiscal 2020. The financial risk profile should
remain below average on account of modest accretion to reserve.
Strength:
* Extensive experience of the promoter: The two-decade-long
experience of the promoters, their healthy relationships with
customers and suppliers and their strong understanding of the
market dynamics should continue to support the business risk
profile.
Liquidity: Poor
Net cash accrual, expected at INR0.2 crore per annum, will be
insufficient vis-à-vis yearly debt obligation of INR0.4-0.8 crore
over the medium term. The company had minimal cash and bank balance
of INR0.16 crore as on March 31, 2020. Bank limit utilisation
averaged 87% over the 12 months through October 2020. Liquidity is
partially supported by emergency Covid-19 loan of INR1 crore.
Outlook Stable
CRISIL believes SADPL will continue to benefit from its established
market position in decorative ceramic tiles segment.
Rating Sensitivity factors
Upward factors
* 20-25% growth in revenues per annum over the medium term at
improved operating margins leading to higher than expected cash
accruals
* Improvement in financial risk profile; especially liquidity
profile
Downward factors
* Lower than expected revenues or profitability
* Deterioration of financial risk profile; especially interest
cover falling below 1 time.
Incorporated in 1992, Ahmedabad-based SADPL prints decorative
ceramic tiles and has printing capacity of 2,000 square metre per
day. Mr. Bhavin Mahasukhlal Shah, Mr. Kalpu Bhavin Shah and Ms
Kalpu Shah are the promoters of the company.
ARM WINSYS: Insolvency Resolution Process Case Summary
------------------------------------------------------
Debtor: M/s Arm Winsys Tech Private Limited
B-27, 2nd and 3rd Floor
Sector-64, Noida
Gautam Budh Nagar
U.P. 201301
Insolvency Commencement Date: January 28, 2021
Court: National Company Law Tribunal, Allahabad Bench
Estimated date of closure of
insolvency resolution process: August 1, 2021
(180 days from commencement)
Insolvency professional: Mr. Deepak Kumar Garg
Interim Resolution
Professional: Mr. Deepak Kumar Garg
Shanti Niketan, Tibra Road
Street No. 4
Modi Nagar 201204
Distt. Ghaziabad
E-mail: deepakgarg07@rediffmail.com
- and -
411, 4th Floor, Essel House
Asaf Ali Road
New Delhi 110002
E-mail: irp.armwinsys@gmail.com
Last date for
submission of claims: February 18, 2021
B.P. CONSTRUCTION: Ind-Ra Lowers Long Term Issuer Rating to 'D'
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded B.P.
Construction's (BPCON) Long-Term Issuer Rating to 'IND D' from 'IND
BB- (ISSUER NOT COOPERATING)'.
The instrument-wise rating actions are:
-- INR60 mil. Fund-based working capital limits (long term)
downgraded with IND D rating; and
-- INR85 mil. Non-fund-based working capital limits (short term)
downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects BPCON's overutilization of its working
capital limits in January 2021, which continued until February 4,
2021, due to a stretched liquidity position, resulting from delayed
receivables. Furthermore, the firm reported delays in debt
servicing for the month of January 2021.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months could
be positive for the ratings.
COMPANY PROFILE
B.P. Construction was established as a proprietorship concern in
1987. The firm was reconstituted as a partnership firm in 1988. The
firm is primarily engaged in civil construction and electrification
for various government departments in the state of Jharkhand. The
firm is registered as a Class-1A contractor with the Public Works
Department, Jharkhand, and a Class-1 electrical contractor with
Vidyut Vibhag, Energy Department, and the government of Jharkhand
for electrification work The firm has its registered address at
Ranchi (Jharkhand) and its partners are Bhim Prasad and Janki Devi.
BAFNA JEWEL: CRISIL Migrates B+ Rating from Not Cooperating
-----------------------------------------------------------
Due to inadequate information and in line with the Securities and
Exchange Board of India guidelines, CRISIL Ratings had migrated its
ratings on the bank facilities of Bafna Jewel Arts (BJA) to 'CRISIL
B+/Stable/CRISIL A4; Issuer not cooperating'. However, the
company's management has subsequently started sharing the
information necessary for a comprehensive review of the ratings.
Consequently, CRISIL Ratings is migrating the ratings to 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 12 CRISIL A4 (Migrated from
'CRISIL A4 ISSUER NOT
COOPERATING)
Proposed Bank 1 CRISIL A4 (Migrated from
Guarantee 'CRISIL A4 ISSUER NOT
COOPERATING)
Secured Overdraft 2 CRISIL B+/Stable (Migrated
Facility from 'CRISIL B+/Stable
ISSUER NOT COOPERATING)
Key Rating Drivers & Detailed Description
Weakness:
* Small scale of operations with susceptibility to intense
competition in a fragmented industry: Revenue was modest at
INR31.27 crore in fiscal 2020. The jewellery industry is highly
fragmented and largely dominated by the unorganised sector, as it
is neither capital nor technology-intensive. As a result, the
operating margin remains constrained.
* Below-average financial risk profile: Networth was small at
INR4.96 crore as on March 31, 2020, while total outside liabilities
to tangible networth ratio was high at 4.13 times. Debt protection
metrics were modest, as indicated by interest coverage ratio of
1.56 times and negative net cash accrual to adjusted debt ratio.
Strengths:
* Extensive industry experience of the partners: The managing
partner, Mr. Vijay Bafna, has experience of more than two decades
in the gold jewellery industry. This has enabled the firm to
establish healthy relationships with suppliers and customers.
Liquidity: Stretched
Cash accrual is expected at INR0.4-0.5 crore per fiscal, which is
sufficient to cover yearly debt obligation of INR0.3 crore over the
medium term. Overdraft limit of INR2 crore was fully utilised over
the 12 months through December 2020.
Outlook Stable
CRISIL Ratings believes BJA will continue to benefit from the
extensive industry experience of its partners.
Rating Sensitivity factors
Upward factors
* Growth in revenue and improvement in operating margin, leading to
higher cash accrual
* Improvement in interest coverage ratio to more than 2 times
Downward factors
* Decline in revenue or profitability, leading to cash accrual of
less than INR0.3 crore
* Large, debt-funded capital expenditure or stretched working
capital cycle weakening the financial risk profile especially the
liquidity
BJA was set up in 2012 as a partnership firm by Mr. Vijay Bafna and
his family members. The firm manufactures gold jewellery primarily
for export. BJA retails gold jewellery and has a showroom in
Punarvi Karnatka.
BARANI FERROCAST: CARE Lowers Rating on INR9.70cr Loan to B+
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Barani Ferrocast Private Limited (BFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 9.70 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE BB-; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 19, 2020, placed the
rating(s) of BFPL under the 'issuer non-cooperating' category as
BFPL had failed to provide information for monitoring of the
rating. BFPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 15, 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 rating takes into account the non-availability of
requisite information due to non- cooperation by BFPL 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 March 19, 2020 the following were the
rating strengths and weaknesses:
Key Rating Weakness
* Small scale of operations: Though the company is having
reasonable track record of around 8 years, the scale of operations
of the company remained small at INR32.72 crore in FY19 with
moderate net worth base of INR7.49 crore as on March 31, 2019 as
compared to other peers in the industry.
* Declining profitability margins: The PBILDT margin has dropped by
189bps at 8.20% in FY19 as against 10.12% in FY18. However, PAT
margin has improved marginally by 136bps to 1.25% as against 1.10%
in FY19.
* Weak though improved debt coverage indicators: The debt coverage
indicators, marked by TD/GCA have improved, however continued to be
weak at 8.64x in FY19 over the previous year (10.46x in FY18).
Interest coverage ratio stood at 1.90x in FY19.
* Working capital intensive nature of operations: The operations of
the company continue to be working capital intensive in nature
marked by its elongated operating cycle at 77 days in FY19 which
has been improved from 104 days in FY18.
* Profitability margins are susceptible to volatility in raw
material prices: The main raw materials used by BFPL are iron and
steel products, which constitute around 50-60% of the total cost of
sales during the last three years. The prices of these raw
materials are governed by demand-supply dynamics and had shown huge
fluctuations in past few years. Therefore, the company is exposed
to raw material price risk to the extent of loss in the
inventory value as the production process is long and it has to
keep a good amount of inventory.
* Highly competitive & fragmented nature of industry: The company
operates in the steel industry which is highly fragmented in nature
due to the presence of large number of unorganized players.
Fragmented nature of industry results in intense competition and
limits the bargaining of the company. The industry faces high
competition from the overseas players as well. The competitive
intensity is further stressed by influx of second
hand/reconditioned imported components at cheaper prices.
Key Rating Strengths
* Resourceful & Experienced promoters for more than three decades
in Engineering Industry with well-established manufacturing
facilities and qualified staff: Barani Ferrocast Private Limited
(BFPL) which was incorporated in February 2011 by Mr. T.K.
Karuppannaswamy (Director) and his family member. The promoters of
the company has more than three decades of experience in
Engineering business, with established clientele base in domestic
and foreign countries. The promoter of the company is also Director
of associate entity M/s Barani Hydraulics India Private Limited.
BFPL has well-established manufacturing facilities, which is
located at beside to its associate concern Kalappatti, Coimbatore,
Tamil Nadu. The company also has in-house innovation team to
manufacture and rebuild new products with its latest products with
high precision are in place to meet the quality and needs of the
customers. Also, the company has well qualified and experienced
staff to support the operations.
* Growth in total operating income in FY19: Total operating income
of the company has grew by 16.19% to INR32.72 Crore in FY19 viz a
viz INR28.16 Crore in FY18.
* Improved capital structure: Capital structure of the company has
improved marginally in FY19 marked by overall gearing ratio of
1.45x as on March 31, 2019 as against 1.83x as on March 31, 2018.
Barani Ferrocast Private Limited (BFPL) which was incorporated in
the year 2011 by Mr. T.K. Karuppannaswamy who has more than three
decades of business experience. The promoters of the company and
staff are qualified Engineers and have more than a decades of
experience in the similar industry. BFPL is engaged in business of
manufacturing of machined grey, nodular iron casting and design &
development of various engineering components. The company also
undertakes job work for its associate concern M/s Barani Hydraulics
India Private Limited which is located near BFPL unit as well as
from other units. The manufacturing unit is located at
Kurumbapalayam main road, Kalappatti, Coimbatore, Tamil Nadu. BFPL
caters to various end user industries like Automobile, Agriculture,
Construction and other Engineering industries.
BLA PACKAGING: CRISIL Migrates B+ Ratings from Not Cooperating
--------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with SEBI
guidelines, had migrated its rating on the long-term bank
facilities of BLA Packaging Industries Private Limited (BPIPL) to
'CRISIL B/Stable Issuer Not Cooperating'. However, the management
has subsequently started sharing requisite information, for
carrying out a comprehensive review of the rating. Consequently,
CRISIL Ratings is migrating its rating to 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Long Term Loan 15.53 CRISIL B+/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Proposed Working 4.97 CRISIL B+/Stable (Migrated from
Capital Facility 'CRISIL B/Stable ISSUER NOT
COOPERATING')
The rating reflects the average yet improving scale of operations.
These weaknesses are partially offset by the moderate financial
risk profile, backed by funding support from the promoters.
Analytical Approach
Unsecured loans of INR33.6 crore extended by the promoters as on
March 31, 2020, have been treated as 75% equity and 25% debt as
these are interest-free, and are expected to remain in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness:
* Average yet improving scale of operations: BPIPL commenced its
commercial operations in fiscal 2020, and reported operating income
and margin of INR23 crore and 4.3%, respectively. Scale of
operations and profitability should improve in the current fiscal.
Operating income stood at INR24.35 crore, while earnings before
interest, taxes, depreciation and amortisation (EBITDA) stood at
INR3.5 crore for the first nine months of fiscal 2021.
Strength:
* Moderate financial risk profile: Financial risk profile was
marked by a modest networth and gearing of INR25.3 crore and 1
time, respectively, as on March 31, 2020. Though the company
reported losses in fiscal 2020, funding support from the promoters
has aided the capital structure. Interest cover was weak at 0.5
time in fiscal 2020, but may improve to over 2 times in the current
fiscal.
Liquidity: Stretched
Liquidity remains stretched as expected cash accrual of INR2.5-3
crore will be tightly matched against maturing debt of INR2-3 crore
over the medium term. However, funding support via unsecured loans
from promoters and other affiliates should support liquidity.
Outstanding unsecured loans stood at INR33.6 crore as on March 31,
2020, up from INR25.2 crore as on March 31, 2019. As on December
31, 2020, unsecured loans from promoters stood at INR34.56 crore.
Bank limit utilisation averaged 45% for the 12 months ended
December 31, 2020. The company had availed moratorium on the
interest payment of its working capital facility, as per Reserve
Bank of India guidelines.
Outlook: Stable
CRISIL Ratings believes BPIPL will continue to benefit from the
increasing scale of its operations and funding support from the
promoters.
Rating Sensitivity Factors
Upward factors:
* Sustained growth in revenue, leading to cash accrual above INR4
crore
* Better working capital management
Downward factors:
* Decline in scale of operations resulting in lower-than-expected
net cash accrual
* Weakening of interest cover ratio below 1.2 time
BPIPL was set up in 2016 by the promoter, Mr. Narendra Kumar
Agarwal. The Mumbai-based company manufactures flexible printing
and packaging of laminates.
BLISS ENTERPRISES: CRISIL Reaffirms B+ Rating on INR3.5cr Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Bliss Enterprises (BE).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.4 CRISIL A4 (Reaffirmed)
Cash Credit 3.5 CRISIL B+/Stable (Reaffirmed)
Proposed Fund-
Based Bank Limits 3.0 CRISIL B+/Stable (Reaffirmed)
Proposed Non
Fund based limits 2.1 CRISIL A4 (Reaffirmed)
The ratings continue to reflect BE's modest scale of operations and
below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of the proprietor in
the pumps industry and healthy relationships with the principal and
customer.
Analytical approach
Unsecured loans of INR0.48 crore as on March 31, 2020 extended by
the proprietor, have been treated as debt as these may be withdrawn
if not required in the business.
Key rating drivers & detailed description
Weaknesses:
* Modest scale of operations: The modest scale limits benefits from
economies of scale available to large players. Revenue was small at
INR13 crore and operating margin average at 4.5% in fiscal 2020.
* Below-average financial risk profile: Financial risk profile is
below-average as reflected in high gearing of 2.76 times and total
outside liabilities to tangible networth ratio of 2.94 times as on
March 31, 2020. The networth stood modest at INR1.52 crore as on
March 31, 2020 because of low profitability and capital withdrawal
limiting financial flexibility. Debt protection metrics are
subdued, as reflected in interest coverage ratio of 1.31 times in
fiscal 2020. The large working capital requirement necessitates
high dependence on bank debt and creditors, thereby weakening
financial metrics.
Strength:
* Extensive experience of the proprietor and healthy relationship
with the principal and customer: BE, an authorised dealer in pump
sets made by Kirloskar Brothers Ltd (KBL; rated 'CRISIL
AA-/Stable/CRISIL A1+'), has maintained a healthy relationship with
the principal since 2002. The company caters to reputed and strong
counterparties such as Hindustan Petroleum Corporation Ltd (rated
'CRISIL AAA//FAAA/Stable/CRISIL A1+').
Liquidity: Stretched
Bank lines were utilised 75.06% on average in the 12 months through
December 2020. Because of significant capital withdrawal, cash
accrual was negative. Current ratio was average at 1 time as on
March 31, 2020. CRISIL Ratings does not anticipate further
withdrawal of capital over the medium term and as a result cash
accrual is likely to be INR45-60 lakh, which would tightly match
repayment obligations of around INR45 lakh. Moreover, need-based
funding support from the proprietor is expected to continue. It had
availed moratorium under the guidelines of The Reserve Bank of
India.
Outlook: Stable
CRISIL Ratings believes BE will continue to benefit from the
proprietor's extensive experience and healthy relationship with the
principal (KBL).
Rating Sensitivity Factors
Upward Factors
* Increase in scale of operations resulting in cash accrual of more
than INR1 crore over the medium term
* Improvement in debt protection metrics, especially interest
coverage ratio
Downward Factors
* Interest coverage ratio sustaining below 1.2 times over the
medium term
* Significant withdrawal of capital thereby constraining financial
flexibility, especially liquidity
Established in 2002, BE is a proprietorship concern of Mr. Baldev
Wani that trades in pump sets and valves, mainly used in the oil
and gas sector. BE is an authorised dealer for KBL's pump sets and
valves.
COMPETENT ENGINEERS: CARE Cuts Rating on INR8.53cr Loan to B+
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Competent Engineers (CEG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 8.53 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE BB-; Stable and moved
to ISSUER NOT COOPERATING
Category
Short term Bank 0.05 CARE A4; Stable; ISSUER NOT
Facilities COOPERATING; Rating moved to
ISSUER NOT COOPERATING
Category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from CEG to monitor the rating
vide letter dated January 18, 2021 and e mail communications dated
September 11, 2020, September 3, 2020, September 1, 2020 and
numerous phone calls. In line with the extant SEBI guidelines, CARE
has reviewed the rating on the basis of the publicly available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. The rating on Competent Engineers will now
be denoted as CARE B+; Stable/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The rating has been revised by taking into account non- cooperation
by Competent Engineers with CARE'S efforts to undertake a review of
the rating outstanding. CARE views information availability risk as
a key factor in its assessment of credit risk. The rating assigned
to Competent Engineers continues to remain constrained due to
intense competition due to exposure to tender driven nature of
business, exposure to raw material price volatility and partnership
nature of constitution. The ratings, however, derive strength from
experienced partners and favorable processing location.
Key Rating Weaknesses
* Intense competition due to exposure to tender driven nature of
business: CEG's business is tender-based which is characterized by
intense competition resulting in low operating margins for the
firm. The growth of business depends entirely upon the firm's
ability to successfully bid for tenders and emerge as the lowest
bidder. Therefore, the ability of the firm to secure new orders and
successful execution with existing competition remains a concern.
* Exposure to raw material price volatility: The major raw
materials for manufacturing are stainless steel items etc. The
prices of the same remain volatile in nature affecting the overall
raw material cost which accounts for over 67% of the total
operating income in FY19. The firm's presence in the highly
competitive market further restricts the scope to pass on the hike
in the raw material prices which has impact on the profitability
margins of the firm.
* Partnership nature of constitution: CEG's constitution as a
partnership firm has the inherent risk of possibility of withdrawal
of the partners' capital at the time of personal contingency and
firm being dissolved upon the death/retirement/insolvency of
partners.
Key Rating Strengths
* Experienced partner: CEG was promoted by Mr. Balraj Bhakhan as
its partner. Mr. Balraj Bhakhan is graduate by qualification and
having an industry experience of around 27 years in the industry
through their association with CEG only. The partner looks after
the overall operations of the firm. The promoter has been in the
industry for nearly 3 decades which will aid in establishing a
healthy relationship with their suppliers and customers.
* Association with reputed though concentrated customer base: The
firm is into manufacturing of iron and steel products which find
its application in the railway industry and is supplying all of its
finished products to reputed players. CEG has been able to receive
repetitive orders from the customers on account of quality products
being delivered and moreover, association with reputed players
enhances the image of the firm in the market.
Competent Engineers (CEG) was established as a partnership firm in
1992. The firm is currently being looked after by Mr. Balraj
Bhakhan as its partners. CEG was established with an aim to set up
a manufacturing facility at Jalandhar, Punjab for manufacturing of
stainless steel components for railway like frame, partition
sheets, connecting couplers, draft gear, break assembly, gear box,
set of car lines, end-wall, roof element, ventilator etc. with
varied installed capacity for the various products.
DANEM HEAVY: CARE Lowers Rating on INR30cr LT Loan to B
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Danem Heavy Industries Private Limited (DHI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 30.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B+; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated January 14, 2020, placed the
rating(s) of DHI under the 'issuer non-cooperating' category as DHI
had failed to provide information for monitoring of the rating. DHI
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated January 15, 2021. 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 rating takes into account the non-availability of requisite
information due to non- cooperation by DHI 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 January 14, 2020, the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Project implementation risk: The company proposes to establish a
fabrication unit with installed capacity of 63 Metric Tonnes per
day. The estimated project cost is INR49.45Crore, out of which
INR29.56 crore of term loan, for construction of factory building
and for purchase of machinery which has proposed to be financed by
the bank. The remaining INR15.07 crore has been funded by the
promoters. The company also proposes to borrow working capital
facilities post commencement of production. The company has
purchased the land for the unit, which spreads over 22 acres.
Currently the project undergoing land development stage. The
commercial operations are expected to be commenced during January
2019.
* Profitability susceptible to volatile raw material prices: Any
fluctuation in commodity prices especially that of steel, which is
the company's major raw material, will impact profitability.
* Highly fragmented and competitive business segment due to
presence of numerous players: The company is engaged into a
fragmented business segment and competitive industry. The market
consists of several small to medium-sized companies that compete
with each other along with several large enterprises. However it is
partially mitigated by the group support.
Key Rating Strengths
* Extensive experience of the promoters in Fabrication industry:
Mr. Parayil Daniel Mathew is a promoter of the company who is the
chairman of Danem Group, having experience of almost three decades
in fabrication service industry. Mrs Susan Mathew is another
promoter of the company, who is expertised in administration and
industrial exposure. Both the promoters belongs to a same family.
* Comfort from group companies: DHI draws comfort from group
companies in terms of orders, operations, marketing and financial
aspects. DHL belongs to Danem Group which is operating around nine
countries across the world providing all metal fabrication products
and services. Totally 16 entities are operating under this group.
DHL will get the orders from its group's existing clients, and for
manpower it is deputing some skilled and managerial employees from
its associate companies.
M/s. Danem Heavy Industries Private Limited (DHI) was incorporated
on 1st March 2016, registered under companies' act 2013. The
company is having its registered office at Ernakulum, Kerala. The
company proposes to engage in fabrication of Windmill Tower,
Pressure Vessels & Tanks, Structural Steel, Material Handling
equipments, Gas Turbine Auxiliaries and Supply Auto Auxiliaries.
DHI belongs to Danem Group, headquartered in UAE. The promoters are
Mr. Parayil Daniel Mathew and Ms. Susan Mathew, who are also the
directors of other associate companies under Danem Group. The
current project is yet to be executed.
DIVYA SIMANDHAR: CARE Lowers Rating on INR15cr LT Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Divya Simandhar Construction Private Limited (DSCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 15.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category and Revised from
CARE B; Stable; ISSUER NOT
CO-OPERATING
Long Term/ 34.75 CARE D; ISSUER NOT COOPERATING
Short Term Rating continues to remain
Bank Facilities under ISSUER NOT COOPERATING
category and Revised from
CARE B; Stable/CARE A4; ISSUER
NOT COOPERATING
Short Term 5.00 CARE D; ISSUER NOT COOPERATING
Bank Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category and Revised from
CARE A4; ISSUER NOT CO-
OPERATING
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 26, 2018, placed the
ratings of DSCPL under the 'issuer non-cooperating' category as
DSCPL had failed to provide information for monitoring of the
rating as agreed to in its Rating Agreement. DSCPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and email dated February
2, 2021. 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 revision in the ratings assigned to the bank facilities of
DSCPL takes into account delays in servicing debt obligations on
its bank loan facilities due to weak liquidity position.
Key Rating Sensitivities
Positive factors:
* Improvement in overall liquidity position of the company along
with timely servicing its debt repayment obligations.
Negative Factors: Not Applicable
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in servicing of debt: As per the feedback received from
banker on February 2, 2021, DSCPL has delayed in servicing interest
on cash credit (CC) facilities for a period of two months i.e.
December 2020 and January 2021 and the CC account remains overdrawn
for more than 30 days.
DSCPL was established during April 2007 as a partnership firm
'Simandhar Construction' by Mr. Tushar Shah and Ms. Sheetal Shah.
In December 2012, the firm was converted into a private limited
company and renamed as DSCPL.
DSCPL is engaged in the construction and infrastructure related
activities (mainly road work) on Engineering Procurement and
Construction (EPC) basis in Gujarat.
GANESH METALIKS: Ind-Ra Affirms & Withdraws 'B' LT Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shree Ganesh
Metaliks Limited's (SGML) Long-Term Issuer Rating at 'IND B' with a
Stable Outlook and has simultaneously withdrawn it.
The instrument-wise rating actions are:
-- The 'IND B' rating on INR350 mil. Fund-based limits# affirmed
and withdrawn;
-- The 'IND B' rating on INR1,857.26 bil. Term loans# due on
March 2030 affirmed and withdrawn; and
-- The 'IND A4' rating on INR140 mil. Non-fund-based limits*
affirmed and withdrawn.
#Affirmed at 'IND B'/Stable before being withdrawn
*Affirmed at 'IND A4' before being withdrawn
Ind-Ra is no longer required to maintain the ratings as the agency
has received a no-objection certificate from the lenders. This is
consistent with the Securities and Exchange Board of India's
circular dated March 31, 2017 for credit rating agencies.
KEY RATING DRIVERS
The affirmation reflects SGML's continued medium scale of
operations as indicated by revenue of INR4,425.29 million in FY20
(FY19: INR5320.69 million). The decline in the revenue was driven
by a decline in the prices of finished goods as there was a
downfall in prices of steel during the last two quarters. Till
December 2020, the company booked revenue of INR3,464.5million.
The ratings continue to factor in the company's modest EBITDA
margins owing to the highly fragmented and competitive nature of
the iron and steel industry. The margins improved to 10.08% in FY20
(FY19: 7.07%) owing to an increase in the absolute EBITDA to
INR446.06 million (INR376.36 million), due to a decline in raw
material costs. The return on capital employed stood at 10% in FY20
(FY19: 11%).
The ratings continue to reflect SGML's modest credit metrics owing
to the high debt levels (FY20: INR2,239 million; FY19: INR2,299
million). However, the net financial leverage (total adjusted net
debt/operating EBITDA) improved to 4.9x in FY20 (FY19: 6.0x) and
the interest coverage (operating EBITDAR/gross interest
expenditure) to 1.8x (1.6x) due to the improvement in the absolute
EBITDA.
Liquidity Indicator - Poor: The company's average utilization of
the fund-based and the non-fund-based limits was 97% and 81.67%,
respectively, for the 12 months ended December 2020. The cash flow
from operations improved to INR231.63 million in FY20 (FY19:150.03
million) on the back of improved absolute EBITDA. However, the free
cash flow turned negative INR60.68 million in FY20 (FY19: INR74.68
million) due to a significant capex incurred for setting up of a
rolling mill for manufacturing Thermo mechanically treated bars;
the unit became operational from November 2020. The company's cash
and cash equivalent stood at INR49.46 million at FYE20 (FYE19:
INR31.02 million). SGML had availed the Reserve Bank of
India-prescribed debt moratorium during March to August 2020for
term loan repayment.
However, the ratings continue to be supported by the promoter's
experience of more than a decade in the iron and steel industry.
COMPANY PROFILE
Incorporated in 2003, SGML manufactures sponge iron and billets in
the Sundargarh district of Odisha. The company is headed by its
promoter director, Manoj Kumar Agarwal.
GAZIABAD FORGINGS: CRISIL Migrates B+ Rating from Not Cooperating
-----------------------------------------------------------------
Due to inadequate information and in line with Securities and
Exchange Board of India guidelines, CRISIL Ratings had migrated the
rating on the long-term bank facility of Gaziabad Forgings Pvt Ltd
(GFPL) to 'CRISIL B+/Stable Issuer not cooperating'. However, the
management has started sharing information necessary for carrying
out a comprehensive review of the rating. Consequently, CRISIL
Ratings is migrating the rating on the bank facility of GFPL from
'CRISIL B+/Stable Issuer not cooperating' to 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.75 CRISIL B+/Stable (Migrated from
'CRISIL B+/Stable ISSUER NOT
COOPERATING')
The rating reflects the company's modest scale of operations and
large working capital requirement. These weaknesses are partially
offset by the extensive experience of the promoters in the steel
forging and heavy machinery parts business and moderate financial
risk profile. Revenue is expected to remain stable in fiscal 2021
due to the impact of Covid-19. Operating margin is expected at 7%
over the medium term.
Analytical Approach
Unsecured loan of INR0.68 crore as on March 31, 2020, from the
promoters has been treated as neither debt nor equity as it will
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Operations are working capital
intensive, as reflected in gross current assets (GCAs) of 433 days
as on March 31, 2020, driven by receivables and inventory of 118
days and 310 days, respectively. Inventory remains large as the
company supplies customised products. Payables of 150-200 days
support the working capital cycle. CRISIL Ratings believes working
capital requirement will remain large over the medium term.
* Modest scale of operations: Revenue was a modest INR13.21 crore
in fiscal 2020, and is expected to remain stable for fiscal 2021 as
the plant was non-operational until July 2020 due to the lockdown
imposed to contain the Covid-19 pandemic. The company booked
revenue of INR7.8 crore until December 2020.
Strengths
* Extensive experience of the promoters: The promoters' experience
of more than three decades in the forging industry and strong
relationships with suppliers and customers will continue to support
the business. GFPL caters to reputed clients such as Bharat Heavy
Electricals Ltd, NTPC Ltd and Tata Steel Ltd.
* Moderate financial risk profile: Gearing was 1.03 times and total
outside liabilities to tangible networth ratio is estimated at 1.9
times as on March 31, 2020. Debt protection metrics were adequate,
with interest coverage and net cash accrual to adjusted debt ratios
at 1.37 times and 0.12 time, respectively, in fiscal 2020. In the
absence of any major debt-funded capital expenditure (capex), the
financial risk profile will remain moderate over the medium term.
Liquidity: Stretched
Bank limit utilisation was high at 88% on average over the 12
months through September 2020. Cash accrual of INR0.30 crore
adequately covered debt obligation of INR0.10 crore in fiscal 2020.
Liquidity is supported by the unsecured loan of INR0.68 crore as on
March 31, 2020, from the promoters.
Outlook Stable
CRISIL Ratings believes GFPL will continue to benefit from the
extensive experience of the promoters.
Rating Sensitivity factors
Upward factors
* Increase in operating income by more than 30% and stable
operating margin, leading to cash accrual above INR1 crore
* Improvement in the working capital cycle, with GCAs below 300
days
Downward factors
* Decline in revenue and fall in operating margin below 5%, leading
to net cash accrual of less than INR0.2 crore
* Large, debt-funded capex, weakening the financial risk profile
and liquidity
Incorporated in 1978, GFPL manufactures steel forgings and heavy
machinery parts. The company is promoted by Mr. M P Goel, Mr.
Sanjay Goel and Mr. Saurabh Chatwal.
HOTEL BABYLON: CRISIL Migrates D Rating from Not Cooperating
------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with
Securities and Exchange Board of India guidelines, had migrated the
rating on the bank facility of Hotel Babylon Capital Pvt Ltd
(HBCPL) to 'CRISIL D Issuer Not Cooperating'. However, the
management has subsequently started sharing the requisite
information for carrying out a comprehensive review of the rating.
Consequently, CRISIL Ratings is migrating the rating to 'CRISIL D'
from 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 29 CRISIL D (Migrated from
'CRISIL D ISSUER NOT
COOPERATING')
The rating continues to reflect delay in meeting debt obligation.
The rating also factors a weak financial risk profile and exposure
to intense competition. However, the company benefits from the
extensive experience of the promoters in the hospitality industry
and their funding support.
Analytical approach
Unsecured loan of Rs. 8.72 crore as on March 31st 2020, has been
treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Delay in servicing term loan: There were delays in payment of
interest as well as principal instalments against the term loan for
December 2020 and January 2021. The overdue amounts are being
serviced but with delays.
* Weak financial risk profile: The networth was modest, estimated
at INR11.59 crore as on March 31, 2020. This, coupled with
substantial debt contracted for project implementation, has led to
a high gearing of 3.31 times as on this date. The debt protection
metrics are also average, with interest coverage and net cash
accrual to adjusted debt ratios at 1.81 times and 0.04 time,
respectively, for fiscal 2020.
* Exposure to intense competition: Concentration of revenue in a
single hotel constrains access to a wider customer base and renders
the company susceptible to the dynamics of operating in a single
market. It is not only vulnerable to competition from bigger
players in the hospitality industry but also from other hotels
operating in the vicinity.
Strength:
* Extensive industry experience of the promoters: The promoters
have two decades of experience in running hotels under the brand
Babylon. They have also been operating the 4-star Hotel Babylon
International (Raipur, Chhattisgarh) with 80 rooms (operational
since 2001) and a 3-star hotel, Hotel Babylon Inn (Raipur) with 72
rooms (since 2009).
Liquidity: Poor
Cash accrual is expected at INR1-4 crore, insufficient against term
debt obligation of INR3.1-4.2 crore, per fiscal over the medium
term. The current ratio was low at 0.75 time on March 31, 2020. The
promoters are likely to extend support in the form of unsecured
loans to meet repayment obligation. Liquidity is supported by a
moratorium granted against term loan repayment and interest payment
till August 2020.
Rating Sensitivity Factors
Upward Factors
* Timely servicing of term loan for more than 90 days
* Ramp-up in revenue and profitability, leading to improvement in
net cash accrual
* Healthy demand in sale of commercial units
HBCPL, incorporated in 2012, is promoted by Mr. Paramjeet Singh
Khanuja and his wife, Mrs Jugesh Kaur. The company is setting up a
3-star hotel and 81 shops to be sold as commercial office space in
Raipur. The hotel commenced its operations in October 2019.
IMP ENERGY: CRISIL Withdraws B- Rating on INR4cr Bank Guarantee
---------------------------------------------------------------
CRISIL Ratings has downgraded the ratings on the bank facilities of
IMP Energy Limited (IEL) to 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL B-/Stable/CRISIL A4 Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 12 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 2 CRISIL B-/Stable (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL B-/Stable ISSUER NOT
COOPERATING; Rating Withdrawn)
Letter of Credit 4 CRISIL A4 (Issuer Not
Cooperating)
Proposed Bank 4 CRISIL B-/Stable (ISSUER NOT
Guarantee COOPERATING; Downgraded from
'CRISIL B-/Stable ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL Ratings has been consistently following up with IEL for
obtaining information through letters and emails dated March 17,
2020 and September 16,2020 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 IEL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on IEL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, CRISIL Ratings has downgraded the ratings on
the bank facilities of IEL to 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL B-/Stable/CRISIL A4 Issuer Not
Cooperating'. Further, CRISIL has simultaneously withdrawn the
ratings on company's request and receipt of no objection from the
banker. The rating action is in line with CRISIL Rating's policy on
withdrawal of bank loan ratings.
The downgrade reflects delay by IEL in servicing of interest on its
outstanding facilities for more than 30 days.
Incorporated in February 2012 by the Dhoot Family, IEL is engaged
in providing EPC services for mini & small hydro power projects up
to 5 MW, with a focus on the northern regions of India. The company
is a partly owned (77.47%) subsidiary of IPL, a public limited
company listed on the Bombay and National Stock Exchanges. The day
to day operations of the company are managed by Mr. Ajay Dhoot and
his brother, Mr. Aaditya Dhoot, with help from other functional
personnel. The registered office of the company is in Mumbai,
Maharashtra.
IRULAPPA MILLS: CRISIL Withdraws B Rating on INR10cr Loans
----------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Irulappa Mills India Private Ltd (IMIPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL Rating's policy on
withdrawal of its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B/Stable'; Rating
Withdrawn)
Rupee Term Loan 7 CRISIL B/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B/Stable'; Rating
Withdrawn)
CRISIL Ratings has been consistently following up with IMIPL for
obtaining information through letters and emails dated December 23,
2020 and January 29, 2021 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
Ratings failed to receive any information on either the financial
performance or strategic intent of IMIPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on IMIPL is consistent with 'Assessing Information Adequacy Risk'.
CRISIL Ratings has migrated the ratings on the bank facilities of
IMIPL to 'CRISIL B/Stable Issuer not cooperating'.
CRISIL Ratings has withdrawn its rating on the bank facilities of
IMIPL on the request of the company and after receiving no
objection certificate from the bank. The rating action is in-line
with CRISIL Rating's policy on withdrawal of its rating on bank
loan facilities.
Incorporated in 2013 by Mr. I Periyasam and Mr. P Prabhu, Irulappa
Mills India Private Ltd (IMIPL) is engaged in spinning of cotton
yarn and started its commercial production division for Yarn
manufacture in April 2015. The company's manufacturing unit is
based in Dindigul, Tamil Nadu.
JCT LIMITED: CARE Lowers Rating on INR90cr LT Loan to D
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of JCT
Limited (JCT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 90.00 CARE D Revised from CARE B;
Stable
Short term Bank
Facilities 105.30 CARE D Revised from CARE A4
Detailed Rationale & Key Rating Drivers
CARE has revised the ratings for bank facilities of JCT to 'CARE
D'. Facilities with this rating are in default or are expected to
be in default soon. The revision in the ratings of bank facilitates
of JCT takes into account instances of delays in servicing of the
due debt obligations by the company.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Timely Servicing of debt obligations for more than 3 months.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Instances of delays in servicing of debt obligations: The company
has reported instances of delays in servicing of its debt
obligations related to the bank facilities and term loans. There
have been instances of devolvement of letter of credit (LC) in the
month of July and August 2020 leading to overutilization in cash
credit limits which were later regularized. Also, as per the notes
to accounts for 9MFY21 (refers to the period April 1 to December
31) financials, due to financial crunch in COVID19 situation and
also because of non-granting of moratorium/ restructuring under the
RBI's COVID 19 regulatory package to the company, there have been
certain delays in payment of term debt obligations which were not
rated by CARE.
* Weak financial risk profile: The total operating income of the
company has reduced from INR804.61 crore as on March 31, 2019 to
INR696.38 crore as on March 31, 2020 on account of sub-optimal
levels of operations on account of lower availability of raw
materials due to stretched liquidity position for the company. The
losses of the company widened from INR23.88 crore in FY19 to
INR44.56 crore in FY20 due to the moderation in total operating
income in the fiscal. The margins at the operating level declined
from 4.57% in FY19 to 0.12% in FY20. The continuous loss has
resulted in erosion of its networth from INR64.56 crore in FY19 to
INR19.14 crore in FY20. The overall gearing of the company
deteriorated from 3.03x as on March 31, 2019 to 9.11x as on March
31, 2020. JCT reported improvement in profitability metrics in
9MFY21 with PBILDT margins of 10.91% in 9MFY21 as against 1.38% in
9MFY20, however, there has been moderation in topline from
INR541.06 in 9MFY21 to INR451.15 in 9MFY20.
Key Rating Strengths
* Experienced promoters and established track record JCT is the
part of Punjab based Thapar group. As a part of the Thapar family
settlement JCT went to Mr. MM Thapar. As per the family settlement
JCT Limited is the only company under the management of MM Thapar
family. Mr. Samir Thapar, son of Mr. MM Thapar is the Chairman and
Managing Director of the company and looks after the day to day
activities of the company. Mr. Thapar is supported by a team of
experienced professionals. JCT has long track record of more than
six decades and has established itself as a renowned brand in
India.
Liquidity: Stretched
The liquidity of the company is stretched with high utilization of
working capital limits with an average utilization of 96% for the
last 12 months ending January 2020. The cash and bank balance as on
December 31, 2021 stood at INR1.22 crore. As per RBI guidelines
dated March 27, 2020 and May 23, 2020, companies can avail a
moratorium of 6 months on their payment obligations due during the
period March –August 2020. The company had requested the same
from CARE rated working capital lenders Bank of Baroda, Punjab
National Bank and Allahabad Bank which has been approved.
JCT Limited (JCT) was incorporated as Jagatjit Cotton Textile Mills
Limited in October 1946 and subsequently renamed to JCT in 1989.
JCT is the part of Punjab based Thapar group. JCT is engaged in
manufacturing of cotton, synthetic & blended fabrics and nylon
filament yarn at its integrated textile facility in Phagwara
(Punjab) and filament yarn facilities in Hoshiarpur (Punjab). JCT
has installed capacity of 1,50,000 meters per day of cotton/blended
fabrics and 50,000 meters per day of synthetic fabrics at its plant
at Phagwara and 16000 Tonnes Per Annum (TPA) of nylon filament yarn
at Hoshiarpur plant.
JUST LOGICAL: First Creditors' Meeting Set for Feb. 24
------------------------------------------------------
A first meeting of the creditors in the proceedings of Just Logical
Pty Ltd will be held on Feb. 24, 2021, at 10:00 a.m. at 22 Lindsay
Street, in Perth, WA.
Jack Robert James and Paula Lauren Smith of Rodgers Reidy were
appointed as administrators of Just Logical on Feb. 12, 2021.
MCNALLY SAYAJI: Faces Bankruptcy; Admitted for CIRP
---------------------------------------------------
TelegraphIndia.com reports that McNally Sayaji Engineering Ltd is
going to face bankruptcy, the first casualty of the financial
turmoil at Williamson Magor Group.
The company is an unlisted subsidiary of McNally Bharat Engineering
Ltd, which is at the heart of the woes in the group. The Calcutta
bench of the National Company Law Tribunal admitted McNally Sayaji
for the corporate insolvency resolution process (CIRP) at the
behest of ICICI Bank, TelegraphIndia.com says.
According to the report, McNally Bharat managing director Srinivas
Singh said the company was examining the order. "The next course of
action will be decided based on the legal counsel."
Further, the NCLT appointed an interim resolution process to carry
out the CIRP process and declared a moratorium on new cases against
the company under Section 14 of Insolvency and Bankruptcy Code,
2016.
McNally Sayaji owes a little more than INR75 crore to ICICI Bank,
including principal and interest, TelegraphIndia.com discloses
citing court document. The company cumulatively owes INR213.18
crore in secured and unsecured loans, excluding outstanding
interest and default in paying interest, as on March 31, 2020.
ICICI Bank had moved an application seeking CIRP before the court
in January 2020. However, the matter could not be heard because of
the lockdown in March.
The matter was listed again in November, the report notes.
TelegraphIndia.com relates that the order passed on February 12
noted that the McNally Sayaji counsel sought to impress upon the
fact that the promoters had been pursuing several debt
restructuring initiatives. An investor named ANGCC Capital
Management, Iceland, had submitted a proposal but it was not
possible to follow it through because of the pandemic.
A revised plan was submitted by the foreign investor in August,
TelegraphIndia.com recalls. However, the consortium of lenders,
including ICICI Bank, asked the company to revise the plan
further.
According to TelegraphIndia.com, Rishav Banerjee, who appeared on
behalf of ICICI Bank, submitted before the court that the proposed
resolution plan did not in any manner curtail or limit the
financial creditor in its individual capacity to enforce its rights
against the corporate debtor as McNally Sayaji has not disputed
either the default or the debt on the same.
TelegraphIndia.com says the court agreed to the submission noting
the default has taken place, triggering insolvency. "In these
circumstances, we have no hesitation in admitting the application
and in ordering initiation of CIRP against the corporate debtor,"
the order read.
McNally Bharat, which is a listed entity, holds an 81.86 per cent
stake in the subsidiary with a part of it pledged with the lenders.
ICICI Bank had invoked around 18 per cent of the pledged stake in
November 2020.
MCNALLY SAYAJI: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Mcnally Sayaji Engineering Limited
Campus 2B, Ecospace Business Park
11F/12, Rajarhat, Newtown
Kolkata 700160, West Bengal
Factory Locations:
Savli Industrial Estate, GIDC
Plot No. 75-79B, Post Alindra
Dist Vadodara, Gujarat 391775
Kumardhubi, Dist: Dhanbad
Jharkhand 828203
Plot No. M 16, ADDA Industrial Area
P.O R. k Mission
Asansol 713305, West Bengal
- and -
Plot No. 313, Survey No. 72 & 76
3rd Phase, Malur Industrial Area
Nosigere Taluk, Kolar District
Malur 563130, Karnataka
Insolvency Commencement Date: February 11, 2021
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: August 9, 2021
Insolvency professional: Jitendra Lohia
Interim Resolution
Professional: Jitendra Lohia
Klass Insolvency Resolution Professionals
Pvt. Ltd.
2/7 Sarat Bose Road
Vasundhara Apartment, 2nd Floor
Near Minto Park
Kolkata 700020
West Bengal
E-mail: jitulohia@knjainco.com
cirp.msel@gmail.com
Old address:
2 Lal Bazar Street, Todi Chamber
Room No. 204, 2nd Floor
Near Minto Park
Kolkata 700001
Last date for
submission of claims: February 27, 2021
NATURAL COTTON: CARE Lowers Rating on INR23.20cr Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Natural Cotton Spinners Private Limited (NCS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 23.20 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B+; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 18, 2020, placed the
rating(s) of NCS under the 'issuer non-cooperating' category as NCS
had failed to provide information for monitoring of the rating. NCS
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated January 15, 2021. 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 rating takes into account the non-availability of
requisite information due to non- cooperation by NCS 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 March 18, 2020, the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Working capital intensive nature of operations: The operating
cycle of NCS stood elongated at 173 days in FY19 as compared to 192
days in FY18 majorly due to high average inventory period at 170
days. Average collection and creditor days stood at around 30 days
each during FY19.
* Leveraged capital structure and weak debt coverage indicators:
The overall gearing stood leveraged at 2.93x as of March 31 2019 as
against 2.53x as of March 31 2018. The total debt/GCA improved
however continues to be weak 12.19x in FY19 against 25.64x in FY18
mainly at the back of improved GCA earned by the company. The
interest coverage ratio marginally improved from 1.40x in FY18 to
1.78x in FY19.
* Highly fragmented industry and volatility associated with raw
material prices: The cotton ginning and spinning industry is highly
fragmented in nature with several organized and unorganized
players. 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. Hence,
the profitability margins of the company are susceptible to
fluctuation in raw material prices.
Key Rating Strengths
* Long track record and experience of the promoters for more than
two decades in textile business: The management team of NCS led by
Mr. R Palaniswamy (Managing Director) and Mr. G Rathinasapabathy
(Director) has more than two decades of experience in textile
business. Mrs. P Indhumathi (Director) and Mrs. R Revathi
(Director) has more than one decade of experience in textile
business. The operations of the company are also supported by
experienced executive team. Through their experience in this
industry, they have established healthy relationship with large
number of clients. Established relationship with customers and
suppliers and cluster presence with easy access to job workers and
raw material suppliers owing to the long operational track record
of the group entities, the company has maintained a good
relationship of more than a decade with all the suppliers,
customers and its job workers.
* Financial performance marked by growth in operating income along
with satisfactory PBILDT margin and thin PAT margins albeit
improvement: The total operating income in FY19 improved and stood
at INR61.97 crore as against INR56.30 crore in FY18. The PBILDT
margin improved from 7.01% in FY18 to 8.05% in FY19. PAT margin
remained thin however improved from 0.48% in FY18 to 1.94% in FY19
Coimbatore based, Natural Cotton Spinners Private limited (NCS) was
incorporated on October 03, 2005 and promoted by Mr. R Palaniswamy,
Mrs. Indhumathi, Mr. Rathinasapabathy and Mrs. R Revathi. The
company is mainly engaged in manufacturing of grey fabric.
RAMESHWAR PRASAD: CRISIL Reaffirms B+ Rating on INR10cr Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Rameshwar Prasad Sharma
Contractor (RPSC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Cash Credit/
Overdraft facility 10 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect RPSC's modest scale of operations
amid intense competition and large working capital requirement.
These weaknesses are partially offset by the extensive experience
of the partners in the civil construction industry.
Analytical Approach
Unsecured loans (Rs 2.8 crore as on March 31, 2020) extended by the
partners have been treated as debt as these loans have been repaid
in the past.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition: There civil
construction industry comprises numerous organised and unorganised
ones and the consequent intense competition may continue to
constrain scalability, pricing power and profitability. Thus,
revenue remained restricted at INR68-92 crore during the three
fiscals through 2020. Further, the Covid-19 pandemic-led economic
slowdown has significantly impacted flow of tenders and their
timely execution. Therefore, revenue is likely to drop by 40-50% in
fiscal 2021 (on-year basis); revenue is reported at around INR20
crore till December 2020.
* Large working capital requirement: The working capital cycle may
remain stretched over the medium term and will be closely
monitored. Gross current assets (GCAs) increased to 333 days as on
March 31, 2020, from 296 days a year ago as debtors rose to 130
days from 101 days. This is because payment from government
authorities is realised only on an average of 90-150 days.
Retention money and security deposits with various departments
further escalate the needs.
Strength
* Extensive experience of partners: The managing partner, Mr.
Rameshwar Prasad Sharma, has been associated with the civil
construction industry for over two decades, and has established
strong industrial relationship. The firm is classified as 'AA
class' road contractor in Rajasthan. This shall help the firm in
building strong order book and should boost business growth over
the medium term.
Liquidity: Stretched
Cash accrual is projected at INR2.5-3.0 crore per annum over the
medium term, sufficient to meet the yearly debt obligation of
INR1.5-2.0 crore. Bank limit utilisation was moderate and averaged
around 68% during the 12 months through November 2020. Also,
need-based financial support from partners will continue to aid
liquidity.
Outlook Stable
RPSC will continue to benefit from the extensive experience of the
key partner
Rating Sensitivity Factors
Upward Factors
* Revenue growth of over 20% per annum and stable profitability
* Significant improvement in working capital cycle, leading to
moderation GCA days
Downward Factors
* Steep decline in revenue and/or profitability, leading to cash
accrual of INR1.5 crore
* Further sizeable stretch in working capital cycle
RPSC was set up in 1997 as a partnership entity by Mr. Rameshwar
Prasad Sharma and his family members. The firm is a road
construction contractor working for various government authorities
in Rajasthan.
REFAIR INDIA: CARE Lowers Rating on INR3.0cr LT Loan to B
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Refair India Private Limited (RIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 3.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable and moved
to ISSUER NOT COOPERATING
Category
Short term Bank 3.00 CARE A4; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable and moved
to ISSUER NOT COOPERATING
Category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from RIPL to monitor the ratings
vide e-mail communications/letters dated January 27, 2021, January
25, 2021, October 12, 2020, July 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 RIPL's bank facilities will now be denoted as CARE B;
Stable/ CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings have been revised on account of non-availability of
requisite information and due to non-cooperation by Refair India
Private Limited with CARE'S efforts to undertake a review of the
rating outstanding. CARE views information availability risk as a
key factor in its assessment of credit risk. The rating takes into
account modest and declining scale of operations elongated
operating cycle, liquidity- stretched, highly fragmented and
competitive industry. The rating, however, continues to draw
comfort from experienced promoters with long track record of
operations, moderate profitability margins, moderate capital
structure and moderate coverage indicators and moderate order book
position.
Detailed description of the key rating drivers
At the time of last rating on November 6, 2019 the following were
the rating weaknesses and strengths: (Updated for the information
available from the Registrar of Companies):
Key Rating Weaknesses
* Modest and declining scale of operations: The scale of operations
of the company remained modest and declining marked by total
operating income and gross cash accruals of INR5.21 crore and
INR0.62 crore respectively during FY19(Audited) as against INR6.56
crore and INR0.78 crores respectively during FY18 and INR8.38 crore
and INR0.85 crores respectively during FY17 owing to low execution
of order in hand. Also, the net worth stood moderate at INR4.79
crore as on March 31, 2019(Audited). The small scale limits the
company's financial flexibility in times of stress and deprives it
of scale benefits. Though, the risk is partially mitigated by the
fact that the scale of operation is growing continuously. The
company's total operating income in 5MFY20 is 7.80 crores and
expected to achieve to INR16.00 crore in FY20.
* Elongated operating cycle: The operating cycle of the company
remained elongated at 157 days for FY19 (Audited) as against 145
days in FY18 on account of high average collection days. The
increase in realization days is on account of delay in funds
release by the government departments as the company primarily
deals with PWD and Ministry of Defence. Due to elongated operating
cycle the working capital borrowings of the company remained almost
fully utilized during the past 12 months ending August 31, 2019.
The company gets a credit period from its suppliers resulting in
average creditor days of 10 days as the company deals in fire
fitting and electric fittings installation done in government
departments and the suppliers are local players who do not provide
a long credit period.
Liquidity- Stretched
Liquidity is marked by tightly matched accruals to repayment
obligations as marked by high current ratio and quick ratio of
3.36x and 3.36x respectively on account of high trade receivables
which leads to blockage of funds and modest cash balance of INR0.07
lakhs as on March 31, 2019. Its bank limits are fully utilized
during the past 12 months ending August 31, 2019.
* Highly fragmented and competitive industry: The spectrum of the
industry in which the company operates is highly fragmented and
competitive marked by the presence of numerous players in India
owing to relatively low entry barriers. Hence, the players in the
industry do not have pricing power and are exposed to competition
induced pressures on profitability.
Key Rating Strengths
* Experienced promoters with long track record of operations: The
company was incorporated in January, 1996 by Mr. Rakesh Kumar Sood
and Mrs. Aarti sood. Mr. Rakesh Kumar sood is post graduate
qualification in mechanical engineering with specialization in air
conditioning and refrigeration. In 1988, Mr. Sood has started
venture namely M/s Refair Engineers and Consultants, which is
converted into private limited company in FY1996 and have a vast
experience of more than a three decades through their association
with this company. Mrs. Arti sood is graduate by qualification and
have an equal experience. The company is also managed by Mr. Raghav
Sood. Since inception, The RIPL is dealing with Defence Research
and development organization (DRDO) as a register vendor providing
solutions in creating air- conditioned environments for their
technical facilities and offices.
* Moderate Profitability Margins: The profitability margins as
marked by PBILDT and PAT margin stood moderate for the past three
financial years i.e. FY17- FY19. PBILDT margin stood at 21.17% in
FY19 (Audited) as against 19.69% in FY18 on account of decrease in
purchase of traded goods. Further, PAT margin stood moderate at
9.03% in FY19 (Audited) as against 9.53% in FY18.
* Moderate Capital structure and Moderate coverage indicators: The
capital structure of the company stood moderate marked by
debt/equity ratio and overall gearing ratio of 0.46x and 0.46x
respectively in FY19 (Audited) as against 0.62x and 0.62x
respectively in FY18 on account of High Net Worth of the company
and lower reliance on external borrowings. Further, the coverage
indicators marked by Interest coverage ratio and total debt to GCA
ratio stood moderate at 3.00x and 3.84x in FY19(Audited) as against
3.23x and 3.84x for the FY18 owing to moderate profitability
position and repayment of debt obligations.
* Moderate order book position: As on September 13, 2019, the
unexecuted order book position of the company was INR7.70 crore.
The order book at present is moderate. Hence, effective and timely
execution of the orders has a direct bearing on the margins
attained. Furthermore, in the past, the company's order book was
concentrated towards few contracts and the ability of the company
to maintain relationship with steady flow of orders from its
clientele shall remain critical for the growth of the company. The
total orders in hand are INR12.06 crores, out of which orders of
INR4.37 crores is completed till September 13, 2019. However, in
the absence of latest details, CARE is unable to comment on the
same.
Refair India Private Limited was incorporated in January 01, 1996,
is a private limited company, engaged in providing services of
complete infrastructure that includes Air conditioning,
firefighting equipment, cables etc to the government departments
and PWDs. The company gets tender based orders for electricals,
HVAC, firefighting luminous, Audio Visuals and provide annual
maintenance and operation maintenance to the clients. The major
clients of company are government organization i.e. Ministry of
defence, Ministry of Home affairs and all PWD's. The company is
promoted by Mr. Rakesh Kumar sood and Mrs. Arti sood. The products
(Air conditioner, cables etc) used for providing services are
procured from Hitachi, Voltas, Dykin etc. are procured from Delhi
NCR.
RENU RESIDENCY: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Renu Residency Private Limited
House No. 553/14
Civil Line Road
PO+PS-Deoria
UP 274001
Insolvency Commencement Date: February 12, 2021
Court: National Company Law Tribunal, Lucknow Bench
Estimated date of closure of
insolvency resolution process: August 10, 2021
Insolvency professional: Sharavan Kumar Vishnoi
Interim Resolution
Professional: Sharavan Kumar Vishnoi
BCC Tower, 1008, 10th Floor
Sultanpur-Lko Road
Arjun Ganj
Near Saheed Path
Lucknow 226002 (UP)
E-mail: shravan.vishnoi@yahoo.com
Last date for
submission of claims: February 26, 2021
RK WIND: CARE Lowers Rating on INR9.73cr LT Loan to B+
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of R.K.
Wind Farms (Karur) Private Limited (RKWPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 9.73 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE BB-; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 17, 2020, placed the
rating(s) of RKWPL under the 'Issuer non-cooperating' category as
RKWPL had failed to provide information for monitoring of the
rating RKWPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 29, 2021. 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 RKWPL 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 March 17, 2020 the following were the
rating strengths and weaknesses
Key Rating Weaknesses
* Climatic and technological risks: Achievement of desired PLF
going forward would be subject to change in climatic conditions
(low wind regimes in India), as well as technological risks.
Key Rating Strengths
* Long experience of the promoters in renewable energy industry
with established track: R.K. Textiles was established in the year
1985, the company has a track record of more than three decades
which was at a later stage converted to RKWFPL in 2012. Mr. K
.Subramanian, the promoter, Chairman cum Managing Director, has an
experience of more than three decades in textile industry and
renewable energy industry since 2003. He is a graduate in arts and
heads finance, accounts and marketing departments. Previously, he
was associated with a textile company run by his brother-in-law as
Manager, Production department for the period of 5 years from 1980
to 1985. Mrs. Malliga Subramanian, W/o Mr. K .Subramanian, is a
science graduate who heads administration and day to day affairs of
the company. She has an experience of total three decades in the
textile industry and renewable energy industry. His son Mr. Raghul
Subramanian, is a B.Tech, M.B.A who handles administration and
finance of the company. He has an industrial experience of three
years.
* Growth in total operating income and profitability margins: The
total operating income grew by 14% in FY19 and stood at INR8.65
crore as against INR7.56 crore. With improved scale of operations,
the PBILDT margin of the company has improved significantly to
43.7% in FY19 as compared to 36.53% in FY18. With increase in
interest obligation w.r.t to term loan availed in the month of
September 2017, the PAT margin declined by 90 bps to 9.29% in
FY19.
* Improved capital structure and debt-coverage indicators: The
capital structure of the company remained satisfactory marked by
improvement in FY19 in overall gearing ratio to 1.24x as on March
31, 2019 as against 1.59x as of March 31 2018 at the back of
scheduled repayment of debt obligation. The debt coverage
indicators marked by Total debt/GCA stood at 3.95x in FY17
improving from 5.78x FY18 due to improved gross cash accruals
achieved during FY19 i.e INR2.65 crore (PY: INR2.10 crore) and
scheduled debt repayments.
R.K. Wind Farm (Karur) Private Limited was formerly known as RK
Textiles which was established in the year 1985. Presently, RKWFPL
is engaged in the sale of green energy with the capacity of
generating 8.5MW as on January 2020.
ROYAL GENERAL: CRISIL Assigns B+ Rating to INR25cr New Loan
-----------------------------------------------------------
CRISIL Ratings has assigned the 'CRISIL B+/Stable' rating to the
long-term bank facility of Royal General Contractors Pvt Ltd
(RGCPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 25 CRISIL B+/Stable (Assigned)
The rating reflects the company's susceptibility to risks inherent
in tender-based business and modest scale of operations. These
weaknesses are partially offset by the extensive experience of the
promoters in the civil construction industry and healthy debt
protection metrics.
Analytical approach:
Unsecured loan of INR1.84 crore as on March 31, 2020, from the
promoters has been treated as debt as the loan may not be retained
over the medium term.
Key Rating Drivers & Detailed Description
Weakness:
* Susceptibility to risks inherent in tender-based business:
Revenue and profitability depend on the ability to win tenders.
Because of intense competition, players have to bid aggressively to
get contracts, which constrains profitability. Moreover, on account
of cyclicality inherent in the construction industry, the ability
to maintain profitability through operating efficiency becomes
critical.
* Modest scale of operations: Intense competition constrains
scalability and operating flexibility. Orders of around INR80 crore
to be executed in the next 12-18 months provide medium-term revenue
visibility.
Strengths:
* Extensive experience of the promoters: The promoters' experience
of around 5 years in the civil construction industry, understanding
of market dynamics and established relationships with suppliers and
customers will continue to support the business.
* Healthy debt protection metrics: Debt protection metrics were
comfortable, reflected in interest coverage and net cash accrual to
total debt ratios of 14.2 times and 0.30 time for fiscal 2020. The
metrics will remain stable over the medium term.
Liquidity: Stretched
Cash accrual expected at INR2.5-3 crore per fiscal will just about
cover term debt obligation of INR1-2 crore over the medium term.
Current ratio was healthy at 1.71 times as on March 31, 2020. The
promoters are likely to extend funding support through equity
infusion and unsecured loans (Rs 1.84 crore as on March 31, 2020)
to meet working capital requirement and debt obligation.
Outlook Stable
CRISIL Ratings believes RGCPL will continue to benefit from the
extensive experience of the promoters and established relationships
with clients.
Rating Sensitivity factors
Upward factors
* Successful implementation of project undertaken through
installation of necessary plant and machinery
* Increase in revenue to more than INR50 crore and operating margin
above 10%
* Downward factors
* Further stretch in the working capital cycle
* Decline in profitability by over 300 basis points
Incorporated in 2018, RGCPL undertakes building and road
construction projects. The company is based in Hyderabad, and is
promoted by Mr. Shaik Hussain and Ms Shaik Sameena.
RUKMINI SILK: CRISIL Assigns B+ Rating to INR12cr Loans
-------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Sree Rukmini Silk Emporium (SRSE).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Bank
Facility 2.1 CRISIL B+/Stable (Assigned)
Secured Overdraft
Facility 9.9 CRISIL B+/Stable (Assigned)
The rating reflects the firm's modest scale of operations and
average financial risk profile. These weaknesses are partially
offset by the extensive industry experience of the partners.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operations: Business risk profile is constrained
by subdued scale in the intensely competitive textiles (readymade
garments) industry. Operating revenue was INR45.6 crore in fiscal
2020 and is expected to decline marginally owing to Covid-19. Also,
the industry is highly fragmented due to the presence of many
unorganised players. This limits pricing flexibility and bargaining
power of the players. Hence, the firm's operating margin has been
4.35-5.62% in the three fiscals through 2020.
* Average financial risk profile: Gearing and total outside
liabilities to adjusted networth ratio were weak at 2.24 times and
4.41 times, respectively, as on March 31, 2020. Networth remained
low at INR4.55 crore on account of significant capital withdrawal.
Interest coverage ratio was comfortable at 1.97 times while net
cash accrual to total debt ratio remained negative at (0.19) time,
for fiscal 2020 due to dividend payment of INR2.89 crore in fiscal
2020
Strength
* Extensive experience of the partners: Presence of more than three
decades in textiles industry has enabled the partners to understand
market dynamics and establish strong relationships with suppliers
and customers.
Liquidity: Stretched
Bank limit utilisation was high at 96.04% for the 12 months through
December 2020. Cash accrual is expected to be over INR0.4 crore per
annum against term debt obligation of INR0.10 crore, over the
medium term. Current ratio was healthy at 2.01 times on March 31,
2020. The partners have withdrawn INR2.86 crore during the last
few years ended March 31, 2020, resulting in a decline in
networth.
Outlook Stable
The firm will continue to benefit from the extensive experience of
its partners and established relationships with clients.
Rating Sensitivity factors
Upward factors
* Improvement in financial risk profile resulting in gearing of
less than 2 times
* Ramp up in operations while sustaining profitability resulting in
higher cash accrual
Downward factors
* Deterioration in scale of operations by over 30% and fall in
profitability
* Significant capital withdrawal leading to further weakening of
financial risk profile, especially liquidity
Established in 2017 in Andhra Pradesh as a partnership firm by Mr.
G Sreedhar Babu and family, SRSE manufactures silk sarees.
SARMANGAL SYNTHETICS: CARE Lowers Rating on INR14cr Loan to B+
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sarmangal Synthetics Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 14.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE BB-; Stable
Short Term Bank 0.98 CARE A4; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 18, 2020, placed the
rating(s) of SSPL under the 'issuer non-cooperating' category as
SSPL had failed to provide information for monitoring of the
rating. SSPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 15, 2021. 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 rating takes into account the non-availability of
requisite information due to non- cooperation by SSPPL 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 March 18, 2020, the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Decline in PBILDT margin and thin PAT margin: The PBILDT margin
of the declined by 76 bps and stood at 6.93% in FY19 as against PY:
7.69%. Further, the PAT margin though marginally increased by 18
bps but stood thin at 0.58% in FY19.
* Working capital intensive nature of operations: The operating
cycle of the company though improved but stood elongated at 121
days in FY19 as against 144 days in FY18.
* Susceptibility of margins to raw material price movements, and
intense competition in highly fragmented industry which restricts
pricing flexibility: The profitability margins of the firm are
susceptible to fluctuation in raw material prices. Further, high
competitive intensity in the textile industry, volatility of raw
material prices and sluggish demand outlook from developed markets
are the major cause of concern for the Indian textile industry.
Key Rating Strengths
* Long experience of the promoters in the textile industry and
established track record of operations: Mr. Balchand Bothra is the
founder of the Mahaveers group and is the Chairman of SSPL. The
family has been engaged in textile business for more than four
decades and all the directors of the company have an average of
more than two decades of experience in textile industry. SSPL has
an operational track record of two decades.
* Modest scale of operation with increase in total operating
income: The scale of operation stood modest marked by TOI of the
company has increased from INR69.81 in FY18 to INR75.17 crore in
FY19.
* Improvement in capital structure and moderate debt coverage
indicators: The capital structure of the company marked by overall
gearing stood at 1.84x as on March 31, 2018 and has improved
marginally to 1.57x as on March 31, 2019. Further, debt coverage
indicators marked by interest coverage ratio stood moderate at
1.98x in FY19 witnessed marginal deterioration as against 2.07x in
FY18. And TD/GCA stood modest at 10.92x in FY19 when compared to
11.70x in FY18.
Established in Coimbatore in April 1995, Sarmangal Synthetics
Private Limited (SSPL), was promoted by Mr. B. Balchand Bothra, Mr.
B. Mahaveer Chand Bothra and Mr. B. Nirmal Kumar Bothra to
manufacture Polyster viscose blended yarn (single and double),
Polyster yarn, dyed yarn, mélange yarn and fancy yarn. The lender
had confirmed that the company has not availed moratorium for its
existing bank facilities.
SEAFOOD INNOVATIONS: CRISIL Withdraws Rating on INR5.0cr Loan
-------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Seafood Innovations (SI) on the request of the company and receipt
of a no objection certificate from its bank. The rating action is
in line with CRISIL Ratings' policy on withdrawal of its ratings on
bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 5.0 CRISIL B+ /Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Packing Credit 2.5 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Term Loan 3.7 CRISIL B+ /Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL Ratings has been consistently following up with SI for
obtaining information through letters and emails dated December 7,
2020 and December 12, 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
Ratings failed to receive any information on either the financial
performance or strategic intent of SI. This restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SI is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the rating on bank facilities of SI
continues to be 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
CRISIL Ratings has withdrawn its ratings on the bank facilities of
SI on the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with CRISIL
Ratings' policy on withdrawal of its ratings on bank loans.
SI, established in 1994 in Kerala as a partnership between Mr.
Joseph Zachariah and his wife Ms Sunila Joseph, processes and
exports frozen seafood, including squid, cuttlefish, and shrimp.
SONIA MARINE: CRISIL Reaffirms B Rating on INR3.35cr Term Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable/CRISIL A4'
ratings on the bank facilities of Sonia Marine Exports Pvt Ltd
(SMEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.15 CRISIL A4 (Reaffirmed)
Cash Credit 3 CRISIL B/Stable (Reaffirmed)
Foreign Bill
Discounting 2.5 CRISIL B/Stable (Reaffirmed)
Packing Credit 14 CRISIL A4 (Reaffirmed)
Term Loan 3.35 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect the company's weak financial risk
profile, exposure to risks inherent in the seafood processing
industry and intense competition. These weaknesses are partially
offset by the extensive industry experience of the promoters
Analytical Approach
Unsecured loan of INR8.80 crore as on March 31, 2020, from the
promoters has been treated as neither debt not equity as it is
expected to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below-average financial risk profile: The financial risk profile
is constrained by small networth of INR11.47 crore and high gearing
and total outside liabilities to adjusted networth ratio of 2.04
and 4.55 times, respectively, as on March 31, 2020. Debt protection
metrics is subdued as reflected in net cash accrual to total debt
and interest coverage ratios of 0.10 and 1.62 times, respectively,
for fiscal 2020. The financial risk profile will likely remain
below average over the medium term on account of low accretion to
reserve.
* Exposure to intense competition: The seafood industry in India
has a large number of small players on account of low entry
barriers. The intense competition leads to pressure on scalability
and operating margins of players. Moreover, the Indian seafood
processing industry faces increasing competition from neighbouring
countries.
* Risks inherent in seafood industry: Seafood is a depleting
commodity, and tightened regulations on fishing have made supply
conditions more irregular. The segment has also been affected by
any adverse impact of changes in climatic conditions, seasonal
availability of seafood, and diseases, as well as by rising prices
of diesel, ice, fishing gear, boats and trawlers.
Strength:
* Extensive experience of the promoters: The promoters' experience
of three decades and healthy relationships with customers and
suppliers have helped increase revenue to INR145.97 crore in fiscal
2020 from INR62.16 crore in fiscal 2016, and should continue to
support the business
Liquidity: Poor
SMEPL has utilised bank limit over 92% the 12 months through
November 2020. Net cash accrual are estimated at INR1.2-2.7 crore
for fiscals 2021 and 2022 against repayment obligation of INR1.19
crore and INR2.62 crore, respectively. Cash and cash equivalents
stood moderate at INR0.46 crore as on March 31, 2020. The company
had taken moratorium amid COVID-19 till August 2020 as per RBI
guidelines.
Outlook Stable
CRISIL Ratings believes SMEPL will continue to benefit from the
extensive experience of the promoters.
Rating Sensitivity factors
Upward factors
* Increase in revenue and operating margin leading to higher cash
accrual
* Reduction in bank limit utilisation to 80%
Downward factors
* Decline in revenue and operating profitability reducing net cash
accrual to INR1.0 crore
* Stretch in the working capital cycle to 100 days, impacting the
financial risk profile
SMEPL was established in 1977 as a partnership firm and was
reconstituted as a private limited company in 2019. It is promoted
by Mr. Narendra B Patil and his family members and is based in
Mumbai, SMEPL processes and exports fish and manufactures fish meal
and fish oil.
SUHASINI BUILDER: CRISIL Reaffirms B+ Rating on INR20cr Loans
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Suhasini Builder (SB).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 17.5 CRISIL B+/Stable (Reaffirmed)
Term Loan 2.5 CRISIL B+/Stable (Reaffirmed)
The rating reflects SB's exposure to risks and cyclicality inherent
in the real estate industry and geographical concentration in
revenue. These weaknesses are partially offset by the firm's strong
brand in its area of operations.
Key rating drivers and detailed description
Weakness:
* High geographical concentration in revenue: Since all of the
firm's completed and ongoing projects are in Midnapore, West
Bengal, it remains exposed to fluctuations in the region's real
estate market. Also, demand for real estate will depend on the
level of economic activity in the region, and any revision in rates
will significantly affect profitability.
* Exposure to risks related to cyclicality in the real estate
industry: The real estate sector in India is inherently cyclical
and highly fragmented, dominated by a few regional players. Demand
is largely impacted by insecurity regarding earnings of
individuals, with the economy facing high retrenchment levels.
Customers' anticipation of further correction in real estate prices
was the key reason for low demand in the recent past. The
government has undertaken steps to stimulate demand with
differential interest rates, priority sector status for low-value
loans and reduction in taxes on major inputs, such as steel and
cement.
Strength
Strong brand in Midnapore: Industry presence of around a decade has
enabled the partners to establish the firm's brand in Midnapore.
Liquidity: Stretched
Construction of ongoing and future projects is expected to be
funded through a mix of customer advances, unsecured loans and bank
loan. Although cash flow from the current project is expected to
sufficiently cover the future debt obligations, any unforeseen
delay in construction might result in cost overrun, thereby
affecting debt repayment. Any delay in receipt of advances from
customers is also expected to significantly impact liquidity.
Outlook: Stable
SB will continue to benefit from its partners' extensive
experience.
Rating sensitivity factors
Upward factors
* Early completion of projects and higher customer advances leading
to substantial positive cash flow of more than INR1 crore
* Higher-than-expected equity infusion leading to a better capital
structure
Downward factors
* Subdued response to, or delay in completion of, projects leading
to low positive cash flow of less than INR1 crore
* Delay in completion of the firm's project
Established in 2014 as a partnership concern by Mr. Anand Gopal
Maity and Mr. Nilakshaya Karan, SB primarily constructs apartments
and villas and has one ongoing project.
SUN FOODS: CRISIL Reaffirms B Rating on INR10.5cr Cash Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long-term bank facility of Sun Foods and Feeds (SFF).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10.5 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect SFF's large working capital
requirement, weak financial risk profile and exposure to intense
competition and industry-specific risks. These weaknesses are
partially offset by extensive experience of the partners in the
poultry industry.
Analytical Approach: Not applicable
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Operations are highly working
capital intensive as reflected in expected gross current assets
(GCAs) of 211 days in fiscal 21, driven by expected inventory and
debtors of 167 days and 19 days, respectively. GCAs are expected
to remain at 200-210 days over the medium term.
* Weak financial risk profile: Net worth is expected to be low at
INR3.77 crore for fiscal 21, with expected gearing high at 5.12
times for March 21, 2021. Debt protection metrics may be subdued,
with interest coverage ratio expected at 1.15 times in fiscal
2021.
* Exposure to intense competition and risks inherent in poultry
segment: Intense competition (from organized and unorganised
players catering to regional demands) may continue to constrain
scalability, pricing power and profitability. Furthermore, players
in the industry remain vulnerable to risks such as high
transportation cost, perishable nature of product and outbreak of
diseases. With an operating income of INR49 crore in fiscal 2020,
scale also remains small.
Strength
* Extensive experience of partners and established customer
relationship
The partners' experience of around two decades, their strong
understanding of market dynamics and healthy relationships with
various traders and feed suppliers should continue to support the
business.
Liquidity: Stretched
Liquidity is likely to remain weak. Bank limit utilization was high
and averaged around 98% during the 12 months through December 2020.
Cash accrual is projected at around INR0.2-0.4 crore per annum
over the medium term which is insufficient to meet the yearly term
debt obligation of INR0.38-1.65 crore. The shortfall will be met
with unsecured loans. Current ratio is expected at 1.54 times in
fiscal 21.
Outlook Stable
SFF will continue to benefit from the extensive experience of its
partners.
Rating Sensitivity factors
Upward scenarios
* Revenue growth of 20% per annum and steady operating margin,
leading to higher cash accruals
* Significant improvement in working capital cycle
Downward scenarios
* Steep decline in revenue or operating profit, resulting in cash
accrual below INR15 lakh
* Further sizeable stretch in working capital cycle
* Adequacy of credit enhancement structure
* Unsupported ratings
SFF was set up in 2001 as a partnership firm by Ms N Vani and Ms B
Surekha. This firm, based in Hyderabad, produces commercial eggs.
SUPREME BATTERIES: CARE Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Supreme
Batteries Pvt Ltd. (SBPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 33.55 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
Category
Short Term Bank 10.50 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 December 10, 2019, placed
the rating of SBPL under the 'issuer non-cooperating' category as
SBPL had failed to provide information for monitoring of the
rating. SBPL continues to be non-cooperative despite repeated
requests for submission of information through phone calls and
email dated December 14, 2020, December 21, 2020 and January 07,
2021. 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 December 10, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
* Stretched liquidity position: The liquidity profile of the
company is poor marked by lower accruals when compared to repayment
obligations. Based on interaction with bankers, there are ongoing
delays in interest and principal repayments obligations towards the
bank. Also there have been instances of LC devolvement.
Supreme Batteries Private Limited (SBPL) was initially established
as a partnership firm in 1982 and was incorporated as a private
limited company in the year 2001 and is promoted by Mr. Vimal Kumar
Agarwal, Mr. Anuj Agarwal and Mr. Ajay Goyal. However, commercial
production commenced from the month of September 2009.
SUPREME MILLS: CARE Lowers Rating on INR5.75cr LT Loan to B
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Supreme Mills India Private Limited (SMIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.75 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B+; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 19, 2020, placed the
rating(s) of SMIPL under the 'issuer non-cooperating' category as
SMIPL had failed to provide information for monitoring of the
rating. SMIPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 15, 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 non-availability of
requisite information due to non- cooperation by SMIPL 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 March 19, 2020 the following were the
rating strengths and weaknesses.
Key Rating Weakness
* Small scale of operation: The scale of operation stood small
marked by TOI of INR19.74 crore in FY19 and tangible net worth base
of INR3.36 crore as on March 31, 2019.
* Moderately leveraged capital structure and weak debt coverage
indicators: The overall gearing stood moderately leveraged at 1.88x
as of March 31 2019 as against 1.55x as of March 31 2018. The total
debt/GCA has marginally declined from 9.39x in FY18 to 9.71x in
FY19.The interest coverage ratio marginally improved from
2.01x in FY18 to 2.03x in FY19.
* Working capital intensive nature of operations: The operating
cycle of SMIPL stood elongated at 97 days in FY19 as compared to 90
days in FY18 majorly due to nominal increase average inventory
period days in FY19. Average collection and creditor days stood at
around 60 and 30 days during FY19.
* Highly fragmented industry and competitive business segment due
to presence of numerous players: The company is into a fragmented
business segment and competitive industry. The market consists of
several small to medium-sized companies that compete with each
other along with several large enterprises.
Key Rating Strengths
* Experience of the promoters in textile industry: The managing
director, Mr. G. Arulmozhi has experience of about three decades in
the textile industry. Prior to establishing SMIPL, he was engaged
in trading of textile machinery through his association with
Premier Associates which was established in 1998. Prior to
establishing Premier Associates, he was working with Super Sales
Engineering for about 12 years. Ms. Sujini, has 17 years of
experience in this field through her association with SMIPL since
its inception in 2000.
* Financial performance marked by growth in operating income along
with satisfactory PBILDT margin and thin PAT margin: The total
operating income in FY19 improved and stood at INR19.74 crore as
against INR18.53 crore in FY18.The PBILDT margin improved from
6.40% in FY18 to 7.31% in FY19. The PAT margin stood stable at
0.97% in FY19 as against 0.99% in FY18.
Supreme Mills India Private Limited (SMIPL) was incorporated on
November 13, 2000 by Mr. G. Arulmozhi and Ms. A. Sujini in
Coimbatore, Tamil Nadu. The company is engaged in manufacturing of
cotton yarn which finds its application primarily in manufacturing
bed sheets and towels.
VISHNU PRIYA DRIER: CARE Assigns B+ Rating to INR6.87cr Loans
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Vishnu
Priya Drier Industries (VPD), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 1.50 CARE B+; Stable Assigned
Long Term Bank
Facilities 5.37 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of VPD rating continues
to be tempered by seasonal nature of availability of paddy
resulting in working capital intensive nature of operations,
constitution of the entity as a partnership firm. However the
ratings also takes into account improvement in total operating
income, capital structure and debt coverage indicators, during FY20
(refers to the period April 1 to March 31). The ratings derives
comfort from experienced partners, locational advantage with
presence in cluster and easy availability of paddy and stable
outlook of rice industry.
Rating Sensitivities
Positive Factors (Factors that could lead to positive rating
action/upgrade)
* Increase in total operating income of INR40.00 crore and above
while maintaining PBILDT margin of more than 7.6% on sustained
basis
* Improve in overall gearing ratio less than 2.00x on sustained
basis
Negative Factors (Factors that could lead to negative rating
action/downgrade)
* Any significant increase in total debt levels result in
deterioration of overall gearing beyond 3.00x on sustained basis.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Limited track record and small scale of operations: Though the
firm was established in October 2015, it started its commercial
operations in January 2018. Due to nascent stage of operations, the
total operating income continues to remain small though it has
grown to INR21.94 crore in FY20 as compared to INR19.25 crore in
FY19. The growth of 14% in TOI backed the increase in orders from
customers coupled by healthy demand for rice. Further, the firm has
registered the total operating income of INR16.30 crore for 9MFY21
(Prov.).
* Leveraged capital structure and moderate debt coverage
indicators: Due to nascent stage of business operations, the
capital structure stood high due to high debt infusion, however,
the overall gearing ratio has improved from 3.64x as on March 31,
2019 to 2.35x as on March 31, 2020 due to retention of profits into
the business coupled with capital infusion by the partners and
decline in total debt levels. The total debt to gross cash accruals
has improved and stood moderate at 6.49x as on March 31, 2020 as
compared to 7.63x as on March 31, 2019 due increase in cash
accruals with growth in TOI. However, the PBILDT interest coverage
has declined marginally from 2.42x in FY19 to 2.31x in FY20, due to
increase in finance cost on back of higher utilization of working
limits during the year.
* Seasonal availability of paddy resulting in working capital
intensive nature of operations: Paddy in India is harvested mainly
at the end of two major agricultural seasons Kharif (June to
September) and Rabi (November to April). The millers have to stock
enough paddies by the end of the each season as the price and
quality of paddy is better during the harvesting season. During
this time, the working capital requirements of the rice millers are
generally on the higher side. As reflected in its high gross
current assets (GCA) days of 99 days as on March 31, 2020. The
large GCA days are driven by moderate inventory levels and average
debtors period March 31, 2020. However, the inventory levels and
debtors period are offset by credit from the raw material suppliers
which resulted in moderate operating cycle of 46 days as on March
31, 2020.
* Constitution of entity as a partnership firm with inherent risk
of withdrawal of capital: With the entity being partnership firm,
there is an inherent risk of instances of capital withdrawals by
partners resulting in lesser of entity's net worth. Further, the
partnership firms are attributed to limited access to funding.
During the review period, the partners has infused net capital of
INR0.21 crore during FY20.
Key Rating Strengths
* Experienced promoters in the rice business: VPD was established
in 2015 by Mr. Nalla Venkateshwar Rao and his friends. Mr. Nalla
Venkateshwar is the Managing Partner of the firm. He has more than
one decade of experience in the trading of Fertilizers and Paddy.
Through partner's long term experience in this industry, they have
established healthy relationship with large number of clients.
* Satisfactory profitability margins: The PBILDT margin has
declined marginally by 57 bps over FY19 and stood satisfactory at
6.98% in FY20 due to increase in overhead expenses like employee
cost, raw material cost with increase in TOI. However, the PAT
margin has increase by 30 bps over FY19 and stood 1.52% in FY20 due
to absorption of finance and depreciation cost due to absolute
increase in amount of PBILDT.
* Healthy demand outlook of rice: Rice is consumed in large
quantity in India which provides favorable opportunity for the rice
millers and thus the demand is expected to remain healthy over
medium to long term. India is the second largest producer of rice
in the world after China and the largest producer and exporter of
basmati rice in the world. The rice industry in India is broadly
divided into two segments – basmati (drier and long grained) and
non-basmati (sticky and short grained). Demand of Indian basmati
rice has traditionally been export oriented where the South India
caters about one-fourth share of India's exports. However, with a
growing consumer class and increasing disposable incomes, demand
for premium rice products is on the rise in the domestic market.
Demand for non-basmati segment is primarily domestic market driven
in India. Initiatives taken by government to increase paddy acreage
and better monsoon conditions will be the key factors which will
boost the supply of rice to the rice processing units. Rice being
the staple food for almost 65% of the population in India has a
stable domestic demand outlook. On the export front, global demand
and supply of rice, government regulations on export and buffer
stock to be maintained by government will determine the outlook for
rice exports.
* Locational advantage with presence in cluster and easy
availability of paddy: The rice milling unit of VPD is located at
Koppal district which is the top district for producing rice in
Karnataka. The manufacturing unit is located near the rice
producing region, which ensures easy raw material access and smooth
supply of raw materials at competitive prices and lower logistic
expenditure.
Liquidity Analysis: Stretched
The liquidity profile of the firm stood stretched marked by the
high utilization of bank limits at 90% for the period of 12 months
ending December 31, 2020 and modest cash and bank balance of
INR0.02 crore as on March 31, 2020. However, the current ratio of
the firm stood above unity at 1.10x as on March 31, 2020. Further,
the firm had availed moratorium on its debt obligations for the
period March 01, 2020 to August 31, 2020.
Karnataka based, Vishnu Priya Drier Industries (VPD) was
established on October 2015 and started its commercial operations
in January 2018. VPD was promoted by Mr. Venkateshwar Rao and his
friends. VPD is engaged in paddy drying, rice milling and
processing with installed capacity of 50 ton per day.
VISHNU PRIYA: CARE Assigns B+ Rating to INR1.50cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Vishnu
Priya Agro Industries (VPA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 1.50 CARE B+; Stable Assigned
Long Term Bank
Facilities 9.02 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of VPA takes into
account improvement in total operating income, capital structure
and debt coverage indicators, during FY20 (refers to the period
April 1 to March 31). However the rating continues to be tempered
by seasonal nature of availability of paddy resulting in working
capital intensive nature of operations, constitution of the entity
as a partnership firm. The rating, however, derives comfort from
experienced partners, locational advantage with presence in cluster
and easy availability of paddy and stable outlook of rice
industry.
Rating Sensitivities
Positive Factors
* Increase in total operating income of INR50.00 crore and above
while maintaining PBILDT margin of more than 3.00% on sustained
basis
* Improve in overall gearing ratio less than 2.00x on sustained
basis
Negative Factors
* Any significant increase in total debt levels result in
deterioration of overall gearing beyond 3.50x on sustained basis
Detailed description of the key rating drivers
Key Rating weaknesses
* Limited track record and small scale of operations: Though the
firm was established in October 2015, it started its commercial
operations in July 2017. Due to nascent stage of operations, the
total operating income continues to remain small though it has
grown at CAGR of 48.76% during FY18 to FY20. The total operating
income stood small at INR36.05 crore in FY20 and the tangible net
worth stood low at INR2.62 crore as on March 31, 2020. The firm,
has registered the total operating income of INR26.40 crore for
9MFY21 (Prov.). Leveraged capital structure and moderate debt
coverage indicators Due to nascent stage of business operations,
the capital structure stood high due to high debt infusion,
however, the overall gearing ratio has improved from 6.96x as on
March 31, 2019 to 3.50x as on March 31, 2020 due to retention of
profits into the business coupled with capital infusion by the
partners. The debt coverage indicators has improved due to y-o-y
increase in cash flow from operations as a result of increase in
total operating income. The PBILDT interest coverage ratio stood
moderate at 2.20x in FY20 (P.Y:2.05x). Further, the total debt to
gross cash accruals improved and stood moderate at 7.42x in FY20
(P.Y: 9.64x).
* Seasonal availability of paddy resulting in working capital
intensive nature of operations: Paddy in India is harvested mainly
at the end of two major agricultural seasons Kharif (June to
September) and Rabi (November to April). The millers have to stock
enough paddies by the end of the each season as the price and
quality of paddy is better during the harvesting season. During
this time, the working capital requirements of the rice millers are
generally on the higher side. As reflected in its high gross
current assets (GCA) days of 96 days as on March 31, 2020. The
large GCA days are driven by moderate inventory levels and average
debtors period March 31, 2020. However, the inventory levels and
debtors period are offset by credit from the raw material suppliers
which resulted in moderate operating cycle of 60 days as on March
31, 2020.
* Constitution of entity as a partnership firm with inherent risk
of withdrawal of capital: With the entity being partnership firm,
there is an inherent risk of instances of capital withdrawals by
partners resulting in lesser of entity's net worth. Further, the
partnership firms are attributed to limited access to funding.
During the review period, the partners has infused net capital of
INR0.27 crore during FY20.
Key Rating Strengths
* Experienced promoters in the rice business: VPA was established
in 2015 by Mr. P. Sathya Babu and his friends. Mr. P. Sathya Babu
is a graduate in B.com and Managing Partner of the firm. He has
more than one decade of experience in the trading of Fertilizers
and Paddy. Through partner's long term experience in this industry,
they have established healthy relationship with large number of
clients.
* Satisfactory profitability margins: The profitability margin
continues to remain satisfactory due to y-o-y increase in total
operating income. The PBILDT margin has grown by 44 bps and stood
at 6.38x in FY20 as compared to 5.94x in FY19. Further, the PAT
grown marginally by 63 bps and stood at 1.97x in FY20 as compared
to 1.34x in FY19.
* Healthy demand outlook of rice: Rice is consumed in large
quantity in India which provides favorable opportunity for the rice
millers and thus the demand is expected to remain healthy over
medium to long term. India is the second largest producer of rice
in the world after China and the largest producer and exporter of
basmati rice in the world. The rice industry in India is broadly
divided into two segments – basmati (drier and long grained) and
non-basmati (sticky and short grained). Demand of Indian basmati
rice has traditionally been export oriented where the South India
caters about one-fourth share of India's exports. However, with a
growing consumer class and increasing disposable incomes, demand
for premium rice products is on the rise in the domestic market.
Demand for non-basmati segment is primarily domestic market driven
in India. Initiatives taken by government to increase paddy acreage
and better monsoon conditions will be the key factors which will
boost the supply of rice to the rice processing units. Rice being
the staple food for almost 65% of the population in India has a
stable domestic demand outlook. On the export front, global demand
and supply of rice, government regulations on export and buffer
stock to be maintained by government will determine the outlook for
rice exports.
* Locational advantage with presence in cluster and easy
availability of paddy: The rice milling unit of VPA is located at
Koppal district which is the top district for producing rice in
Karnataka. The manufacturing unit is located near the rice
producing region, which ensures easy raw material access and smooth
supply of raw materials at competitive prices and lower logistic
expenditure.
Liquidity Analysis: Stretched
The liquidity profile of the firm stood stretched marked by the
high utilization of bank limits at 90% for the period of 12 months
ending December 31, 2020 and modest cash and bank balance of
INR0.18 crore as on March 31, 2020. However, the current ratio of
the firm stood above unity at 1.09x as on March 31, 2020. Further,
the firm had availed moratorium on its debt obligations for the
period March 01, 2020 to August 31, 2020.
Karnataka based, Vishnu Priya Agro Industries (VPA) was established
in October 2015 as partnership firm by Mr. P. Sathya Babu and his
friends. VPA is engaged in milling and processing of rice. The firm
started its commercial operation in July 2017. The rice milling
unit of the firm is located at Raichur (Dist.), Karnataka. Apart
from rice processing, the firm is also engaged in selling off its
by-products such as broken rice, bran and husk.
WAINGANGA EXPRESSWAY: CARE Lowers Rating on INR298.99cr Loan to B+
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Wainganga Expressway Private Limited (WEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 298.99 CARE B+; Stable Revised from
Facilities CARE BB+; Stable
Detailed Rationale & Key Rating Drivers
The revision in rating assigned to the bank facilities of WEPL is
on account of expected moderation in debt coverage indicators due
to continued underperformance of toll collection, stretched
liquidity position and absence of Debt Service Reserve Account
(DSRA). CARE also takes cognizance of the fact that restructuring
plan has reached at an advanced stage and is likely to be
implemented soon. The ratings continue to be constrained by
inherent traffic risk associated with toll road projects,
operations and maintenance (O&M) risk and interest rate risk. The
rating however continues to derive strength from its operational
track record of over six years and it being a wholly owned
subsidiary of JMC (rated CARE A+; Stable/CARE A1).
Rating Sensitivities
Positive Factors:
* Substantial increase in toll revenue leading to self-sufficient
operations and improvement in the debt coverage indicators above
unity
Negative Factors:
* Delay in finalization of restructuring plan
Detailed description of the key rating drivers:
* Moderation in debt coverage indicators: CARE expects moderation
in debt coverage indicators of WEPL on account of continued
underperformance of toll collection, stretched liquidity position
which is marked by delays in premium payment to authority and
absence of DSRA.
Key Rating Weaknesses:
* Absence of DSRA: WEPL had created DSRA in the form of Bank
Guarantee which expired in June 2019 and was not renewed on its
expiry. Further, WEPL has applied for restructuring of its existing
debt and hence there is uncertainty over the creation of the DSRA.
* Inherent traffic risk marked by significantly lower than
envisaged traffic on the toll road: WEPL is exposed to traffic risk
as toll collection is its only source of revenue. WEPL's highway is
located on the NH-6, connecting Hazira in Gujarat to Kolkata in
West Bengal and witness good east-west traffic movement. Further,
around 75% of the traffic on the toll road consisted of commercial
vehicles, which increases the susceptibility of reduction in
revenue due to slowdown in the economy. WEPL commenced toll
collections in January 2015 post completion of the construction of
road and achievement of provisional commercial operations date
(COD). Toll collection continued to remain significantly lower than
what was originally envisaged despite growth of 9% during FY20 on
y-o-y basis. Toll collection during 9MFY21 was stable in comparison
to 9MFY20 despite suspension of toll collection due to Covid-19
lockdown with growth in Average Daily toll Collection (ADTC) of
around 7.9% on y-o-y basis during 9MFY21. Despite that,
significantly lower than initially envisaged toll collection and
increasing cash outflow towards debt servicing and premium
liabilities is expected to weaken debt coverage indicators of
WEPL.
* Partial deferment of concession premium by NHAI: WEPL had won the
concession for the toll road project in May 2011 for a period of 18
years, based on its bid for paying annual premium of INR27.35 crore
(fixed escalation of 5% p.a.) to NHAI. However, in October 2014,
WEPL applied to NHAI for partial deferment of premium on the
expectation of lower than envisaged traffic. WEPL's request was
approved by NHAI in December 2014. As per the approval for partial
premium deferment, WEPL is required to pay INR185 crore of premium
during FY15-FY24, instead of INR328 crore over this period (i.e.
deferment of INR143 crore). This deferred premium shall be payable
along with interest one year prior to end of concession period
leading to payment of significant amount of premium over the
balance concession period.
Nevertheless, in order to compensate for the shortfall in traffic,
the concession agreement provides for extension in the concession
period in case of shortfall in the traffic as compared to the
estimated traffic calculated based on target date (falling in
2021). In such cases the concession period can be extended by
maximum up to 20% of the concession period. The current traffic is
lower than the target traffic which makes the project eligible for
extension of the concession period as per the clauses of concession
agreement, subject to requisite approvals.
* Inherent O&M risk partially mitigated by fixed price O&M
contract: WEPL is also exposed to the risk of higher than envisaged
maintenance costs; however its fixed price contract with third
party contractor for O&M activity provides some control over it.
Till date, WEPL is yet to create any MMR due to inadequate surplus.
As articulated by the company management, its first major
maintenance falls due in FY23-FY24. Inherent interest rate risk:
WEPL's project cost is structured with debt-equity ratio of 2.58:1
exposing the WEPL to adverse movement in the interest rates due to
the floating nature of loans with yearly reset clause which may
impact the debt coverage indicators of the company. Further,
majority of the debt repayment is back-ended (around 79% in the
last six years of repayment, as against repayment tenure of 11
years), magnifying the interest rate risk.
Key Rating Strengths
* Operational track record of over six years and strong parentage
of JMC: JMC promoted WEPL as a Special Purpose Vehicle (SPV) to
benefit from its core competency in civil construction and enhance
its position as an asset developer. The parentage of JMC provides
strong financial flexibility to WEPL and expertise for the
execution and operations of the project. Also, JMC has infused
additional unsecured loans to fund the cost overrun to complete the
construction of the project highway along with need-based support
for meeting operational (including concession premium) and debt
servicing requirement. WEPL received provisional COD on January 7,
2015 and has operational track record of over six years.
Till March 31, 2020, JMC had infused INR191 crore in WEPL, which is
INR91 crore more than its envisaged initial commitment of INR100
crore, primarily to fund the cost over run in the project and
towards meeting the continued shortfall in debt servicing
requirement.
Liquidity: Stretched
WEPL's stretched liquidity is marked by continued subdued toll
collection coupled with high premium and repayment obligations.
Furthermore, pressure on liquidity position is evident by delays in
payment of premium to concessioning authority along with absence of
DSRA and major maintenance reserve (MMR) due to inadequate surplus.
Historically, WEPL had relied on need based support from parent JMC
for meeting its premium and repayment obligations, which is now
expected to be restricted to commitment under the restructuring
plan which is presently at an advanced stage.
Incorporated in June 2011, WEPL is a SPV sponsored by JMC promoted
to undertake four-laning of Nagpur to Wainganga Bridge section of
National Highway (NH) 6, spanning 46 KMs, under National Highways
Development Programme (NHDP) Phase-III on Design, Build, Finance,
Operate and Transfer (DBFOT) – Toll basis. JMC, a 67% subsidiary
of KPTL, is engaged in various types of civil and mechanical
construction activities like infrastructure, real estate,
industrial and institutional buildings as well as power plants with
a strong presence across the country. The Concession Agreement
between WEPL and National Highways Authority of India (rated CARE
AAA; Stable) was executed on June 21, 2011 for a concession period
of 18 years (incl. 2.5 years construction period). The project was
completed at a cost of INR455 crore funded through term loan of
INR328 crore and balance through equity and unsecured loan from
JMC. Toll collection on the stretch started with receipt of
provisional COD on January 7, 2015, three months behind the
scheduled COD in October 2014. In December 2014, NHAI approved the
partial premium deferment application of WEPL.
=====================
N E W Z E A L A N D
=====================
MAGSONS HARDWARE: Owes Over NZD22 Million, Receivers Report Shows
-----------------------------------------------------------------
Stuff.co.nz reports that the ill-fated Nido furniture store in
Auckland owes NZD22.3 million to creditors and staff, a receivers
report showed.
But unsecured creditors are unlikely to see any of it, receivers
Kare Johnstone and Connor McElhinney of McGrath Nichol said.
Billed as the country's largest homeware store, Magsons Hardware,
trading as Nido, went into receivership in December, plagued by
construction and funding problems. It continues to trade.
According to Stuff, the report said the 27,000 square metre
superstore opened about nine months later than planned on May 29
last year, hampered by continued construction delays.
It was put into receivership after the liquidation of the
construction company building the store, Vijay Holdings, in
November.
Both companies share the same sole director, Nido founder Vinod
Kumar, who was also in charge of a related company which went into
liquidation last week, Magsons Investments.
Other factors contributing to Magsons Hardware's failure included
trading challenges and a lack of funds to cover losses and ongoing
trading costs, the report, as cited by Stuff, said.
The company had over NZD13.5 million in assets and NZD22.3 million
in liabilities. Other items on its books included NZD18.22 million
in intercompany loans and intercompany debt of NZD10.5 million,
Stuff discloses.
Staff were owed NZD666,000 of which NZD565,000 was claimed as a
preferred creditor.
Stuff relates that the receivers said the company who appointed
them, Central Assets Investment Ltd, was owed NZD6.4 million and as
there would not be enough to cover this debt, there would not be
any money for unsecured creditors.
Central Assets and the receivers were working together to sell Nido
as a going concern but "due to the sensitive nature of the
transaction and ongoing negotiations, the details of the proposed
sale have been omitted from this report".
Meanwhile, work has resumed on the unfinished development which is
owned along with the land by a property syndicate, Stuff says.
Maat Group, the investment firm which arranged the syndicate, told
Stuff that workers, including some of the original contractors, had
returned to the site to finish the job.
Stuff relates that the syndicate, Central Park Property Investment,
invested NZD35 million to buy the property which was held in a
joint venture company called Everest Central Investments Limited
(ECIL).
ECIL took out a NZD25 million loan with mezzanine lender
Pearlfisher and Magsons Investments, which originally owned a small
stake in the joint venture, acted as guarantor, says Stuff.
Maat has previously advised investors that Pearlfisher would sell
the property as a mortgagee sale if it did not receive sufficient
payment by February 28, Stuff adds.
=====================
P H I L I P P I N E S
=====================
LUFTHANSA TECHNIK: To Slash 300 Jobs Amid Pandemic
--------------------------------------------------
Xinhua News reports that airline maintenance provider Lufthansa
Technik Philippines (LTP) will lay off 300 employees in April due
to the impact of the COVID-19 pandemic on the airline industry that
forced some of its clients into bankruptcy.
"This decision comes after careful study and consideration of the
business situation as a result of the pandemic, its effects on the
aviation industry," Xinhua quotes LTP president and CEO Elmar
Lutter as saying in a letter to employees dated Feb. 11.
"As a maintenance, repair, and overhaul provider for aircraft, the
significant fleet reductions announced by various customer airlines
with some already in bankruptcy proceedings have a direct negative
effect on LTP's business," Mr. Lutter said.
Xinhua relates that Mr. Lutter said the "rightsizing program" will
be carried out in two phases, first by voluntary separation, and
then by retrenchment. The layoff "is temporary until our industry
fully recovers," he added.
The company said around 2,700 workers will remain after the
layoffs, which take effect on April 1.
The LTP is a joint venture company of Lufthansa Technik AG and
MacroAsia Corporation, controlled by Philippine Airline (PAL) owner
Lucio Tan. LTP's client list includes PAL and some of the world's
largest airlines.
Xinhua says the Philippines shut down airports and banned flights
in mid-March last year amid COVID-19-related lockdowns.
The flight restrictions forced several carriers such as PAL, Cebu
Pacific, and Air Asia Philippines to slash jobs to stay afloat,
Xinhua notes.
=====================
S O U T H K O R E A
=====================
KUMHO TIRE: Union Votes to Accept Wage Freeze
---------------------------------------------
Yonhap News Agency reports that unionized workers at Kumho Tire Co.
have voted to accept a wage deal for the year of 2020 amid the
prolonged coronavirus pandemic, the union said on Feb. 16.
Yonhap relates that the management and labor union reached an
agreement early this month on a wage freeze and a cash bonus worth
KRW1 million (US$900) per worker plus a contract to guarantee job
security.
Its 2,700-strong union approved the deal in a vote held from Monday
to Tuesday, union spokesman Kim Seong-jin said.
Kumho Tire didn't raise wages for 2018 and 2019, and its union
members returned two months of bonuses a year and accepted reduced
welfare benefits, he said, Yonhap relays.
For the whole of 2020, its net losses widened to KRW46.2 billion
from KRW43.4 billion a year earlier due to COVID-19's impact on the
automobile industry, Yonhap discloses.
Full-year operating profit fell 37 percent to KRW36.43 billion from
KRW57.4 billion during the same period. Sales declined 8.4 percent
to KRW2.17 trillion from KRW2.37 trillion.
In 2018, Chinese tiremaker Qingdao Doublestar Co. acquired a 45
percent stake in the Korean tiremaker for KRW646.3 billion from the
state-run Korea Development Bank.
Kumho Tire has eight plants -- three in South Korea, three in
China, one in Vietnam and one in the United States -- with a
combined production capacity of 54.64 million tires.
SSANGYONG MOTOR: Extends Plant Suspension Amid Parts Shortage
-------------------------------------------------------------
Yonhap News Agency reports that financially troubled carmaker
SsangYong Motor Co. said Feb. 16 it will extend the suspension of
its local plant this week due to a lack of parts from contractors.
According to Yonhap, SsangYong Motor already halted its plant in
Pyeongtaek, 70 kilometers south of Seoul, on Dec. 24, Dec. 28, Feb.
3-5 and Feb. 8-10 as its subcontractors refused to deliver parts
due to outstanding payments.
The SUV-focused carmaker said it plans to resume operations at the
Pyeongtaek plant on Feb. 23.
Yonhap says SsangYong's Indian parent firm Mahindra & Mahindra Ltd.
is in the process of selling its controlling stake in the Korean
unit but reportedly faced difficulty in narrowing terms of the deal
with a potential buyer.
Mahindra acquired a 70 percent stake in SsangYong for KRW523
billion in 2011 and now holds a 74.65 percent stake in the
carmaker, Yonhap notes.
About Ssangyong Motor
Headquartered in Kyeonggi-Do, South Korea, Ssangyong Motor Co. Ltd.
engages in the manufacture and sale of automobiles. The Company
mainly manufactures and sells recreational vehicles (RVs), sports
utility vehicles (SUVs), multi-purpose vehicles (CDVs) and
passenger cars under the brand name of rexton sports, korando,
korando sports, korando turismo, tivoli, tivoli air and others. The
Company also provides automobile parts. The Company distributes its
products within domestic market and to overseas markets.
SsangYong Motor Co. on Dec. 21, 2020, filed for court receivership
as it struggles with snowballing debts amid the COVID-19 pandemic,
according to Yonhap News Agency. The decision comes after SsangYong
Motor, the South Korean unit of Indian carmaker Mahindra & Mahindra
Ltd., failed to pay KRW60 billion (US$54.8 million) worth of debts
to its three creditor banks.
The company received a three-month suspension of its obligation to
pay its debts, as it aims to find a new investor during the period
before the court-led restructuring begins on Feb. 28, Yonhap said.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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